Gazprom sees no gas shortage for supplies to Europe,Asia: Medvedev

Gazprom sees no gas shortage for supplies to Europe,Asia: Medvedev

Moscow (Platts)--5Jun2006

Russia's gas giant Gazprom is not experiencing shortages of gas for
supplies both to European countries and Asian-Pacific markets, Russia's first
deputy prime minister Dmitry Medvedev said late Friday, as Prime-Tass news
agency reported Monday.
"There is no [gas] shortage," Medvedev was quoted as saying. "Nobody has
ever said that... all European gas should be redirected to Asia, i.e. to
supply gas designed for Western Europe to markets of China, India and Japan."
Earlier this year, International Energy Agency expressed concern about a
looming shortage of Russian gas for supplies to Europe after Russia reveiled
its plans to start gas supplies to Asian markets.
"We have reserves in West Siberia gas province, which are yet to be
developed," said Medevedev, who is also the chairman of Gazprom's board of
directors. He added that the company's main target would be an increase in gas
production.
Medvedev also said that Gazprom viewed asset swaps as a priority for
cooperation with foreign partners. "We are strengthening Europe's energy
security through offering such swaps," Medvedev said.
He said that European consumers and companies should not be scared of
Gazprom's intention to enter into European assets. "When you are inside, you
think how to strengthen gas deliveries rather than to re-direct them to other
destinations," Medvedev was quoted as saying.
Medvedev said that Gazprom would continue its policy designed to become
involved in gas deliveries to final consumers in European countries. At the
same time, he said that other countries' reaction against this policy was
natural. "Appearance of a well-structured player in a market cannot help but
raise such a reaction," he said.

STATE SHOULD PRESERVE CONTROL IN KEY STRATEGIC INDUTRIES
Medvedev also spoke in favor of preserving state control over the
country's key strategic companies, the agency said.
"The state is not the most effective owner but must be present in certain
companies which are of critical importance for the state's security," said
Medvedev, who is viewed by some analysts as possible successor to Russia's
president Vladimir Putin who is to leave his office in 2008, according to
Russia's law.
The state should preserve control in defense and nuclear sectors as well
as in Gazprom, Medvedev said. "The state's present in Gazprom is of critical
importance. The state should not leave Gazprom now or in the next 10 to 15 to
20 years," he said.
"Everything else can and must be owned privately under market economy,"
he said.

NEEDS MORE TIME TO DECIDE ON PARTNERS FOR SHTOKMAN
Medvedev also said that Gazprom would choose partners for its huge
Shtokman LNG project in the Barents Sea after it analyze in detail all new
proposals by shortlisted companies.
"We need time to analyze proposals. To tell frankly, [they are] very
complicated," he said answering to a question on when the gas giant was to
announce the partners.
Medvedev said that there were a lot of ill-considered decisions made in
1990s when assets of high value were given away "for nothing". Later,
Gazprom's main aim was to receive these assets back, he said.
Gazprom was previously expected to select partners this spring, after it
had repeatedly postponed the decision from the earlier planned date of late
2005.
Gazprom has shortlisted five foreign majors for the project such as
Norway's Statoil and Norsk Hydro, France' Total, and ChevronTexaco and
ConocoPhillips of the US. First LNG supplies to North America are expected in
end 2010 - early 2011 with LNG production from the 3.7-billion cubic meters of
gas field to amount to 15 million mt/year by 2012.
Medvedev also said that Gazprom's participation in development of the
Kovykta gas field in East Siberia should also be thoroughly weighted. "There
are other owners of the project at the moment, and they can do with the asset
what they think is necessary," he said. "They think Gazprom's participation
will be useful for the project," Medvedev added.
Anglo-Russian joint venture TNK-BP has offered Gazprom a controlling
stake in a holding to be set up to develop Kovykta, which has estimated
reserves of 1.9 trillion cubic meters of gas. TNK-BP currently develops the
field via its subsidiary Rusia Petroleum to supply gas to local markets.
But the field is supposed to become the resource base for a planned gas
pipeline from East Siberia to export Russian gas to China. This cannot be
happen without the involvement of Gazprom as Russia exports all its gas via
so-called "single export route" controlled by the gas giant.

---Nadia Rodova, nadia_rodova@platts.com

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