Gazprom is understood to have reconsidered the pipeline’s design and improved parameters for the project, and has managed to make considerable savings over the original Euro 25-billion estimate. Mr Miller also said that the capacity of the pipeline would also be higher than previously estimated, with the Hungarian section alone able to transmit up to 10bn cum/yr.
Hungary’s Prime Minister Ferenc Gyurcsany was present at the signing, and confirmed that the project would help his country improve its energy security. Hungary currently receives all its gas through Ukraine, and was directly affected by January’s cessation of supplies in connection with the Russia-Ukraine gas dispute. “Hungary is not interested in there being one gas pipeline or one oil pipeline,” he said. “Hungary is interested in having as many pipelines as possible.” Mr Gyurcsany went on to say that the South Stream project should not be considered a rival to the Nabucco pipeline, being designed to transport Azerbaijanian and the Caspian basin gas to Europe. He said that Budapest would benefit from transit fees from both pipelines.
The South Stream project also includes Gazprom and Hungary’s oil and gas giant MOL constructing a major underground gas storage facility in Hungary for up to 1bn cum of gas. Mr Gyurcsany said his country’s existing storage facilities had helped Hungary cope with the gas shortages resulting from January’s dispute.
The South Stream pipeline’s route will by-pass Ukraine and directly link Russia and Central and Western Europe. It will cross the Black Sea to the Bulgarian coast at Varna, and then split into two branches, the southern one to Italy and the northern one to Austria, with a total combined capacity of 31-47bn cum/yr. Gazprom has already signed intergovernmental agreements with Bulgaria, Greece, Serbia, and Hungary, and negotiations with Slovenia and Austria are on schedule. According to a report in the Moscow Times Russian Prime Minister Vladimir Putin – exhibiting a nicely-turned capitalistic phraseology – said to those doubting the validity of the project that “if we aren’t able to build South Stream, which I doubt, we’ll liquefy our gas and sell it to you for more.”