OREANDA-NEWS. On June 23, 2007, in the presence of Viktor Khristenko, Minister for Industry and Energy of the Russian Federation and Pier Luigi Bersani, Minister for Economic Development of Italy, Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee and Paolo Scaroni, Chief Executive Officer of ENI signed a Memorandum of Understanding for the South Stream project execution. The Memorandum was signed in the frames of the bilateral Agreement on strategic cooperation as of November 14, 2006, reported the press-centre of  Gazprom.

The Memorandum sets the cooperation directions for both companies in the engineering, financing, construction and management sectors for the South Stream project.

Pursuant to the document, the South Stream marine section will lay across the Black Sea from the Russian coast (the Beregovaya compressor station) to the Bulgarian coast. The parties consider two different construction routes for the onshore section crossing the territory of the European Union member countries. Within the project execution Gazprom and ENI will utilize modern technologies in compliance with the strict environmental requirements.

“The South Stream project is aimed at strengthening the European energy security. The document signed today is a confirmation of the strategic partnership between Italy and the Russian Federation, which will be used to benefit the EU-Russia relationship,” said Pier Luigi Bersani, Minister for Economic Development of Italy.

“A challenge for the governments of both countries participating and potentially interested in the South Stream project is to create an efficient system for agreements supporting the initiative of the Russian and Italian companies. This is exactly the situation when the goal of the industrial project corresponds with the goals of the governments and population of a number of European countries,” stated Viktor Khristenko, Russian Federation Minister for Industry and Energy.

“The South Stream project is a third pillar for the Agreement on strategic cooperation signed by ENI and Gazprom in 2006. This new accord achieved for gas transmission will enable ENI to use at best recently purchased Artic Gas and Urengoil assets. The South Stream, whose execution foresees adherence of all the necessary requirements starting from environmental standards, represents a crucial step towards strengthening the European energy supply security,” said Paolo Scaroni, CEO of ENI.

“The Memorandum signed today – is a bright event channeled to further development of long-term, mutually beneficial and strategic partnership between Gazprom and ENI. It is another real step towards execution of the Gazprom strategy on route diversification of Russian natural gas supplies to European countries and a significant contribution to provision of the energy security in Europe,” said Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee.

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The natural gas market of Italy is the third-largest in Europe after the Great Britain and Germany. The share of gas in the Italian primary energy mix exceeds 30 per cent. Last year Italy imported approximately 86 per cent of its natural gas requirements, with the bulk coming from Algeria and Russia.

Italy is the second-largest importer of Russian gas in Europe. The Gazprom Group supplies gas to Italy under five long-term contracts. In 2005 deliveries were at 22 bcm.

Gazprom and ENI participate in the Blue Stream draft program implementation (gas main development for direct Russian gas deliveries to Turkey through the offshore section of the Black Sea). Gazprom together with ENI created a joint venture Blue Stream Pipeline Company to provide financing, pipeline construction and its operating. Blue Stream was launched in February 2003. In 2005 Turkey received 5 bcm of gas via the Blue Stream Pipeline, and in 2006 Turkey will receive nearly 7 bcm of gas.

In November 2006 Gazprom and ENI signed the Agreement on strategic cooperation stipulating an opportunity for Gazprom to provide direct Russian gas deliveries to the Italian market in 2007. By 2010 annual gas volume supplied will reach 3 bcm. The Agreement foresees prolongation of existing contracts for gas supply up to 2035.

The South Stream is a gas pipeline system, which will join Russia and Europe across the Black Sea. The total length of the Black Sea gas pipeline section is around 900 km, the total depth is more than 2000 m.