Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

St. Petersburg Abandons Gazprom Tower Project

St. Petersburg — Plans to build a business tower in the historic heart of Russia's second city of St Petersburg have been dealt a blow by city authorities who have opted to sell their share in the project.

Opponents say the tower would ruin the unique skyline of the city, often dubbed Russia's Venice. State media and some officials have begun to express doubts after years of support.

Prime Minister Vladimir Putin has been vague on the $3-billion project, saying it is up to the city to decide whether to go ahead with it. Putin and President Dmitry Medvedev were born and grew up in the city, then called Leningrad.

The city has now made its choice and sold its 22.7 percent in the project for almost 3 billion rubles ($100 million) to Gazprom's oil arm, Gazprom Neft, said a municipal official close to the deal.

"Due to the financial crisis, there is a need to channel the money to more important infrastructure projects. The cash will replenish the 2010 city budget," Eduard Batanov, a St. Petersburg official in charge of city financing, told Reuters on Friday.

Gazprom Neft, which plans to build the 403-metre tower by 2016 to house Gazprom offices, confirmed on Friday it had used its preemptive right to acquire the stake and paid 2.95 billion rubles for it.

The company said it would go ahead with the plan to build the tower regardless of the city's participation in the project.

The U.N. cultural organization UNESCO has warned Russia that it could exclude St. Petersburg from its list of world heritage sites if the tower is built, as it would dominate the canals and baroque houses of the city founded by Tsar Peter the Great in 1703 as Russia's window on Europe.

Dubai's Arabtec Holding won the contract to build the first stage of the tower in April 2008, and planned to start construction in March.

At 16.10 Moscow time, Gazprom Neft shares fell by around 1.7 percent on the MICEX exchange, underperforming a 1.2 percent rise on the wider market.