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. Last Updated: 07/27/2016

Slovenia Signs Up to South Stream

RIA-Novosti / ReutersPutin and Pahor watching their national teams playing a 2010 World Cup qualifying match at Luzhniki on Saturday.

Prime Minister Vladimir Putin won Slovenia’s approval Saturday for the South Stream pipeline, undermining European Union efforts to reduce dependency on Russian gas and clearing the way for the project to start.

The seal of approval is the latest victory for the Kremlin as it seeks to counter the long-delayed Nabucco pipeline, which is backed by the EU to curb its energy dependency on Russia by pumping gas from the Caspian and the Middle East.

Slovenia’s approval brings the South Stream pipeline a step closer to being built, though its backers — Gazprom and Italy’s Eni — still have to raise billions of dollars to finance the project.

“We have now signed deals with all the European partners needed for this project to be completed,” Putin told reporters at his Novo-Ogaryovo residence outside Moscow after signing the cooperation deal with his Slovenian counterpart, Borut Pahor.

The accord was signed by Energy Minister Sergei Shmatko and Slovenian Economy Minister Matej Lahovnik. Putin and Pahor later watched the Russian national team beat the visiting Slovenians 2-1 in a World Cup 2010 qualifying match.

“We wanted to sign the agreement before our relations are spoiled after the victory of our team,” Pahor joked at Luzhniki Stadium, RIA-Novosti reported.

Slovenia joins Bulgaria, Serbia, Hungary and Greece as a partner in the onshore section of South Stream. The 900-kilometer pipe, due to deliver gas by the end of 2015 and being built in partnership by Gazprom and Eni, will run under the Black Sea to the Balkans, where it will split into northern and southern routes.

With a capacity of 63 billion cubic meters per year, the pipeline is expected to cost between 19 billion and 24 billion euros ($28 billion to $36 billion). It is due to become operational in 2015.

“Thanks to Slovenia’s participation, Russian natural gas will reach the Italian border, the main target market for the [South Stream] project,” a Russian government source, who requested anonymity, told reporters.

Russia has been trying to persuade major European powers that support for alternative supply routes that bypass Ukraine — such as South Stream and another project known as Nord Stream — will ensure smooth supplies.

Putin, who has said Russia will cut gas deliveries to Europe again this year if Ukraine siphons off transit supplies, will travel to Ukraine this week to discuss energy with his Ukrainian counterpart, Yulia Tymoshenko.

Approval for the pipelines is a coup for Putin and a blow for Nabucco, which has been plagued by a lack of supply agreements. But Gazprom is facing an unprecedented fall in demand as some of its European customers switch to cheaper, liquefied natural gas and has yet to secure billions of dollars in financing for South Stream.

Slovenia had said in the past that it also supports Nabucco, which if built would transport 31 billion cubic meters per year from the Caspian region to an Austrian gas hub via Bulgaria, Romania, Turkey and Hungary.

(Reuters, Bloomberg, MT)