Russ Oil-Gas

03 April 2007 - Upstream onLine - Russian gas monopoly Gazprom should invest more in upstream capacity development as - despite having massive reserves - it could be short of marketable gas in coming years, International Energy Agency (IEA) boss Claude Mandil warned today. "We have some concerns that Gazprom does not invest enough in upstream projects to develop gas, which means that it could be short of gas in the coming years," Mandil told a news conference today. Mandil said Hungary should not rely solely on the extension of Gazprom's Blue Stream pipeline to diversify its gas supply, 80% of which now comes from Russia, as that would not mean a new source, only a new route. He said three alternative projects should be considered together - Blue Stream, the European Union's Nabucco project, which would bring gas from the Caspian region, and a liquefied natural gas terminal on the Adriatic Sea. Both Blue Stream and the five-nation Nabucco are estimated to cost around €5 billion ($6.6 billion) and Hungary's government, which has closer ties with Moscow than most east European countries, has been accused of favouring the Russian alternative. The government said it had not picked either pipeline. "On diversification, Nabucco is much better, no doubt about that," Reuters quoted Mandil as saying. "The only problem is it is not a very clear project and not very well supported by industry and governments," he said. "LNG is certainly the best solution for diversification, it's gas that can come from anywhere in the world," he added. "The problem is that is has not started."