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Gazprom bullying Europe again..

October 17th, 2010 · No Comments

and again, and again…
The Russians are threatening to send more gas to Europe if they proceed with a single energy policy initiative.  Even if that happens, Europe will have to replace the gas (since it’s rather depressingly dependent on Russian gas) from somewhere..

And it seems Russia might miss the boat in China as well (too bad one needs a subscription to see the whole article):

A gas-supply agreement between Russia and China is advancing. But Gazprom may already have missed its chance to meet soaring Chinese gas demand, writes Isabel Gorst

From Reuters:

EU builds “Great Wall of China” in gas sector- Gazprom
* Gazprom exec says gas reforms expose EU to supply risk

* Reforms mean EU faces more competition with Asia

By Jessica Bachman

MOSCOW, Oct 14 (Reuters) – Gazprom (GAZP.MM) warned the European Union on Thursday that proceeding with the bloc’s gas industry reforms would mean the end of stable supplies as the Russian energy giant would send more gas to Asia.

Gazprom’s export chief, Alexander Medvedev, said that Europe’s gas-sector initiatives would build “a sort of Great Wall of China” that would cut off his company, which supplies a quarter of the EU’s gas needs, from gas transmission infrastructure.

EU legislation requires pipelines to be open to all companies, which threatens Gazprom’s position in countries such as Poland where it is a dominant supplier via its Yamal pipeline. [ID:nLDE68G12J]

“Having no opportunity to get reasonable income while the gas pipeline is operating or take part in its operation, the suppliers will not wish to make such significant investments. They will start searching for more attractive markets,” said Medvedev.

The EU’s gas reform has figured at the centre of Russia’s inability to strike a gas-supply deal with Poland, whose current deal runs out on Oct. 20, and whose supplies from its main Yamal pipeline fall short of annual gas needs. [ID:nLDE69B141]

Last October Warsaw and Moscow, as well as Gazprom and Polish gas monopoly PGNiG (PGNI.WA), clinched a deal prolonging the Yamal contract to 2037 and increasing supplies by some 2.5 billion cubic metres (bcm) annually to 10 bcm.

But the European Union blocked the deal, saying it violated the 27-nation bloc’s energy policy and forcing Warsaw into last-minute renegotiations.

Poland imports from Russia about two-thirds of the 14 bcm of natural gas it uses annually.

The European Union is trying to pull together the fragmented energy policies of its 27 member states into a single, unified strategy, which aims to reduce the risk of sudden energy shortages and open energy markets to more competition. [ID:nLDE6940K7]

Gazprom says this new gas market model creates supply-side risks because it favours competition between producers bound to short-term supply contracts over traditional long-term supply “take-or-pay” contracts, which Russia usually insists on.

“Without long-term price contracts, the volume of gas coming to market starts depending on the price appeal. The gas will be available when the price is high. If the price is low, the volumes may outflow to more attractive markets,” said Medvedev.

“The reliability of European gas supply will be determined by the competition with other global gas markets, primarily with Asian ones,” he said.

Tags: Natural Gas