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. Last Updated: 07/27/2016

Schröder Defends His Pipeline Role

APFrom left, E.On chairman Burckhard Bergman, former German Chancellor Gerhard Schr?der and Gazprom CEO Alexei Miller shaking hands on Thursday.
As he took the reins of a consortium behind the North European Gas Pipeline on Thursday, former German Chancellor Gerhard Schröder dismissed criticism for accepting a job that will pay him 250,000 euros ($301,000) per year.

Speaking to a room packed with journalists at the Gazprom headquarters in Moscow, Schröder emphasized the importance of the project's securing energy supplies to Europe, saying any German government would have supported the $5 billion plan.

"I cannot understand this criticism," Schröder said, stressing that he was invited to chair the project by Gazprom, which owns a controlling stake of 51 percent. German partners E.On and BASF each have a 24.5 stake in the joint venture.

"This project is of huge importance for securing energy supply to Germany. ... The criticism is wrong," Schröder said.

"This is a project of three independent companies, and is in Germany's interest. Any German government would have supported it," he said. "The decisions were of commercial nature, and I did not have any inside knowledge at any stage."

The news conference was held after the pipeline's shareholder committee held its first meeting Thursday, the official start of his chairmanship.

Schröder said he accepted the post on Dec. 9 last year, around the time the joint venture was created. The initial agreement to build the pipeline -- which is to carry up to 55 billion cubic meters of natural gas annually under the Baltic Sea directly from Vyborg to Greifswald, Germany -- was sealed in September. Schröder left office in November.

When his chairmanship was announced, Schröder's leap from politics to big business provoked a wave of international criticism.

In addition to the appointment of Schröder, who is considered a close friend of President Vladimir Putin, the committee on Thursday also formalized the role of Dresdner Bank's Matthias Warnig as managing director.

Warnig, board chairman of Dresdner Bank's Russian arm, has been friends with the president since Putin's days in the St. Petersburg city administration in the 1990s. According to some reports, the two go back even further, to when Putin was a KGB agent in East Germany.

Dresdner's investment arm, Dresdner Kleinwort Wasserstein, was selected by the Justice Ministry in 2004 to evaluate Yuganskneftegaz, formerly Yukos' key production unit. Although valued by DrKW at $14.7 billion to $17.3 billion after liabilities, Yugansk was sold off in a forced auction in December 2004 for $9.4 billion to state oil giant Rosneft.

Last December, Dresdner bought one-third of Gazprombank for $800 million. It also advised Gazprom last year on its $13 billion purchase of Sibneft.

The first gas is to flow through the yet-to-be-built pipeline in 2010. The throughput capacity is to be boosted from an initial 27.5 bcm to 55 bcm per year by 2012.

No details were provided Thursday on how funding for the mammoth project is to be secured.

The pipeline will give Gazprom direct access to some of Europe's richest consumers.

It could also give Russia additional leverage in negotiations with countries such as Poland, Belarus and Ukraine, which not only purchase Russian gas but also transit it to countries in Western Europe.

Gazprom has already earmarked deals to sell the gas due to be shipped through pipeline, Gazprom's deputy CEO said Thursday, declining to elaborate, Interfax reported.

The North European Gas Pipeline at full capacity is to satisfy up to 10 percent of the EU's gas demand, said Burkhard Bergmann, who is to represent E.On in the project.

E.On and BASF are each to have two representatives on the committee, while the remaining four seats are to be held by Gazprom's nominees, including CEO Alexei Miller and Schröder.

While Schröder is to be paid 250,000 euros per year as chairman, other committee members will receive 200,000 euros per year, committee members told reporters Thursday.