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Gazprom boss stresses Europe's dependence on Russian energy

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Gazprom boss stresses Europe's dependence on Russian energy

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Following disruptions to gas supplies from Russia over two winters, Europe is demanding better guarantees of energy security from Moscow. It also wants to reduce its reliance on Kremlin controlled sources, getting its gas from more countries.

The state dominated Russian energy giant Gazprom is sceptical about that effort. In an exclusive interview, the Deputy Chairman and head of Gazprom’s export division, Alexander Medvedev, told EuroNews that Europe will actually use more Russian gas in the future as it is vital to the region’s economic competitiveness.

EuroNews:

“Talking about UK payments to the EU, former British Prime Minister Margaret Thatcher once famously said ‘I want my money back.’ Would you say something like that in your talks with your ex-Soviet partners?”

Medvedev:

“It is a striking phrase, but it’s not part of our dialogue with our ex-Soviet partners. We don’t ask for any compensation for the many years when we were practically subsiding their economies, delivering gas at a price which made no profit, which didn’t even cover our transport and gas extraction costs. We’re not talking about compensation. What we want is to have market relations with all our partners today. And, step by step, we’re moving towards those relations, proposing different payment schemes to them. For example, the gas can be partially paid for by industrial assets which interest us. That is what happened with Armenia and Belarus. Moreover, Russia is also moving – step by step – to the principle of pricing gas at the market rate.”

EuroNews:

“There’ve been supply cut problems – solved at the last moment – involving Ukraine and then Belarus. Europe is worried and asking for more guarantees about supplies. Can you give them?”

Medvedev:

“I want to stress that there were no supply cuts from our side. Fully respecting the contracts we have with our European partners, we did supply, are supplying, and will supply gas. If we analyse objectively, without being emotional, what happened last winter and this winter, we will see that Gazprom was doing everything possible to overcome the risks of transporting our gas through Ukraine and Belarus to the European market. Gazprom took all the responsibility for the conflict on its own shoulders and resolved it without any help from European countries. Today there are no risks at all to our deliveries to Europe and all our export obligations will be fulfilled.”

EuroNews:

“Right now, Europe is working out its own new energy strategy, calling for a diversification of sources. Could that lead to a fall in Russian gas supplies to Europe?”

Medvedev:

“Basic arithmetic shows that, even without signing a single new contract, just by fulfilling our current obligations, taking into consideration the growth of demand in Europe and a decrease in Europe’s own gas production, the role of Russian gas will grow from the current 26% to 33% by 2010-2015. Calls for diversification don’t carry much weight, because in a long-term perspective there will only be three main sources for the world gas market: Russia, Qatar and Iran. As modern gas markets have been built, over the last few years, Russia has played a very important role. It’s also due to Russian gas that Europe has become so competitive today.”

EuroNews:

“Gazprom has decided to develop the Shtokman gas field in the Barents Sea on its own. A decision that has been criticised by foreign energy companies. Why was that decision made?

Medvedev:

“After long negotiations with the potential participants, we realised we were not happy with their estimation of reserves and the assets they could offer us in exchange. So we took the decision to keep the Shtokman field under just our control.
At the same time, in the near future, we will be negotiating with those foreign groups we have short listed, as well as other major international energy and engineering companies, about their participation in this project, on a contractual basis.

EuroNews:

“Gazprom is launching a major PR campaign aimed at improving its image in the West. It is said that Gazprom wants to promote itself as a commercial entity, and distance itself from the Kremlin. Why?”

Medvedev:

“Our head office is 15 kilometres away from the Kremlin. Considering the Moscow traffic jams, we can say it’s quite a distance … Gazprom is working as a commercially-oriented company, in which, however, the state has a controlling stake. And I, personally, don5;t see any contradiction between the fact the state has a controlling stake and that we are a commercially-oriented company which works for more capitalisation and profit. As to our image, it’s natural that there’s a lot of interest in a company which is one of the world’s five biggest. For us the relationship with investors and with the media is all part of our business. We did reach conclusions from the lessons learned in the last two winters (the Ukrainian and Belarusian crises) and these lessons are that we should explain and clarify better our steps and strategies. That’s why I’m always happy to give interviews, and so are many of my colleagues.