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FINANCIAL TIMES (UK)
Blow to US as Hungary backs Russian pipeline
By Stefan Wagstyl in London, Kester Eddy in Budapest and Neil MacDonald in
Belgrade
Published: February 26 2008 02:00 | Last updated: February 26 2008 02:00
Hungary yesterday backed a planned Russian gas pipeline crossing south-east
Europe in a move that risks angering Budapest's western partners and could
threaten the prospects of Nabucco, a rival pipeline supported by the US and
the European Union.
Ferenc Gyurcsany, prime minister, announced the move during a visit to
Budapest by Dmitry Medvedev, Russia's first deputy prime minister and likely
successor to the president, Vladimir Putin. The deal is expected to be
signed in Moscow on Thursday.
The Hungarian decision puts Gazprom, the Russian gas monopoly, in a strong
position to build its proposed $10bn-plus (£5bn, EUR6.7bn) Southstream
pipeline, which would bring gas from Russia across the Black Sea and into
the heart of the EU. Having secured the support this year of Bulgaria and
Serbia, Gazprom has now obtained agreements for most of the route to Italy,
the pipeline's main destination. It is also in a position to build a link to
Austria, central Europe's gas hub, where the Russian group already enjoys
close links. Gazprom has yet to decide whether to build a separate
connection from Bulgaria across Greece and the Adriatic to southern Italy.
Mr Gyurcsany and Mr Medvedev denied that Southstream was a threat to
Nabucco, which would bring gas from central Asia to Europe via Turkey. Mr
Gyurcsany said: "It's in the interests of Hungary to have both pipelines
crossing Hungarian territory." The Hungarian section of the pipeline will be
owned by a 50-50 joint venture between the government and Gazprom.
Mr Medvedev said that for Russia the diversification of routes was
important. Moscow is building Southstream and a Baltic Sea route called
Nordstream to reduce its dependence on its current principal pipeline
running through Ukraine.
However, Nabucco's backers fear that Southstream is gaining big commercial
advantages by signing gas supply deals, weakening Nabucco's position. A US
official said: "It's important to remain focused on the clear Euro-Atlantic
priority, which is Nabucco. It's understandable that countries want to have
as many pipelines crossing their territory as possible. But it's a flawed
approach because sequencing matters, and you want to put into place some
diversification before deepening your dependence on a primary supplier."
Mr Medvedev also visited Belgrade with Alexei Miller, the Gazprom chief
executive, to resolve details of the Serbian section of the route.
The EU is in an awkward position because, while its collective gas policy is
to encourage diversification of supply away from Russia, leading EU members,
including Germany, France and Italy, have signed bilateral deals with
Gazprom.
* Mr Medvedev showed support for Serbia yesterday after what he called
Kosovo's "illegal" western-backed declaration of independence last week.
"We proceed from the understanding that Serbia is a single state with its
jurisdiction spanning its entire territory ," he said.
FINANCIAL TIMES (UK)
Blow to US as Hungary backs Russian pipeline
By Stefan Wagstyl in London, Kester Eddy in Budapest and Neil MacDonald in
Belgrade
Published: February 26 2008 02:00 | Last updated: February 26 2008 02:00
Hungary yesterday backed a planned Russian gas pipeline crossing south-east
Europe in a move that risks angering Budapest's western partners and could
threaten the prospects of Nabucco, a rival pipeline supported by the US and
the European Union.
Ferenc Gyurcsany, prime minister, announced the move during a visit to
Budapest by Dmitry Medvedev, Russia's first deputy prime minister and likely
successor to the president, Vladimir Putin. The deal is expected to be
signed in Moscow on Thursday.
The Hungarian decision puts Gazprom, the Russian gas monopoly, in a strong
position to build its proposed $10bn-plus (£5bn, EUR6.7bn) Southstream
pipeline, which would bring gas from Russia across the Black Sea and into
the heart of the EU. Having secured the support this year of Bulgaria and
Serbia, Gazprom has now obtained agreements for most of the route to Italy,
the pipeline's main destination. It is also in a position to build a link to
Austria, central Europe's gas hub, where the Russian group already enjoys
close links. Gazprom has yet to decide whether to build a separate
connection from Bulgaria across Greece and the Adriatic to southern Italy.
Mr Gyurcsany and Mr Medvedev denied that Southstream was a threat to
Nabucco, which would bring gas from central Asia to Europe via Turkey. Mr
Gyurcsany said: "It's in the interests of Hungary to have both pipelines
crossing Hungarian territory." The Hungarian section of the pipeline will be
owned by a 50-50 joint venture between the government and Gazprom.
Mr Medvedev said that for Russia the diversification of routes was
important. Moscow is building Southstream and a Baltic Sea route called
Nordstream to reduce its dependence on its current principal pipeline
running through Ukraine.
However, Nabucco's backers fear that Southstream is gaining big commercial
advantages by signing gas supply deals, weakening Nabucco's position. A US
official said: "It's important to remain focused on the clear Euro-Atlantic
priority, which is Nabucco. It's understandable that countries want to have
as many pipelines crossing their territory as possible. But it's a flawed
approach because sequencing matters, and you want to put into place some
diversification before deepening your dependence on a primary supplier."
Mr Medvedev also visited Belgrade with Alexei Miller, the Gazprom chief
executive, to resolve details of the Serbian section of the route.
The EU is in an awkward position because, while its collective gas policy is
to encourage diversification of supply away from Russia, leading EU members,
including Germany, France and Italy, have signed bilateral deals with
Gazprom.
* Mr Medvedev showed support for Serbia yesterday after what he called
Kosovo's "illegal" western-backed declaration of independence last week.
"We proceed from the understanding that Serbia is a single state with its
jurisdiction spanning its entire territory ," he said.