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Europe rules Serbia is breaking gas pipeline rules

Feb. 25, 2014 at 7:10 AM

VIENNA, Feb. 25 (UPI) -- Serbia hasn't taken the steps necessary to keep natural gas suppliers out of the pipeline transit sector, a European regulator said.

The Energy Community Secretariat said state-owned transit company Srbijagas and Yugorosgaz, a subsidiary of Russian energy company Gazprom, have not met their obligations to separate production from gas transmission as European legislation requires.

The secretariat ruled Srbijagas hasn't unbundled its transit system activities. While Yugorosgaz has set up a separate pipeline subsidiary, that wasn't enough to ensure independent decision making within the company.

"Serbia is now requested to rectify the identified issues of non-compliance within a time limit of two months," the secretariat said in a statement Monday.

The decision followed a meeting between Srbijagas and Gazprom to discuss the South Stream natural gas pipeline, a transit system that would run through the Black Sea to European consumers.

Gazprom said the pipeline is meant to add diversity to Russia's export routes through Europe. A contractual dispute between Gazprom and its counterparts in Ukraine, which hosts most of Russia's gas for Europe, adds a layer of risk to conventional routes.

Gazprom said it plans to commission parts of South Stream before the end of 2015.

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