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Gazprom expanding ties to U.S. firms Plan to give government majority of shares could bring more deals Allen Baker Petroleum News Contributing Writer
Russia’s giant gas company OAO Gazprom could be an awakening bear. New clout comes from its pending majority ownership by the government and liberation from limits on foreign ownership that could bring in significant new capital.
The first sign of the company’s new assertiveness came Sept. 22, with the signing of a deal with ChevronTexaco, which is based in San Ramon, Calif.
It’s a six-month memorandum of understanding for the two companies to undertake joint feasibility studies on projects in Russia and the United States. Among the projects mentioned is an LNG production line in Russia, an LNG import terminal in North America, and a role for ChevronTexaco in existing Gazprom projects in northwestern Siberia. Russian reserves attractive Studies are only that, of course, and real investments may not come out of the initial handshakes. But major oil companies are hungry for a safe way to tap into the huge reserves available in Russia, which are only rivaled in the politically unstable Middle East.
“ChevronTexaco maintains a strong interest in making additional major, long-term investments in Russia that will help develop the country’s long-term energy potential,” ChevronTexaco CEO Dave Reilly said in announcing the agreement. “In addition, the development of a global, integrated natural gas business is a cornerstone of our own growth strategy. The signing of an MOU with a company of Gazprom’s stature is a positive step toward achieving both goals.”
While U.S. companies want access to Russian oil and gas, they’re leery of getting crosswise with Russian officials. Gazprom’s big asset will be majority control by the Russian government itself, so foreign companies will at least know they’re dealing with the country’s most powerful entities. At a minimum, Gazprom should have a sort of immunity from the kind of tax issues that brought Yukos to its knees. Majority government control Russian President Vladimir Putin announced Sept. 14 that Gazprom, already 39 percent owned by the government, would buy Russia’s wholly owned oil company Rosneft.
With the Gazprom shares received for Rosneft, Russia will have well over 50 percent of the gas giant. Under Russian laws, that would open the way for wider foreign ownership of Gazprom.
The new entity will have reserves of about 650 trillion cubic feet of natural gas and 2.4 billion barrels of oil. That translates into more than 120 billion barrels of oil equivalent, far more than ChevronTexaco, or for that matter ExxonMobil.
Alexei Miller, Gazprom’s chief executive, visited the United States Sept. 21-23, meeting with executives of ExxonMobil, ConocoPhillips, and Petro-Canada.
The ChevronTexaco agreement is vital for Gazprom, Miller noted, because “access to the American gas market is strategically important, and in addition, we are keen to bring advanced LNG production and transportation technologies to Russia.” The formal study agreement is between Chevron Neftegaz Inc., an affiliate of ChevronTexaco, and Gazprom.
Gazprom plans to start supplying liquefied natural gas to the United States as early as next year by swapping its fuel in Europe for LNG shipments to North America, the company said Sept. 24. By 2010, Gazprom plans to be shipping its own LNG to the United States. Gazprom seeks Siberian development As for Russian field development, Gazprom is said to be keen to sign a supply agreement so it can obtain financing of about $10 billion to develop the Shtokmanov field, with an estimated resource of more than 100 tcf of natural gas. Statoil ASA is already involved in that project and others in the Barents Sea area.
Gazprom is already the world’s largest gas producer, as well as Russia’s largest company.
ChevronTexaco’s major investment in Russia up to now has been its 15 percent stake in the $2.6 billion Caspian Pipeline Consortium, though it was also involved in the Sakhalin-3 deal that fell through when Russia pulled out of a production-sharing agreement. ChevronTexaco is said to be interested in an investment in Russia in the $5 billion to $10 billion range.
Rival BP, meanwhile, is putting $7.7 billion into the TNK-BP partnership. France’s Total has recently announced a $1 billion deal for a 25 percent stake in the Russian company OAO Novatek. And ConocoPhillips is reported to be the top contender for at least a $2 billion stake in Lukoil.
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