Rosneft ready to sue Gazprom on export pipeline

Business & Economy July 01, 2014, 18:38

The statement quotes Gazprom’s chief executive Alexei Miller as saying that the pipeline in question and gas supplies to China will only be based on Gazprom resources

MOSCOW, July 01. /ITAR-TASS/. Rosneft is determined to assert its right to use the Power of Siberia pipeline for export to China in court, says the Russian oil and gas company’s release.

As an infrastructure monopoly, Gazprom is obliged to provide independent producers with access to the transportation system. In that case, 40 billion cubic meters of gas produced by Rosneft in Eastern Siberia and at least the same amount produced by other independent companies would flow to the regions and provide electricity and energy.

Rosneft is going “to assert the people’s right to a decent life through negotiations within corporate procedures in cooperation with the regulators and, if needed, in court”, goes the statement.

The statement quotes Gazprom’s chief executive Alexei Miller as saying that the pipeline in question and gas supplies to China will only be based on Gazprom resources.

“This position radically contravenes the goal of developing Siberia and Russia’s Far East and directly breaches the law,” says the statement. “Gazprom’s argument is that its gas transportation system is considered an instrument to fulfill the interests of its shareholders and investors in boosting sales and their efficiency, obviously referring to an allegedly similar position of Rosneft that refused to worsen positions of its shareholders in favor of the TNK BP holding’s minority shareholders.”

According to the oil major, Gazprom ignores the fact that it is not an equal market player but a monopoly that, besides advantages, has some liabilities to other players, some of these duties guaranteed by law.

Gazprom had no place for independent producers’ gas in the planned Power of Siberia pipeline set to link Eastern Siberian fields with the Far Eastern sea ports for supplies to China as agreed with the Chinese National Petroleum Corporation (CNPC), Miller said earlier. Gazprom’s chief executive is sure the holding’s resource base, Chayanda and Kovykta fields will suffice for the supplies.

Rosneft has been the most active lobbyist of giving access to the pipeline to independent producers. The company is negotiating annual 18 billion cubic meters supplies from its deposits in Eastern Siberia to the pipeline but Gazprom refuses to open Power of Siberia for other companies. “Strangely enough, Gazprom’s approach is based solely on the ownership of the unified gas transportation system,” said Rosneft president, Igor Sechin.

Possible access scenarios were discussed at the latest meeting of the presidential energy complex commission. Two options have been proposed, according to a participant.

One scenario is that Gazprom buys gas from independent producers at a price equal to the export price, less duty and transportation expenses. This would allow the holding to retain the pipeline monopoly.

The other option is for independent companies to establish a consortium to construct gas transportation infrastructure and boost supplies to China, so that Gazprom would probably rescind supply monopoly in this direction, the source told ITAR-TASS.

Expansion of the Russian gas transportation system is necessary to increase supplies to Asia Pacific. Miller and CNPC president Zhou Jiping signed the 30-year contract on 38 billion cubic meters gas export on May 21.

“Independent producers say they are ready to export 20-30 billion cubic meters of gas a year to China,” said an official who participated in the meeting. “But the discussion of giving them access to the Eastern export route did not dispel uncertainty over whether their resource base can provide the necessary volumes over the long term.”

Neither Gazprom, nor China was ready to boost exports beyond those stipulated in the contract, he added.

Another source familiar with the discussion told ITAR-TASS an oil and gas consortium for construction of Eastern Gas Program pipelines on the basis of Power of Siberia was proposed by Sechin, who is also executive secretary of the presidential commission.

Read more on the site →