Russian paper predicts trouble for South Stream pipeline

(MOSCOW) - A Russian newspaper on Friday predicted trouble ahead for Moscow's strategic South Stream gas pipeline, saying the project could be held up by difficult relations with neighbouring Ukraine.

The report by the Kommersant broadsheet came after Russian and Hungarian officials at a Kremlin ceremony on Thursday signed the latest in a series of agreements between Moscow and countries along the route of the proposed pipeline.

South Stream, to be developed by Russia's Gazprom and Italy's ENI, is to become a major artery bringing gas from Russia across the Black Sea to southern Europe.

It has been brought forward in response to a rival US-backed pipeline project, Nabucco.

Kommersant said that while planning for the land route appears to be going well, the going could be less easy for the section that will have to pass through Ukraine's economic zone in the Black Sea.

Quoting an analyst, Mikhail Korchemkin, the paper said Russia had neglected to consult countries along the sea route.

It went on to say that Ukraine could gain leverage from its position along the route in a current dispute with Moscow over unpaid debts to Gazprom.

Gazprom has threatened to reduce gas supplies to Ukraine from March 3 amid the long-running dispute.

While Ukraine cannot issue a blanket ban, the press service of its environmental ministry told Kommersant the pipeline would require "close study, the conducting of a large-scale ecological assessment."

And an unnamed Ukrainian government source told the paper Ukraine's attitude would depend on Moscow's views on an alternative pipeline being promoted by Kiev, intended to bring gas from Central Asia via the Black Sea and dubbed White Stream.

"We will need permission from Moscow to lay the pipeline on the bottom of the Black Sea. Then we will be talking about an exchange -- we build White Stream and Russia South Stream," the government source said.