Norway Offers Gas to European Union; Serbia Tells Sergei Lavrov South Stream Construction Will Begin

Norway Offers Gas to European Union; Serbia Tells Sergei Lavrov South Stream Construction Will Begin

Russian Foreign Minister Sergei Lavrov said Serbia will continue construction of the South Stream pipeline in July as Norwegian gas company Statoil told the European Union it will help with gas supplies. Russia cut off gas to Ukraine on Monday, which could affect Europe’s gas supply.

“We can increase somewhat but we cannot replace Russian gas,” CEO Helge Lund said.

Gazprom is the dominant force in the natural gas market at 16% and Statoil is barely behind with 14% of the market share. Europe receives 30% of its gas from Gazprom and half of those pipelines run through Ukraine. CEO Alexei Miller said Gazprom will continue to provide gas to Europe, but made a snide remark that Ukraine might take some for them and he will not make up the difference.

Norway is not in the EU and it does not look like it will happen any time soon. The country rejected the referendum in 1972 and 1994 and in 2013, and a poll showed less than 20% of Norwegians want to join the EU. However, Norway does belong to the European Economic Area and European Free Trade Area. In 1998, “[T]rade from Norway to the EU amounted to €91.85 billion” while the “EU’s exports to Norway amounted to €43.58 billion.”

Russia is looking to bypass Ukraine and wants to open the South Stream pipeline, which would travel through the Black Sea into Bulgaria, Serbia, Hungary, and Austria. It should be completed in 2015, but the EU said the pipeline might break the bloc’s rules and “is concerned that the contracts for the Bulgarian portion of South Stream were not awarded transparently.” Bulgaria, which receives almost 90% of all gas from Russia, suspended work on June 8. Serbia did not want to stop construction, but Deputy Prime Minister and Minister of Energy Zorana Mihajlovic said the country might have to halt because of Bulgaria.

But, as much as Serbia wants to join the EU, the country has ties to Russia. Gazprom owns 51% of Serbian company NIS. Lavrov visited Serbia on Tuesday and said despite the setbacks, Serbia assured him South Stream construction will begin on schedule.

“We confirmed our readiness for South Stream and the need to carry it out as it is the only realistic project for gas security in southeastern Europe,” Lavrov said. “All agreements remain in force and no changes have occurred. We consider that everything will proceed as planned.”