WSJ: Germany's Wintershall to Join South Stream Project*

Views on BG | March 19, 2011, Saturday // 14:35|  views

Russia recently announced the The 900-km underwater section of South Stream might be replaced with a LNG terminal. Map by


The German oil-and-gas company Wintershall AG is set to join Russia's South Stream natural-gas pipeline, a person familiar with the matter said Friday, a move that the partners hope will increase the pipeline's chances of gaining European Union backing.

Paolo Scaroni, chief executive of the Italian energy giant Eni SpA, said in an interview that a German company would be joining South Stream in the next few days, "giving the project solidity not just in terms of who will be the buyers of the gas, but also in terms of its perception in the EU."

"It won't fly unless the EU gives its support," he added.

A person familiar with the matter said the company due to sign up was Wintershall, the oil arm of Germany's BASF SE. Wintershall declined to comment.

The .5 billion South Stream pipeline would transport up to 63 billion cubic meters of gas from Russia to Central and Southern Europe. The venture is owned 50-50 by Eni and OAO Gazprom, Russia's natural-gas giant. El?ctricit? de France SA is to take a 10% stake in it later this year.

Wintershall is already a partner in another big Gazprom-led project, Nord Stream—a pipeline which will transport Russian gas across the Baltic Sea into Germany. The project also involves Germany's E.ON Ruhrgas AG, Gasunie of the Netherlands and GDF Suez SA.

South Stream has suffered from its highly politicized image. The idea of a new conduit for Russian gas into Southern Europe is widely seen in Europe as Moscow's riposte to a rival EU-backed project, Nabucco, which would transport gas from the Middle East and the Caspian region and so reduce the continent's dependence on Russian energy imports.

Russia first broached the idea of South Stream after disputes with its neighbor Ukraine led to a series of cutoffs of Russian gas into Europe, which badly damaged Gazprom's reputation as a reliable energy supplier. South Stream would bypass Ukraine entirely, instead passing under the Black Sea into Bulgaria.

The plan faces regulatory problems in the EU. Analysts say it could fall foul of the bloc's "third energy package," which came into force this month, and is designed to liberalize European energy markets by guaranteeing third-party access to pipelines and separating suppliers from owners of transport infrastructure. Under the new rules, Russia may have to sell some of its pipeline network.

Mr. Scaroni said South Stream will only work if it is exempted from the third-party access rule—a prospect that would be bolstered by Germany's signing up. "We need to have the EU backing the project, and having three companies from three major countries of the EU as part of the project should be a positive," he said.

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Tags: South stream, gas, transit, pipeline, natural gas, Russia, Gazprom, Rosneft, Lukoil, Ukraine, ENI, Black Sea, Nabucco


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