Gazprom and its partners in South Stream have made a final decision to invest in the 16 billion euro underwater gas pipeline, supporting Russia's dominance of the European market and gaining a jump on rival projects. The decision late on Wednesday showed Gazprom's determination to hang onto its core European market despite falling demand and pressure from the European Union, which is conducting an antitrust investigation of the Russian gas export monopoly and supports rival projects to carry gas from Central Asia.
Furthermore, the estimated 16 billion euro cost for South Stream is seen as high, and its status is unclear under the European Union's Third Energy Package, which bars suppliers from owning transportation capacity. Gazprom, which is expected to fund half of the total capital expenditures according to its share in the project, did not disclose the financial outlays, which according to some analysts may exceed 25 billion euros once the onshore sections are built.
Gazprom and its partners including France's EDF, Germany's Wintershall and Italy's Eni ruled in the final investment decision that the pipeline would terminate in Italy at Tarvisio, the entry point to its pipeline network. The map on the project website, showing Tarvisio, is based on the final investment decision, a Gazprom spokesman said.
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