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Thursday, February 05, 2009

RWE not planning to ask Gazprom for compensation

ESSEN, Germany, Feb 5, 2009 (Reuters by Vera Eckert) - German utility RWE will not ask Russian supplier Gazprom for compensation for gas not delivered due to a row between Russia and Ukraine last month, a senior supply executive said on Thursday. "We currently don't intend to demand compensation of any kind," Stefan Judisch, chief commercial officer of the RWE Supply & Trading unit, told reporters at a workshop at the Essen headquarters. RWE did not receive Russian gas via Ukraine for nearly three weeks due to the dispute that disrupted gas flows to Europe. Rival E.ON Ruhrgas recently said it was looking into possible demands for compensation once it knew how much it had lost but Gazprom signalled those demands were unjustified. RWE kept up full supply to customers using alternative supply channels and underground storage. It also helped make up for supply shortfalls in the Czech Republic and Slovakia. Judisch also said the 10-year transit contract since established between Russia and Ukraine did not offer guarantees that conflicts over volumes and fees might not erupt again. There might also be technical disruptions due to the Ukrainian grid, he said. RWE has reaffirmed its plans to diversify supply routes, namely as a partner in the Nabucco project to bring Caspian region gas to Europe via Turkey. Also, with U.S. partner Excelerate, RWE plans to build a liquefied natural gas landing terminal at Wilhelmshaven on the North Sea coast for a likely start in 2012, as a way to avoid costly onshore reception and regasification facilities. Judisch said eastern European gas distribution partners hit by the transit row were keen to explore LNG options fast. First results of new efforts to boost LNG might be ready to go by next winter, he added, without giving details. On Nabucco, RWE executives stressed intergovernmental agreements (IGAs) promising support for the construction and operation of the pipeline must be signed between the countries on the route in the first half of 2009 as a precondition for market testing to begin. They said inspiring trust in the supplier countries was more important than procuring gas at origin, or securing capital. "We don't see supply as a reason for Nabucco not to happen," said Jeremy Ellis, head of business development at the Supply & Trading unit. "But the IGA documents must be signed so that supply can begin to form." Nabucco partners are also seeking more regulatory exemptions from the EU, having been assured that tariffs will not be regulated and 50 percent of the pipeline space will be given to consortium members before third parties.

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