By RIA Novosti
Moscow : Russian energy giant Gazprom and Italy’s Eni SPA signed a deal to build a gas pipeline that will run under the Black Sea from Russia to the European Union.
The document to set up the South Stream joint venture was signed Thursday in Kremlin by Gazprom’s chief executive, Alexei Miller, and Eni President Paolo Scaroni in the presence of Russian President Vladimir Putin and Italian Prime Minister Romano Prodi.
The project is expected to strengthen Russia’s position as Europe’s energy supplier.
“The South Stream project has strategic significance for the energy security of Europe as it is based on transparency, and consideration for mutual interests of suppliers and consumers. We are grateful to the European Commission for supporting the project,” Putin said after negotiations with Prodi.
State-controlled Gazprom and oil and gas giant Eni agreed in June to build the 900-km South Stream pipeline, which will deliver 30 billion cubic metres of gas annually via Bulgaria to Austria, Slovenia and Italy.
Under the memorandum on establishing the South Stream, Gazprom and Eni will each hold 50 percent in the company, Scaroni said, adding that a third company could join the project during the feasibility study.
Investment in the South Stream project is expected to exceed $10 billion, Scaroni said.
Gazprom and Eni have also agreed that the feasibility study will be completed by the end of 2008 and the pipeline will come on stream in 2013.
The South Stream project, announced by Gazprom in June, replaces previous plans to extend the Blue Stream pipeline, which runs from Russia to Turkey and is operated by Gazprom and Eni.
Russia’s state gas monopoly has actively sought new export routes to avoid transit countries since energy disputes with Ukraine and Belarus in the past two years.
In November 2006, Gazprom and Eni signed an agreement, which opened the way for direct Russian gas exports to Italy from 2007. The supplies are to be gradually increased to three billion cubic metres a year by 2010. The agreement also extended the current contracts for Russian gas supplies to Italy until 2035.
Gazprom is also working on the Nord Stream pipeline with Germany’s E.ON and BASF, which will link Russia to Germany via the Baltic seabed.