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South Stream pipeline crucial for Serbia

Serbia's energy minister speaks to Anadolu Agency on Russia's South Stream gas pipeline project.

23.07.2014
South Stream pipeline crucial for Serbia

ANKARA

 

The South Stream gas pipeline project which is the largest infrastructure project in Europe awaits a crucial agreement between Moscow and Brussels, Aleksandar Antic, Serbian Minister of Energy and Mining said Wednesday.

The European Commission, however, opposes the project claiming it contradicts EU’s policy of separation of gas companies’ sale operations from their distribution networks. Most recently, the commission asked Serbia on Monday to suspend the construction of the project. 

Speaking to Anadolu Agency in an exclusive interview about the ongoing debates on Russia's South Stream, Antic said the South Stream pipeline would bring great benefits and energy security to Serbia.

For the last two years, Russia has signed agreements with a number of EU countries for the construction of the South Stream gas pipeline, which aims to transport Russian gas to Europe by bypassing Ukraine.

 Antic underlined Serbia is a candidate for EU membership and has obligations arising from that status. He said whatever is pertinent for EU member states on the route of the South Stream should also apply to Serbia too.

“The abandonment of the project would work adversely not only for Serbia, but for a number of other countries involved in the South Stream,” Antic said, adding that, “I am optimistic and believe the gas will flow through the South Stream, regardless of the current dilemma.”

Orhan Dragas, the general manager of Serbia based research center, International Security Institute, explained Serbia's dilemma with the country needing to cover 90 percent of its gas needs with Russian imports - the only long term source of supply for Serbia.

“It is, of course, not a favorable circumstance for Serbia, but there are currently no visible alternatives,” Dragas said. “The South Stream may not be ideal, but is the most acceptable solution in the given circumstances.”

He added that Serbia aims to take a neutral position and maintain it as long as possible on the crisis between western countries and Russia.

- "Serbia’s ties with Russia are forced ones"

On the other hand, Director of the Center for Euro-Atlantic Studies, Jelena Milic said Serbia’s ties with Russia are forced ones and are related to the country’s energy dependency.

“Russia does not want to admit EU legislation has an upper hand on domestic issues and is separate from international common law,” Milic said, referring to Russia's objection to EU's Third Energy Package, which restricts Russian energy giant Gazprom’s operation share in natural gas pipelines to a maximum of 50 percent. However, Gazprom refuses to adapt itself to the package and continues to negotiate with the EU countries seperately, as Gazprom is the sole company allowed by the Russian Federation to operate international pipelines. 

Milic said that there are three possible scenarios on the future of South Stream.

"Firstly, the Russians and the EU make an agreement, and this is the best case for Serbia, as we have already made two big down payments," Milic said.

The second scenario would be with no agreement between Russia and the EU. In this case, Serbia loses out, as the country has no clause in the agreement with Russia, in which if Russia fails to deliver the promised natural gas to Serbia, it should compensate Serbia.

The final scenario, Milic said, is the worst one.

"The EU forces Serbia to withdraw from the Energy treaty with Russia unilaterally. As Serbia's deal with Russia is 30 years long and it does not stipulate consequences in case of unilateral withdrawal, Serbian companies would have to additionally compensate Russian companies that have invested so far in the deal."

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