South Steam Shareholders to Strike New Agreement in 2011

South Steam Shareholders to Strike New Agreement in 2011

A new shareholders' agreement for the South Stream gas transit pipeline will be signed in 2011, Gazprom CEO Alexei Miller has announced.

The shareholders are going to come up with a final investment decision for the construction of the Russian-sponsored gas pipeline at the end of 2012, according to Marcel Kramer, CEO of South Stream AG, as cited by RIA Novosti Thursday.

The entire technical and economic assessment of the future pipeline, for which Bulgaria will be a geographic hub, will be completed by September 2011, Kramer is quoted as saying.

He also announced that the shareholders Gazprom and Italian company Eni, who current have 50% stakes each, are making progress on the inclusion of France's EDF in South Stream.

EDF is expected to get a share of 10%, while the subsidiary of Germany's BASF, Wintershall, will have a share of 15%; both of those will be subtracted from Eni's share, which will be reduced to 25%.

The inclusion of EDF and Wintershall is supposed to be completed by the end of 2011.

For the execution of its project South Stream, a competitor to EU-sponsored pipeline Nabucco, Russia has signed bilateral cooperation agreements with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia, and Austria. Bulgaria's neighbors Romania and Macedonia are also to be included.

The South Stream pipe will start near Novorosiysk on the Russian Black Sea coast, and will go to Bulgaria's Varna; the underwater section will be 900 km long.

In Bulgaria, the pipe is supposed to split in two - one pipeline going to Greece and Southern Italy, and another one going to Austria and Northern Italy through Serbia, Croatia and Slovenia.

The project was initiated by Gazprom and the Italian company Eni, with French company EdF and German BASF to join as shareholders. It is seen as a competitor to the EU-sponsored project Nabucco seeking to bring non-Russian gas to Europe.

Bulgaria's Bulgargaz, a subsidiary of the Bulgarian Energy Holding, and Gazrpom signed a road map for the construction of the Russian sponsored South Stream pipeline in Varna in July 2010, and during Putin's visit in Sofia in November 2010, they signed a shareholders' agreement for the project company, which is to construct the Bulgarian section of South Stream. Both parties will have 50% of the shares in the joint venture.

The preliminary survey for the Bulgarian section of South Stream is expected to be completed by the end of March 2011, and after that Bulgaria will make a final decision on an EUR 500 M investment in its section of the South Stream project. (Source: Sofia News Agency)

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