Russian competitor seeks end to Gazprom export monopoly

Russian gas company Novatek has renewed its long-standing demand to market liquefied natural gas (LNG) directly to foreign customers without going through monopoly gas exporter Gazprom.

Novatek Chief Executive Leonid Mikhelson told the German business daily Handelsblatt that building LNG facilities on the Arctic Yamal peninsula with Gazprom would be made easier if Novatek was allowed to export directly.

"Direct exports would make the financing of the giant project [Yamal] easier and reduce risks," he said, adding he expected a decision on the issue within a few months. "A positive decision would be very helpful for Russia's gas industry."

Novatek – in which both Gazprom and Total have stakes – and Gazprom signed a deal last week to build an LNG terminal in partnership with Total with an initial annual capacity of 16.5 million tonnes.

The Kremlin is concerned about declining markets for the gas which it sends via pipeline to European markets, a key source of revenues for Gazprom, and therefore wants to build LNG terminals to be able to ship gas around the world.

Mikhelson also said Novatek needed the European Union's readiness to support long-term gas shipment contracts, to support Yamal, as the huge financial commitments could not be shouldered without guarantees the gas would be sold.

He said EU companies would benefit if Yamal gathered speed. "Firms like BASF and Siemens want to submit bids at (Yamal) tenders and become contractual partners," he said.

However the EU wishes to avoid long-term gas contracts because it wants its industry to benefit from lower-cost spot gas supplies.

Novatek last July signed a 10-year supply deal with German utility EnBW, setting foot in the lucrative European gas market by dodging the Russian monopoly situation via a Switzerland-based trading arm, which officially does not ship gas. 

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