Russian monopoly Gazprom, an equal partner with Italy’s Eni SpA in the South Stream natural-gas pipeline project, may reduce its stake to allow Electricite de France to buy shares in the venture. Gazprom and Eni agreed last year to allow EDF to buy an interest of 10% to 20% in South Stream, the operator of the planned offshore section of a pipeline under the Black Sea.
No deal has yet been signed and neither partner has said which will reduce its holding to allow EDF’s entry. “We allow for the possibility that our part can be cut,” Gazprom executive Alexander Medvedev told Bloomberg today in an interview in Paris. He did not say by how much Gazprom may trim its holding, or how much Rome-based Eni may also sell. The 900-kilometre (560-mile) pipeline, due to open at the end of 2015, is designed to connect Russia to the Balkans, where it will split into northern and southern routes. The link will bypass Ukraine, helping avoid a repetition of the gas disputes that have curbed supplies to Europe in the past four years.
EDF, which may get as much as 6 billion cubic metres of gas a year under the agreement struck last year to join South Stream, needs gas to fuel planned power plants in France, Belgium, the Netherlands and the UK that will in part replace coal-fired generators. Medvedev said it is not the division of stakes that matters but corporate governance rules, which will allow the partners to feel “comfortable” in decision-making. “The magic of figures shouldn’t mislead anyone,” he said.
The executive plans to meet with EDF management tomorrow to discuss the transaction. The Gazprom delegation, headed by boss Alexei Miller, is accompanying Russian President Dmitry Medvedev on his visit to Paris this week. The decision on selling shares to EDF will depend on Eni, Gazprom’s Medvedev said, adding that “up to 20% is realistic and corresponds to the interest of EDF.”