The Gazprom headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Paolo Scaroni, Chief Executive Officer of Eni.

Following the negotiations between Vladimir Putin, Prime Minister of the Russian Federation and Silvio Berlusconi, Prime Minister of the Republic of Italy, the parties addressed the crucial issues of the bilateral cooperation between Gazprom and Eni.

Paolo Scaroni emphasized that “our companies, as strategic partners, have gained a vast experience in successful cooperation and joint projects delivery. Construction and operation of the South Stream gas pipeline will become a new stage of the partnership relations development. The pipeline is of great importance for securing the reliability of gas supplies to Europe”.

Particular attention was paid to the feasibility study (FS) elaboration for the offshore section of the South Stream, which would be ready any day now. Based on the FS, the final investment decision (FID) on the offshore section will be taken by the partners.

The parties also deliberated on the key principles of EDF’s entry into the South Stream AG shareholding structure. For instance, the parties have agreed that EDF should join the project through acquisition of an up to 20 per cent stake in the joint venture. In the near future, the parties will start tripartite negotiations with EDF in order to get the agreements governing the French company’s entry ready for signing at the 2010 Saint Petersburg International Economic Forum.

Background:

Italy is the third largest Russian gas importer in Europe. According to the provisional estimates, in 2009 Gazprom supplied Italy with 19  billion cubic meters of natural gas.

In November 2006 Gazprom and Eni entered into the Strategic Partnership Agreement providing Gazprom with the opportunity to directly supply Russian gas to the Italian market starting from 2007. Gas supply volumes will be gradually increased to 3 billion cubic meters per annum by 2010. Under the Agreement the existing contracts for Russian gas supplies to Italy have been extended till 2035.

On June 23, 2007 Gazprom and Eni signed the Memorandum of Understanding for the South Stream project execution. The Memorandum sets the directions of cooperation between the two companies in the South Stream engineering, financing, construction and management sectors.

On January 18, 2008 the special-purpose company South Stream AG was registered in Switzerland. The founders of the company, on a parity basis, are Gazprom and Eni.

On May 15, 2009 Gazprom and Eni signed the second Addendum to the Memorandum of Understanding on the South Stream project implementation. The Addendum stipulates an increase in  the annual throughput capacity of the pipeline’s offshore section to 63 billion cubic meters of gas and regulates the gas marketing issues within the project.

On December 3, 2009 Gazprom and Eni signed the Memorandum of Understanding on the South Stream project. The Memorandum states that Gazprom and Eni support EDF’s entry into the South Stream project.