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. Last Updated: 07/27/2016

Gazprom Inks Deal To Boost EU Supply

Gas giant Gazprom chief Rem Vyakhirev said Wednesday that his company had signed a deal with European partners aimed at increasing gas supplies to Europe.

"Our French, German and Italian colleagues and ourselves have signed an agreement which will permit an increase in gas supplies to the European Union," Vyakhirev said.

Earlier Wednesday, a senior company source said Gazprom, Germany’s Ruhrgas and Wintershall, French Gaz de France and Italy’s Snam had set up a consortium to build a new natural gas pipeline to Europe bypassing Ukraine. He added official confirmation would come Thursday.

A Gazprom spokesman said the companies had signed a memorandum of intention to set up the consortium but could not immediately confirm the final deal. Vyakhirev made no mention of the consortium.

The consortium’s 600-kilometer pipeline, with a maximum capacity of 60 billion cubic meters of gas per year, could have two lines and would run through Belarus, Poland and Slovakia, bypassing Ukraine. Its cost is estimated at $2 billion.

"The pipeline aims to supply supplementary volumes of natural gas to cover contracts which already exist between Gazprom and its main European gas consumers," the source said.

The source said the consortium, of which one hundred percent of shares are owned by its founding companies, will organize the financing of the project and deal with the whole complex of technical and economic issues surrounding it.

It was not immediately clear whether the members of the consortium had obtained the consent of all the countries through which the pipeline would pass. Slovakia had earlier expressed its support for the pipeline, but Poland has opposed it, claiming it would hurt the interests of neighboring Ukraine.

Gazprom has said Ukraine has been pilfering its gas from the pipeline, which crosses its territory and through which Gazprom supplies around 90 percent of its 120 bcm per year exports to Europe.

In addition, Ukraine owes Russia around $2 billion for gas supplies.

On Tuesday, Russia and Ukraine reached a debt settlement agreement, and Russia also agreed to allow 35 bcm of Turkmen gas to be transported through its territory to Ukraine until the end of 2001. Gazprom’s deputy CEO -Pyotr Rodionov was quoted as saying Tuesday that the agreement would not deter plans to build a bypass.