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South Stream confident on EDF deal

disclaimer: image is for illustration purposes only
by Staff Writers
Moscow (UPI) Feb 14, 2011
There's no question that French energy giant EDF will join the Russian-led South Stream pipeline project, consortium head Marcel Vietor said.

"To me that's already a fact. We see this as a Russian-Italian-French venture. We are already getting support from the French government," Vietor, the chief executive officer of the South Stream consortium, told the European Energy Review in an interview.

A pipeline project jump-started by the Kremlin to bypass traditional transit country Ukraine, South Stream would eventually bring more than 60 billion cubic meters of natural gas per year to Europe, mainly by rerouting gas from Ukraine.

Gazprom, Italy's Eni as the main European backer of South Stream and EDF last summer signed a memorandum of understanding that the French utility would join the pipeline consortium by the end of 2010; the agreement hasn't been finalized.

The Europeans, meanwhile, are pushing hard for Nabucco.

Backed by Germany's RWE and OMV from Austria, Nabucco would transport up to 31 billion cubic meters of gas per year from Caspian and Middle Eastern gas to Europe, bypassing Russia. However, the pipeline hasn't secured definitive gas commitments.

Experts have questioned whether there is supply and demand for both projects, an analysis that has resulted in what the media has termed the "pipeline war."

The European Union has identified Nabucco as a key project to diversify Europe's energy imports and wants to support it via its new infrastructure package. European Commission President Jose Manuel Barroso and Energy Commissioner Guenter Oettinger recently visited Azerbaijan and Turkmenistan to secure gas commitments from the region.

South Stream's CEO since October, Vietor said Nabucco shouldn't be given preferential treatment when it comes to financing and regulatory procedures.

"We are not asking for preferential treatment or for subsidies," Vietor said. "We can do this project by ourselves, with our partners. All we are asking for is a level playing field."

He added, "There should not be a built-in disadvantage for a project just because it brings gas from Russia, a long-standing strategic partner of the EU."

Nabucco, a project supported by Brussels and Washington, will receive loans from the World Bank, the European Investment Bank and the European Bank for Reconstruction and Development.

Ever since a row over gas prices with Ukraine in 2006, the Kremlin has been accused of using its energy reserves as a political pressure tool. The lack of trust has resulted in conflicts over Europe's diversification strategy, with Russia threatening to supply Asia's emerging economies instead.

The problems have intensified as Europe is pushing for renewable energy and in the wake of the financial crisis demand and prices for gas have tumbled.

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