The agreement splits the equity in the 10 billion euro ($13.5 billion) offshore section between Gazprom, the Russian gas export monopoly and holder of the world’s largest gas reserves, and a group of European companies.
Gazprom will own 50 percent, while 20 percent will go to Italy’s Eni and 15 percent each to France’s EDF and Germany’s Wintershall in the 940-km pipeline.
The agreement appears to put to rest earlier speculation that E.ON could become a partner.
In a statement, the consortium said it also had agreed “immediate steps” toward a final investment decision.
ENI Chief Executive Paolo Scaroni said at the signing on the sidelines of an economic conference in the Black Sea resort of Sochi that the cost estimate was 10 billion euros but subject to change. Earlier estimates put the cost at $15 billion. “It will be reviewed higher or lower when we know the cost of the steel, which is a big part of investment. When I say 10 billion I consider steel in the region of 3-4 billion,” he said.
He said the partners would mandate an investment bank to prepare a presentation on financing proposals and aim to be ready for a final investment decision by the end of 2012.
South Stream would secure effective Russian control over gas supplies from Central Asia to Europe and provide a new outlet for its own gas. It would also circumnavigate transit countries such as Ukraine.
In a statement issued in Germany Wintershall CEO Rainer Seele said: “In the global race against Asian countries for raw materials, South Stream — like Nord Stream — will ensure access to energy resources which are vital to our economy.”
Wintershall is jointly producing gas with Gazprom in Siberia and by owning a stake in transport infrastructure aimed to contribute more to Europe’s energy supply security, it said.
Rival Nabucco is designed to remove Russian influence from the equation, but resources and financing for both may be hard to come by.
The EU drew a direct warning from Moscow this week to halt new talks on a proposed Caspian Sea pipeline to run between Turkmenistan and Azerbaijan, which would come as a boost to Nabucco.
