Gazprom to press on with EU investment

Gazprom, the Russian gas monopoly, pledged on Tuesday to press ahead with downstream investments in the European Union in spite of uncertainty generated by worsening relations between Moscow and Brussels.

Alexander Medvedev, deputy chairman, insisted the group would stick to its existing programme of diversifying outside Russia and investing in the EU.

“Our strategy was already announced several years ago – to become a leading world energy company which will participate in all parts of the value chain and with a diversified portfolio of products and diversified geographical activity,” he told the FT in an interview.

Mr Medvedev was speaking just before joining senior Gazprom executives accompanying Russian President Vladimir Putin on a trip to Austria and Luxembourg to highlight progress on three energy deals. The visit, coming days after the unsuccessful EU-Russia summit, is aimed at reminding the EU of Russia’s key role in energy supplies and its readiness to deal directly with individual states when relations with the bloc as a whole are mired in disputes.

Mr Medvedev conceded politics was “important” and influenced the business environment. He said the blocking of negotiations between Russia and the EU did not help nor did “unreasonable criticism” of the planned Baltic Sea pipeline. The route, linking Russia and Germany, is opposed by Poland and some other east European states.

He warned that Poland and some other east European states could be undermining sound policymaking in the EU. “I don’t want to interfere in the practice of the European community and its policy coordination … but I believe that certain issues which have pan-European importance have come under the negative influence of countries which are not taking care of the problems of the whole of Europe but are pursuing their own egoistic and very strange directions,” he said.

However, the Gazprom executive argued the turmoil in EU-Russia relations was not causing any particular problems in its commercial activities as “our partners know what we are doing”.

Nevertheless, Mr Medvedev argued international agreements in energy security were needed to create sound investment conditions. He urged Germany, which this year chairs the Group of Eight industrialised countries, to build on the progress made under last year’s Russian chairmanship. “We need guarantees for our investments like every investor needs. We need predictability in market development. We don’t want to face unjustifiable surprises like the allocation of pipeline capacity to a nobody from nowhere.”

Mr Medvedev said the group was interested in potential EU acquisitions but insisted Gazprom had never approached Centrica of the UK. “We have never expressed such a specific interest,” he said, declining to comment further.

Mr Medvedev also denied Gazprom was in talks with TNK-BP, the Russian-British joint venture, over investing in TNK-BP’s huge Kovykta field in eastern Siberia. There were “no negotiations at this time”, he said, responding to reports that there had been contacts. He added Gazprom could not help TNK-BP in its damaging dispute with regulators over the development of Kovykta.

In Austria, Gazprom officials will sign a memorandum of understanding for a joint venture with OMV, the Austrian energy group, for a gas transit management centre. The company will also sign a deal for large underground gas storage facilities with capacity of 2.4bn cubic metres to be built jointly by Gazprom, Austria’s RAG energy group, and Wingas, a German joint venture distribution company owned by Gazprom and Germany’s Wintershall, a subsidiary of chemicals group BASF.

Dmitry Peskov, Kremlin spokesman, said relations were developing “very positively” with Austria which “as opposed to other countries of the EU has respectful relations to Soviet soldiers buried there” – a reference to the recent decision by Estonia’s government to move a Soviet war memorial, a move that sparked protests.

In Luxembourg, the Russian president is expected to approve an “action plan” for an 800-megawatt gas-fired power station planned with Luxembourg’s Socef.

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