European trio take stake in Russia's South Stream

Three EU energy majors on Friday agreed to take a 50-percent stake in a Black Sea natural gas link Russia is developing for Europe's growing market in competition to one backed by the United States. The partners said Italy's ENI will get a 20-percent stake in South Stream's offshore operator while Germany's Wintershall and the French firm EDF will each keep 15 percent. The remaining 50-percent share will belong to Gazprom -- the Russian energy monopoly and world's largest gas producer that is developing routes to bypass nations such as Ukraine with which it suffers price disputes. "The signing demonstrates that the partner companies agree that South Stream is not only strategically important in the medium and long term, but that it is also a commercial opportunity not to be missed," South Stream chief executive Marcel Kramer said in a statement. The shareholder structure had been under review since the venture -- founded by Gazprom and ENI -- was joined by BASF's hydrocarbon subsidiary Wintershall and then by EDF. The $21.5 billion project has been facing questions about its economic viability and doubts as to whether the partners can lock in the reserves needed to feed hungry European markets for the coming decades. South Stream is being set up in direct competition with the Nabucco pipeline the United States is backing in hopes of relieving Europe's dependence on Russian energy and its accompanying political risks. Both links hope to tap into Caspian Sea and Central Asian fields that are also finding interest in the booming markets of Asia such as China. The problems with Ukraine resurfaced again on Friday when its President Viktor Yanukovych unexpectedly suggested diverting a part of the link across his country instead going through the western part of the Black Sea. But it only took minutes for Gazprom to dismiss Yanukovych's comments as irrelevant. "They have been offering this for a long time," the firm's deputy chairman Valery Golubev was quoted as saying by Interfax. "But why do that, when we can just run the pipeline straight?" Russia and Ukraine have in recent weeks reached a new crisis in relations over gas prices following a 2009 conflict that saw gas supplies cut off for three weeks. The Kremlin said Yanukovych will meet his counterpart Dmitry Medvedev in Russia on September 24 in another attempt to negotiate a lower price for Russian gas. The latest dispute with Ukraine has been used by Gazprom as another argument as to why it needs the South Stream pipeline. Russia began filling gas into the Baltic Sea's Nord Stream pipeline that runs directly to Germany on August 6.