Putin orders Gazprom to sell Arctic railway

Russian Prime Minister Vladimir Putin addresses the audience during an investment forum in the Black Sea resort of Sochi, September 18, 2009.

YURIBEI, Russia (Reuters) - Russian gas company Gazprom should sell a railroad it values at 130 billion roubles ($4.3 billion) to focus on producing gas at the Arctic field it will serve, Prime Minister Vladimir Putin said.

Gazprom chief executive Alexei Miller agreed Thursday it should sell the railway line, but the powerful head of Russian Railways, Vladimir Yakunin, told reporters: "For this kind of money, let them keep it."

Work on the 572 km railway to the Bovanenkovo gas field, which holds 4.9 trillion cubic meters of gas, restarted four years ago when Gazprom decided to complete the Soviet-era project to open up reserves on the remote Yamal peninsula.

The route, expected to become operational next year in time for the proposed 2012 launch of the Bovanenkovo field, runs across the longest bridge north of the Arctic Circle, which Miller opened Thursday.

Hours after the bridge's opening ceremony, Putin said the state rail monopoly would be a more suitable owner of the line.

"It would be better for Russian Railways to buy and operate this railroad, while Gazprom would deal with production and development," Putin told a meeting of government officials and foreign energy executives in the city of Salekhard.

"This additional burden on Gazprom is not needed," he said.

Miller, addressing the meeting, valued the railroad at 130 billion roubles and agreed Gazprom should sell it.

LONGEST BRIDGE

The construction of the railroad and the bridge across the Yuribei river revived a project begun in the latter days of the Soviet Union to conquer vast mineral reserves on the Yamal peninsula, which juts into the Arctic Ocean north of Salekhard.

Russia, the world's largest gas producer, rediscovered this drive during a decade of high energy prices that coincided with Putin's tenure as president. The Yamal region has enough gas to satisfy world demand for an estimated five years.

Russia is courting foreign energy majors with a view to developing gas projects in the region.

"In the near future, Yamal will become Russia's next large gas-producing area," Miller told a group of about 50 workers gathered at the bridge for the opening ceremony.

The railroad, which will carry workers and supplies to the gas fields, sits on a frozen dyke. Trains are not allowed above 40 km per hour.

In the past two decades, Russia has been living largely on Soviet infrastructure and experts say it is time to start building before that infrastructure collapses.

The builders say the bridge, a flexible metal construction on 110 pillars inserted in the permafrost, was built in only 341 days, far exceeding the pace of construction in Soviet times.

About 7,000 workers, recruited from different regions of Russia, work in temperatures that plummet to minus 50 degrees Celsius in winter.

"It's better to work in minus 40 or 50, when frost bites but there is very little wind, than in minus 20, when it's usually very windy," said 46-year-old engineer Alexander Kazarov, who arrived in Yamal in 1988 after graduating from construction college in Moscow.

(Writing by Robin Paxton; Editing by Dan Lalor)

($1 = 30.00 roubles)