A meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Paolo Scaroni, Chief Executive Officer of Eni took place today as part of the St. Petersburg International Economic Forum 2013.

The parties addressed joint projects in the energy sector, paying special attention to the South Stream gas pipeline construction. It was agreed that the offshore section of the South Stream gas pipeline would be constructed starting from the second quarter of 2014.

Consideration was also given to Russian gas supplies to Italy, with an emphasis placed on a significant increase in Gazprom's exports starting from 2013. At the end of the meeting the parties agreed to adjust the gas price in 2013.

Background

Italyis the second largest importer of Russian gas in the European Union behind Germany. Gazprom and Eni have a long-lasting business relationship.

In 2012 Gazprom supplied Italy with 15.1 billion cubic meters of gas.

In November 2006 Gazprom and Eni entered into the Strategic Partnership Agreement. Under the Agreement, the existing contracts for Russian gas supplies to Italy were extended until 2035 and Gazprom began to directly supply the Italian market with natural gas in the amount of up to 3 billion cubic meters a year and was entitled to acquire stakes in Eni's international assets.

For the purpose of diversifying natural gas export routes Gazprom constructs a gas pipeline across the Black Sea to Southern and Central Europe – the South Stream project.

The offshore section of the South Stream gas pipeline will run under the Black Sea from the Russkaya compressor station on the Russian coast to the Bulgarian coast. The total length of the Black Sea section will exceed 900 kilometers, its maximum depth will be more than two kilometers, annual capacity – 63 billion cubic meters.

On September 16, 2011 the Shareholders Agreement of South Stream Transport was signed for the construction of the offshore gas pipeline section. According to the document Gazprom holds a 50 per cent stake in the project, Italian Eni – a 20 per cent stake, German Wintershall Holding and French EDF – 15 per cent stakes each.

The Consolidated Feasibility Study for South Stream was finalized in the third quarter of 2011 and included a feasibility study for the offshore section and feasibility studies for the respective gas pipelines in the host countries of Southern and Central Europe.

On November 14, 2012 the South Stream Transport Board of Directors adopted the final investment decision for the offshore section of the South Stream project.

On December 7, 2012 the South Stream gas pipeline construction started near Anapa in the Krasnodar Territory.

The first string of the offshore gas pipeline is to be commissioned in late 2015.