RUSSIA & EU PARTNERSHIP

Russia is set to remain a central player of the European gas industry, as an eventual deal between Kiev and Moscow is not a precondition of strong ties between the European Union and the Kremlin. This is was a view emerging from the first day of the European Autumn Gas Conference.

Negotiations are taking place in Brussels on Wednesday, but experts of the Russian gas industry dismiss ongoing diplomatic discussions as not decisive. A deal would not change much: Europe needs Russia, as Russia needs Europe.

RUSSIA WILL NOT DECREASE GAS DELIVERIES TO EUROPE

According to several experts, Russia will not decrease gas exports to Europe in any case. A strong confrontation is not in Moscow's interest.

"Gazprom will be not very much interested in decreasing gas to Europe also in case of reverse flow," Vladimir Drebentsov, Vice President of BP Russia.

At the same time, Ukraine is expected not to siphon off any gas.

"Monitoring system is much better than in 2009," Drebentsov explained, recalling the buck-passing between Russia and Ukraine five years ago.

Drebentsov explained that if Kiev siphoned gas off, it would be clear to everybody. Ukraine would then be held accountable.

Given that both Russia and Ukraine need Europe, the risks of a substantial crisis are therefore limited, added the Vice President of BP Russia.

"I don't think there will be a crisis," Drebentsov stated, explaining that Russia has now means to deliver gas through alternative means.

In this context, Russian companies are expected to continue their normal growth. According to Drebentsov, Gazprom is the only company really affected by the ongoing tensions. Indeed, in the first 8 months of the year, Gazprom's gas output decreased by 19 bcm, while Russian gas output was down by 10-11 bcm, said BP Russia's Vice President.

BP has been operating in Russia since the early 1990s. In 2003, BP merged its interests in Russia with those of TNK to create TNK-BP. The company created 11 years ago is now the third biggest vertically integrated oil and gas company in the country.

THE EUROPEAN MARKET IS NOT THAT BAD FOR RUSSIA

"The European gas market is not that bad. The other alternatives are even worse," said Tatiana Mitrova, Head of Oil and Gas Department at ERI RAS.

The point is that other regions are even less attractive than Europe, both for Russia and other gas exporters like Norway.

"Does anybody want to send gas to North America, or Africa, or India?" Mitrova added, explaining that there are several opportunities for gas exporters in Europe, given the decline in domestic gas production in the continent.

But not everything is rosy. According to Mitrova, the current tensions might have an impact in the long term, as Gazprom could decide to refrain from new investments in Europe.

"Gazprom could have an interest in investing in European power generation," Mitrova said during the conference taking place in London on Wednesday and Thursday.

Despite the business opportunity, the Russian expert said that the current political contrasts make future cooperation quite unlikely, with possible backlash against Europe's power and gas industries.

In this sense, at least in the coming years, Russia is set to remain. Not having many alternatives, Europe is called to stick to Russia. This is especially the case, considering that Iranian gas could take at least 5 years to arrive in Europe.

In other words, Russia and Europe cannot take their wedding band off. Despite alleged treasons, active confrontations and clear oppositions, they will not divorce. Now, the only risk is that they will not plan any beneficial holiday together, enjoying each other company and shrugging tensions off.

naturalgaseurope.com