OAO Gazprom‘s London-based trading company had targeted today for carrying out its first trades in Europe’s biggest power market and has delayed the start until tomorrow or later this week, Philip Dewhurst, a spokesman, said in a phone interview. „Germany is Europe’s most liquid market, and if you want to trade European power you’ve got to be in Germany,” Keith Martin, Gazprom Marketing & Trading Ltd.‘s head of trading, said in an interview on Monday in London. The country is attractive because it serves as a hub for international power flows, bordering eight other nations, Martin said. The Russian gas monopoly’s debut follows the UK, where it began trading power in October, and the French market, which Gazprom entered two months ago.

Banks including Morgan Stanley and Barclays Plc. and funds such as Valartis AG‘s European Energy Fund are active in the German market. They compete with utilities including domestic generator E.ON AG and Nuon NV of the Netherlands. The market has a „great diversity,” of traders, Martin said. Gazprom, the supplier of a quarter of Europe’s natural gas, is considering buying stakes in European power plants that burn the fuel. That would help secure sales of its gas and provide power to trade or sell directly to customers.
„It makes sense to develop power exposure,” Martin said. The company has no specific market or partner-company in mind, he added. A decision will be based on economics, he said, providing no details on discussions. The London-based trading company is a wholly owned Gazprom subsidiary.

The company employs 10 traders and another 20 people who support them. They’ve been hired from companies including Glencore International AG, Royal Dutch Shell Plc and Electrabel SA. Gazprom also plans to expand into carbon-emissions markets beyond Europe, where it already trades. International investors can fund emission-reducing projects in developing countries including China and India that generate so called Carbon Emission Reduction credits. These may be sold in the European market. Last year the global emissions market was worth $30 billion. „We’re looking like everyone else for commercial projects” that can produce credits, Martin said. „And when we find the right projects we will happily invest in them. We’ve got an appetite to take exposure for the longer term,” he said.

Gazprom later this year plans to enter markets to trade weather derivatives and financial contracts for coal, said Martin, who joined the company in 2005 after he was hired from Shell. In that year Gazprom Marketing and Trading had revenue of almost £600 million ($1.17 billion) and an operating profit of £28 million. That was exceeded in 2006. „Last year we had record volume, record profits and record growth,” Martin said. Results in 2007 „will be better than last year,” CEO Vitaly Vasiliev of Gazprom Marketing & Trading, said on Monday in the interview together with Martin. Accounts are set to be published at the end of March or early April.

Gazprom is trading energy directly with its counterparties, in the over-the-counter market with brokers, or via exchanges. It plans to deal on power bourses including France’s Powernext SA and Germany’s European Energy Exchange AG. The company has about 80 counterparties, including banks such as Goldman Sachs Group Inc., Morgan Stanley and Barclays and utilities Centrica Plc and Nuon, Martin said. Upstream oil and gas companies Shell, BP Plc and Total SA are also Gazprom’s trading partners. „The preferred approach is to trade bilaterally,” directly on the phone, Martin said. „It’s easier to get things done in size,” and commission costs to the exchanges and brokers are lower, he said. (Bloomberg)