Translated material
Too many deals
Alexander Medvedev spoke about Gazprom's export successes
“Having returned from distant travels, it is especially pleasant to meet with the press, especially since, like a year ago, there is something good to talk about,” said Gazprom Deputy Chairman Alexander Medvedev yesterday, opening a press conferenceon the results of the concern’s export activities . He said that the concern firmly holds first place in the world in natural gas exports. And it continues to break records for foreign exchange earnings - $37.2 billion in 2006 versus $26.1 billion in 2005. The reason for this is high prices in Europe, higher prices in the CIS and an increase in supply volumes. Gazprom Export sold 151 billion cubic meters of Russian gas and about 9 billion of Central Asian gas. Giving a forecast for the current year, Mr. Medvedev categorically stated: “There will be a new record.” But he did not announce specific figures: although prices remain at the level of 250-270 dollars per thousand cubic meters, this winter the concern had a significant shortage of gas under European contracts, which may affect the final sales volume.“Our clients sought to develop cooperation with Gazprom Export,” said a top manager of Gazprom. All this resulted in the extension of long-term contracts for the supply of Russian gas with all major buyers in Western Europe until at least 2030. Mr. Medvedev noted with regret that “European politicians continue to attack long-term contracts with varying degrees of intensity.” And he called Brussels’ intention to ban mining companies from transporting and selling gas “extremist measures” and expropriation of property. “When we ask them to paint an image of how they see a new system of gas transportation and guarantees of its delivery to consumers, the result is either an ugly embryo or something similar to the Enron company,” he said angrily. But at the same time he expressed hope that within the framework of dialogue with the EU it will be possible to resolve these problems.
However, when asked by Vremya Novostey whether the topic of changing the gas pricing system embedded in existing long-term contracts is relevant for Gazprom (the price is determined by a formula tied to a basket of petroleum products typical for these markets, from 6--9- monthly lag), the deputy chairman of the board of the concern answered evasively: “I understand the background of the question, this is what was discussed in Qatar (at the forum of gas exporting countries. - Ed. ). We agreed to study pricing mechanisms. But studying does not mean that we are unhappy with the current system. After all, it allows you to avoid sharp fluctuations in gas prices, as happens on spot sites.”
As expected, Gazprom’s entry into the Kovykta project (last Friday the concern agreed with TNK-BP to buy out its 62% stake in RUSIA Petroleum, the project operator) radically changed the monopoly’s vision of the future field. Until now, Gazprom has insisted that there is no point in producing gas at Kovykta until 2017, and recorded this fact in the draft program for creating a unified gas supply system in Eastern Siberia and the Far East. Now, according to Mr. Medvedev, the start of development may be postponed to an earlier date, taking into account the prospects for gas sales to China, South Korea and domestic demand. In addition, the government commission on the fuel and energy complex on June 15 did not approve the program at all, but only approved it in general. “I was just flying (from Italy, where over the weekend Gazprom and Eni signed a memorandum on the implementation of the South Stream gas transport project. - Ed. ) together with the Minister of Industry and Energy Viktor Khristenko and had the opportunity to clearly clarify this point,” - - he said. However, so far there are no new guidelines for the commissioning of the field.
The deputy chairman of the board of Gazprom also said that negotiations had resumed with E.ON Ruhrgas about joining the Yuzhno-Russkoye field development project. A year ago, the companies signed a framework agreement on the exchange of assets in gas production, trading, marketing of natural gas, and electricity. The German concern was to receive 25% minus one share in Severneftegaz (implementing a field development project), and Gazprom was to receive 50% minus one share each in the Hungarian gas enterprises E.ON Foldgaz Storage and E.ON Foldgaz Trade and 25 % plus one share in the regional electricity and gas company E.ON Hungaria. Mr. Medvedev noted that Gazprom is much more interested in the strategic value of assets, rather than the cash equivalent. “There is a question about whether these assets (offered by the German concern - Ed. ) correspond to our strategic goals, because there is a lot of uncertainty around them,” he said. According to him, European regulators are asking many questions that cannot be ignored. There is no clarity with the system of state subsidies for certain categories of Hungarian consumers, and there are also no guarantees that there will be no anti-monopoly actions (restrictions on market shares, etc.).
Mr Medvedev himself looked satisfied but tired. He confused Sakhalin Energy (the operator of the Sakhalin-2 project), in which Gazprom recently became the controlling shareholder, with RUSIA Petroleum, 62% of the shares of which will become the property of the gas concern within 90 days. He complained about the huge number of large transactions and the limited human capabilities (obviously, his own), which have not yet allowed the completion of negotiations on the exchange of assets with E.ON Ruhrgas. Since the number of acquisitions and new investment projects of Gazprom around the world promises to grow, the burden on the foreign economic bloc will not decrease either. The only question is how successfully the concern's management will cope with structuring the acquired assets without compromising the business efficiency of the entire group.
The European Commission does not consider the South Stream gas pipeline under the Black Sea, the agreement on which was concluded by Gazprom and the Italian Eni, to be a competitor to the Nabucco project. “Nabucco is one of the EU’s priority projects, which involves laying a gas pipeline from the Caspian Sea through the Transcaucasus, bypassing Russia. The EU’s demand for natural gas is growing rapidly, and the European Commission considers it positive to build any new infrastructure that would help meet this demand,” the representative said European Commission Michele Cercone. He recalled that Brussels, in any case, has a positive attitude towards the diversification of sources and routes for supplying the EU with energy resources, be it “the emergence of new opportunities to obtain energy from other geographical areas or through new routes from traditional suppliers.” INTERFAX