UPDATE 3-Putin says Russia closely watching EU Gazprom raids

Mon Oct 3, 2011 11:59am EDT

* European raids on Gazprom units stoke tensions

* Putin warns he is watching situation closely

* Russian gas exports to Europe up 25 bcm on year

* Gazprom CEO says export to Asia set to grow (Adds Gazprom CEO on export to Asia)

By Thomas Grove

MOSCOW, Oct 3 (Reuters) - Russia's Vladimir Putin said Moscow was paying close attention to recent European raids on Gazprom subsidiaries, which have been linked to concerns in Brussels over the continent's dependence on supplies of Siberian natural gas.

The prime minister told the gas export monopoly to cooperate with European authorities, who ordered searches on units in central and eastern Europe last week as part of a probe into firms involved in the supply, transmission and storage of natural gas.

"The government of Russia will follow what is going on around Gazprom in the most attentive way," Putin told Gazprom Chief Executive Alexei Miller in a meeting at his Novo-Ogaryovo residence outside Moscow on Monday.

Moscow wants to keep a firm grip on one of the world's biggest gas markets. Russia is opening the 55 billion cubic metre capacity Nord Stream pipeline to Europe this week and plans to build another massive pipeline through southern Europe.

Europe, meanwhile, is likely to be more dependent than ever on Russian gas supplies as Germany phases out its nuclear power and other EU countries shelve plans to build reactors.

The European Union's executive commission said the raids were linked to suspicions over anti-competitive practices. Sources on both sides said they were linked to EU efforts to reduce reliance on Russian gas, which makes up about a quarter of Europe's supplies.

Miller said Gazprom, Russia's biggest company and the largest gas exporter in the world, was ready to defend its rights according to law.

"You must cooperate with the authorities of the countries, where you work, and it is necessary to be open and help the agencies who are carrying out the checks and supply them with objective and full information," Putin said.

Putin, who said late last month that he will run for president in an election next year, told Miller he wanted to be kept up to date on the situation with Europe and asked how Gazprom is diversifying its exports away from Europe.

"The volumes of Russian gas planned for purchases by our Asian partners may in the medium term exceed volumes supplied to the European market," Miller said.

GAS WARS

Miller, who called the raids an "unpleasant surprise", said Nord Stream was due to start pumping gas on Nov. 8.

Nord Stream, which will pump gas into Germany, and the planned South Stream pipeline to be laid on the bed of the Black Sea have raised fears in Europe over Russia's increasing stake in supplying the continent.

Russian gas exports to Europe grew by 25 billion cubic metres in the first nine months of the year, Miller said.

"The growth of consumption is tied first of all to growth of deliveries of gas to the countries that are the economic leaders of the European Union. The tendency we are seeing will continue with a growth in Russian gas volumes to Europe," he said.

Moscow's critics say Russia could use its position in the gas market as a bargaining chip in political disputes.

Europe was badly hit in 2006 and 2009 when gas supplies were turned off after a pricing dispute between Moscow and transit country Ukraine, the route for around 80 percent of Gazprom's exports to Europe.

Those disputes largely underpinned the conception of the European Union-backed Nabucco pipeline, the chief European rival to Russia's South Stream. Nabucco aims to pump 31 billion cubic metres of a gas a year through Turkey and on to Europe.

Supplies from the rich Caspian Sea region, especially in Azerbaijan, are being eyed by western firms, which want to reshape the make-up of Europe's gas imports.

Competition among three major pipeline consortia eager to export gas from the second phase of production at Azerbaijan's Shah-Deniz natural gas field to Europe heated up ahead of an Oct. 1 deadline for them to submit bids.

Even with a new map being drawn of European energy supplies, Russian pipeline exports are expected to dwarf those of rivals.

Plans by Germany to phase out nuclear power plants by 2022 because of fears tied to a nuclear disaster in Japan have led to calls to reinforce joint action over the bloc's energy security problems. (Editing by Steve Gutterman and Jane Baird)

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