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Putin likely to discuss gas pipeline

Published: 20 Jun 2014 16:39 GMT+02:00

During the one-day trip on Tuesday Putin will oversee the signing of a shareholder agreement between Gazprom and energy firm OMV enabling them to press on with work to build a section of the planned South Stream pipeline in Austria, Putin's top foreign policy aide said on Friday.
 
The Russian president is expected to use the opportunity to try to secure Vienna's backing for the Gazprom-led pipeline after another EU member involved in the project, Bulgaria, suspended work on it earlier this month under pressure from the EU, Putin's aide Yury Ushakov said.
 
"The issue needs to be clarified," Ushakov told reporters. "It's obvious that the topic will be discussed in this context. It's a very important subject."
 
With the deadly crisis in Ukraine showing no sign of abating, the multi-billion-euro pipeline intended to bring Siberian gas to Europe has become a new focus of tensions between Moscow and Brussels.
 
Moscow bills the pipeline as a recipe to ensure European energy security and has accused Brussels of pressuring Bulgaria into suspending work on South Stream in order to seek revenge over the Kremlin's alleged role in supporting separatists in eastern Ukraine.
 
The European Commission has called on all 28 member states to stand united in resisting pressure from the Kremlin over the project, saying the contracts Gazprom has signed on pipeline breach the bloc's competition rules.

But the EU member states appears deeply divided on the project with several states that depend on Russian gas transported via Ukraine supporting it.

Austria, Slovenia express support

Austria and Slovenia on Friday voiced support for the pipeline, saying it will ensure a stable energy supply.

"I believe that the South Stream project is the right and possible path to ensure a mid-term energy supply sustainability", Austrian Chancellor Werner Faymann said after meeting his Slovenian and Croatian counterparts.

"Austria in principle backs the South Stream project ... and we believe it should be carried out for the mid- and long-term sustainable supply of natural gas," said Faymann who is set to meet Putin for talks on Tuesday.

Prime Minister of Slovenia Alenka Bratusek struck a similar note, calling South Stream "a vital infrastructure project."

"There are still some technical issues that remain open and have to be solved with the EU," she added.

Serbian Prime Minister Aleksandar Vucic said last week his country, which is a candidate for EU membership, would press on with plans to build Serbia's stretch of the pipeline.
 
Backed by Italy's ENI and France's EDF, the South Stream pipeline is a major project for reducing Moscow's reliance on Ukraine as a transit country following disputes with Kiev in 2006 and 2009 that led to interruptions of shipments to Europe.

With a capacity of 63 billion cubic metres per year, the main pipeline will stretch nearly 2,500 kilometres (1,500 miles) from Russia under the Black Sea to Bulgaria, Serbia, Hungary and Slovenia to end in Italy.
 
Analysts said that while the pipeline will remain hostage to persisting tensions over Ukraine, Austria could help salvage Moscow's flagship project.
 
"Austria is a more prominent EU member than Bulgaria, its voice will be taken into account," said Valery Nesterov, an oil and gas analyst at Sberbank CIB.
 
After the latest round of EU-brokered Moscow-Kiev gas talks collapsed, Russia earlier this week suspended gas supplies to Ukraine and warned Brussels that deliveries to Europe could be interrupted.

Moscow-based political analyst Alexei Mukhin said Brussels appears ready to sacrifice its economic interests for the sake of teaching Russia a lesson.

"Europe needs South Stream," he said. "But the European Commission will find a way to put it on ice."

Separately, during his Austria trip Putin will meet with OSCE chairman Didier Burkhalter to discuss the Ukraine crisis.

AFP/The Local (rosie.waites@thelocal.com)

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