The decision of BASF to join South Stream is proper, strategic and so European

The South Stream project depends on numerous factors that include intergovernmental agreements to be made with gas consuming and transiting countries. This process is nearly complete. In addition, a consortium of companies participating in the offshore gas pipeline construction is to be finalized. Furthermore, it is necessary to obtain a Turkish permit for the gas pipeline construction.

Once BASF acquires a 15 per cent stake in South Stream, the project consortium will become more trustworthy and, most importantly, appropriate for the European regulators and the European community on the whole.

The project has a better chance to obtain the Trans-European Network (TEN) status and to stay away from the Third Energy Package.

However, one should understand that the Memorandum of Understanding is just a beginning. A crucial contribution to the project will be made in case the Turkish permit is obtained rather than in case the consortium is finally shaped for the offshore pipeline section. If the submerged gas pipeline permit is hampered, alternative options will be considered, including an LNG plant construction.

The appearance of new participants in the consortium will certainly facilitate the fundraising for the gas pipeline construction. These factors contribute to successful implementation of the South Stream project.

As we know, BASF already partners Gazprom on the Nord Stream gas pipeline construction and the companies cooperate perfectly well within this project.

BASF has tight links to Russia in its business and it is the large corporate group in Germany that acts as Gazprom's strategic partner building an energy alliance between Russia and Germany or, let's better say, Russia and Europe.

While the final route of South Stream is currently being discussed, it is clear anyway that the gas pipeline will run across the Balkan states allowing BASF to enter the market of Southern Europe, particularly the Italian one.

The decision of BASF to join South Stream is proper, strategic and so European. Due to the Arab world unrest, BASF may suffer heavy losses in Libya. Moreover, the aftermath of the Japanese disaster could make many countries give the nuclear industry up. These facts evidence once again that Russia is the major source of reliable energy supplies to Europe.

Any internationalization of a project like South Stream certainly makes it more reliable. Also worth noting is that South Stream outruns the Nabucco project so far, while it is still uncertain whether Turkmenistan will join Nabucco. Moreover, some companies that were eventually ready to participate in Nabucco are tied to the German nuclear market. These companies may incur certain losses due to the recent events thus impeding the project fundraising.

Being a major market player, BASF is welcome as the South Stream project participant. Along with the planned entry of French EDF, this fact will raise South Stream's status as an international project, enhance the economics and ensure additional gas consumption.

I believe it is absolutely fair that Gazprom retains a 50 per cent stake in the project.

In fact, natural gas will play a globally increasing role in the future. Europe has recently shown a rather critical attitude to gas especially after January 2009. The European Union pays more attention to energy alternatives, underestimating the role of gas even though energy alternatives are much more expensive than gas. These statements are largely a matter of politics and, therefore, participation of Wintershall in South Stream proves that natural gas will become ever more important for the global energy sector.