Europipe Sees Chance to Win South Stream Tender Expected

Europipe GmbH sees a good chance of winning the tenders expected this year to supply South Stream’s third and fourth offshore gas pipelines after it was awarded most of the first, Chief Executive Officer Michael Graef said.

The company, which started deliveries today for the first line, is also interested in supplying onshore sections of the South Stream network in Slovenia, Hungary, Serbia and Bulgaria.

“We are on it,” Graef said in an interview on May 21 at the offices of the venture between Salzgitter Mannesmann GmbH, a unit of Salzgitter AG, and AG der Dillinger Huettenwerke. Those contracts are expected to be awarded this year, he said.

Europipe last month began output at its plant in Muelheim, Germany, to supply the 455,000 metric tons of pipe, or more than 600 kilometers (370 miles) of the 931-kilometer line, it already won. New orders for Europipe, beaten in the second tender by Japanese and Russian rivals, will counter weak European pipeline spending and help fill what it says is the world’s largest-capacity mill. Europipe supplied 1.57 billion metric tons of pipe for the Nord Stream line that began operating in 2011.

This year “won’t be a sunny year” for Europipe as the South Stream output will only contribute significantly in 2015, Graef said. Markets aren’t expected to “dramatically improve” elsewhere in Europe for another two to three years, he said.

Planning and construction of South Stream isn’t affected by sanctions against Russia over the Ukraine crisis, Graef said.

The pipeline will ship as much as 63 billion cubic meters of gas a year through the Black Sea from 2017, about an eighth of European Union demand, bypassing routes through Ukraine.

(Updates with CEO comment on Ukraine in sixth paragraph.)
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