Germany's BASF agrees to enter Russia-led South Stream

21st March 2011, Comments 0 comments

Germany's chemical giant BASF agreed Monday to enter the Russian-led South Stream gas project, in a ceremony overseen by Russian Prime Minister Vladimir Putin who seeks foreign support for his pet project.

"I am very pleased that you find it suitable to enter South Stream," Putin said moments before chief executives of Russia's Gazprom and Germany's BASF signed a preliminary agreement paving the way for Wintershall, the BASF hydrocarbon subsidiary, to enter the Russian-led project.

Putin added that he was "especially pleased" that German Chancellor Angela Merkel supported the German firm's decision to become part of the project in which it would receive 15 percent.

BASF chief executive Juergen Hambrecht, who signed the preliminary agreement with Gazprom chief executive Alexei Miller, pledged the companies would work quickly to hammer out a firm deal.

"I am very glad to have the opportunity to sign the documents on this project, this is only the start, this is only a memorandum of understanding," he said.

"Now we have to work hard and fast to sign a corresponding detailed agreement, but we always work hard."

In a separate statement, Gazprom said Wintershall would acquire a 15 percent stake in the gas pipeline, with the Russian gas giant retaining 50 percent.

The company did not provide further financial details of the deal but Putin's powerful deputy in charge of energy, Igor Sechin, said Wintershall could invest two billion euros ($2.8 billion) in the project.

The deal boosts the credibility of South Stream which already involves Italian energy company ENI and French group EDF and shores up Russia's status as a key supplier of gas.

"This means that the South Stream has been decided and Gazprom will remain a supplier of gas to Europe for many decades to come," Miller told reporters after the signing.

The South Stream project, designed to compete with the EU's Nabucco pipeline that would reduce European dependency on Russian energy interests, would run 3,600 kilometers (2,250 miles) under the Black Sea and through the Balkans by 2015.

Gazprom and Wintershall already work together on gas projects in Russia and on the North Stream gas pipeline.

© 2011 AFP

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