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. Last Updated: 07/27/2016

Putin, Prodi Bless South Stream Deal

Itar-TassPutin greeting Prodi in the Kremlin on Thursday. Italy's Eni reiterated that it was ready to swap assets with Gazprom.
Russia and Italy on Thursday moved closer to building a joint natural gas pipeline under the Black Sea, a project that would reinforce Russia's standing as Europe's major energy supplier.

At a ceremony in the Kremlin, President Vladimir Putin and Italian Prime Minister Romano Prodi blessed the setting up of a joint venture to carry out a feasibility study into the South Stream pipeline.

"The South Stream project has a strategic significance to ensure energy security for Europe," said Putin after Gazprom's Alexei Miller and Eni chief executive Paolo Scaroni inked the deal. The $14.8 billion project would send 30 billion cubic meters of Russian gas to Europe annually.

Gazprom and Eni will each hold 50 percent of the joint venture, Gazprom said in a statement Thursday. The joint venture will be formed by Jan. 15 and will plan to start gas deliveries by 2013, the statement said.

South Stream is seen as a challenge to the Nabucco pipeline, a $6.2 billion project that is due to carry Caspian gas via Turkey and the Balkans as Europe seeks to reduce its dependence on Russian energy.

At the Kremlin, Prodi said he was keen to develop "strategic relations" with Russia, saying the deals signed Thursday were bound to take the bilateral ties forward. The other agreement signed in the presence of the leaders was a document of intent to return ownership of a Russian Orthodox Church in the Adriatic port of Bari to Russia.

The South Stream ceremony came as top European officials met in Brussels to discuss the rival Nabucco pipeline project, which includes Austria, Hungary, Bulgaria and Romania so far.

Those countries are "glued to the project ... and see [it] as a priority," Jozias van Aartsen, the EU's coordinator for Nabucco, said after meeting with EU Energy Commissioner Andris Piebalgs. While insisting that the project was not "anti-Russian," Van Aartsen added: "The European Union in the longer term, if you look 10 to 15 years ahead, cannot accept of course a monopoly of supply out of this region."

Moscow sees the South Stream and Nabucco projects as linked, Van Aartsen said, Reuters reported. "[The Russians] have changed their language from saying it's completely nonsense to saying 'well OK, if you move with this, we will move with South Stream,'" he said.

South Stream will run from Novorossiisk under the Black Sea to Bulgaria. From there, two branches are being considered, both ending in Italy.

Putin and Prodi both said Thursday's talks were successful, with Prodi calling the Russian president "dear Vladimir" and adding that his personal friendly ties with Putin were a good basis for the bilateral relations.

On international issues, Putin said he and Prodi were unlikely to reach common ground on Kosovo independence, but said Russia's position on controversial U.S. missile-defense plans "had been heard." Putin also expressed hope that talks would be held soon in Moscow with Polish officials on lifting Russia's ban on meat imports from the country.