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. Last Updated: 07/27/2016

Putin Eyes Belgium as Gas Export Hub

APVerhofstadt and Putin meeting in Novo-Ogaryovo. Gazprom says it wants to build a gas storage facility in Belgium.
NOVO-OGARYOVO, Moscow Region -- President Vladimir Putin on Friday discussed with Belgian Prime Minister Guy Verhofstadt building a large gas storage facility in Belgium that could become a hub for exports to Europe.

Meeting at Putin's residence outside Moscow, the two leaders discussed ways to increase cooperation in diamonds, electricity and the nuclear industry, with energy talks topping the agenda.

"We may implement a rather big project that would be useful not only for both of our nations but also for all of Europe," Putin told Verhofstadt. "That would be building a rather big gas storage facility even for Europe, which would allow for the shipment of gas to other, third European nations, including Britain, using subsea transportation systems that start in Belgium," he said.

Gazprom is one of the main shippers of gas through a subsea pipeline from the Belgian port of Zeebrugge to Bacton, on Britain's southeast coast.

Verhofstadt, who earlier Friday met with Gazprom CEO Alexei Miller, said Belgium agreed with Gazprom that there were "big opportunities for our further cooperation." He said Belgium could serve as a hub for gas transport, without elaborating on the storage facility. Ahead of his visit to Russia, Verhofstadt said in comments carried by Interfax on Wednesday that he welcomed plans by Gazprom and Belgian gas transport firm Fluxys to build Belgium-based storage facilities.

Gazprom said in a statement Friday that the depository could be built in Poederlee, a town near the port of Antwerp. An agreement to build it could be signed during Putin's visit to Belgium in May, Kommersant reported Saturday, without citing anyone.

Last June, Gazexport, a Gazprom subsidiary, established a joint venture with Fluxys, to explore possibilities for underground natural gas storage. Berenice Crabs, a spokeswoman for Fluxys, said Friday that the project was still at an early stage and exploratory drilling at the site would take place in the second half of the year.

Some gas experts cast doubt on whether the depository was feasible at the Poederlee site.

Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies, said Poederlee's geology might not be suitable for gas storage facilities. "Otherwise, they'd have built it already," he said.

Artyom Konchin, an analyst with Aton, said the depository would help Gazprom become more flexible, storing gas there instead of just shutting off the valve when demand drops.

Gazprom has also expressed interest in Distrigas, Belgium's major gas supplier, which is expected to be up for grabs as the country opens its energy markets up to competition. In remarks carried by Interfax on Wednesday, Verhofstadt said he wouldn't oppose a Gazprom bid, saying: "We welcome investors from any country."

Gazprom is seeking access to European retail markets, sparking concern about its heavy-handed tactics.

Belgian executives, including from Fluxys and Distrigas, accompanied Verhofstadt on his one-day visit to Moscow, the Kremlin said in a statement.

Putin and his foreign policy adviser Sergei Prikhodko also discussed increasing cooperation in the diamond, electricity and nuclear industries, among others, with Verhofstadt and Belgian Ambassador Vincent Mertens de Wilmars.

Verhofstadt also met with Alrosa president Sergei Vybornov earlier Friday, and said Belgium was keen to expand cooperation in the diamond industry.