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Tuesday, November 21, 2006

Gazprom Refused to Invest in Germany

Germany11-21-2006 - Russia’s gas monopoly, Gazprom, has refused to buy main gas pipelines and gas distribution networks in Germany, as political risks of their loss are very high now. The liberalization of the EU gas market that is slated for July 1, 2007 will destroy the vertically-integrated chains from producers to end users, hitting Europe’s big energy consortiums as a result.
The company sees no need to spend funds for buying assets in Germany, Gazprom Germania CEO Hans-Joachim Gornig made clear to Der Tagesspiegel yesterday. The reason is the general political conditions with control over the energy markets getting tougher and tougher. Environmental ministers of the EU even speak of stripping consortiums off their energy and gas networks, Gornig specified.
In the Moscow office of Gazprom, they neither explained nor denied the statement of Gornig.
So far, energy assets in Ruhr region and a stake in RWE have been of interest to Gazprom, Gornig said. In October, Leipzig Burgomaster Burkhard Jung said he was in talks with Gazprom about the possible sale of the city’s share in a gas consuming communal enterprise.
Nowadays, Gazprom owns 5 percent in Leipziger Verbundnetz Gas gas networks of the city and Gazprom’s subsidiary, Efet, joined the organization of German energy traders a few months ago.
The refusal to buy assets in Germany will hardly mean material damage to Gazprom, said UBS analyst Kakha Kiknavelidze. Because of control, the gas distribution in Europe isn’t the most lucrative business in terms of money, the analyst explained.
By demonstrating external indifference, Gazprom probably attempts to force down the price for the asset, supposed Konstantin Baturin from Alfa Bank.

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