CROATIAN CENTER of RENEWABLE ENERGY SOURCES
South Stream Project Presentation
What is South Stream?
The South Stream is a transnational gas pipeline project being developed for the purpose of diversifying the routes of natural gas supplies to European consumers and stipulating the conveyance of the blue fuel to South and Central Europe across the Black Sea.
Significance
The South Stream project is aimed at strengthening the European energy security. It is the key project in the diversification strategy for gas supply routes to the EU. The South Stream gas pipeline will ensure a direct connection between hydrocarbons suppliers and consumers thus raising significantly the energy supply security on the entire European continent.
Experts share the opinion that in the medium and long term gas demand will grow in the European Union. The countries which used to consume moderate amounts of gas for industrial purposes are likely to guide their economies towards its increased utilization, since coal, fuel oil and nuclear power are less environmentally-friendly if compared to natural gas. Regardless that indigenous production still satisfies the bulk of consumption in Europe today, it will steadily decrease in time. Europe will need more imported gas and, accordingly, new transmission capacities.
According to the consensus forecast by the world’s leading forecast centers, Europe’s annual demand for additional gas import may reach 80 billion cubic meters by 2020 and surpass 140 billion cubic meters by 2030.
Thus, the main issues of the European energy security are building up gas supplies and eliminating transit risks. These very criteria are fully met by Russia’s initiative related to the South Stream pipeline construction.
The major objective of the South Stream project is meeting Europe’s additional demand for natural gas, the most environmentally-friendly and secure fossil fuel. Natural gas will long remain a reliable foundation for the European energy sector, therefore, diversification of routes and implementation of joint projects to construct new offshore gas pipeline systems are vital elements of the current energy security architecture in Europe.
Gas Pipeline Route
The South Stream gas pipeline will ensure direct gas supplies from the producer to the consumer.
At the pre-investment stage of the project a number of optional gas pipeline routes are being addressed including onshore sections crossing a number of European countries as well as offshore gas pipelines running via the Black and Adriatic Seas (in case the option of gas supply to Southern Italy is selected). Besides, it is projected to expand the existing and construct new gas transmission capacities in the Russian Federation in order to provide South Stream with a sufficient amount of natural gas.
New Gas Pipeline Routes in Russia
A new 2.5-kilometer gas pipeline system intended for providing South Stream with natural gas will run from the Pochinki compressor station to the Black Sea coast. Ten compressor stations are to be built for this purpose.
Gas pipelines will be laid in eight Russian regions: the Voronezh, Volgograd, Rostov, Nizhny Novgorod, Penza and Saratov Oblasts, Mordovia and the Krasnodar Krai.
In 2010 upon acquisition of all the necessary permits and approvals, the relevant design and survey operations were initiated.
Offshore Section
Running across the Black Sea, the South Stream offshore section will connect the Russkaya compressor station on the Russian coast with the Bulgarian coast. Its total length will be some 900 kilometers, the maximum depth – over two kilometers.
There are several optional routes for the South Stream offshore section in the Black Sea. At present, the route crossing the exclusive economic zones of Russia, Turkey and Bulgaria is being elaborated as the key one.
Gazprom has already completed the feasibility study for the South Stream offshore section using its own resources. At the moment, the Company is carrying out engineering and reconnaissance surveys offshore the Black Sea.
Gazprom is implementing the pipeline offshore section in cooperation with Italian Eni S.p.A. French EDF is to join the two companies soon.
South Stream Sections in Southern and Central Europe
Two options for the gas pipeline route in Europe are being considered today. The northwestern route – towards Slovenia and Austria via Bulgaria, Serbia and Hungary and the southwestern route – towards Greece and Italy. Gas laterals will be diverted from the main route of the South Stream onshore section in Europe to Croatia and Macedonia.
Russia signed intergovernmental agreements with Bulgaria, Serbia, Hungary, Greece, Slovenia, Austria and Croatia for the purpose of implementing the onshore pipeline section in Europe. These agreements stipulate preparation of feasibility studies for the South Stream construction in each of the project host countries as well as setting up joint ventures between Gazprom and national energy companies authorized to implement the project. All national feasibility studies will be completed before long, laying the foundation for the consolidated feasibility study.
By now, the feasibility studies for Serbia and Slovenia have already been submitted.
The obtained results and the immense experience of the South Stream partners in designing and implementing large-scale international infrastructure projects will permit to start the South Stream gas pipeline construction in 2013. First gas supplies are scheduled for 2015.
Environment Safety and Responsibility
South Stream: Natural Gas and Highest Environmental Standards
Environment and safety are top priorities of South Stream. The project is aimed at supplying Europe with the cleanest fossil fuel in the most eco-friendly way.
In addition to the benefit derived from guaranteed and competitively priced energy supplies to European consumers, South Stream will also enable Europe to significantly reduce CO2 emissions before long as transition to natural gas from pollutant fuels is the most effective way of reducing hazardous air emissions.
South Stream brings together leading Russian and European companies which have a vast experience in building and operating onshore and offshore pipelines.
Priority environmental targets of South Stream include process and environmental safety of its construction and operation, preservation of the natural habitat in the pipeline facilities areas as well as efficient use of natural resources.
South Stream will be built with the use of cutting-edge and time-tested engineering solutions meeting environmental requirements.
The Environmental Impact Assessment (EIA) for South Stream will be completed in full compliance with the international and European laws and regulations as well as with the national legislation of the project host countries.
Project History
On November 13, 2010 Gazprom and Bulgarian Energy Holding signed the Shareholders’ Agreement and the Articles of Association for the South Stream Bulgaria AD joint project company (JPC) to implement the South Stream project in the Republic of Bulgaria.
On October 22, 2010 Gazprom and Bulgarian Energy Holding signed the Agreement on the feasibility study for the Bulgarian section of the South Stream gas pipeline.
On October 13, 2010 Gazprom and Transgaz S.A. signed the Memorandum of Intent to prepare a feasibility study for South Stream in Romania.
On June 19, 2010 Gazprom, Eni and EDF signed the trilateral Memorandum providing for specific steps towards the French company’s entry in the shareholding structure of South Stream AG.
On June 7, 2010 Gazprom and DESFA signed the Articles of Association for the South Stream Greece S.A. joint project company to implement the South Stream project in Greece.
On April 24, 2010 Russia and Austria signed the intergovernmental agreement envisaging Austria’s accession to the South Stream project;
Gazprom and OMV signed the Basic Agreement of Cooperation under the South Stream project implementation in the Republic of Austria.
On March 2, 2010 Russia and Croatia signed the intergovernmental agreement envisaging Croatia’s accession to the South Stream project.
On January 29, 2010 Gazprom and Hungarian Development Bank (MFB) set up the South Stream Hungary Zrt. joint venture to implement the South Stream project in the Republic of Hungary.
On November 27, 2009 Gazprom and EDF signed the Memorandum envisaging joint participation of the companies in the South Stream project implementation.
On November 17, 2009 the constituent documents were submitted for the registration of the South Stream Serbia AG joint project company.
On November 14, 2009 Russia and Slovenia signed the intergovernmental agreement on Slovenia’s engagement into the South Stream gas pipeline construction in the country.
On May 15, 2009 Gazprom and Bulgarian Energy Holding signed the Agreement of Cooperation as part of the South Stream project implementation;
Gazprom and DESFA signed the Basic Agreement of Cooperation as part of the South Stream project implementation;
Gazprom and Srbijagas signed the Basic Agreement of Cooperation as part of the South Stream project implementation;
Gazprom and Eni signed the Second Addendum to the Memorandum of Understanding on further actions as part of the South Stream project stipulating an increase in the annual capacity of the offshore pipeline section to 63 billion cubic meters.
On March 10, 2009 Gazprom and Hungarian Development Bank (MFB) signed the Basic Agreement of Cooperation within the South Stream project implementation.
On April 29, 2008 Russia and Greece signed the intergovernmental agreement on the South Stream gas pipeline construction in Greece.
On February 28, 2008 Russia and Hungary signed the intergovernmental agreement envisaging Hungary’s engagement into the South Stream gas transmission system project.
On January 25, 2008 Russia and Serbia signed the umbrella intergovernmental agreement for the South Stream project and the Banatski Dvor UGS project.
On January 18, 2008 Russia and Bulgaria signed the intergovernmental agreement envisaging Bulgaria’s participation in the South Stream project;
The special-purpose company South Stream AG was registered in Switzerland. South Stream AG is incorporated by Gazprom and Eni on a parity basis.
On June 23, 2007 Gazprom and Eni signed the Memorandum of Understanding for the South Stream project implementation.
Facts and Figures
South Stream gas pipeline design capacity: 63 billion cubic meters per annum.
Total length of the offshore pipeline section: 900 kilometers.
Maximum pipeline depth in the Black Sea: 2,250 meters.
Russia signed intergovernmental agreements with:
Bulgaria – January 18, 2008;
Serbia – January 25, 2008;
Hungary – February 28, 2008;
Greece – April 29, 2008;
Slovenia – November 14, 2009;
Croatia – March 2, 2010;
Austria – April 24, 2010.
Construction of South Stream will commence in 2013.
First gas supplies are scheduled for late 2015.
South Stream costs will be finally estimated after completion of the Consolidated Feasibility Study for the gas pipeline. They will be comparable to those of similar projects.More info at http://solarserdar.blogspot.com
CROATIAN CENTER of RENEWABLE ENERGY SOURCES ( CCRES )
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