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. Last Updated: 07/27/2016

E.On, Gazprom Put Station Plan on Hold

SURGUT, Khanty-Mansiysk Autonomous District — E.On and Gazprom put on hold a project to build a power station in eastern Germany, E.On board member Lutz Feldmann said at a briefing in Surgut on Friday.

“I don’t know whether we will ever reconsider building the Lubmin power station,” Feldmann said declining to elaborate.

E.On and Gazprom agreed in February last year to build a gas-fired 1.2-gigawatt power plant in Lubmin that was to come on line in 2011. The plant was slated to be managed through a joint venture and to use gas delivered by the Nord Stream pipeline.

A Gazprom spokesman reached on Monday could neither confirm nor deny the project’s suspension.

Feldmann also said Monday that E.On could increase the volumes of gas it currently buys from Gazprom. “As gas resources in Germany and the Netherlands decrease, the share of our gas supplies from Russia will stay stable or even increase,” he said in comments cleared for publication Tuesday. E.On currently buys 26 percent of all the gas it purchases from Gazprom.

E.On, the largest foreign investor in the utilities sector, has come to an agreement with the System Operator to shift the deadline for the launch of its 800-megawatt coal-fired unit at the Beryozovskaya power station in the Krasnoyarsk region by three years to 2013, E.On Russia Power spokesman Viktor Anoshkin said Monday.

The System Operator, which regulates the electricity market, must first approve changes in the generators’ investment programs and propose the changes to the Energy Ministry, which in turn presents the recommendations to the government. The government will meet Tuesday to discuss changes to generators’ investment programs, an Energy Ministry’s spokeswoman said Sunday.

As electricity demand has fallen 7 percent over the first half of the year and access to credit has became tighter, many generating companies have asked the government to approve changes to their investment programs. Generators took on obligations to build a certain amount of capacity as part of the deal when they bought power stations during the sector’s privatization.

E.On Russia Power chief executive Sergei Tazin said Friday that E.On was considering a variety of ways, including infrastructure bonds, to finance its 2.3 billion euro investment program. He added that the company would not need to borrow any money this year, however.

E.On, which has invested 4.6 billion euros in the Russian electricity sector and currently manages five power stations, will recoup its investment in seven to 10 years if the prices for its new capacity are set at a “reasonable” level, Feldmann said.