The South Stream Transport B.V. headquarters in Amsterdam (the Netherlands) hosted today the signing of contracts with regard to supply of 75 thousand 12-meter pipes for the first line of South Stream's offshore section.

The pipes will be supplied by German EUROPIPE (50 per cent of the whole volume), United Metallurgical Company (35 per cent) and Severstal (15 per cent). The total value of the contracts is approximately EUR 1 billion.

South Stream's offshore section is made up of four lines of 931 kilometers each, with a diameter of 813 millimeters and wall thickness of 39 millimeters. The unparalleled pipes made of X65 steel designed for an extreme operating pressure of 28.45 MPa will be used during the offshore section construction.

Once the required amount of pipes is stockpiled at temporary bases on the Black Sea coast of Bulgaria, South Stream's offshore section construction will start in autumn 2014. The first offshore line is scheduled to start operations in December 2015.

“With a view to supply the offshore gas pipeline section with the required pipes of the adequate quality, a bidding procedure for the pipe product suppliers was based on extremely stringent requirements to the pipe specification. It's worth mentioning that half of the bid was justly won by the Russian pipe plants that yet again confirmed their status of reliable high-quality pipe product suppliers.

EUROPIPE, United Metallurgical Company and Severstal will supply pipes for the world's most technically unrivalled offshore gas pipeline. It is a big responsibility for the manufacturers. The time has come to move on to the gas pipeline construction stage,” stated Oleg Aksyutin, Member of the Management Committee, Head of the Gas Transportation, Underground Storage and Utilization Department of Gazprom; Chief Executive Officer of South Stream Transport B.V.

Background

German EUROPIPE GmbH manufactures a wide range of welded large-diameter steel pipes designed for operation under extremely high and low temperatures at a super-high underwater pressure.

Being one of the main pipe suppliers to Gazprom, United Metallurgical Company is a largest pipe manufacturer in Russia, mainly focused on the production of large-diameter pipes. The leading Russian and foreign companies from 30 countries are among the major consumers of the United Metallurgical Company products.

Severstal is one of the world's largest vertically integrated steel casting and mining companies with the assets in Russia and the USA as well as in Ukraine, Latvia, Poland, Italy, Liberia and Brazil.

The South Stream gas pipeline is a global infrastructure project aimed at constructing a gas pipeline with a capacity of 63 billion cubic meters across the Black Sea to Southern and Central Europe for the purpose of diversifying the natural gas export routes and eliminating transit risks.

South Stream's offshore section will run under the Black Sea from the Russkaya compressor station on the Russian coast to the Bulgarian coast. The total length of the Black Sea section will exceed 930 kilometers and its maximum depth will be more than two kilometers.

A 1,455-kilometer onshore section will cross Bulgaria, Serbia, Hungary and Slovenia. The gas pipeline will end at the Tarvisio gas metering station in Italy. Gas branches from the main pipeline route will be built to Croatia and to Republika Srpska.

On September 16, 2011 the Shareholders Agreement of South Stream Transport B.V. was signed for the construction of the offshore gas pipeline section. According to the document, Gazprom holds a 50 per cent stake in the project, Italian Eni – a 20 per cent stake, German Wintershall Holding and French EDF – 15 per cent stakes each.

In December 2012 the South Stream gas pipeline construction started near Anapa in the Krasnodar Territory. On October 31, 2013 the first joint was welded at South Stream's Bulgarian section near the Rasovo CS site. On November 24, 2013 a ceremony of welding the first joint of the Serbian section of the South Stream gas pipeline took place in the vicinity of Sajkas village, South Backa District.

The first gas will be supplied via South Stream in late 2015.