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EU Commission: Ready to Discuss Solutions in South Stream Negotiations

    EU Commission: Ready to Discuss Solutions in South Stream Negotiations

  PR Newswire

  BRUSSELS, December 5, 2013

BRUSSELS, December 5, 2013 /PRNewswire/ --

A constructive discussion took place yesterday at the European Parliament at a
conference entitled "South Stream: The Evolution of a Pipeline", hosted by
Natural Gas Europe, where representatives of Gazprom and the European
Commission discussed potential ways forward on the application of EU
legislation to the South Stream pipeline.

The event heard that by 2030 Europe's natural gas needs are anticipated to
grow by 25%, of which 80% will be imported. Faced with the prospects of
diminishing domestic production and uncertainty about regulatory and
environmental aspects of commercial unconventional development, Europe
requires security of supply. The two-hour debate discussed the role of the
pipeline in economic stimulation, security of supply, diversification of
energy sources and its key position in the development of a strong partnership
between the energy enterprises of Europe.

Stressing the importance of the pipeline, Deputy Chairman of the Management
Committee and Director General of Gazprom Export, Alexander Medvedev
emphasized that, "South Stream is a flagship project, which will provide our
European partners with new gas reserves from Russia and the possibility to
export 63 billion cubic meters of gas, alongside direct investments, tax
revenues and the creation of new jobs. It will open a new chapter of
time-tested cooperation, helping spread energy security responsibly to more
customers. More importantly, South Stream will integrate gas markets in the
region - it is a Pan-European project which will connect, not divide, people
and economies."

The European Commission has always emphasized that it will enforce the terms
of the Third Energy Package. However,the Director of the Internal Energy
Market at DG Energy, Klaus-Dieter Borchardt, stressed that exemptions for
unbundling obligations have not been ruled out. He said that South Stream will
not operate in the EU if it is not in compliance with EU energy law, as
expected of all energy operators, but stated that he was ready to discuss a
range of options.

"It will not be an easy task. It needs a lot of mutual understanding and
possibly some new ideas that have yet to be discussed. The Commission is open
to looking at this infrastructure and will contribute to its realisation, but
we all need to find a solution and the Commission is willing to play its
part."

South Stream, which is to run 2385 km long and will involve the partnership of
9 countries, including Bulgaria, Serbia, Hungary, Italy and Russia, has
required substantial agreements between governments and major energy
enterprises. Russia is the most important commercial energy partner for Europe
and has always represented a sure, stable supply of gas for many European
countries, with Gazprom supplying over a quarter of the European market.

Anatoly Yanovsky, Russia's Deputy Minister of Energy, assured the audience
that Russia's strategic objective is "To achieve a Pan-European energy space,
with a functioning integrated network infrastructure, with open, transparent,
efficient and competitive markets, making the necessary contribution to
ensuring energy security and reaching the sustainable development goals of
Russia and the EU." He added that negotiations between the EU and Russia will
ensure a solution to the problems raised by the Third Energy Package, which
has been seen as a roadblock to the commencement of construction.

Despite some concerns raised by the EU, independent research undertaken by
World Thinks, a research agency based in the UK and presented at the
conference, showed that 59% of the general public support South Stream in the
participant countries, and about 58% believe the advantages outweigh the
disadvantages -demonstrating a rather positive outlook towards the overall
project. The research further revealed that key stakeholders, including
academics, politicians, policy makers and business leaders, feel that South
Stream will diversify supplies, and increase security. The survey also
revealed that there is clearly strong support for South Stream and also for
natural gas as people see it as preferable to coal, oil and nuclear.

A number of independent experts addressing the conference noted that much more
needed to be done to open up dialogue between Russian and the EU. Director of
the LLM Programme at City Law School, Professor Alan Riley stressed that there
were several possible resolutions for Russia and Europe, and that the current
energy policies of both countries were not working.

Professor Riley said, "European policy is not making the right steps towards
energy diversification and security. Countries such as Germany are burning
more and more coal, rather than attempting to reduce its use and make way for
natural gas and possibly renewables down the line." He also said that Russia
needed to actively participate in the energy debate in Brussels in order to
find a suitable solution for both sides.

Highlighting the benefits of South Stream for her own country, Zorana
Mihajlovic, Serbia´s Minister of Energy, Development and Environmental
protection, told the conference, "South Stream is of great economic and
geo-strategic importance for Serbia. The project demonstrates that Serbia
still has an important role to play today as a key bridge between Europe and
Russia."

She also said that natural gas has an important role to play in the energy mix
both of Serbia but the EU too, adding that at a time of austerity in Europe,
the economic investment required to develop South Stream offers "significant
benefits" to a part of the continent that seeks economic stimulus.

The conference in Brussels was the last in a series to have been held in
participatory countries over the course of 2013, as part of an effort to bring
greater transparency to the pipeline and provide a forum for a range of
experts and industry figures to add their voices to the debate. Other speakers
present at yesterday's conference also included all directors of South Stream
joint ventures in each country, including Oleg Aksyutin, CEO of South Stream
Transport and Gazprom Member of the Management Committee, Alexander
Syryomatin, Deputy Head, Gazprom Project Management, Franc Cimmerman, from
Plinovodi, and Zorana Mihajlovic, Serbian Minister of Energy and Development
amongst others.

Note to Editors: Natural Gas Europe provides essential daily reading on
European gas matters.

As an independent organization, Natural Gas Europe providesinformation and
analyses of natural gas matters from correspondents, contributors and media
partners.

Natural Gas Europe 's focus is on the role of natural gas in
Europe,facilitating dialogue and understanding of important matters such as
exploration, environment, regulation and energy security.

Contact: Contact: Rick Gill (hrgill@minoils.com), Telephone: +16046446624