Gazpromand BP are in talks to set up a possible joint venture for liquefiednatural gas, Gazprom said Thursday, even as the two companies spar overthe future of BP's Russia venture, TNK-BP.
GazpromCEO Alexei Miller and BP CEO Lord Browne discussed the venture duringan hour-long meeting at Gazprom's headquarters in Moscow.
"Thecreation of a joint venture for developing the companies' internationalbusinesses, including LNG, was discussed," Gazprom said in a statement.
Gazpromand BP spokespeople declined to provide further details, stressing thatthe talks were at a preliminary stage. Browne later met with Gazpromboard chairman and First Deputy Prime Minister Dmitry Medvedev.
TNK-BP,BP's joint venture with billionaires Mikhail Fridman, Viktor Vekselbergand Leonard Blavatnik, has come under increasing state pressure as theKremlin moves to take more control of the oil and gas sector.
TNK-BPis the midst of tough talks with Gazprom over the state-run giant'sproposed entry into TNK-BP's flagship Kovykta project in east Siberia,which holds an estimated 1.9 trillion cubic meters of gas. Gazpromspokesman Sergei Kupriyanov said the company chiefs discussed TNK-BP,but declined to provide further details. Gazprom has been seeking toexpand into LNG, a form of gas that is cooled until it is liquefied,thus allowing for shipment by tanker worldwide, beyond the reach ofpipelines.
AlthoughLNG still accounts for a small share of BP's global business, thecompany also hopes to grow its LNG cargo trading, BP spokesman TobyOdone said from London.
Gazpromsigned a deal in December to take a controlling stake in Shell-runSakhalin-2, the site of the country's first LNG plant. And whileGazprom has said that the huge Shtokman field in the Barents Sea willuse pipelines in its first phase, some analysts believe it may stilltry to explore LNG there as well.
"Gazpromis interested in cooperating with international companies because itneeds the technical expertise," said Tanya Costello, an analyst withEurasia Group.
Analystsagree that Gazprom lacks the know-how to develop Shtokman on its own.Gazprom said in October that it had rejected bids for equity stakesfrom five shortlisted foreign companies and would instead keep 100percent of the project.
"Itcould be that they're thinking of Shtokman," said Alexander Burgansky,an oil and gas analyst at Renaissance Capital. "They're certainly notgoing to be building an LNG train in the middle of Siberia."
Stateenvironmental officials have threatened to pull the Kovykta project'sproduction license, accusing TNK-BP of failing to fulfill itsproduction obligations, while Gazprom continues to block theconstruction of an export pipeline to China.
"Thereare various indicators inside Russia that settling this issuesurrounding TNK-BP and the development of Kovykta are becoming more ofa priority," Costello said.
