Gazprom takes a hit from regional unrest
The Russian gas giant Gazprom is emerging as one of the biggest potential losers from the continuing unrest in the Middle East.
It was only last week that Gazprom Neft, the company's oil arm, signed an agreement to take a stake in the Elephant oil project in Libya. According to the deal, Gazprom is acquiring a 33.3 per cent stake worth US$178 million. The Elephant oilfield has reserves estimated at 700 million barrels.
A number of foreign companies were reported to have suspended explorations and to be evacuating family members from Libya as conditions worsened yesterday.
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Gazprom, which has staff based in Tripoli, said it was monitoring the current unrest in Libya but by late yesterday had not made a decision on withdrawing employees.
In Bahrain, where protests entered their ninth consecutive day, Gazprom has had talks with government officials to create a hub there to supply liquefied natural gas (LNG) to neighbouring GCC countries, as well as India and Pakistan.
Gazprom is part of a group of international companies operating off the coast of Iran in the giant South Pars gasfield, the largest known gas reserves in the world.
Gazprom is also facing declining market share in Europe because of a surge in cheaper LNG imports by buyers on the continent. The company is therefore increasingly dependent on reaching a deal to supply gas to China.
After years of talks to supply gas to China, Gazprom's deputy chief executive, Alexander Medvedev, said last week the chances of an agreement had increased. "We have agreed on all the basic terms for gas supplies, except prices," Mr Medvedev said.
Gazprom shareholders are not the only ones monitoring the company's performance closely: the Kremlin collected 15 per cent of its tax revenue from the gas company last year.
Updated: February 22, 2011 04:00 AM