Hungary to join Russia's South Stream pipeline

Hungary was on Thursday to become the latest country to sign up to Russia's ambitious South Stream gas pipeline project during a visit to Moscow by Prime Minister Ferenc Gyurcsany, the Kremlin said.

In a statement outlining the deal, the Kremlin painted Hungary as an exemplary partner within the European Union and NATO, implicitly contrasting Budapest's friendly position with that of Western critics who worry about Moscow's energy might. The statement said that the two sides would sign an "inter-governmental agreement on cooperation in creating a gas pipeline for transporting natural gas through Hungary." "This allows Hungary's inclusion in the planned construction of the South Stream main gas pipeline project," the statement said.

The South Stream project is part of a two-pronged plan by Russia to cement its grip on Europe's gas market, the other part of the plan being construction of a pipeline under the Baltic Sea to northern Germany and beyond.

This year Moscow has signed deals with Bulgaria and Serbia including them in South Stream. Led by Russian energy giant Gazprom and Italy's ENI, the project envisages building a gas pipeline under the Black Sea from Russia to Bulgaria and then branches to Austria and Italy.

Thursday's statement by the Kremlin praised the two countries' economic ties, noting that Hungarian oil company MOL was developing fields in Siberia and the Volga region, while Hungary's OTP bank had invested in Russia's banking sector. It said trade turnover between Hungary and Russia last year equalled 8.7 billion dollars (5.7 billion euros).

The South Stream pipeline is expected to carry up to 30 billion cubic metres of gas a year under the Black Sea from Russia, Gazprom says. Analyst Chris Weafer, of Moscow-based URALSIB bank, said South Stream was Russia's attempt to counter the rival Nabucco project and was likely to go ahead with fewer problems than the Nord Stream pipeline under the Baltic.

Together with recent agreements between Moscow and the Central Asian gas provider Turkmenistan, South Stream was likely to significantly set back Nabucco, he said. South Stream "is a pipeline that was really not planned to be done that quickly. It's a direct result of the European Union having announced plans to build Nabucco," Weafer said.
AFP