Translated material
Your own cartel
Gazprom is trying to buy gas for Europe
Gazprom management energetically set about achieving the goal of “expanding the geography of purchases” of gas for the purpose of resale on world markets. The head of the concern , Alexey Miller, told Prime Minister Vladimir Putin about this the other day . Yesterday it became known that Mr. Miller went to Libya , where he made an offer to the head of that country, Muammar Gaddafi, to purchase all volumes of gas (natural and liquefied) and oil intended for export “at competitive prices.” As stated in a Gazprom press release, “issues of coordination of marketing policies” were discussed, and “the Libyan side assessed Gazprom’s proposals for the acquisition” of hydrocarbons. In addition, Messrs. Gaddafi and Miller agreed to begin substantive negotiations on the acquisition of the “currently free volumes of hydrocarbons” available to Tripoli . And the Russian concern, in turn, received (and accepted) an offer from its hospitable hosts to “discuss the possibility of building new gas transportation facilities from Libya to Europe.”Apparently, the concern is not going to stop there. And proposals to purchase gas for the purpose of further resale will be made to other producers of this type of fuel. Thus, Gazprom, which has always publicly doubted the possibility and feasibility of creating a gas cartel, shows that it is trying to take control of as many export flows to the EU as possible. That is, to extend its “single export channel,” which now de facto operates for gas producers in Central Asia, not only to Azerbaijan (corresponding proposals were made to it in June), but also to non-CIS countries.
For Europe, the implementation of such a scenario looks much more unpleasant than the ephemeral Iranian idea of a “gas OPEC.” Moreover, Gazprom may well act as an intermediary in the supply of Iranian gas to the EU (plans for joint marketing of gas with Tehran were once voiced at meetings between Vladimir Putin and Mahmoud Ahmadinejad). Large European companies cannot yet invest in projects to transport Iranian gas due to the categorical rejection of such investments by the United States.
Of course, with a high degree of probability, nothing will come of this venture, experts believe - gas producers, naturally, are unlikely to agree to sever ties with sales markets. The goal of these demonstrative negotiations with Libya and Iran is to make Europeans more accommodating in matters of bilateral cooperation and reduce pressure on Russian export projects (Nord Stream and South Stream). The Libyans and other owners of gas resources are also not averse to making Europe nervous once again in order to strengthen their negotiating positions in the future.
After the Gazprom head's trip to Tripoli, the Italians should be most worried. National oil and gas giant Eni is the largest foreign operator in Libya and last fall extended its contracts for a further 35 years. The company, together with the Libyan National Oil Company, is developing a significant number of oil and gas fields. Eni is the operator of production in Libya of about 550 thousand barrels of oil per day (the Italian company's share of production is 250 thousand barrels per day), or about a third of all Libyan production, as well as about 8 billion cubic meters of gas per year, which is supplied under a long-term contract to Italy via the Green Stream underwater corridor. In addition, Eni agreed with NOC to increase the gas pipeline's capacity by 3 billion cubic meters per year and to build a new liquefied natural gas plant with a capacity of 5 billion cubic meters per year, which will double Libya's export capabilities.
It is difficult to say what volumes Gazprom can claim (for now, the statements contain more politics than specifics). However, it is very likely that the already difficult negotiations between Gazprom and Eni on the entry of the Russian concern into the Libyan projects of the Italians will proceed even more slowly. As is known, Eni has an obligation to sell to Gazprom shares in promising projects, equivalent in cost and strategic value to a 30 percent stake in Arcticgas and Urengoil, which the Italian concern bought at the auction for the sale of Yukos property. For about a year now there has been talk about the sale of shares in the Elephant oil project and a number of other areas to Gazprom, but the deal has not reached the implementation stage. Now Eni is unlikely to be interested in speeding up the strengthening of the position of its Russian partner-competitor in Libya.
In addition to the meeting with Mr. Gaddafi, Alexey Miller held a working meeting with the Chairman of the NOC Management Committee Shukri Mohamed Ghanem. The parties also agreed to create a joint venture to modernize existing and build new oil refining facilities. According to Gazprom, a delegation of specialists from the Russian concern will arrive in Libya by the end of July “to detail the agreements reached in all areas of cooperation.”