Gazprom to buy out EU partners in cancelled South Stream project

By ELENA MAZNEVA and JAMES KRAUS
Bloomberg

OAO Gazprom, the world’s biggest natural-gas exporter, agreed to buy the 50% it doesn’t own in South Stream Transport from Italy’s Eni, Electricite de France and the Wintershall unit of Germany’s BASF.

No purchase price was disclosed in statements issued by EDF, BASF and Moscow-based Gazprom. Eni, owner of a 20% stake, hasn’t issued a statement.

BASF and EDF, which each own 15% stakes, said they’re recovering their investments in the proposed $45 billion Black Sea pipeline that Russia scrapped this month.

President Vladimir Putin on Dec. 1 announced the cancellation of South Stream, which was to carry gas to Europe coming ashore in Bulgaria, citing the European Union’s opposition.

The decision came as Putin struggles to stabilize the ruble and prevent Russia from economic crisis amid plunging oil prices and sanctions from the nation’s annexation of Crimea.

Gazprom owns half of South Stream Transport, the planned 931-kilometer (579-mile) undersea section of the pipeline, on which construction was scheduled to start this month.

As South Stream hasn’t signed any deals with banks yet, all investment and loans were to be provided by the partners according to their stakes.

French utility EDF had spent 150 million euros ($183 million) through the middle of the year, Carole Trivi, a company spokeswoman, said this month.

The sale by BASF’s Wintershall unit marks an additional setback for the Ludwigshafen, Germany-based company, which had tied the future of its oil-and-gas unit to Russia through a partnership with Gazprom.

BASF 10 days ago said it wasn’t able to conclude an agreement to obtain stakes in Siberian gas fields in exchange for its share of a gas-trading joint venture in Europe. It earlier said it expected to close the deal by year-end.

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