Timchenko challenges Gazprom's gas export monopoly: Forbes

Mon Oct 29, 2012 5:48am EDT
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MOSCOW (Reuters) - Gennady Timchenko, co-owner of Russia's No.2 gas producer Novatek NVTK.MM, questioned Gazprom's (GAZP.MM: Quote) monopoly on gas exports and said Novatek was lobbying for changes in the law to be able to export itself, Forbes magazine reported.

Novatek is forced to sell the gas it produces only in Russia, where prices are regulated by the government, under the provisions of a 2006 law that gives state-owned Gazprom, Russia's largest gas producer, exclusive rights to sell gas abroad.

Timochenko said Novatek and Swiss-based trading house Gunvor, which he also co-owns, may join efforts in the gas business.

"Novatek wants to be present on the European gas market, while the Europeans want to see not only Gazprom there," he told Forbes in an interview published in the latest issue of the magazine.

Novatek, in partnership with France's Total (TOTF.PA: Quote), plans to build an LNG plant in the Arctic peninsula of Yamal, which is seen as Russia's next major gas producing region as West Siberian brownfields have become depleted.

The rights to ship gas from Yamal are crucial for Novatek.

"We have to understand that is we want to launch a project like this, we need to amend the legislative framework. That's it," Timchenko, who controls 23.49 percent in Novatek, said.

Production at Yamal LNG is set to begin in 2016 with initial annual output of 5 million tonnes of super-cooled liquefied natural gas, rising to 15 million in 2018.

Gazprom will act as an exporting agent by shipping the gas from Yamal LNG, though details of this agreement are not yet clear. Timchenko voiced his frustration over uncertainty about how exactly LNG from the plant will be shipped overseas.   Continued...