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Gazprom, BASF, EdF, ENI sign shareholder agreement in South Stream project

September 16, 2011, 19:20 UTC+3

Gazprom is the largest shareholder in South Stream with 50%. BASF and EdF hold 15% each, and ENI’s share is 20%

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SOCHI, September 16 (Itar-Tass) —— Russia’s Gazprom, Germany’s BASF, France’s EdF and Italy’s ENI have signed a shareholder agreement in the South Stream project in the attendance of Prime Minister Vladimir Putin and on the sidelines of the Sochi 2011 Investment Forum.

Gazprom is the largest shareholder in South Stream with 50%. BASF and EdF hold 15% each, and ENI’s share is 20%.

The final investment agreement will be presented to the banks pool in the second half of 2012, ENI CEO Paolo Scaroni told reporters on Friday.

South Stream aims to diversify the routes of natural gas deliveries to Europe. A gas pipeline will be built across the Black Sea to Bulgaria, Serbia, Hungary, Slovenia, Austria and Northern Italy. There will be extensions to Croatia, Macedonia, Greece and Turkey..

The construction works are due to start in 2013, and the first line with the rated capacity of 15.75 billion cubic meters of gas per year is due to become operational on December 30, 2015. After that additional facilities will be commissioned annually for bringing the total capacity of the pipeline to 63 billion cubic meters in 2018.

The project value is estimated at 15.5 billion euros, including about 10 billion euros to be invested in the undersea segment.

The South Stream company was registered in Switzerland in January 2008. Gazprom and Italian Eni were the cofounders of the company on parity terms.

Gazprom and French EdF signed a memorandum of mutual understanding on November 27, 2009, to enable EdF to join the construction of the South Stream sea segment.

On March 21, 2011, Gazprom and BASF signed a memorandum involving BASF subsidiary Wintershall in the project.

The laying of the South Stream gas pipeline on the Black Sea bottom is totally safe, South Stream Project Director Marcel Kramer told Russia Today this June.

He said they were very careful about the environmental impact of the whole project and its elements. The transportation of gas through a pipeline laid on the bottom of a sea does not create any danger, he said, nothing that the effect on the sea bottom and the environment must be minimized on the particular route.

As for the opinion of experts that modernization of Ukrainian gas pipelines would cost much less than the laying of the new gas pipeline across the Black Sea, Kremer said that the South Stream project participants decided that it would be unwise to rely on gas transit across Ukraine in the current amounts. Actually, some gas will still be delivered across Ukraine, in addition to the South Stream pipeline – a modern and efficient gas transit route to enhance the reliability of gas deliveries to Europe.

Transit routes need modernization, Kramer said. In his words, the Nord Stream pipeline is a good example, as it will also help ensure uninterrupted gas supplies to Europe through a modern pipeline and under supervision of modern managers.

He said that the South Stream capacity would amount to 63 billion cubic meters upon the end of the construction in 2019, but the capacity of the pipeline would be growing step by step and it would start from modest amounts in 2015.

The market will determine how much gas will be supplied, he said. According to the basic plan, two-thirds of South Stream deliveries will be gas that is currently transited across Ukraine.

Russia presented the South Stream project at the European Commission in Brussels on May 25.

Russian Energy Minister Sergei Shmatko said that Europe was increasingly interested in the project, and the number of skeptics had gone down.

“The fact that we will present the project at the European Commission headquarters shows that Europe no longer avoids contacts related to this cooperation project. It has been said a lot over recent months about Russian gas’ being a substantial energy resource for Europe, and many skeptics have drastically changed their point of view,” Shmatko said.

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