EU to Focus on South Stream Solution -- Update

By Gabriele Steinhauser 

BRUSSELS--The European Union said Tuesday it will continue to work with its member states on finding a deal with Russia to build a gas pipeline though southeastern Europe, despite an announcement by Russia's president, Vladimir Putin, that the project has been abandoned.

"The next meeting [on the South Stream pipeline] had been planned for the 9 December 2014 and it will take place regardless of the announcement by Russia to stop the project," the EU's vice president for energy, Maros Sefcovic, said. "Obviously this new development will be an additional element that will be discussed in that meeting."

Saipem SpA, which has a EUR2 billion ($2.49 billion) contract to install the first subsea line for South Stream, said it hasn't been contacted about Russia's plans to terminate the project and is continuing to carry out its work. A Saipem ship in charge of laying the gas pipes left Bulgaria yesterday to reach the Russian Black Sea coast.

The $20 billion South Stream project ran into trouble earlier this year when the European Commission, the EU's executive arm, said that national agreements on the pipeline with Moscow were illegal under EU law. The pipeline, designed to transport Russian gas underneath the Black Sea to Bulgaria and other countries in southeastern Europe, would have allowed Russian gas to bypass Ukraine, whose disputes with Moscow have stopped supplies to the EU in the past.

But Mr. Putin announced Monday that failure to reach a deal on South Stream with Bulgaria had lead Russia to drop the project and instead build a pipeline through Turkey. "We couldn't get necessary permissions from Bulgaria, so we cannot continue with the project. We can't make all the investment just to be stopped at the Bulgarian border," Mr. Putin said in Ankara where he is on a state visit. "Of course, this is the choice of our friends in Europe."

Eric Sylvers contributed to this article.

Write to Gabriele Steinhauser at [e-mail]

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