Published October 29, 2012
MOSCOW – Gennady Timchenko, co-owner of Russia's No.2 gas producer Novatek , questioned Gazprom's 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 , 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.
"We have an agreement, according to which Gazprom Export will be exporting Yamal LNG gas for a certain fee. But Gazprom Export has yet to sign a single contract with the users and don't promise us anything," Timchenko said in the interview.
A Gazprom Export source said there was insufficient information on the project related to future LNG exports, including pricing.
"Gazprom Export intends to stick to the agreements, as planned, when it receives such information and documents," the source said.
Timchenko also criticized Gazprom's policy in Europe, which he said has contributed to a decline in market share.
Gazprom and its exporting arm, Gazprom Export, have been losing market share in Europe, where it covers around a quarter of natural gas needs, at a time of sagging demand combined with an influx of cheaper, alternative, fuels, such as liquefied natural gas (LNG).
"I believe that Gazprom Export's marketing campaign led to its European share decrease ... Liquefied natural gas has already come to the market. In essence, a new, cheaper gas market is emerging; one has to see such things," Timchenko told the magazine.
An official for Gazprom Export declined to comment.
Gazprom's exports to Europe, a vital source of revenue, are likely to decline this year from the 150 billion cubic metres it sold last year, analysts say.
Gazprom has also become the target of a European Commission anti-monopoly investigation into whether it hindered the free flow of gas supply across the continent.
(Reporting by Vladimir Soldatkin; Editing by Lidia Kelly and Jane Baird)