Russia’s controversial South Stream pipeline gets under way

Russia’s ministry of construction, housing and utilities has issued the permit that will allow work to begin work on the South Stream gas pipeline. The permit was awarded to South Stream Transport, the company that will oversee the project. This consortium of Russian, Italian, German and French companies is based in Amsterdam. 

The permit allows the company to start construction work on the technical infrastructure needed for the project. The site for this first phase is near Anapa in the northern Caucasus, and will involve building access roads; in addition, the company will take on the deliveries of construction machineries, equipment and materials and arrange for the protection of rare plants and animals.

It will also build four "micro-tunnels" to connect South Stream to Gazprom’s "Unified Gas Supply System" in the rest of the Russian Federation. South Stream Transport is made up of Gazprom (50%), Italy’s Eni (20%), France’s EDF (15%) and Germany’s Wintershall (15%).

Construction of South Stream will begin in the Caucasus, near the city of Krasnodar

The pipeline is controversial owing to its by-passing the Ukraine – allowing Russia more easily to cut off its gas supply – and Bulgaria’s reluctant decision to halt work on the development.

Some commentators have argued that there is little commercial reason to spend the vast amount of money – more than $40bn – required to finance the project.

Sandro Gozi, Italy’s state secretary for European affairs, said this week that Italy is planning to participate in South Stream, a branch of which will pass under the Adriatic to Puglia in the heel of the Italian boot. He said: "We assume that in order to strengthen a single European energy market, it is absolutely necessary to diversify infrastructure connecting it with various suppliers." He added: "This project enhances the energy security of our country and we will not let Hungary be dependent on Ukraine."

At present Hungary is still planning to go ahead with the project.


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