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Heat rises as Gazprom stirs Russia-European Union gas tensions


By
Lucie Godeau
AFP
MOSCOW
Petroleumworld.com 04 30 06

Tensions between Russia and the European Union burst into the open last week over Russian state-controlled Gazprom's hard-headed ambitions to control everything from supply to distribution of European gas.

Gazprom has a swagger in its giant step and is making some in Europe nervous with its sheer size, its control of vast gas reserves and declared intention of getting into the retail end of the industry on European soil.

Already, the European Union gets 26 percent of its natural gas from Gazprom and Russian President Vladimir Putin has a blunt response to any EU jitters.

"We constantly hear about some threat of dependence on Russia and that Russian companies should have limited access to the energy market," he said in the Siberian city of Tomsk Thursday after meeting German Chancellor Angela Merkel.

"What are we to do when we hear the same thing every day? We start to look for other markets."

When Gazprom talks, the energy hungry West listens.

The company's market capitalisation leapt Wednesday to 266 billion dollars (212 billion euros), making it second only to the US ExxonMobil among world energy companies.

The semi-public company controls 60 percent of Russia's immense natural gas reserves and has monopoly control over the country's gas pipelines.

Now Gazprom, whose policies and managers are closely linked to the Kremlin, is looking to eat up more than a dozen European assets such as Centrica, which distributes gas across half the British market, deputy chairman Alexander Medvedev said last Tuesday.

Putin this week blasted what he said were moves being considered in Britain to block a Gazprom acquisition of Centrica "under the slightest pretext."

"When people come to us, it is investment and globalisation, but if we plan to go somewhere, then it is already the expansion of Russian companies."

But Adam Landes, oil and gas analyst for Renaissance Capital, said Gazprom was far from the innocent party it claims to be.

"There is no reciprocity, Gazprom is criticizing Europe for not opening its markets but Russia is completely shut," he said. "Gazprom responds ruthlessly to threats... it always behaved like that."

The Austrian economy minister, Martin Bartenstein, whose country currently holds the EU's presidency, warned that an EU-Gazprom conflict would "have no benefit" and British Prime Minister Tony Blair's government has indicated that Gazprom is free to shop for Centrica.

But the European Union has ratcheted up pressure on Russia to sign its Energy Charter, a document that regulates energy transport and would prohibit any signatory from disrupting contracted supplies for any reason.

Medvedev told participants at an economic forum in London last week that the pact was "stillborn."

According to Putin economic advisor Igor Shuvalov, such "tension is okay, it's a problem with any growth."

"Russia is part of the family, we were considered the small kid. Now we are growing and we raise our voice," he added.



AFP 30 04 06 0302 GMT

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