South Stream Pipeline to Transit Russian Natgas to Hungary

November 19, 2013 08:52 AM

Officials from the Russian and Hungarian governments met in Budapest today along with executives from Gazprom to discuss the construction and logistics of the planned South Stream pipeline. The South Stream Pipeline would transit natural gas from Russia's Gazprom to parts of southern Europe covering 2385 km and servicing partnerships with 8 countries.

Opening the conference was Hungarian Minister of National Development, Zsuzsa Nemeth, who reiterated Hungary's need for energy diversification and emphasized that South Stream would create a strategic partnership with neighboring countries. "South Stream is a unique initiative with strong political backing from all sides. It provides an excellent tool for diversification amongst these countries and contributes to energy security in the whole region."

Hungary counts on imports for 60% of natural gas demand annually and the pipeline would secure supplies to the region and lend a market for Russian natgas. But supplies from Gazprom have been at the good pleasure of Moscow and any nation that falls outside those bounds can quickly find the natural gas hose kinked.

The Secretary of State for Energy Affairs, Pal Kovacs insisted, "We need a strategy which will focus on promoting energy efficiency and improvement of energy infrastructure as well as security of supply. We need to ensure access to natural gas and that is something that South Stream will guarantee by 2015."

Russia is the most important commercial energy partner for Europe with Gazprom supplying over a quarter of the European market. Analysts predict that the gas demand will increase from 312 billion cubic meters to 537 billion cubic meters over the next fifteen years.

"Russia is the third largest partner for the E.U.," said Russia's Deputy Minister of Energy, Anatoly Yanovsky. "We need to consider the past problems and differences between the E.U. and Russia on energy policy, but in Russia, energy assets have been privatized and the oil and gas industry has transformed -- energy infrastructure is booming. Russia's strategy till 2050 will be a mechanism based on a continuous monitoring process and we need to be forward-looking and make recommendations for a series of steps to enhance Russia-E.U. energy cooperation over the coming decades."

Construction on the pipeline is expected to begin in 2015 and hopes to combat falling natgas extraction rates in the E.U. and surrounding countries.

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