Gazprom and ENI set up Special Purpose ENTITY to implement South Stream project

The Special Purpose Entity South Stream AG was registered today in Switzerland. The venture was established on a parity basis by Gazprom and an Italian oil and gas company ENI.

The Special Purpose Entity South Stream AG will carry out the marketing research and technical and economical feasibility study for the South Stream project to be completed till the end of 2008.

Gazprom and ENI may jointly decide to engage other foreign partners in the project.

A government-level meeting between Russia and Italy with Gazprom and ENI involvement has been planned for the 1st quarter of 2008 to outline the schedule for reaching agreements with transit countries along the gas pipeline's route.

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On June 23, 2007 Gazprom and ENI signed a Memorandum of Understanding for the South Stream project execution.

The Memorandum sets the cooperation directions for both companies in the South Stream engineering, financing, construction and management sectors.

According to the document the offshore section of the pipeline will run across the Black Sea seabed to connect Russian and Bulgarian shores. The total length of the Black Sea gas pipeline section will be around 900km with the maximum depth of more than 2000 m, and design capacity nearly 30 bcm. The offshore section of the South Stream is planned for commission in 2013.

The parties examine several routes for the construction of the onshore section crossing the territory of the European Union countries. Within the project execution Gazprom and ENI will apply modern technologies in compliance with the most strict environmental requirements.

On November 22, 2007 the companies signed a Supplement to the Memorandum of Understanding for the South Stream project execution.

The Supplement envisages establishing a Special Purpose Entity on a parity basis to carry out marketing research and technical and economical feasibility study for the project.