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The South Stream Losses
December 9, 2014 17:21

The shut-down of the “South Stream” will cost foreign countries 3 billion euros.

The losses of foreign companies caused by the freezing of the “South Stream” project will make up at least 2.82 billion euros. The direct losses of European companies may equal 2.5 billion euros. Japanese companies will lose an order for 320 million euros. It was reported by TASS, referring to the materials of the company “South Stream Transport”.

In particular, the German “Europipe” was recognized a supplier of 50 percent of the order for the pipe for the first line of “South Stream” in the amount of 500 million euros. The Japanese consortium “Marubeni-Itochu and Sumitomo” received an order for 40 percent of the supply of pipes for the second line of the project. In March the company “South Stream Transport B.V.” concluded a contract for the installation of the first line of “South Stream” with the Italian “Saipem”, a subsidiary of the Italian “ENI” which acted as a contractor for pipe installation on the projects “Blue Stream” and “North Stream”. The contract value amounted to 2 billion euros. In April “South Stream Transport B.V.” signed contracts for the construction of the second line of the offshore pipeline section “South Stream” with the Swiss company “Allseas Group” - for the works on installation of deep-water gas pipeline, as well as with the Italian “Saipem” - for services on ensuring of the construction.

The contract price was not disclosed. Earlier, on December 2 the Head of the Austrian oil company “OMV”, one of the largest European partners of “Gazprom”, Gerhard Reuss told to Bloomberg that he was surprised by the decision of “South Stream”.

According to Reuss, the Russian holding did not consult OMV before the shut-down of the project. He also noted that gas should not be used as a political weapon. In March 2014 Austria officially returned to the project “South Stream” and expected that the first portion of gas would come through the pipeline to the country at the end of 2016. On December 1 the Russian President Vladimir Putin stated that under the current circumstances Russia would not implement the “South Stream” project. In his turn, the head of “Gazprom” Aleksei Miller noted that the project was no longer relevant.

The “South Stream” project worth 15.5 billion euros was intended for delivery of 67 billion cubic meters of gas per year to Europe. It had to go across the Black Sea to Southern and Central Europe. It was assumed that the gas transportation through it would begin in late 2015. It was planned to lay the route of the pipeline through the territory of Bulgaria, Serbia, Hungary, Austria, Italy and Slovenia. Macedonia also expressed the desire to participate in the project.

Author: Anna Dorozhkina

Tags: South Stream Sanctions Russia International   

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