19 September 2011
Three European energy companies, France’s EdF, Italy’s Eni and Germany’s Wintershall signed a legal agreement with Gazprom to build the South Stream pipeline, which would bypass Ukraine by running under the Black Sea and into Bulgaria before going on to Greece, BBC reported on Friday. Gazprom will own 50% of the JV, Eni 20%, and both EdF and Wintershall will have 15% stakes. Construction is expected to begin in 2012, with gas expected to start flowing in 2015. An Eni chief executive quoted in the story said the underwater section alone was expected to cost USD 10 bln. The pipeline could have an annual capacity to transfer 63 bln m3 of gas. Last week Gazprom started pumping natural gas through the USD 10 bln Nord Stream subsea pipeline from Russia to Germany, which also bypassed Ukraine. Currently Ukraine transports 80% of Russian gas to the EU. Gazprom said it could divert up to 20 bln cubic from Ukraine’s transit route through Nord Stream, causing Naftogaz of Ukraine to lose around USD 600 mln in revenue from transit next year.