Gazprom starts work on Serbian stretch of South Stream pipeline
By Ivana Sekularac
BELGRADE (Reuters) - Work began on Sunday on the Serbian leg of Gazprom's South Stream gas pipeline, a project set to tighten Russia's grip on Balkan energy supplies and provide an alternative to a troublesome route via Ukraine.
The planned pipeline will transport some 63 billion cubic metres of gas per year through the Black Sea, Bulgaria, Serbia, Hungary and Slovenia into Italy, starting by 2016-17.
A worker welding a steel pipe in a field north of Belgrade marked the ceremonial start of construction work in Serbia on Sunday after Serbian President Tomislav Nikolic gave a formal go ahead via a video link.
Russian President Vladimir Putin sent a personal message that Energy Minister Alexander Novak read out at the ceremony.
"Cooperation between Serbia and Russia on the South Stream project fits within a framework of constructive partnership of our two states which is based on long lasting traditional friendship," Putin said.
BYPASSING UKRAINE
The main route for Russian gas to Europe runs through Ukraine, but has been dogged by political and pricing disputes that have affected supplies and raised concerns over Europe's energy security.
The 2,380-km pipeline is expected to cost 17 billion euros ($23 billion). Construction of the Bulgarian stretch began last month.
For Serbia, a former Yugoslav republic still recovering from a decade of war and sanctions in the 1990s, its 450-km leg of the pipeline is worth almost 2 billion euros and at least 2,000 jobs.
"South Stream is of great economic and geo-strategic importance for Serbia," Prime Minister Ivica Dacic told Reuters on Saturday. "We expect to benefit a lot from gas transit tax that could potentially bring in 100 million euros aurally."
Serbia put its oil and gas sector largely in the hands of Russian state-controlled energy giant Gazprom in 2008, in a deal widely seen as a trade off for Russia's support of Belgrade in opposing the secession of its former Kosovo province.
The project will inevitably bolster Russia's political influence in the Balkan region, potentially grating with Serbia's aim of joining the European Union through accession talks expected to begin in January.
"Serbia is on its European path and is determined to join the European Union, but we have a long history of acting as a gateway between Europe and the East thanks to (our) strategic geographic location," Dacic's deputy, Aleksandar Vucic, said in a statement.
"(The) South Stream project demonstrates that Serbia still has an important role to play today as a key bridge between Europe and Russia."
Dacic said fellow ex-Yugoslav republic Macedonia, on Serbia's southern border, was interested in South Stream gas, and that he had raised the possibility of supplies to Kosovo too.
Shareholders in the offshore section of South Stream are Gazprom, Italy's Eni , France's EDF and Germany's Wintershall.
Serbia consumes about 2.5 billion cubic metres of gas, mostly imported from Russia through Hungary. The Western Balkan nations as a whole consume about 6 bcm per year, a figure expected to rise in coming years as economies grow.
($1 = 0.7394 euros)
(Writing by Matt Robinson; Editing by William Hardy)
