* Commission says working constructively on legal solution
* Gazprom says South Stream gas already has buyers
By Barbara Lewis
BRUSSELS, Dec 4 Gazprom's giant South
Stream gas project cannot operate on EU territory unless it
complies with the bloc's energy law, and it could take years to
do so, the European Commission said on Wednesday.
EU law does not allow energy suppliers to own the pipelines
they use for shipment, but Russia's gas export monopoly still
has forged ahead with its multi-billion-euro South Stream
pipeline into southeastern Europe, avoiding Ukraine.
Last month, it started work on the Serbian section of South
Gazprom Deputy Chairman Alexander Medvedev told a Brussels
meeting that all 63 billion cubic metres (bcm) of gas that will
flow through the link had found buyers.
Addressing the same meeting, a senior Commission official
said EU authorities were working to find a legal solution to
South Stream but it would take time.
"In all openness and frankness, the South Stream link will
not operate in the territory of the European Union if it's not
in compliance with EU law," said Klaus-Dieter Borchardt,
director of the Internal Energy Market in the energy department
of the European Commission.
"I can only reiterate our willingness to work
constructively," he said. "It will take not months; it will take
maybe two years."
The difficulties concern tariffs and EU legislation, known
as the Third Energy Package, that says the owner of resources
cannot also own the infrastructure through which they are
Borchardt agreed with Medvedev that Commission law did not
stop Gazprom from building its pipeline.
But he said Gazprom could not: "Hand a baby to us and then
say, 'Now how can we operate it in accordance with the Third
Relations have deteriorated since the Commission announced
it was investigating Gazprom on suspicions that the company has
hindered the free flow of gas across Europe and imposed unfair
prices in some cases.
EU Competition Commissioner Joaquin Almunia said on
Wednesday that Gazprom had offered concessions to stave off
The interest of both Russia and the European Union in
alternative gas supply routes dates back to a series of disputes
between Russia and Ukraine over unpaid gas bills, notably in
early 2009 when gas deliveries into the European Union were
While Russia has focused on alternative supply routes, the
European Union has also sought alternative suppliers.
Nervousness about disruption has grown after Ukraine's
refusal to sign a partnership agreement with the European Union
triggered a political crisis and popular unrest.
(editing by Jane Baird)