The agreement covers a technical and economic feasibility study of the project and the necessary political and regulatory evaluations. It also establishes the guidelines for the co-operation between both companies for the planning, financing, construction and technical and commercial management of the pipelines.
Eni said that the agreement will significantly contribute to improving the security of energy supply for the EU. The project is particularly relevant considering the significant gas shortage that will be experienced by the EU between now and 2015, as demand increases while internal production decreases significantly.
The transport capacity of South Stream will be defined through feasibility studies in order to optimize costs and on the basis of market analyses that will be carried out in the countries involved, as well as in the end markets.
In its offshore section, the South Stream will cross the Black Sea from the Russian coast of Beregovaya to the Bulgarian coast, with a 900km pipeline reaching a maximum water depth of more than 2,000m. For the onshore section, two different routes from Bulgaria are being studied: a route towards the northwest and one towards the southwest.
Gazprom deputy chairman Alexander Medvedev commented on the pipeline project saying: It is a further step towards the tangible execution of Gazprom’s strategy to diversify Russian gas supply routes towards European countries and significantly contribute to Europe’s energy security.
Although the parties hope that the agreement will enhance the security of energy supply to Europe, The Financial Times has reported that the move has increased fears over Europe’s dependence on Russia’s energy reserves. The publication has speculated that the project could cost more than E10 billion.
The agreement is a further step towards the implementation of a strategic agreement that Eni and Gazprom signed in November 2006.
