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UPDATE 1-Russian gas pipeline project bypassing Ukraine signs major deals
March 14, 2014 / 3:26 PM / 4 years ago

UPDATE 1-Russian gas pipeline project bypassing Ukraine signs major deals

* First South Stream line to be build by Saipem

* South Stream secured deals on pipes (Changes headline, releads, adds detail)

MOSCOW, March 14 (Reuters) - The Moscow-led South Stream pipeline project to take Russian gas directly to Europe, bypassing Ukraine, signed construction and pipe supply deals as Russia’s Gazprom pushed ahead despite an EU decision to delay talks on the scheme.

The European Union, already concerned to reduce state-controlled Gazprom’s dominance over its energy supply, especially in eastern Europe, has been further rattled by Russia’s seizure of the Crimea region from Ukraine.

Earlier this week the bloc’s executive, the European Commission, announced that it planned to delay talks but state-controlled Gazprom, disregarding the move, said it expected to sign deals this month.

On Friday, Gazprom said Italy’s Saipem had secured deals worth 2 billion euros ($2.79 billion) to build the first stage of the underwater pipeline, which would be laid in the Black Sea from Russia to Bulgaria.

Construction is expected to be completed by the third quarter of 2015.

Gazprom also said deals to supply pipes for the second stage of South Stream, worth a total of 800 million euros, were signed with Japan’s Marubeni, Itochu, Sumitomo as well as with Russia’s OMK and Severstal.

The pipes would be supplied for the underwater section of the pipeline

Russia has long sought to cut its reliance on pipelines across Ukraine, the route for roughly half of its gas exports to Europe.

Past spats between the two former Soviet republics over pricing and debt have interrupted flows via Ukraine to Europe, also prompting the European Union to seek to reduce its reliance on Russian gas.

The 2,400 km (1,500-mile) South Stream pipeline, which Gazprom says will be fully operational by 2018, would be able to supply over 60 billion cubic metres (bcm), or almost 15 percent of Europe’s annual gas demand.

Construction of the entire subsea stretch is expected to cost around 17 billion euros.

Gazprom already secured pipes for the project’s first stage, due to be operational as early as next year

The shareholders in South Stream are Gazprom, France’s EDF , Germany’s Wintershall, and Italy’s Eni. ($1 = 0.7180 Euros) (Reporting by Vladimir Soldatkin; Editing by Steve Gutterman and Anthony Barker)

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