Gazprom’s Board of Directors considers development status of South Stream gas transportation project
The Gazprom Board of Directors' meeting is in progress at the Gazprom Headquarters.
The Board of Directors took notice of the information relevant to the activities performed as part of the South Stream project implementation.
Within the diversification of Gazprom's natural gas export routes to Central and South Europe the Board of Directors tasked the Company's Management Committee to take the appropriate measures required for settling the current issues embracing the South Stream Project Feasibility Study (FS) development with the foreign partners.
The Management Committee was also entrusted with securing the execution of the Project's pre-investment stage and to inform the Gazprom Board of Directors on the results of the work performed during the second half of 2010.
For the purpose of diversifying natural gas export routes Gazprom is exploring the possibility of constructing a gas pipeline across the Black Sea to South European and Central European countries – the South Stream project.
At the pre-investment stage of the Project a number of optional gas pipeline routes are being addressed including onshore sections across the Russian Federation (from the Pochinki compressor station to the Black Sea coast) and several European countries, as well as offshore gas pipelines via the Black and Adriatic Seas (in case the option of gas supply to the Southern Italy is selected).
The South Stream design capacity accounts for 31 bcmpa.
South Stream AG joint venture (Switzerland) was established on a parity basis as part of the Memorandum of Understanding entered into by Gazprom and Eni S.p.A. to perform the FS for constructing the offshore section of the gas pipeline.
To implement the onshore section of the Project outside Russia, intergovernmental agreements were signed with Bulgaria, Serbia, Hungary and Greece. A relevant draft agreement with Slovenia is being coordinated; another one is to be signed with Austria.
The provisions of the above mentioned agreements stipulate establishing joint ventures responsible for the FS development, as well as for the further engineering, construction and operation of the South Stream gas pipeline in the signatory countries provided that the technical practicability and economic viability assessments are confirmed.
The initial stage of the Project execution envisages the development of a consolidated Investment Rationale (IR) embracing IR for the Russian onshore section, FS for the Black Sea offshore section and FS for the onshore sections of Bulgaria, Serbia, Hungary, Slovenia and Greece. Based on the results of the consolidated Investment Rationale a decision with regard to advancing to the investment stage will be taken.
Taking into account the seasonal nature of the offshore survey, the Company entrusted Piter Gaz to arrange for reconnaissance and environmental surveys including the acquisition of the necessary permits from the countries, whose exclusive economic zones and territorial waters the gas pipeline route is planned to pass through.
Preparation of the FS for the onshore sections is planned to be completed by the fourth quarter of 2009 in order to launch the consolidated FS project by Gazprom.