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Wednesday, April 26, 2006

Russia's Gazprom Threatens to Halt Gas Supplies to Europe

20.04.2006 MosNews - Russia's state-controlled natural gas monopoly Gazprom said on Wednesday, April 19, that if European Union countries continue to block its international ambitions it could redirect gas supplies to other markets. The move comes after the British Financial Times newspaper reported that the British government wanted to legislatively block Gazprom's acquisition of Britain's biggest gas supplier Centrica. In a statement after a meeting between Alexei Miller, Gazprom's chief executive, and EU ambassadors, the company said: "It is necessary to note that attempts to limit Gazprom's activities in the European market and politicize questions of gas supply, which in fact are of an entirely economic nature, will not lead to good results." As MosNews reported earlier this week, the Financial Times learned that the U.K. government had considered changing merger rules to block a potential takeover of Centrica, Britain's biggest gas supplier, by Gazprom. Gazprom's CEO met ambassadors of the 25 EU states in Moscow on Tuesday, April 18, to discuss Gazprom's relations with Europe, and insisted the world's largest gas producer understood its responsibilities as supplier of a quarter of the EU's gas. Wednesday's statement by Gazprom threatened to devote more of the company's supplies to fast-growing markets elsewhere if plans to expand in Europe — where it has ambitions to move into downstream gas distribution — were thwarted. "It should not be forgotten that we are actively familiarizing ourselves with new markets, such as North America and China. Gas producers in central Asia are also paying attention to the Chinese market. This is for a reason: competition for energy resources is growing," it said. Gazprom said that, while it would fulfill its current contracts with European clients, any future relationship with these countries should take into account the Russian company's ambitions to move into the downstream markets. Sergei Kupriyanov, a spokesman for Gazprom, told the Financial Times: "We just want European countries to understand that we have other alternatives in terms of gas sales. We have a fast-growing Chinese market, and a market for liquefied natural gas in the U.S. If the European Union wants our gas, it has to consider our interests as well." Gazprom's threats follow an outline agreement between Russia and China to supply the Chinese market with gas from Western Siberia, which is also the main source of gas for Europe. Given that Gazprom's reserves have been static for the past five years, the supply of gas to China will decrease the volume of gas available to European countries. Gazprom has made no secret of its ambition to supply up to 20 percent of the U.K.'s gas by 2015. Other European countries have also expressed concerns about Gazprom's plans to take a share in their domestic markets. The EU earlier indicated it would be prepared to let Gazprom into its downstream market if Russia were to liberalize access to gas pipelines to other countries and independent producers — a prospect that Gazprom has ruled out.

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