Slovak pipeline operator proposes South Stream alternative

By bne IntelliNews December 1, 2014

bne IntelliNews -


The head of Slovak gas transmission system operator Eustream has proposed what it called an alternative to Russia's planned South Stream pipeline. In comments published on November 28, the company claimed the route would reduce the Balkans' dependence on Russian supplies.

Eustream chairman Tomas Marecek told Reuters in an interview that the proposed 570km Eastring pipeline, which will have a capacity of 20bn cubic metres per year and cost an estimated €750mn, will allow countries such as Bulgaria and Serbia to receive gas even if Russian supplies via Ukraine are halted. Marecek said the pipeline could transport gas either from Russia to the Balkans or from Western Europe to the Balkans.

According to the proposed project, gas could be piped either from Russia or European hubs via Slovakia and Ukraine, before heading to Romania and Bulgaria. It could use Slovakia’s existing network, which has a capacity of more than 80bn cubic metres per year, and Ukraine’s Soyuz pipeline, which skirts the Romanian border. The Romanian network could then be adapted to form a corridor linking to a major pipeline near the Black Sea and send gas across the Balkan region.

According to Merecek, Eastring is a cheaper alternative to South Stream, and offers an advantage in that it would be reversible. Moreover, he added, it would make use of already built infrastructure.

The mainline of the €17bn South Stream is planned to run under the Black Sea and through Bulgaria, Serbia and Hungary to a hub in Austria. Spurs to Slovenia and via Greece to Italy will also help distribute the 63bn cubic metres of Russian gas it would carry per year.


However, South Stream has faced resistance from the EU for years due to Brussels' bid to diversify gas supplies. Since the annexation of Crimea in March, the EU has been blocking the project, which would bypass Ukraine's gas transit network - through which southeast Europe is currently served with Russian gas - draining huge revenue from the struggling country and removing its main leverage in ongoing gas talks with Moscow.

The European Commission has ordered the project be put on hold, and the contracts between Gazprom and the host nations redrawn in line with its regulations. That would take at least two years. Meanwhile, Brussels is pushing countries to the eastern end of the block to build greater energy connections amongst themselves.  

Slovakia had previously appeared one of the more vulnerable to Moscow's tactics, and was previously unenthusiastic in helping to send EU gas to Ukraine, and over sanctions against Russia. However, Bratislava has played a much more supportive role in recent months.

After Ukraine, Slovakia would be the other big loser if South Stream is built. Around 20% of the EU's total gas consumption is imported on the mainline route that runs through the two countries. Eustream - controlled by the government and closely held Slovak financial group J&T - will now seek to attain funding for Eastring from Brussels.

"Economically and strategically it is best solution for this part of Europe," Marecek claimed, adding that financing will depend on the final set-up and route. "We will go public with more details in a few weeks. Only then will we discuss with the EU. We want to be prepared well for discussions."

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