Ukraine is critical of the European Union's silence on Russia building the South Stream gas pipeline, the deputy head of national oil and gas company Naftogaz Ukrainy, Vadym Chuprun, said at a Wednesday press conference in Kyiv.
The recent commissioning of the Banatski Dvor underground gas storage facility in Serbia is an important part of the South Stream project, Chuprun said. "It surprises us that European officials have not reacted to this, and we regard their silence as a sign of agreement. That’s why such a position doesn’t make sense to us, especially knowing that the position was straightforward: the European route is the Nabucco gas pipeline. Even European Energy Commissioner Gunther Oettinger talked about this. And now there is silence," he said.
South Stream is a direct competitor to Ukraine’s gas-transport system, Chuprun said. The cost of building it is quite a lot more than investments that might be made in the Ukrainian system to increase its throughput capacity for gas destined for Europe, he said.
"The cost of South Stream today looms at $27 billion. For the sake of the short term, this may be beneficial for individual European countries, since they could receive preferences on gas prices today. But we need to remember that within five years they will need to pay transport costs for South Stream – I’m afraid to even name a figure for the cost of gas," he said.
"The Ukrainian side has put forth its proposal regarding efficient use of the southern direction with the Ukrainian gas transport system. With the Ukrtransgaz system’s existing infrastructure and minor capital investments, we are capable of providing up to 45 bcm of natural gas to countries in the Balkans area. This is a more economically beneficial transit corridor than to build the main South Stream gas pipeline at the bottom of the Black Sea for quite a lot of money," Ukrtransgaz’s senior engineer Ihor Lokhman said.
The official launch ceremony of Banatski Dvor was held in Serbia on Nov. 22, two months after it was physically commissioned on Oct. 1. At the ceremony, Gazprom CEO Alexei Miller said that "essentially, the commissioning of the Banatski Dvor gas storage facility is the launch of the first facility in the framework of the South Stream project." Miller and Serb President Boris Tadic discussed the prospects for implementing the project during Miller’s visit to Serbia.
Banatski Dvor is one of the major gas storage facilities in South-Eastern Europe. It actively stores 450 million cubic meters of gas, with a maximum daily send-out capacity of 5 million cu m per day.
The storage facility also has the potential for future expansion. It provides additional security for Russian gas deliveries to Hungary, Serbia and Bosnia and Herzegovina.
In order to diversify natural gas export routes, Gazprom plans to construct a gas pipeline – South Stream – through the waters of the Black Sea to countries in South and Central Europe.
Intergovernmental agreements have already been signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria on the land section of the project.
Gazprom and Italy’s Eni initiated the South Stream project. France’s EDF and Germany’s BASF/Wintershall also joined the project.
A new shareholder agreement was signed in Sochi on September 16. EDG and BASF each hold 15% in the project, Eni – 20% and Gazprom – 50%.
