Reuters: FACTBOX-Gazprom eyes global expansion (after Shell Surrender)

Mon Dec 11, 2006 4:41am ET

Dec 11 (Reuters) – Gazprom (GAZP.MM: Quote, Profile , Research), the world’s biggest gas producer, has been expanding steadily around the globe.

Industry sources told Reuters on Monday Royal Dutch Shell (RDSa.L: Quote, Profile , Research) had offered to cede control of the $22 billion Sakhalin-2 project, Russia’s biggest single foreign investment, to Gazprom after months of government pressure.

Following are Gazprom’s expansion plans in Russia, the rest of Europe, Asia and the United States.

RUSSIA

– Royal Dutch Shell has offered to cede control of the $22 billion Sakhalin-2 project, Russia’s biggest single foreign investment, to state gas monopoly Gazprom after months of government pressure, industry sources said on Dec 11.

An agreement in principle for oil major Shell to reduce its 55 percent stake to a blocking stake of at least a quarter in the world’s largest liquefied natural gas (LNG) project was reached at talks last week, the sources told Reuters.

– Gazprom’s chairman said on Dec. 8 the firm may join the giant Kovykta gas field of BP’s Russian vehicle TNK-BP.

EU

– Gazprom wants to boost its share of Europe’s gas market to 30 percent from 25 percent by buying into gas storage, gas marketing and power firms, a company source said in March.

AUSTRIA

– Gazprom supplies three quarters of Austria’s gas under a term deal with OMV (OMVV.VI: Quote, Profile , Research). Austria is a transit route for Russian gas to Italy, France, Hungary, Slovenia and Croatia.

Austria’s RAG, German Wingas and Gazprom have agreed a 250-million euro deal to build the Haidach gas storage site in Austria which will be the second largest in central Europe.

BELGIUM

– Gazprom is eyeing ventures with Belgian power firms Distrigas (DISTy.BR: Quote, Profile , Research) and Fluxys (DIST.BR: Quote, Profile , Research), might buy a stake in Fluxys, is interested in becoming a gas hub operator in Zeebrugge and is interested in gas supply and storage of liquid natural gas. Gazprom has signed a memorandum of understanding to look at potential gas storage projects in northern Belgium.

BRITAIN

– Gazprom wants to take its share of the UK market, Europe’s biggest, to 10 percent and sell up to 10 billion cubic metres a year, up from the current 4 bcm, by 2010.

– In June, Gazprom entered Britain’s industrial and commercial gas market by buying the supply business of Britain’s largest privately-owned gas distributor Pennine Natural Gas.

– On Oct 5, 2006 Gazprom said it will take a stake in a new Dutch pipeline to the UK. The pipeline’s operator, Dutch company Gasunie, will take a nine percent stake in Gazprom’s Baltic pipeline from Russia to Germany.

– Gazprom wants to buy North Sea gas projects, boost its share in the Interconnector pipeline between Britain and Belgium and expand storage capacity. It has already bought into the Humbly Grove storage project in southern England.

CZECH REPUBLIC

– Czech natural gas firm Vemex has signed a deal with Gazprom unit Gazexport on gas deliveries to the Czech Republic which bypass the former Czech monopoly.

DENMARK

– Gazprom has agreed to supply Denmark’s DONG Energy with gas from 2011. DONG will supply Gazprom with gas from next year for re-export to Britain.

ESTONIA, LATVIA, LITHUANIA 

– Gazprom wants to build gas storage in the former Soviet Union’s Baltic states.

FRANCE

– Gazprom said on July 3 it plans to move into France’s industrial and commercial gas market in the fourth quarter. It supplies one quarter of France’s gas needs under term contracts with Gaz de France (GAZ.PA: Quote, Profile , Research). Gazprom sees Gaz de France and Algeria’s Sonatrach as important partners to swap Russian pipeline gas in Europe against liquid natural gas (LNG).

GERMANY

– Gazprom supplies one third of Germany’s gas under term deals with E.ON’s (EONG.DE: Quote, Profile , Research) Ruhrgas and BASF’s (BASF.F: Quote, Profile , Research) Wintershall. It controls a 1,830 km gas pipeline network in Germany via Wingas — a joint venture between Gazprom and Wintershall, Western Europe’s largest gas storage company.

– It supplies Romania via a joint venture with Wintershall and Switzerland via a joint venture with Ruhrgas.

– Gazprom is looking for direct deals with utilities, to trade electricity, buy new storage facilities and expand supplies via a new pipeline under the Baltic Sea.

HUNGARY

– Under a deal announced on July 13, 2006, Gazprom gained stakes in Hungarian gas and power companies in return for giving Germany’s E.ON a share in the Siberian Yuzhno-Russkoye gas field.

– Gazprom and MOL have formed a company to study the proposed extension of the Blue Stream gas pipeline, which takes Russian gas to northern Turkey.

ITALY

– Gazprom supplies one-third of Italy’s gas under term contracts with ENI (ENI.MI: Quote, Profile , Research).

– On Nov. 14 Gazprom signed a landmark deal with Italian energy firm Eni (ENI.MI: Quote, Profile , Research) under which Gazprom will sell gas directly on the Italian market from 2007. Gazprom will extend supply contracts to Eni to 2035, and the two companies will cooperate on upstream projects in Russia and other countries.

– Gazprom has separate deals to supply utilities in Italy, and wants to expand these activities to take advantage of Italy’s gas market liberalisation. The firms include Enel (ENEI.MI: Quote, Profile , Research) and Edison (EDN.MI: Quote, Profile , Research).

NETHERLANDS

– On Nov. 29 the Dutch national gas network operator Gasunie said it was keen to expand cooperation with Gazprom (GAZP.MM: Quote, Profile , Research), but added it was keen to expand cooperation.

POLAND

– Gazprom wants to expand transit pipelines.

SLOVAKIA

– Gazprom owns 49 percent of gas network SPP together with Ruhrgas and Gaz de France.

TURKEY

– Gazprom supplies three quarters of Turkey’s gas via southern Europe and by a pipeline under the Black Sea, which it jointly owns with ENI.

It wants to expand the underwater line to ship more gas to Austria and Italy to rival a similar plan by BP (BP.L: Quote, Profile , Research) for Azeri gas. It wants to buy Turkish gas distribution firms, seeks direct deals with Turkish utilities and wants to transit gas to Israel.

UKRAINE

– Gazprom said on July 6 Ukraine had proposed creating an international consortium to manage its transit gas pipelines, a bone of contention for the two ex-Soviet states. Ukraine, route of 80 percent of Russia’s gas exports to Europe, has been resisting Gazprom’s efforts to raise the prices it charges its former Soviet satellite.

BELARUS

– On July 6, Belarus proposed a joint venture to run its pipelines with Gazprom as a compromise to demand it yields control of the network to avoid quadrupling of gas prices.

ROMANIA

– Gazprom wants to build new gas storage in Romania.

ASIA AND MIDDLE EAST

– Gazprom wants to supply China and South Korea with pipeline gas. It says it will sign a deal on a gas pipeline to China this year and it may swap Chinese Liquefied Natural Gas (LNG) imports for Russian pipeline gas.

Gazprom has said it may supply China, Korea and Japan with LNG if it buys into Shell’s (RDSa.L: Quote, Profile , Research) Sakhalin field. It also wants to develop gas fields in India, take part of a gas pipeline from Iran to India and work on Iran’s South Pars project.

THE UNITED STATES

– Gazprom has said it wants to supply up to 20 percent of U.S. gas markets within decades.

It is in talks with Chevron (CVX.N: Quote, Profile , Research), ConocoPhillips (COP.N: Quote, Profile , Research), Total (TOTF.PA: Quote, Profile , Research), Statoil (STL.OL: Quote, Profile , Research), Norsk Hydro (NHY.OL: Quote, Profile , Research), Sempra (SRE.N: Quote, Profile , Research) and Royal Dutch Shell on assets swaps, purchase of LNG assets and access to regasification terminals in the United States, Mexico and Canada.

© Reuters 2006. All Rights Reserved.

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