Hungary moves ahead with South Stream pipeline

BRUSSELS - Hungarian prime minister Viktor Orban i on Tuesday reiterated his support for the Russian-backed South Stream natural gas pipeline after parliament gave the green light to a law seen as paving the way for its construction.

The 2,500 km South Stream pipeline is to pump gas from Russia under the Black Sea to Bulgaria, Serbia, and Hungary and onto the rest of the EU while circumventing Ukraine altogether.

But the EU opposes the pipeline plan due to competition and internal market rules given Russia’s Gazprom dominance in the sector. In December 2013, the European Commission told the Kremlin that the pipeline violates EU law.

"We support any gas pipeline which brings in energy sources," Orban said, reports AFP.

“If there is trouble in Ukraine, gas should still reach Hungary, and for that, we need another pipeline," he added.

The prime minister had made similar statements in early July when he said the pipeline was needed to help secure Hungary’s gas needs and supplies.

Hungarian lawmakers on Monday amended legislation to allow companies to build a pipeline without the license required to operate it.

This means gas firms only need to seek the approval to construct a pipeline from the Hungarian Energy Office, according to the Budapest Business Journal.

The head of the ruling Fidesz party’s parliamentary group tabled the bill, which was then voted through with 131 in favour and 35 against.

While the amendment does not explicitly cite South Stream, it reportedly allows companies to bypass the EU construction ban.

"The amendment was a trick to enable the start of construction of South Stream and sidestep EU regulation," an energy expert told AFP.

Hungary’s state-owned MVM Zrt is in a joint venture with OAO Gazprom (GAZP) to build and operate the pipeline.

The company, which does not have a license, is set to start construction within six months.

The European Commission, for its part, said it is in contact with the Hungarian authorities to ask for clarification.

“Such authorisations have to be based on objective and non-discriminatory criteria, which are published and made transparent. From the amendment, it is unclear, according to what criteria such authoritisations to build pipelines could be granted by the Hungarian National Regulatory Authority,” said a commission spokesperson on Tuesday.