Russia signs gas pipeline deals

The Russian state gas firm, Gazprom, has signed agreements with a number of Balkan and southern European countries on the construction of a gas pipeline.

South Stream will deliver gas from Central Asia and Russia to Central Europe and Italy through the Balkans.

The pipeline is in competition with a European Union-backed one, Nabucco.

A commercial and political victory for Moscow, South Stream will undermine the EU's aim of reducing its dependence on Russian energy and diversifying supply.

Rival projects

South Stream is a highly symbolic project, revealing just how much European countries differ in their trust of Russia.

On Friday, Italy, Bulgaria, Greece and Serbia, four countries with close links to Russia, signed agreements in the Russian Black sea city of Sochi that will commit them to specific feasibility studies.

See Nabucco and South Stream pipeline routes

It is an important waypoint at a time when Europe's pipeline projects are stymied by political disagreements and the economic turndown.

South Stream, whose construction is expected to be completed by 2015, will deliver at least 30bn cubic metres of gas a year from Russia, under the Black Sea to Bulgaria before splitting into a southern branch leading to Greece, and a northern branch into Serbia, Hungary, Austria and Italy.

This will lessen Russia's dependence on the existing pipelines, which cross Ukraine and Belarus, countries with which Russia over transit to European customers, a quarter of whose gas needs it supplies.

South Stream is a rival project to another proposed pipeline known as Nabucco.

Backed by the EU and the US as part of a long-term strategy to reduce dependence on Russian gas, Nabucco would bypass Russian and Ukrainian export routes altogether, by delivering gas from Central Asia to Europe via Turkey.

But with a firm commitment to South Stream now given by the countries through which it will be routed, the future of Nabucco is under serious doubt.

Already, only one-fifth of the gas supply needed to run it has been guaranteed by the Central Asian exporters.

Friday's agreements again reinforce the impression that there simply is no unity among EU member states over energy policy.

Russia says South Stream will make deliveries of gas to Europe more reliable than ever before, but it will dismay those European leaders who believe Russia uses energy exports to further its political aims.

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