Turkey Grants Permit For South Stream

February 2012, Vol. 239 No. 2

Turkey granted Gazprom permission for construction of the South Stream gas pipeline in its territorial waters. Construction should begin within the next 12 months.

The pipeline, which is jointly owned by Gazprom, Italy’s Eni, France’s EDF and Germany’s Wintershall, will run from the Russian Black Sea coast across the seabed, emerging in the Bulgarian town of Varna. From there it will continue into various European countries. Gas transmission is expected to begin in 2015 and full transmission capacity of 63 billion m3 a year will be met in 2018.

Operation of the South Stream pipeline could be problematic for Gazprom in light of the EU’s “Third Energy Package.” The new legislation calls for an open gas distribution grid, which may require that Gazprom make available some of its transmission capacity to other gas producers. Gazprom has unsuccessfully tried to get a special exemption status for South Stream and above-ground sections of the North Stream pipeline.

The EU is planning its own Nabucco pipeline to compete with South Stream. It would bring gas from Central Asia and the Middle East to Europe.