Oil Report

UPDATE 1-France's EDF to get South Stream stake from ENI

* Russian, French presidents sign memorandum on South Stream

* EDF to join by year end

* Will get a stake of at least 10 pct from ENI

(Adds background)

ST PETERSBURG, Russia, June 19 (Reuters) - France's EDF EDF.PA will join the South Stream gas pipeline by year end by taking a stake of at least 10 percent from ENI ENI.MI, the three companies said in a joint press release on Saturday.

South Stream aims to carry gas from Russia under the Black Sea to the Balkans and into Europe in a bid to reduce dependence on transit through ex-Soviet neighbours Ukraine and Belarus, where price disputes have threatened or disrupted supplies.

The 20 billion euro plus project is currently controlled by Russia’s state-run gas export monopoly and ENI, an Italian energy group.

Russian President Dmitry Medvedev and France’s Nicolas Sarkozy on Saturday signed the memorandum for EDF membership.

“The memorandum provides for EDF to enter before the end of 2010 as a result of a reduction of ENI’s stake in the joint company,” a statement from the three companies, emailed by Gazprom, said.

“The share of EDF will be no less than 10 percent.”

EDF was expected to get 10-20 percent, with some speculation that Gazprom and ENI may both give up part of their stakes.

Construction of the South Stream pipeline, which will transport up to 63 billion cubic metres (bcm) of gas a year, will start in the first half of 2012.

European Union politicians see it as a rival to the Brussels-backed Nabucco pipeline, which will bring Caspian and Central Asian gas to Europe, bypassing Russia.

“South Stream is our absolute priority,” Gazprom chief executive Alexei Miller told a briefing after the signing.

“Its implementation will mean that Russian will remain the most important partner of the EU in (the) gas industry for decades to come.”

The signing comes as Russia threatens to slash gas supplies to Belarus, which Gazprom says owes it for past deliveries.

Reporting by Vladimir Soldatkin; Writing by Toni Vorobyova; editing by Patrick Graham