Gazprom's South Stream gas pipeline, which avoids Ukraine, progressing as planned

The process for building the South Stream gas pipeline through Hungary is progressing on schedule, Russian energy company Gazprom said.

Gazprom Chairman Alexei Miller met in Budapest with Hungarian Prime Minister Viktor Orban to discuss the project's construction.

"The parties addressed the current state of the South Stream project and highlighted that it was progressing on schedule," Gazprom said in a statement Wednesday. "The gas pipeline is being constructed in Bulgaria and Serbia; the offshore section laying will start in autumn."

Gazprom said it was reviewing route options through Hungary, though planning won't influence a scheduled start date through the Hungarian section of South Stream.

South Stream is meant to avoid geopolitically sensitive territory in Ukraine, which currently hosts the bulk of Russian gas to Europe.

Gazprom said the pipeline has an optimum capacity if 2.2 trillion cubic feet per year. First gas should run through the pipeline by late 2015 and it should reach peak capacity by 2018.

Lingering tensions between Ukraine and Russia have put European energy security at risk, Gazprom says. Pipelines like South Stream, and the existing Nord Stream pipeline, are meant to address that risk.

Former Czech Prime Minister Mirek Topolane said this week Russia was exploiting tensions with Ukraine to facilitate South Stream's construction.