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Thursday, July 10, 2008

Gazprom Planning Libya-Europe Pipeline

10 July Bloomberg- By Lucian Kim

Gazprom, Russia's state- controlled energy company, offered to buy all oil and gas available for export from Libya, threatening to grab greater control of Europe's energy supplies.

Gazprom Chief Executive Officer Alexei Miller made the proposal to Libyan leader Colonel Muammar Qaddafi during a visit to Tripoli yesterday, the Moscow-based company said in a statement.
  • Libya exported about 1.53 million barrels of oil a day in 2006, almost enough to supply Italy.
  • Gazprom considers the country its priority partner in North Africa and said it registered a unit called Gazprom Libya in Tripoli.
  • Less than a month ago the company opened its first African office in neighboring Algeria. Russia, the world's largest producer of natural gas, is seeking to lead closer coordination among nations that produce the fuel.

The Libyan side positively evaluated Gazprom's proposal to buy all future volumes of gas, oil and liquefied natural gas assigned for export at competitive prices,'' Gazprom said. The two sides agreed to start talks on Gazprom buying ``available volumes of Libyan hydrocarbons,'' according to the statement, which didn't give further details.

  • They also agreed to set up a joint venture to modernize existing oil refineries and build new plants.
  • Russia will host a meeting of the Gas Exporting Countries Forum later this year.
  • Gas Transportation Gazprom also said it received a proposal to help build ``new gas transportation capacity'' from Libya to Europe. ``Libya's traditional customers shouldn't worry,'' Shokri Ghanem, chairman of Libya's National Oil Corp., said in a phone interview.
  • Gazprom offered to buy whatever gas or oil that Libya has available for selling, or that has no buyer. It is not offering to take all of Libya's production.''

Libya, Africa's third-largest oil producer, wants to forge new energy partnerships after nearly two decades of international sanctions. The African nation produced 15.2 billion cubic meters of gas last year, piping 9.2 billion to Italy, and pumped 1.85 million barrels of oil a day, according to BP Plc data.

Eni SpA, Italy's largest oil company, has been in Libya since 1959 and has an average daily output of 550,000 barrels of oil equivalent from the nation.

  • Supply Accord Eni and Libya last month extended an oil and gas supply agreement for 25 years, after agreeing last October to jointly invest $28 billion over a decade to expand energy production.
  • No Eni official could be immediately reached for comment. `

`Nobody needs to worry, not the Americans, not the Italians who have contracts with us,'' Ghanem said. ``We will respect all the contractual terms in all the contracts.'' ``Gazprom is just another customer and they're asking for whatever extra supply we might have. If the price is right, we will sell to them.''

  • Gazprom's possible move into Libya may weigh on a U.S. strategy to weaken the Russian company's grip over supplies of gas to Europe.
  • The U.S. is trying to line up new gas supplies from friendly governments in Central Asia, such as Azerbaijan, and from Iraq for shipment to Europe via pipelines that skirt Russia.


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