Gazprom and ENI announce plan for new Black Sea-Europe pipeline

Jun 25, 2007 02:00 AM

Russian gas monopolist Gazprom and Italian oil firm ENI announced a plan for a new pipeline to send Russian gas under the Black Sea to Europe, undermining an earlier plan to extend a Turkish pipeline. Russia is thus diversifying its gas export routes, shaking off dependence from several transit countries, industry experts say.
Gazprom deputy CEO Alexander Medvedev and ENI CEO Paolo Scaroni signed a deal on the South Stream project. The 900-km pipeline would run from Russia to Bulgaria under the Black Sea, come ashore in Bulgaria and then branch to Austria and Slovenia in one spur, and Greece and southern Italy in another, Paolo Scaroni told. The construction of the pipeline with the annual capacity of 30 bn cm of gas might start as early as next year.

The partners will finance the construction on a parity basis, Mr Scaroni noted. Gazprom said the cost of the project and the distribution of stakes among the partners would be decided after the feasibility study, which is currently being done by Italy’s Saipem.
Saipem was also the contractor for the Blue Stream pipeline from Russia to Turkey, another joint venture of Gazprom and ENI. Gazprom earlier talked of expanding Blue Stream to southern Europe via Turkey.

A source in Gazprom said Turkey “showed not interested in the new project,” but supported an alternative Nabucco pipeline project.
“We are going to continue to work with Turkey on plans to supply our gas across its territory and onward to Israel,” Gazprom spokesman Sergey Kupriyanov said. Analysts estimate the undersea part of the project at between EUR 2.25 and EUR 3.75 bn.

Those in the industry say the change in South Stream’s route aims to diversify transit routes to Europe as Russian is anxious about Ukraine’s possible hike in transit tariffs and Turkey’s growing influence in the region.
South Stream’s main rival, the EUR 3.7 bn Nabucco pipeline project will carry an annual 31 mm of Caspian and Middle Eastern gas to Europe via Turkey and the Balkans. The construction is due to finish in 2012. South Stream repeats Nabucco’s Balkan route. The question is which project will secure the most advantageous transit regime in transit countries.

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