Russia's Gazprom Cements Gas Ties with European Partners
ReutersSep. 04 2015 14:43 Last edited 14:44
Russia's Gazprom increased its industrial muscle in the heart of Europe on Friday, bulking up through deals on asset swaps and more pipeline capacity with energy companies keen to get back to business as usual.
Gazprom secured access to western European gas storage as well as a deal with industry partners to double the capacity of the Nord Stream pipeline to deliver gas to Europe bypassing Ukraine, with which Russia is in a protracted conflict.
The surprise revival of an abandoned deal between the Russian behemoth and German chemicals group BASF will give Gazprom access to German gas trading and storage in exchange for more stakes in Siberian gas fields.
BASF's oil and gas production unit Wintershall said in a statement that the partners had deemed the time ready to complete the transaction. “We are convinced that natural gas from Russia is necessary to ensure energy security in Europe,” it said.
The European Union has been trying to loosen Russia's grip on the EU's gas supply — it currently supplies one-third of the gas used by the bloc. Gazprom abandoned its South Stream pipeline project, designed to deliver gas from Russia to Europe via the Black Sea and Bulgaria, last year under EU pressure.
The EU has instead encouraged the development of alternative supplies from the Caspian Sea and the United States.
An agreement with a group of Western energy companies on the Nord Stream link via the Baltic Sea to Europe will now allow it to come online in 2019, giving it a head start on the competition.
“The fact that the global energy majors participate in the project bespeaks its significance for securing reliable gas supply to European consumers,” said Gazprom Chairman Alexei Miller in a statement.
Many Western companies are reducing their exposure to Russia because of sanctions over Moscow's actions in Ukraine.
German officials remain concerned about the situation in Ukraine, but have praised Russia's approach during talks to seal an accord over Iran's nuclear program.
They say Moscow has also shown signs that it is prepared to play a more constructive role in discussions over how to resolve the civil war in Syria — the source of many of the hundreds of thousands of migrants heading for Europe.
Trustful Partnership
Austrian energy group OMV, a long-standing partner of Gazprom, separately reported progress on its own asset-swap talks with Gazprom.
OMV Chief Executive Rainer Seele, a German who recently joined the Austrian firm after many years at BASF, spoke of extending a “trustful partnership.”
Shell's Chief Executive Ben van Beurden, partner to the pipeline deal, stressed Europe's dependence on Russia.
“New projects like Nord Stream 2 are needed to ensure that Europe's demand for energy is met, especially as gas production in Europe itself is falling,” he said.
Nord Stream 2 will come online just as a rival pipeline is supposed to bring Caspian gas to Europe, boosting competition for market share in the bloc and loosening the ties between politics and energy security.
New liquefied natural gas (LNG) exports from the United States should also be in full swing by then and likely landing on Europe's shores in significant volumes, a development set to challenge Russia's current energy dominance.
AI
