BASF, Gazprom in Pipeline Project

Wednesday, March 23, 2011 @ 05:03 PM gHale

Wintershall, the energy subsidiary of BASF, will pay $2.8 billion (€2 billion) to join Russia in building the South Stream natural gas pipeline.

BASF will take a 15 percent stake in the offshore section of the 584-mile pipeline.

The offshore portion of the project, which includes laying pipes across the floor of the Black Sea, will cost $14.1 billion (€10 billion), while the total cost of South Stream will be $28.2 billion to $35.3 billion (€20 billion to €25 billion), said Michael Grabicki, a BASF spokesman.

Russia’s state-owned energy company, Gazprom, will build and manage the pipeline. Once completed, it will provide southeast Europe with 63 billion cubic meters of natural gas a year, Gazprom said in a statement.

Russia already provides 41 percent of Europe’s gas imports.

Wintershall also has a stake in the Gazprom-led consortium that is building the Nord Stream pipeline that will run under the Baltic Sea. Nord Stream will allow Russia to reduce its dependence on Ukraine as a principal transit route for sending its gas to West European markets.

BASF said joining the South Stream consortium, which also includes the Italian energy company Eni, would give it access to markets in southeastern Europe. “The potential is there. This is part of our long-term strategy in this part of Europe,” Grabicki said.

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