Germany's Wintershall, a unit of BASF, said on Monday it will join Russia's South Stream gas pipeline project, which will transport Russian gas under the Black Sea to Europe.

BASF Chief Executive Juergen Hambrecht told Russian Prime Minister Vladimir Putin he would sign on Monday a memorandum to join South Stream, led by Russian natural gas export monopoly Gazprom, then sign a detailed agreement at a later date.

Wintershall will invest approximately €2 billion in return for a 15% stake, Russia's Deputy Prime Minister Igor Sechin said.

Putin welcomed the decision. "I am very pleased you concluded that it is worthwhile to participate in South Stream," Putin told Hambrecht speaking at his suburban Moscow residence.

Russia, whose European pipeline gas market has been eroded by seaborne supplies of liquefied natural gas from Qatar, did a brief about-face on South Stream, saying it could build an LNG terminal on the Black Sea instead of the undersea section of the pipeline.
The reversal followed Japan's nuclear crisis, which is expected to create more demand for LNG to fill the energy gap left by quake-hit nuclear plants.

But Putin then suggested Russia could supply extra gas to traditional clients in Europe so Qatari gas could be rerouted to Japan.
His blessing of a new partner in South Stream suggested that the pipeline plan was still strongly in favor.

Italy's ENI and France's EDF also hold stakes in the pipeline that will transport up to 63 billion m³ of gas to central and southern Europe. The cost is estimated at around $21.5 billion.

Wintershall has long been rumored to become South Stream's fourth stakeholder. ENI said last year the Germany company was considering joining.

South Stream is looking to gain more favor in the EU, which already supports the rival $10.8 billion Nabucco project that will sidestep Russia and Ukraine by piping gas directly from Central Asia to Europe under the Black Sea.