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France's EDF to Own 20% Stake in South Stream

Berlusconi and Putin shaking each other?€™s hand after a press conference Monday at Villa Gernetto, near Milan. Luca Bruno

France's largest power company, EDF, will take 20 percent in the Russian-Italian project to build a gas pipeline under the Black Sea to supply Europe, Prime Minister Vladimir Putin said Monday.

Gazprom, which owns 50 percent of the company created to lay the South Stream pipeline, initially said EDF could count on a stake of 10 percent before raising the limit to 20 percent. Italy's Eni owns the other half of the pipeline venture.

Putin, speaking after talks with his Italian counterpart, Silvio Berlusconi, said the three companies would sign the partnership deal during the St. Petersburg International Economic Forum on June 17 to 19. He did not disclose how Gazprom's and Eni's stakes would change. Calls and e-mails to spokespeople for the companies went unanswered Monday evening.

Russia will not delay or abandon the plan to construct the undersea route for its gas deliveries to Europe despite the recent warming of the ties with key overland transit country, Ukraine, Putin said. The gas trade agreements that Moscow and Kiev signed last week, which include permission for Russia to extend the lease of a Ukrainian naval base, may not last long because of attacks from the Ukrainian political opposition, he said.

“Some opposition members have already stated they will destroy these agreements instantly if they come to power,” he said at Berlusconi's new villa, Villa Gernetto.

Gazprom has said the South Stream will come online at the end of 2015, near the end of term for Ukrainian President Viktor Yanukovych, who has markedly improved ties with Russia after his election in February.

In an apparent attempt to highlight Russia's determination to develop alternative gas transit lines, Putin said the capacity of the Nord Stream pipeline — which is being constructed under the Baltic Sea — might be expanded beyond the now-planned 55 billion cubic meters of gas if European demand picks up. An existing pipeline on the bottom of the Black Sea to Turkey can also transport more gas, if upgraded, to supply other countries in the region, he said.

In another energy-related matter, Putin and Berlusconi presided over the signing of a letter of intent between power companies Inter RAO and Italy's Enel that gives the Italian company a chance to study the plan of building two nuclear power reactors in the Baltic Sea enclave around Kaliningrad. Enel will have until July 2011 to decide whether to be part of the project and propose its terms for the deal.

The plan calls for the reactors, with a capacity of 1.17 gigawatts each, to start operating between 2016 and 2018. Italy's Pirelli may make acquisitions in Russia, Berlusconi said.

During a news conference after the talks, Putin made fun of a question from Italian television reporter Ida Colucci who asked him to share his skills of maintaining a “happy marriage” in politics because he was a master of this, apparently referring to Putin's ruling tandem with President Dmitry Medvedev.

“Mr. Medvedev and I are people of the traditional sexual orientation. I am completely confident in telling you this,” Putin said. “Which means that you are taking it too far with matrimonial unions.”

He did say he was a friend of Medvedev's and was proud of how they had built their cooperation for the good of the country.

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