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The Wall Street Journal: Russia’s New Pipeline Deal; Close Eye on Poison Pill in Japan

June 25, 2007

A new pipeline project highlights Europe’s uncertain relationship with energy power Russia.

The project by Eni SpA and OAO Gazprom to build a pipeline into the heart of Europe may help slake the continent’s rising thirst for natural gas, but it could also boost the Russian gas company’s direct control of Europe’s energy supply.

Representatives of the Russian and Italian governments Saturday signed a memorandum of understanding to cooperate on a 900-kilometer pipeline that could carry as much as 30 billion cubic meters of gas annually from Russia into Europe through the Black Sea. If the project, which is to be owned and financed via a 50-50 joint venture between Eni and Gazprom, overcomes regulatory hurdles, construction would begin as early as next year.

Saturday’s deal has wide-ranging implications for Europe as well as the companies involved. The European Union is under pressure to find new sources of natural gas to feed its growing demand just as its internal production is falling. But just as Europe needs new pipelines, European politicians are increasingly concerned with the continent’s dependence on Russia for future energy supply.

Eni has launched itself as Gazprom’s top partner in Europe — a strategy that could eventually give Eni an advantage over other major oil companies. BP PLC last week sold its stake in a vast Siberian gas field to Gazprom after coming under regulatory pressure from the Russian authorities. Earlier Royal Dutch Shell PLC sold control of the Sakhalin-2 project, in far east Russia, to Gazprom.

Read the report by Gabriel Kahn:
http://online.wsj.com/article/SB118262448220046031.html

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