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Britain could join Nord Stream pipeline: Gazprom

MOSCOW: Gazprom said on Tuesday that it was in preliminary discussions to link Britain with the Nord Stream gas pipeline
06 Mar 2012

gazpromMOSCOW: Gazprom said on Tuesday that it was in preliminary discussions to link Britain with the Nord Stream gas pipeline, potentially making up for domestic supply as North Sea reserves decline.

"These discussions are taking place," a Gazprom spokesman said, adding that he could not provide details at this early stage.

Gazprom launched the first stage of the Nord Stream pipeline, which runs under the Baltic Sea to the German coastal town of Lubmin, in November 2011. It is due to double its capacity to 55 billion cubic metres of gas per year with the launch of a parallel line later this year.

Gazprom has proposed further expansion of Nord Stream to try to reduce shipments via neighbouring Ukraine to minimal levels after the failure of talks on joint control of Ukrainian transit pipelines. There have been long-running tensions between Gazprom and Ukraine over gas prices and transshipment of gas to Europe.

A direct link between Britain and Nord Stream could entail significant new infrastructure investment. But expansion in Britain has long been a goal of the Russian state gas export monopoly.

Gazprom hopes to capture a 10 percent share of Britain's traded gas market by 2015, from 5 percent now, Alexander Medvedev, the company's export chief told Reuters in February.

Gazprom is sceptical about the liquidity of Europe's gas hubs. But Britain is an exception, and Gazprom's export managers praise Britain's gas market as the best-functioning in Europe.

Russia and Britain are keen for closer energy ties and see a common interest in increasing energy trade.

Gazprom, which ran into resistance when it expressed interest in buying British energy group Centrica under the previous UK government, has received assurances it will face no political obstacles to expanding in Britain.

Vladimir Putin, the current prime minister who will return to the Kremlin after his Sunday win in a presidential poll, said British membership in Nord Stream was under discussion.

"We have just started talks on Britain joining Nord Stream, for example, because Britain is gradually becoming a gas importer," Putin said, in remarks reported by his press service at a meeting with foreign newspaper editors last week.

Britain's energy ministry said it was aware that Russia is interested in exporting more gas to the UK.

"Any contract for gas supply would be a commercial matter, and subject to it complying with relevant regulatory frameworks," a spokesman for the Department of Energy and Climate Change said.

The Russian gas giant's plan to build power plants across western Europe, including Britain, was scrapped late last year after talks with German utility RWE collapsed.

However, Gazprom's UK trading arm saw significant expansion in 2010 as it moved into larger offices and recruited up to 600 new staff.

The retail arm of Gazprom Marketing & Trading UK, Gazprom Energy, signed its first contract to buy power from a small producer in January.

Copyright Reuters, 2012