Gazprom's Vyakhirev expresses distaste for EU gas liberalization

Speaking at the World Gas Conference in Nice last week, Gazprom Chairman Dr Rem Vyakhirev dismissed as 'a mess' the forthcoming liberalization of the European Union gas market, which he said would be 'out of fashion in a few years.' He added that he has no intention of following in Algerian state firm Sonatrach's footsteps by forming parnerships to deal with new customers on a more or less short-term basis.


NICE�Gazprom Chairman Dr Rem Vyakhirev dismissed as "a mess" the forthcoming liberalization of the European Union gas market, which he said would be "out of fashion in a few years." He added that he has no intention of following in Algerian state firm Sonatrach's footsteps by forming parnerships to deal with new customers on a more or less short-term basis.

Speaking at the World Gas Conference in Nice last week, Vyakhirev said, "We look on with an open mind as the EU keeps on bringing out directives." French and Germans know where their interests lie, and we shall not run after buyers." He added that Gazprom would not sign gas supply agreements "other than with utilities."

"Saving a dollar here and there is not important. We have 30-year contracts, and if we lose money in the process, this is not important."

He predicted that, in 10 years' time, Algerian and Norwegian gas supplies will be depleting, and France and Italy will have to turn to Russia, which has strongly developing gas resources.

While he seemed peeved at EU gas deregulation, Vyakhirev welcomes market liberalization in Russia, which he said Russian experts have determined "would remedy the disproportion in prices we have suffered over the last years. Domestic gas prices should rise steeply, exceeding other fuels price growth, thus eliminating a four-fold difference between gas prices and those of other energies."

Supplying gas to Asia
Although Vyakhirev insisted in his address that Russia's geographic position between Europe and Asia gives it an edge to "become a leader in creating a single Europe-Asian gas market," he admitted that a link with Japan "is not for tomorrow."

Although Russia has enough gas to send 50-60 billion cu m to China, Japan, or Southeast Asia practically at a moment's notice from assessed offshore Sakhalin reserves, those countries have sufficient gas in the short term from their current suppliers.

Another World Gas Conference speaker, Sin-Ichiro Ryoki, is of the same mind, saying "There is no infrastructure at all connecting Russia and Japan."

Japan's needs are adequately covered with its LNG imports at this time, he said, so "there is no urgency. But in the medium or long term, it would be attractive for Japan" to be able to benefit from Russia's gas resources. This would be achieved, he believes, by a direct pipeline from Sakhalin to Japan and also through LNG facilities that would also supply gas to other countries.

Sin-Ichiro's address dealt with "Asian perspectives for natural gas."

Demand is set to grow strongly, he predicted, from the current relatively low level. This would increase the region's dependence on regions outside Asia, the Middle East, and former Soviet Union.

In this context, he says, "Efforts should be made by countries of both sides to strengthen ties beyond just energy trade and establish solid economic, political, and cultural relations of mutual trust in the future."

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