Putin says trade with Italy to exceed $30 bln in 2007
Italian Prime Minister Romano Prodi Greeting Russian President Vladimir Putin
Trade turnover between Russia and Italy this year is likely to exceed last year's figure of $30 billion, the Russian president said on Thursday during talks with Italian Prime Minister Romano Prodi. "The scale of our cooperation is such that we always have something to talk about," Vladimir Putin said. "This year we will probably surpass last year's trade turnover record." Putin said Russia's economy is open to European partners, which is confirmed by the acquisition of Russian gas and electric power assets by Italian companies Enel and Eni S.p.A. He said, however, that cooperation with Italy is not limited to energy: "Our relations are quite diverse, involving the power industry, high technology, space, and aviation." Gazprom is currently in talks with oil and gas giant Eni and Italian electricity giant Enel on an asset swap, through which the state-controlled Russian energy giant could gain power generating assets from both firms. The Italian companies each own 20% in Gazprom Neft, Gazprom's oil production arm.
Gazprom and Eni agreed on Thursday to create a joint venture to develop a feasibility study for a gas pipeline to run under the Black Sea from Russia to the European Union. The document was signed in the Kremlin by Gazprom CEO Alexei Miller and Eni President Paolo Scaroni in the presence of Putin and Prodi. Gazprom and Eni agreed in June to build the South Stream pipeline, which will deliver 30 billion cubic meters of gas annually via Bulgaria to Austria, Slovenia and Italy. Putin told journalists after his meeting with Prodi that he and the Italian premier believe trade and economic cooperation is developing successfully. The president highlighted joint work in creating the Superjet-100 aircraft, and the possibility of jointly building infrastructure for the 2014 Olympic Games in the Russian southern resort city of Sochi.
Russia, Italy Agree to Build Gas Pipeline to Europe
Russia, supplier of a quarter of Europe's gas, signed a pipeline agreement with Italy today that will give the Kremlin more control over the continent's energy market. OAO Gazprom, Russia's gas exporter, and Italy's Eni SpA agreed to form the operating company for a 10 billion-euro ($14.8 billion) link from Russia to Europe via the Black Sea. The deal was signed in the Kremlin during Italian Prime Minister Romano Prodi's visit with President Vladimir Putin, Gazprom said in an e-mailed statement. "We're using this opportunity to get a political blessing,'' Eni Chief Executive Officer Paolo Scaroni told reporters. "Pipelines in general, and South Stream in particular, are such a significant infrastructure investment that they raise political attention.'' Gazprom and Eni will each own half of the new company, which will hammer out the technical details of constructing the 900- kilometer (560-mile) South Stream pipeline, Scaroni said. The company will be formed by Jan. 15, 2008, and start deliveries in 2013, Gazprom said in the statement. South Stream will be Russia's second underwater gas link to the European Union that bypasses Ukraine and Belarus, through which most of Gazprom's exports flow, after the Nord Stream pipeline is built under the Baltic Sea to Germany. The two projects will enable Russia to boost shipments to Europe by more than 50 percent as early as 2013.
Running under the Black Sea to Bulgaria, South Stream will cost ``more than 10 billion euros,'' Scaroni said. The operator will be registered in Switzerland or the Netherlands. Gazprom and Eni already have Blue Stream, which moves Russian gas across the Black Sea to Turkey. This year Gazprom plans to transport 10 billion cubic meters of gas via Blue Stream, up from 7 billion in 2006, according to the statement. The operating company may take on more partners depending on which countries the pipeline crosses on its way to western Europe, Scaroni said. In Bulgaria, the pipeline will split into a northern route going to Austria via Romania and Hungary, and a southern route crossing the Balkan peninsula to Italy. The northern route passes through the same countries as the Nabucco pipeline from Turkey to Austria, which the EU is pushing to reduce dependence on Russia. Both South Stream and Nabucco are designed to carry about 30 billion cubic meters of gas a year. "I think Europe has room for Nabucco and South Stream,'' Scaroni said. "We expect a lot of support from the EU because South Stream is a European project.'' When asked if South Stream and Nabucco could share the northern route, Scaroni said: "Why not? It's not on the agenda, but we're open to cooperation.''
South Stream is the southern link in Gazprom's strategy to boost capacity and cut reliance on transit countries. Gazprom plans to build the Nord Stream pipeline under the Baltic Sea from Russia to Germany with partners E.ON AG, BASF AG and Nederlandse Gasunie NV. Eni unit Saipem SpA was contracted to build the 1,200-kilometer link in September. Together the two pipelines will have a capacity of 85 billion cubic meters, more than half of the 151 billion cubic meters Gazprom delivered to Europe in 2006. Nord Stream is scheduled to start pumping gas in 2010 and reach its full capacity of 55 billion cubic meters three years later. Gazprom cut deliveries to Ukraine briefly over a price dispute in January 2006, causing shortfalls across Europe. The Russian gas export monopoly threatened to shut off gas to Belarus on Jan. 1 this year in a similar price disagreement. Eni, Gazprom's single biggest customer in Europe, has imported Russian gas since 1974. The two companies signed a ``strategic partnership agreement'' a year ago to develop projects jointly in Russia and North Africa in return for Gazprom gaining the right to sell gas directly to Italian consumers. The companies deepened their ties this year when Eni bid for oil and gas assets owned by bankrupt OAO Yukos Oil Co., including a 20 percent stake in Gazprom's oil arm OAO Gazprom Neft. Gazprom hasn't yet exercised a call option to take control of the assets. When it does, Eni will be left with a 30 percent stake in the production assets, allowing it to book reserves of 1.5 billion barrels of oil equivalent, Scaroni said.
In related news:
China, Russia to build 10-mln-ton oil refinery in Tianjin
China and Russia have agreed to locate a planned oil refinery capable of processing 10 million tons a year in the northern port city of Tianjin. China's top oil firm, China National Petroleum Cooperation (CNPC), and Russia's Rosneft, have set up a joint venture in Tianjin to implement the project, which is still subject to approval by the National Development and Reform Commission. The refinery project is a concrete followup to the two companies' agreement reached in March 2006 to intensify cooperation in the oil sector. During a recent meeting with a Rosneft delegation, Tianjin's vice mayor Yang Dongliang promised to allocate quality land for the project before June. A possible site for the refinery will be the Tianjin Harbour Industrial Park, about 80 square kilometers off the Bohai Bay east of Beijing. The central government has listed Tianjin as a national base for the development of the oil industry.