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EDF Could Take 20 Pct of South Stream Section

Source: Reuters 12/11/2009, Location: Asia

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EDF could take up to 20 percent in the underwater section of the South Stream gas pipeline bringing Russian gas to Europe and there could be other partners, one of the project leaders said.

"I believe that EDF can take a stake of 10-20 percent in the underwater part," Eni Chief Executive Paolo Scaroni told reporters when asked about a decision on EDF's stake in the South Stream project.

Italy's Eni and Russian gas giant Gazprom are equal partners in the project and said this month they would grant EDF a stake.

Details of EDF's entry in the project were expected to emerge from a meeting of top executives of Gazprom and Eni in Venice, but both Scaroni and Gazprom Deputy Chief Executive Alexander Medvedev said there was no agreement yet on which partner should reduce its stake to accommodate EDF.

A final decision on conditions for EDF entering South Stream is expected in the first quarter of 2010, Medvedev said. Scaroni and Medvedev spoke to reporters at an event to mark 40 years of cooperation between Eni and Gazprom. Scaroni added that there could be other partners in the whole project, which he expects to have total investments of over 20 billion euros ($29.45 billion).

"I am not ruling out (other partners) straight away, but noone comes to mind. There is noone in the pipeline at the moment," Scaroni said.

But Medvedev said he doubted the South Stream needed many partners and did not expect other partners in the underwater section of the pipeline project. He also declined to give estimates of total investments in the project before the feasibility study was completed.

"I think it's a forecast which needs to be verified," Medvedev said of the 20 billion euro estimate given by Scaroni.

Take or Pay
Medvedev said that if Bulgaria, whose new government has been reviewing its participation in major Russian-backed energy projects agreed by its predecessors, decided to rethink its part in providing transit for the pipeline, Russia had other options.

"We have other options if things do not work out with Bulgaria. Romania is interested in taking part," he said. Turning to a thorny issue of a "take or pay" clause in long-term gas supply contracts under which customers must buy a minimum amount of gas or pay penalties, Medvedev said neither Gazprom nor its clients planned to change this condition.

"If someone consumes less, they do not pay fines, they make an advanced payment for gas which will be consumed in the future. It is a classical condition of such contracts. Noone of our partners has raised a question of cancelling this condition," he said.

A senor Gazprom official said in November its European customers hit by economic crisis would buy 8-9 billion cubic metres less gas than foreseen by "take or pay" contracts in 2009.

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