WEC: Russia's gas supplies to Europe face risk, Gazprom chief warns

A Gazprom executive warned that Russian gas supplies to Europe face a serious risk because of the EC's proposals to separate ownership of gas and power production from distribution.

Uchenna Izundu
International Editor

ROME, Nov. 14 -- An OAO Gazprom executive warned that Russian gas supplies to Europe face a serious risk because of the European Commission's proposals to separate ownership of gas and power production from distribution.

Speaking at the World Energy Congress, Alexander Medvedev, deputy chairman of Gazprom's management committee, sought "clarification" of the issue from Europe's Energy Commissioner Andris Piebalgs. "At this stage I leave aside the question [of] whether the forced disposal of assets, which the Commission's proposals would require, is compatible with the protection of private property in a market economy."

Gazprom, which provides 25% of Europe's gas needs, has repeatedly said it wants to move into gas transportation. It also is interested in building or buying power plants in Italy and is evaluating projects in the UK.

However, the EC's proposals would limit its ability to buy European Union energy assets. To foster competition, companies would be forced to either sell their transportation networks or hand them over to independent operators.

Medvedev stressed that Gazprom has an incentive to deliver gas to the market and used the proposed 27.5 billion cu m/year Nord Stream gas pipeline as an example of a long-term project that would bring reliable gas supplies to Europe via the Baltic Sea. "This is an example of a real pan-European project in a turbulent environment."

By 2015, Russian gas is expected to account for 33% of the European market, Medvedev said. He assured delegates that Europe remains an important market despite Russia's plans to expand gas supplies to China. Talks with China are well advanced to supply as much as 80 billion cu m/year via two pipelines. Medvedev said he hopes the parties can reach an agreement soon. He also defended the company as a reliable supplier to Europe.

Gazprom is determined to step up involvement in liquefaction projects supplying North America and the Atlantic Basin. "We are looking at the possibility of exchanging LNG for pipeline gas in the medium term, but in the longer term we intend to export LNG from our own projects," he said.

Contact Uchenna Izundu at uchennai@pennwell.com.

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