Hungary, Russia set up joint engineering company for South Stream pipeline project

http://portfolio.hu/en/cikkek.tdp?k=2&i=19411

The Hungarian Development Bank (MFB) and Gazprom, Russian’s state-owned gas monopoly, have established South Stream Hungary Zrt., a joint engineering company (JEC) to implement the South Stream project in Hungary.

The incorporation documents were signed last Friday in Budapest in the course of the Russian-Hungarian Intergovernmental commission meeting in the presence of Russia’s First Deputy Prime Minister Viktor Zubkov and Hungarian Prime Minister Gordon Bajnai.

The 50-50% JEC will organize the preparation of a feasibility study of the Hungarian segment of South Stream, as well as finance, build and manage the gas pipeline in Hungary.

"[...] We have no doubt whatsoever that South Stream will serve as a guarantee of security and flexibility of Russian natural gas supplies to European markets," said Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee.

"Today’s signing of the article of association of the joint venture company, which plays such a major role in the implementation of the Hungarian section of South Stream, is the result of constructive negotiations by the two cooperating parties," said MFB CEO János Erős.

In order to diversify natural gas export routes Gazprom plans to build the South Stream gas pipeline across the Black Sea to the countries of South and Central Europe.

Hungary and Russia signed an intergovernmental agreement on 28 February 2008 in Moscow, by which Hungary officially signed up for the South Stream project. Gazprom and MFB signed a basic co-operation deal on 10 March 2009, agreeing to set up a joint venture for the construction of the gas pipeline and gas transit through Hungary.

The Budapest-headquartered South Stream Hungary has a registered capital of HUF 50 m and the two parties hold a 50% stake each in it.

Gazprom and MFB pledged not to take part in any other project that aims to transmit natural gas via Hungary to southern Europe.

The Board of the JEC comprises four members, two delegated by Gazprom and two by MFB. One of the BoD members takes up the Chairman’s post and is replaced every 12 months.

The feasibility study is to be created by SEPco Kft., a joint venture of Gazprom and Hungarian fuels group MOL.