France's EDF to join South Stream pipeline

MOSCOW, Nov. 30 (UPI) -- French energy giant EDF is planning to join the Russian-Italian South Stream pipeline project.

EDF on Monday signed a memorandum of understanding linked to the construction of the pipeline's offshore section and will likely acquire a 10 percent stake in the project, it was announced during a visit of Russian Prime Minister Vladimir Putin to Paris.

Gazprom CEO Alexei Miller said his company would get a "reliable and long-term partner in EDF."

"The participation of a French company in the South Stream project underscores the pan-European scale of the pipeline and is additional evidence of its tremendous importance for ensuring stable energy supplies to the continent," he said in a statement.

Gazprom also said that the MoU foresees the conclusion of new long-term gas sales contracts and will expand cooperation between Gazprom and EDF in the European electricity market.

Announced in summer 2007, South Stream is intended to bring 63 billion cubic meters of gas per year from Russia under the Black Sea to Bulgaria, and then on to Western Europe. The pipeline consortium is owned to 50 percent by Russia's Gazprom, with Italian company Eni holding the other half.

South Stream is intended to bypass problematic transit country Ukraine and is seen as a competitor to Nabucco, an EU-supported project intended to diversify Europe's energy import sources. The 2,000-mile Nabucco is due to bring 31 billion cubic meters of gas per year from the Caspian Sea to Austria via Turkey, Bulgaria, Romania and Hungary.

Russia has in the past months lobbied for South Stream in a bid to torpedo the EU pipeline. Earlier this year Gazprom signed agreements with transit states Bulgaria, Greece, Serbia and Italy to speed up South Stream. Moscow says it wants to start building South Stream next year, for an estimated total cost of up to $36 billion. The pipeline is due to be completed by the end of 2015.

Russia is also involved in the multinational Nord Stream project, a planned 758-mile natural gas pipeline directly linking Russia and Germany under the Baltic Sea.

The $11 billion pipeline is designed to eventually deliver up to 55 billion cubic meters of gas per year, enough for around 25 million households.

Gazprom holds the majority with 51 percent. Germany's Wintershall and Eon Ruhrgas own 20 percent each with Dutch Gasunie holding the remaining 9 percent.

The construction of Nord Stream is planned to begin in early 2010, with the first pipeline operational in 2011 and the second in 2012.