Gazprom and Eni sign agreements to expand cooperation

RELEASE

The Gazprom headquarters hosted today a working meeting between Alexey Miller, Chairman of the Company’s Management Committee and Paolo Scaroni, Chief Executive Officer of Eni.

Paolo Scaroni and Alexey Miller
Paolo Scaroni and Alexey Miller

Paolo Scaroni and Alexey Miller

The parties signed a Supplementary Agreement which extends the Strategic Partnership Agreement until December 31, 2012 with the possibility of tacit renewal.

In addition, an Agreement on sci-tech cooperation, personnel training and development was signed between Gazprom and Eni in order to amplify interaction between the companies in the following areas: improvement of technologies for hydrocarbons extraction and transportation, energy efficiency and environmental protection, gas processing, including LNG technologies.

The dialog within the framework of the personnel development program will be held in the following areas: international projects management, natural gas chain, energy saving technologies in the gas industry, process risks and process safety.

In accordance with the Agreement, Gazprom and Eni will establish a Coordinating Council responsible for preparation and supervision of sci-tech cooperation programs as well as for personnel training and development.

The meeting stressed that the development of partnership, including the intensification of experience sharing and joint training of staff, would facilitate the successful implementation of joint projects between Gazprom and Eni as well as improvement of the companies’ innovation activities efficiency.

During the meeting Aleksey Miller and Paolo Scaroni also discussed gas supplies to Italy and implementation of measures for French EDF entry in the shareholding structure of South Stream AG.

The parties noted the intense efforts to prepare the feasibility study for the onshore section of South Stream. In particular, the feasibility study for the Serbian section of the project was completed in early December and the preliminary feasibility study for the Romanian section of the gas pipeline – in November.

Background

The Strategic Partnership Agreement between Gazprom and Eni was signed in November 2006. Effective through 2010, the Agreement provided Gazprom with the opportunity to directly supply Russian gas to the Italian market starting from 2007. The supplies volume peaked at 3 billion cubic meters per year by 2010.

Under the Agreement, the existing contracts for Russian gas supply to Italy are extended until 2035. The parties also agreed to elaborate investment projects for gas exploration and production in Russia and third countries.

The South Stream project is implemented in order to diversify the routes of natural gas supply to European consumers and involves the construction of a pipeline across the Black Sea to Southern and Central Europe.

The total design capacity of the South Stream offshore section will reach 63 billion cubic meters per year. Commissioning of the first gas pipeline string is planned for late 2015.

At present, a consolidated feasibility study for South Stream is being developed, which includes a feasibility study for the offshore section as well as feasibility studies for the gas pipelines in host countries of Southern and Central Europe.

On June 23, 2007 Gazprom and Eni inked the Memorandum of Understanding on the South Stream project implementation.

On January 18, 2008 a special-purpose entity, South Stream AG, was registered in Switzerland by Gazprom and Eni on a parity basis.

On June 19, 2010 Gazprom, Eni and EDF signed a trilateral Memorandum providing for specific steps towards the French company's entry in the shareholding structure of South Stream AG through a reduction of Eni's stake in the joint venture. EDF will hold at least a 10 per cent stake.

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