Gazprom Urges Europe to Decide on Pipelines, LNG as Sales Climb

http://www.bloomberg.com/apps/news?pid=20601207&sid=a3edQBaKI1s0&refer=energy

By Steve Bierman and Greg Walters

Nov. 18 (Bloomberg) — OAO Gazprom called on European consumer countries to decide on how they wish to receive natural gas from Russia as the state-run exporter of the fuel increases exports this year by about 4.7 percent.

Exports to Europe will probably reach 161 billion cubic meters in 2008, Deputy Chief Executive Officer Alexander Medvedev said at a gas conference in Moscow today. Russia last year shipped 153.7 billion cubic meters to Europe, where it has about a quarter of the market.

Medvedev echoed a call made last week by Russian Prime Minister Vladimir Putin for European customers to choose between deliveries of liquefied natural gas or deliveries by pipeline. Gazprom is considering more LNG plants in addition to the Arctic Shtokman project, he said.

“Building LNG plants is absolutely realistic,” Medvedev, who heads Gazprom’s export operations, told the conference. “Aside from the Shtokman project there are at least two projects for building gas liquefaction plants in western and in eastern Siberia.”

State-run Gazprom, which is planning to build pipelines to Europe via the Baltic and the Black seas, depends on foreign sales for most of its profit because the government caps domestic prices to subsidize companies and households. LNG is natural gas that’s chilled to a liquid to allow transportation by ship.

Russia’s largest gas producer dropped a Baltic LNG project near St. Petersburg in February to concentrate on the Shtokman field, which it says has enough gas to supply the world for a year, and on the Nord Stream pipeline under the Baltic Sea.

Nord Stream Funding

The Nord Stream venture comprises two parallel links running 1,200 kilometers (750 miles) from Russia to Germany. Funding for the first link should be arranged by July next year and for the second 12 months later, Paul Corcoran, the venture’s financial director, said at the conference.

Gazprom and Italy’s Eni SpA are also developing the South Stream link to carry gas across the Black Sea to Europe via the Balkans. Pipeline exports may reach 219 to 227 billion cubic meters in 2020, Medvedev said.

In June, Medvedev predicted European consumers would increase consumption of Russian gas by 11 percent to 166.8 billion cubic meters this year.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net
Last Updated: November 18, 2008 04:54 EST

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