Shell, Total May Join Euro Gas Pipe

ST. PETERSBURG -- Gas giant Gazprom said Friday that oil majors Royal Dutch/Shell and French Total may join its $5.7 billion pipeline project from Russia to Germany and onward to Europe.

Gazprom, which already supplies Europe with one-quarter of its gas needs, is looking to increase supplies by at least 50 percent in the next decade and is developing new routes to cut its reliance on transit via Ukraine and Belarus.

"These companies [Total and Shell] are the most advanced in their proposals," Alexander Medvedev, the head of Gazprom's export arm, Gazexport, told a news conference.

The project envisages construction by 2007 of a 3,000-kilometer pipeline under the Baltic Sea to Germany with possible branches to Finland, Sweden and Britain, with the aim of shipping up to 35 billion cubic meters per year.

Gazprom exported a total of 130 bcm in 2002.

President Vladimir Putin said Thursday that Gazprom and German gas distributor Ruhrgas, part of the E.ON group, were soon due to sign an agreement to cooperate on the pipeline's construction.

Ruhrgas chairman Burckhard Bergmann told the same news conference, dedicated to celebrating the 30th anniversary of Russian gas supplies to Germany, that his company was continuing talks with Gazprom.

"We hope a deal will be signed in the near future, but we are not yet ready to discuss the details," he said.

He added the firm would take a final investment decision only after the entire list of participants had become clear, and estimated the project cost at between $5 billion and $6 billion.

Medvedev said the list of Gazprom's partners for the project was not limited to Ruhrgas, Total and Shell, and more firms might join. Gazprom has said it is planning to hold talks with Finnish Fortum, Britain's Centrica and Dutch Gasunie.

Energy Minister Igor Yusufov told a news conference in Moscow that the state was ready to guarantee loans for the project and urged Western majors to join the pipeline.

"We are waiting for them [foreign firms] right now, at the stage of a preliminary feasibility study," he said.

"You should understand that we are not going to wait for anybody. Russia has its own financial resources. If there is a need to give guarantees, I think the government will do it. There is no doubt that we are going to implement this project."