Gazprom reaches agreement with OMV and Allseas on South Stream construction

Gazprom signed an agreement with the Swiss company Allseas Group for the construction of a pipeline in the Black Sea, and a preliminary agreement was reached with the Austrian company OMV for the construction of a pipeline to be completed in Austria.

Allseas is expected to lay a pipe about 900 kilometers long by next summer. The work according to the plan will be completed in 2016. OMV added that the Austrian section of the pipeline has a design capacity of 32 billion cubic meters per year. Both sides are interested in obtaining the necessary permits by the end of 2015, and the Austrian section of the pipeline should be fully operational in January 2018.

The pipeline, which is supposed to bring Russian gas to Europe bypassing Ukraine, is facing stiff opposition from European officials who seek to limit Europe's dependence on Russian gas and oil. The European Union also suspended the approval process for the project following the events in Crimea and announced that it would be years before the project could obtain the required approval.

South Stream, according to current plans, will begin transporting Russian gas to Europe from December 2015, passing under the Black Sea and further through Bulgaria, Serbia, Hungary, Slovenia and Austria to northeastern Italy. Other branches will lead to Croatia, Macedonia, Greece and Turkey.

The pipeline will be able to transport about 63 billion cubic meters of gas annually, about 15 percent of the volume that Europe needs per year. Full capacity is expected in 2018. The first stage with a capacity of 15.75 billion cubic meters of gas should pass along the bottom of the Black Sea and be built in the third quarter of next year.