Gazprom Buys Out South Stream Pipeline Partners

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Russian oil and gas giant, Gazprom (PINK:OGAZPY) (Moscow, Russia), has bought up the 50% of shares it did not already own in the cancelled $40 billion South Stream Transport gas pipeline.

The state-owned company has agreed to buy the shares from its former partners including Italy's Eni SpA (Rome, Italy), Electricite de France (EDF) (Paris, France) and the Wintershall unit of Germany's BASF SE (XETRA: BAS) (Ludwigshafen, Germany) for an undisclosed sum.

"Gazprom entered into agreements today with Eni, Wintershall and EDF on purchasing 50 per cent of total shares in South Stream Transport from them," the company said in a short statement. "The deals with the minority shareholders of South Stream Transport were previously agreed on by the Gazprom Board of Directors."

Russia's President, Vladimir Putin, cancelled the project in December blaming Bulgarian reluctance as well as European Union (E.U.) pressure. For additional information, see December 3, 2014, article - Russia Scraps South Stream Natural Gas Pipeline, Chooses New Route to Turkey.

The pipeline would have bypassed Ukraine, running under the Black Sea to bring gas into Europe via Bulgaria. It would then have traversed Serbia, Hungary, Slovenia, Italy, Serbia, Bosnia and Herzegovina, Croatia, and Austria. It was destined to carry 63 billion cubic metres (bcm) of gas a year to Europe - potentially meeting around 20% of E.U. gas demand.

While certain European countries were in favour of the project and saw it as a way of bypassing the supply problems experienced via Ukraine in recent years, the European Union and the U.S. viewed the project as a way for Russia to strengthen its control over gas supplies in Europe. Europe already relies on Russia for around 30% of its gas needs.

President Putin blamed Bulgarian reluctance for scrapping the project as well as E.U. opposition.

"If Europe does not want to carry out [South Stream], then it will not be carried out," he told media. "It would be ridiculous for us to invest hundreds of millions of dollars constructing a project, bringing it to Bulgaria's borders and having to drop it from there on."

Putin has since said Russia will invest in a redirected pipeline called 'Turkish Stream' and will establish a gas hub on the border of Turkey and Greece.

Despite the cancellation of South Stream Germany's Chancellor, Angela Merkel, is backing Bulgaria in its efforts to get the project green lit. After recent talks with Bulgarian Prime Minister, Boiko Borisov, she said: "We need to examine all legal questions surrounding the South Stream project and then use these to move discussions forward with Russia".

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