MOSCOW Nov 19 President Vladimir Putin poured
cold water on a bid by Russia's top independent gas firm Novatek
to export independently of Gazprom, in a move seen as
maintaining the monopoly of the state behemoth.
Novatek co-owner Gennady Timchenko had told the
Russian edition of Forbes magazine that Novatek should be able
to go it alone.
Timchenko has built one of the biggest business empires in
Russia during Putin's 12-year rule and the Russian opposition
has said his success was due to close ties with the leader,
something Timchenko and Putin himself have repeatedly denied.
Novatek's rapid rise prompted many analysts to think Gazprom
might soon start sharing its export monopoly with Novatek.
But on Monday, Putin met Novatek's Chief Executive Leonid
Mikhelson at Putin's suburban Moscow residence and told him to
work with state-controlled Gazprom's export arm to
secure a market for the gas.
"I note that your company, together with Gazprom, or, more
precisely, with Gazprom Export, must work on preliminary sale
contracts to deliver the product (LNG) to our main partners
abroad," Putin told Mikhelson.
"You and I know how this kind of work is done, and
investments can be secured only on existing contracts," Putin
added in remarks carried by the Kremlin web site.
Mikhelson said there was interest in the gas and some tweaks
to Russian law were required to obtain project financing.
"The main thing is that we are on schedule," he told Putin,
according to the Kremlin transcript.
Putin's comments come as a host of projects compete to
liquefy Russian gas, the largest conventional reserves in the
world. Putin has told Gazprom to diversify away from its core
European market, where demand is falling, and work on an
LNG-based strategy to supply the growing markets of Asia.
Merrill Lynch oil and gas analyst Karen Kostanian said
Putin's meeting with Mikhelson showed how keen the government
was to rapidly diversify Russian gas exports from European
pipelines because volumes delivered to Europe and former Soviet
satellite states had fallen since 2008.
"While we believe Russia's push for LNG is the only right
solution to disappearing demand both domestically and in Europe,
it might face increasing competition from upcoming United
States, Qatari and Australian LNG capacity," said Kostanian.
Russia's LNG strategy suffered a setback with the effective
collapse of talks to save the Shtokman consortium, a Gazprom-led
group formed to develop one of the world's largest offshore gas
fields. The partners decided it would be too expensive in the
The Kremlin would be loath to see a second LNG project
delayed or cancelled.