Italy's Enel undaunted by Russia political risks

By Natalya Shurmina

SREDNEURALSK, Russia, Sept 13 (Reuters) - The head of Italy's Enel (ENEI.MI), Fulvio Conti, sees no political risks facing his company in Russia, despite Moscow's weakened relations with the West after the war in Georgia, he said on Saturday.

"There are no reasons for the political situation to impact our projects... I am not concerned and not worried, and don't see anything terrible. Russia is a part of Europe, and relations will develop," Conti told reporters.

The energy major plans to invest a total of $8 billion into its projects in Russia, including in the gas and electricity sectors, where some of Enel's work has been given the blessing of Prime Minister Vladimir Putin before going forward.

"When we work in this country, we feel like Russian citizens," Conti said, adding that Enel had already invested 3.3 billion euros ($4.62 billion) in Russia, and would pour in another 2.2 billion euros before 2012.

The Russian investment climate suffered a massive blow from last month's war in Georgia. The conflict, fought over Georgia's pro-Russian seperatist regions of Abkhazia and South Ossetia, heightened political risks as falling commodities prices and a weakening rouble were already weighing down on Russia's economy.

Danske Bank estimated last week that increased political risk premiums have cost the Russian stock market 15-20 percent in losses out of a total of almost 50 percent that Russian indexes have shed since May.

GAZPROM COOPERATION

Conti spoke at the groundbreaking ceremony for the construction of a 410-megawatt turbine unit at the Sredneuralsk Power Station in a suburb of the city of Yekaterinburg in the Ural mountains.

The power station is owned by electricity generator OGK-5 (OGKE.MM), which Enel acquired in February for $4 billion.

Half of the fuel for the new turbine will come from a joint natural gas venture between Enel and another Italian energy giant, Eni (ENI.MI). Last April, Enel spent $852 million creating the venture to acquire gas fields previously owned by bankrupt Russian oil firm YUKOS.

"The first gas will start flowing in 2010," Conti said.

Enel and Eni are cooperating on this project with Russia's natural gas export monopoly Gazprom (GAZP.MM), which has long been seeking access to European energy assets and infrastructure.

In March, Conti said Enel would give Gazprom a stake in an Italian power plant to reciprocate for gas supplies to OGK-5.

"We let Gazprom choose between stakes in three electricity stations. So far there is no decision. Gazprom is looking at the options, but there is still enough time to make a choice," Conti said on Saturday.