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Thursday, October 05, 2006

Eni Says Oil Pressure Delaying Swap Deal

October 5, 2006 Reuters - By Ian Simpson - MILAN, Italy -- Rising pressure against Western energy companies in Russia has delayed a deal between Italy's Eni and natural gas giant Gazprom, Eni chief executive Paolo Scaroni said Wednesday. Although the Italian oil group, Europe's fourth-biggest, was still working toward closing an asset swap accord with Gazprom by its announced signing date of Oct. 15, that was not a deadline, Scaroni said in Rome. "Certainly when we see the problems encountered by our colleagues that operate in Russia, that raises some grounds for reflection, because we don't want to get into the upstream and encounter the problems these gentlemen are finding," Italy's Ansa news agency cited Scaroni as saying. He gave no details on the talks but called relations with Gazprom excellent. "If instead of the 15th [of October] it's the 21st, it won't be a problem," Scaroni told reporters before a Senate committee hearing in Rome. However, Gazprom export chief Alexander Medvedev said the company was still aiming at an Eni deal before Oct. 15. He denied Italian media reports that it was delayed. The accord on oil, gas, power and liquefied natural gas was to be signed after months of talks. It was expected to give Eni access to Russian oil and gas fields and let Gazprom sell gas directly in Italy. A source in one of the companies said Tuesday that Eni was not ready to let newcomers into its market, and that Gazprom did not want to see new companies in Russia's oil and gas fields. Other oil majors have faced increasing difficulties with their Russian operations in the past month. Royal Dutch Shell and ExxonMobil have come under pressure for cost overruns at their multibillion-dollar projects on Sakhalin Island. Officials also have suggested BP joint venture TNK-BP could lose the license for its giant Kovykta gas field in Siberia. "The experiences of BP and Shell show there are issues you have to be aware of in Russia. Clearly, before you made any major investment, you'd need to make clear that the guidelines are very certain," said an analyst who asked not to be identified. Arkady Dvorkovich, head of the Kremlin's economic research department, said Russia was not trying to oust foreign oil majors with big production sharing agreements but would not agree to large cost overruns. Eni shares were off 0.35 percent at 23 euros ($29) on Wednesday afternoon. Gazprom shares were up 0.96 percent at 285 rubles ($10.63).

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