Russ Oil-Gas

31 August 2007 - Upstream OnLine - The deputy head of Russian gas giant Gazprom Alexander Medvedev will meet with officials from German utility E.ON in a bid to break the deadlock over a proposed deal covering the Yuzhno-Russkoye gas field, Medvedev was quoted as saying today. The main issue they will discuss is Gazprom's agreement from last year to sell a stake of 25% minus one share in Yuzhno-Russkoye to E.ON's Ruhrgas unit. E.ON agreed to pay Gazprom €1.2 billion ($1.60 billion) and to give it just under 50% of its Hungarian gas trading and storage units. E.ON holds around 6.4% of Gazprom's stock. "I will meet with the management of Eon Ruhrgas before this week is over," Medvedev said in an interview with Suddeutsche Zeitung. "There is still hope that we can find agreement on the difficult issues." Among the difficult issues is the fact that Gazprom is not entirely happy with developments in Hungary's energy sector. "Unfortunately the situation in Hungary is not developing as expected. It's not just the price of the assets, but also the regulation of the Hungarian gas market and the role of other market participants," Reuters quoted him as telling the Munich-based daily. He said without elaborating that this was forcing Gazprom "to look for other solutions". Asked if Gazprom now wanted E.ON to offer it something else, Medvedev said: "I don't want to name any specific assets." Russia has been criticised for making it difficult for foreign companies to participate in Russia's energy market. Medvedev dismissed this idea. "It's absolutely untrue that foreign companies are barred from getting access to Russian resources," he said. "But there are rules for working in this market." One such rule, he said, is that with gas fields of "particularly strategic importance" Gazprom or another Russian state enterprise has to have a stake of at least 51%. He reiterated that Gazprom would like to take stakes in European companies but named no specific targets. Medvedev also said that construction on the Baltic sea gas pipeline being built in a joint venture with E.ON and BASF was on schedule despite a recent change in the route of the pipeline.