EU's Juncker: South Stream Pipeline Can Still Be Built

The South Stream gas pipeline can go ahead even though Russia said it had scrapped the $40 billion project to pump gas to the European Union, European Commission President Jean-Claude Juncker said on Thursday.

Russia announced at the start of the week that it had abandoned its South Stream pipeline, which would have bypassed Ukraine, the traditional transit route for Russian gas. It cited EU legal obstacles as a reason.

Some EU nations, especially Bulgaria, which is almost entirely dependent on Russia for its gas and would stand to benefit from a pipeline via its territory, are strong supporters of the Gazprom project.

"As regards South Stream, the European Union and Bulgaria are working together to solve the outstanding issues. These outstanding issues are not insurmountable," Juncker told reporters after talks in Brussels with Bulgarian Prime Minister Boiko Borisov.

Borisov also said South Stream can be built, but agreed it had to comply with EU rules, including legislation, known as the third energy package, that limits how much of a pipeline a company can own if it also controls the gas supply.

Further efforts to bring the project in line will be made on Tuesday, when EU energy ministers are in Brussels for regular talks.

"I hope that all these technical details will be solved at this meeting including the third energy package," Borisov said.

Borisov said he had not received any official notice from Russia that South Stream was not going ahead.

Reporting by Barbara Lewis and Adrian Croft