ST. PETERSBURG, June 13 (RIA Novosti) - Gazprom (RTS: GAZP) boss Alexei Miller said Tuesday that long-term pipeline contracts rather than liquefied natural gas should remain the main gas transportation scheme for Europe.
"For Europe, long-term contracts for pipeline gas supplies should remain a key option," Alexei Miller said on the sidelines of an economic forum in Russia's second city, adding that such contracts guaranteed uninterrupted supplies and predictable prices.
Miller said LNG technologies were not as reliable as pipeline transportation technology at the moment, and reiterated the state-controlled gas giant's position in favor of long-term gas export projects, some of which have been signed for 25 years.
Gazprom sees the contracts as a guarantee that it will retain its share in the European markets and its multibillion-dollar investment in export projects will pay back.
European countries looking to reduce energy dependence on Russia are seeking to diversify their energy supplies, and some have mentioned LNG as a way to improve their energy security.
The debate was prompted partially by a gas price row between Russia and Ukraine early in 2006, when Russia briefly cut off exports to its former Soviet neighbor, which transits Russian gas en route to European markets. Some European consumers reported a drop in supplies at the time, and Russia accused Ukraine of tapping transit gas.
But Miller said liquefied gas projects had promoted the globalization of the natural gas market, and Gazprom was now entering markets that had previously been inaccessible to Russian companies.
Gazprom supplies liquefied gas to the United States, one of the most lucrative LNG markets, via British Gaz Group and Shell Western BV. Gazprom is seeking direct supplies to the U.S., which doubled LNG imports to around 18 billion cubic meters from 2002 to 2004 and plans to increase them several times over by 2010, according to the Web site of Gazexport, Gazprom's export arm.
The Russian gas giant also plans to liquefy gas to be produced from the Shtokman field, which holds an estimated 3.2 trillion cubic meters of natural gas and 31 million metric tons of gas condensate in the Barents Sea. LNG will be exported mainly to the U.S., but 25% is intended for European markets.
Gazprom is also mulling cooperation in LNG production and supplies to the world markets with Algeria, whose gas reserves total 4.55 trillion cubic meters.
