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    Putin asks for proposals for Rosneft supplying gas to Europe


Rosneft appears closer than ever before to gaining access to Gazprom's export pipelines.

by: joseph Murphy

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Putin asks for proposals for Rosneft supplying gas to Europe

Russian president Vladimir Putin has asked the government and Gazprom and Rosneft to submit proposals by March next year for the annual supply of 10bn m3/year of gas by Rosneft to the European market, Interfax reported on December 7.

For years, Rosneft has been lobbying for access to Gazprom's export pipelines, but the latter has fought hard against the breaking up of its monopoly over these supplies. The Russian government has also opposed the move, fearing that competition between Russian gas suppliers internationally will drive down prices and thereby diminish budget revenues.

Rosneft's latest push for access comes after European front-month gas prices have soared in recent months on the back of soaring demand and slower growth in supplies, and the situation has been exacerbated by low levels of gas in storage, prompting fears of winter shortages.

According to Russia's Kommersant newspaper, Rosneft CEO Igor Sechin asked permission to send 10bn m3 of gas annually to Europe in August, and in November, Russian energy minister Nikolay Shulginov said his ministry supported the proposal but would leave it up to Rosneft and Gazprom to make arrangements for the supplies between them.

Rosneft is eager to build up its domestic gas business, but production growth has been slower than expected over the years because of a post-2014 economic slowdown in Russia. Relatively low domestic gas prices have also undermined the investment case for some of its projects.

The company was finally able to bring on stream the next phase of its Rospan gas project in west Siberia earlier this year. Rospan is expected to flow 21bn m3/year of gas at full capacity, up from 6.24bn m3 in 2020. Its second major gas project is Kharampurneftegaz, which flowed under 1bn mof gas last year, though output is expected to reach 11bn m3/yr under the first stage of its development, rising eventually to 25bn m3/yr.

Rosneft's partner at Kharampurneftegaz is BP. The pair signed a strategic agreement on the sale and purchase of gas in Europe back in 2017.