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International Herald Tribune: Gazprom excludes partners

The Associated Press

Gazprom, the Russian state-run natural gas monopoly, said Monday that it alone would develop the country’s biggest untapped natural gas deposit, spurning offers from five Western producers to exploit the $20 billion Shtokman field.

Gazprom’s chief executive, Alexei Miller, told state television that the company did not need “international participation.” Chevron, ConocoPhillips, Norsk Hydro, Statoil and Total had bid to help develop the Barents Sea field’s 3.7 trillion cubic meters, or 130 trillion cubic feet, of gas, enough to supply the United States for more than five years.

The Russian natural gas monopoly also said that piped supplies of fuel from the field to Europe would take precedence over sending liquefied gas to the United States.

President Vladimir Putin is seeking a bigger share of output for state-run companies in Russia, the largest producer of oil and natural gas. The government last month threatened to delay Royal Dutch Shell’s $22 billion Sakhalin-2 oil and natural gas project on environmental grounds, in what analysts said was a form of pressure by the Russian giant to secure better terms for its entry into the project.

The British-Dutch company may be forced to stop work on the huge project in the Russian Far East- a development that has sent shudders through the international investment community and reflects a trend toward increasing state control over Russia’s vast oil and natural gas reserves and ties.

“Anyone that thinks Russia is going to cede any meaningful control of its energy assets to outside interests is dreaming,” said Stephen Leeb of Leeb Capital Management in New York. “They’re much more interested in protecting these assets long-term than they are in exploring and developing them and using them for the world’s interest.”

The first phase of the Sakhalin-2 project, which has already been completed, cost $2 billion. Shell announced in July 2005 that the cost of the second phase, involving the construction of the pipelines, new platforms and the LNG export terminal, had doubled to $20 billion.

The Kremlin has indirectly linked the involvement of U.S. companies in the Shtokman field to Russia’s negotiations to join the World Trade Organization. The United States and Russia, experiencing a chill in relations, have been unable to come to agreement on Moscow’s WTO accession.

Ties between Russia and the United States were already strained by U.S. concerns that Putin was backtracking on democracy and human rights.

Gazprom will concentrate on shipping fuel from Shtokman, Russia’s biggest untapped gas field, to Europe via a pipeline being built to Germany, Miller said. Gazprom in Moscow initially planned to ship Shtokman’s output as liquefied natural gas to the United States to break into the world’s largest energy market.

“Russia is clearly signaling it’s going to prioritize its relationship with Europe over the U.S., while letting European companies know they won’t be allowed in unless Russia gets reciprocal access,” said Chris Weafer, chief strategist at Alfa Bank in Moscow.

Gazprom has repeatedly complained that the European Union was discriminating against it by not letting it buy into the lucrative natural gas retail and marketing business.

Kakha Kiknevalidze, an oil and gas analyst at the Brunswick UBS investment bank, said that the company would be going out on a limb if it were to pursue the complex project alone.

“Gazprom has no experience of offshore projects, it has no experience of LNG. I think it will be very challenging,” he said. “Normally on a project like this you want to share risk exposure.”

“The central government under Putin is coming back and has reasserted control,” said John Parry of the brokerage firm John S. Herold in Connecticut. “They don’t want to have Western interference or have to be accountable to Western capital.” $@

Rosneft doubles Yukos claim

Rosneft, the Russian state-controlled oil company, said that it had more than doubled its claims against Yukos Oil after a court approved its demands for profits stripped from a Yukos unit, Bloomberg News reported.

A court added 137 billion rubles, or $5.1 billion, in claims to the creditor’s list, a Rosneft spokesman, Nikolai Manvelov, said. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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