German oil and gas company Wintershall AG is set to
join
Russia
's South Stream natural gas pipeline, a person familiar with the matter
said Friday - a move that the partners hope will increase the pipeline's chances
of gaining European Union backing.
Paolo Scaroni, chief executive of the Italian energy giant ENI SpA, said in an
interview that a German company would be joining South Stream in the next few
days, "giving the project solidity not just in terms of who will be the
buyers of the gas, but also in terms of its perception in the EU."
"It
won't fly unless the EU gives its support," he added.
A person familiar with the matter said the company due to sign up was
Wintershall, the oil arm of
Germany
's
BASF.
Wintershall declined to comment.
The $21.5 billion South Stream pipeline would transport up to 63 billion cubic
meters of gas from
Russia
to Central
and
Southern Europe
. The venture is owned 50:50 by ENI and OAO
Gazprom,
Russia
's
natural gas giant. Electricite de France SA is to take a 10% stake in it later
this year.
Wintershall is already a partner in another big Gazprom-led project, Nord Stream
- a pipeline which will bring Russian gas across the
Baltic
Sea
into
Germany
. The
project also involved
Germany
's
E.ON Ruhrgas AG, Gasunie of the
Netherlands
and
GDF Suez SA.
South Stream has suffered from its highly politicized image. The idea of a new
conduit for Russian gas into southern
Europe
is
widely seen in
Europe
as
Moscow
's
riposte to a rival EU-backed project, Nabucco, which would transport gas from
the
Middle East
and the Caspian region and so reduce the
continent's dependence on Russian energy imports.
Russia first broached the idea of South Stream after disputes with its
neighbour Ukraine led to a series of cut-offs of Russian gas into Europe which
badly damaged Gazprom's reputation as a reliable energy supplier. South Stream
would bypass
Ukraine
entirely, instead passing under the
Black Sea
into
Bulgaria
.
The plan faces regulatory problems in the EU. Analysts say it could fall foul
of the bloc's "third energy package," which came into force this
month, and is designed to liberalize European energy markets by guaranteeing
third-party access to pipelines and separating suppliers from owners of
transport infrastructure. Under the new rules,
Russia
may
have to sell off some of its pipeline network.
Mr. Scaroni said South Stream will only work if it is exempted from the
third-party access rule - a prospect that would be bolstered by
Germany
signing up. "We need to have the EU backing the project, and having three
companies from three major countries of the EU as part of the project should be
a positive," he said.