Offshore staff

MOSCOW – Turkey’s Ministry of Foreign Affairs has granted all necessary and unconditional permits for construction and operation of the South Stream gas pipeline through the Turkish sector.

South Stream is designed as a new export outlet for Russian gas, taking supplies through the southern part of the Black Sea and into southeast/central Europe.

According to Gazprom chairman Alexey Miller, Turkey’s granting of the construction permit granted by Turkey represents the most serious acknowledgement that the can be executed fully on schedule before the end of 2015.

However, the picture is not so rosy in Ukraine, one of the proposed customers for the gas. Upgrades to the Ukrainian gas transmission system are estimated to cost $20 billion, maybe more. And the Ukrainian negotiators, according to Gazprom’s website, are insisting on a Russian gas price discount, which would cost Gazprom roughly $9 billion a year.

This is far more than the estimated $21.4 billion needed for the entire South Stream project, of which $13 billion will be allocated to the offshore section.

Russian premier Vladimir Putin ordered Gazprom to continue negotiations with its Ukrainian partners, and to speed up the South Stream project execution, with a view to bringing forward construction to this year.

This would be the second Russian gas trunkline through the Black Sea following the Blue Stream project. Gazprom has a 50% stake in the South Stream offshore project, with Eni holding 20%, and Wintershall and EDF 15% each.

01/03/2012