Gazprom official defends reliability of Russian gas giant

Russia's state-controlled natural gas giant defended its reliability as an energy supplier Monday and denounced suggestions that a price fight with Ukraine showed that it was not. Alexander Medvedev, deputy CEO of OAO Gazprom, told an energy conference that the company was dependable and blamed journalists for exaggerating the New Year's incident, which disrupted deliveries to Europe and spooked energy markets.

Photo: Gazprom official defends reliability of Russian gas giant

Gazprom official defends reliability of Russian gas giant

"Gazprom is, was and will be a reliable supplier of natural gas to Europe," he said, speaking ahead of a meeting set for Thursday of energy ministers from the Group of Eight major industrialized nations. The dispute over gas prices erupted over the New Year after Russia more than quadrupled the cost of gas it sells to Ukraine, bringing the price to European levels. Some observers suggested the hike was aimed at punishing Ukraine's pro-Western government.

The disagreement led to Russia cutting its supplies to Ukraine and affecting some European countries. Medvedev noted that Gazprom's market capitalization had spiked in January despite what he called "suppositions" that the company was being used a political instrument of the Russian government.

"Evidently foreign investors think differently," Medvedev said. Medvedev said Gazprom which is the largest gas producer in the world and satisfies a quarter of Europe's gas consumption expects revenues of US$33 billion (27.68 billion) in 2006 from gas exports. The company hasn't put out final data for 2005.

The Russian government has been steadily expanding its domination of the energy sphere. Energy security is one of the priority areas President Vladimir Putin has identified for this year's summit of leaders from the Group of Eight, which Russia is chairing. Deputy U.S. Commerce Secretary David Sampson told the conference that Russia should increase the share of private investment in the energy sphere.

Sampson noted the "vast potential for commercial cooperation" and said in particular that Gazprom should speed up its cooperation with U.S. companies on the giant Shtokman gas field in the Barents Sea Gazprom's first liquefied natural gas project. Analysts estimate the project will cost between US$10 billion and US$20 billion (8 billion and Ђ 16 billion) and come online in 2010. U.S. companies Chevron Corp. and ConocoPhillips are in the running to be Gazprom's partners in the project, as are France's Total SA, Norway's Statoil ASA and Norsk Hydro ASA.

Gazprom will choose its partners for development of the Shtokman field by April 15, Medvedev said, saying there would be no less than two and no more than three partners. "Opportunities are lost when governments fail to welcome capital. And this is particularly true for energy development due to the large amounts of investment that are required," Sampson warned.

U.S. companies have the technology and experience to become valuable partners for Russian energy businesses, Sampson said. "And they have the ability to finance large-scale projects that can greatly enhance Russia's energy sector," he said. Sampson also said it was vital to allow market-based solutions to energy supply problems. He said U.S. energy efficiency had grown nearly 50 percent over the past three decades, and attributed that growth to private sector innovation, reports the AP.

N.U.