Russ Oil-Gas

MOSCOW, June 24 (RIA Novosti) - An Italian engineering company said Tuesday it had signed a contract to lay the first section of the Nord Stream gas pipeline. Saipem, 43% of whose shares are owned by the Italian energy giant Eni SpA, agreed the deal - worth more than $1 billion - with Nord Stream AG, the operator of the pipeline construction project. The first part of the 1,200 km (746-mile) pipeline, which will run from Russia to Germany under the Baltic Sea, is scheduled to start pumping gas in 2010. Russian energy giant Gazprom holds a 51% stake in operator Nord Stream AG, with Germany's BASF and E.ON each holding 24.5%.

German firm wrangles with Gazprom over gas field

June 24, 2008 - Russia Today - Germany energy company E.On Ruhrgas is hoping to finalise an asset swap with Gazprom for 25 per cent of the Yuzhnorusskoe gas field by the end of the year. But the chairman of E.On says it may drop the idea of buying a stake in one of Russia’s larges gas fields if Gazprom rejects its new offer. For four years E.On Ruhrgas has been trying to become Gazprom's partner in developing Yuzhnorusskoe. The gas field has proven reserves of 700 billion cubic metres of gas. In principle Gazprom have agreed to exchange a 25 per cent stake in Yuzhnorusskoe for E.On assets in Europe but so far the two parties have failed to agree terms. Bernhard Reutersberg, Chairman of E.On Ruhrgas, says the value of Yuzhnorusskoe depends on oil prices. “If you look at the development of these prices within the last four years, then of course you’ll see that this gas field is increasing in value. And, of course, you need to fill the gap with new assets”. In December last year E.On offered Gazprom its European electricity production assets and underground gas storage facilities. After almost six months Gazprom announced that the structure of the assets had once again been changed. E.On’s Reutersberg says the negotiations can’t continue forever. “They will be over when we come to a solution or if we have no hope that there will be a solution. Both options are possible, but I’m positive that we’ll come to an agreement this year”. Gazprom says it will finalise the deal with E.On this year. But as energy prices continue to grow, market watchers doubt that the two parties will agree on asset valuation any time soon.