Russian gas monopoly Gazprom said on December 29 that it has bought
out the shares of South Stream Transport BV, a company that was in
charge of the construction of the offshore section of the cancelled
natural gas pipeline.
Italy’s ENI, Germany’s Wintershall, and France’s EDF have decided to
withdraw from theSouth Stream project. They have sold their shares to
Gazprom, which already owned 50% of South Stream Transport BV.
“Due to the fact that it’s difficult to predict receiving permission
for South Stream, and calculate the economic consequences of delaying
its construction for an indefinite period, the participants decided to
close the project,”a Wintershall’s spokesperson said.
South Stream Transport B.V. was established to construct the offshore
part of the South Stream gas pipeline from Anapa in Russia to Varna in
Bulgaria.
On December 1, Russian President Vladimir Putin pulled the plug on
South Stream, choosing to redirect its offshore gas pipe to Turkey,
renaming it Turkish Stream and setting up a gas hub on the border of
Turkey and Greece.
Chris Weafer, a senior partner at Macro-Advisory in Moscow, told New
Europe that the decision to drop South Stream is positive for the
shareholders in Gazprom.
“The cost estimates had been climbing steadily since the project was
first announced and were more recently estimated at $40 billion and
climbing. That was a bad use of Gazprom resources and a poor investment
for the company’s minority investors. There was no need for the pipe
when all that was required — as far as investors were concerned — was a
better deal with Ukraine to continue using the transit pipe and avoid
further payment disputes,” Weafer said.
The company is better off using that cash to either reduce existing
debt or divert it to projects, such as liquefied natural gas (LNG),
which would create better longer term diversification in its business
mix and customer base. Increasing the dividend payout would be even
better.
http://www.neurope.eu/article/gazprom-becomes-100-owner-scrapped-south-stream