Eni may build gas liquefaction plant in Russia with Gazprom

Energy Trade

Eni SpA, Europe's fourth-largest oil company, is in talks with Russia's OAO Gazprom about cooperating on a $2.5 billion project to build a natural-gas liquefaction plant near St. Petersburg, Eni chief Paolo Scaroni said. Eni wants to help Gazprom build a facility capable of processing 8 billion cubic meters of gas a year, CEO Scaroni said yesterday in an interview with Russian daily Vedomosti. An Eni press office representative who declined to be identified said the comments were correctly reported. A natural-gas liquefaction plant cools the fuel until it turns into liquid form, allowing it to be transported by ship. Eni operates one plant in Italy capable of turning the liquid back into gaseous form for sale to its clients there. Scaroni is talking to Gazprom about acquiring oil and gas resources in Russia to help meet his target to expand production by an average of 4% a year from 2005 through 2009. A possible accord may involve Rome-based Eni giving Gazprom some access to Italian retail gas clients in exchange for rights to develop oil and gas fields in Russia, Scaroni said July 28. Eni and Gazprom could reach an accord over access to resources and clients in their respective countries by the end of the year, Scaroni said on a conference call on the company's H1 earnings July 28. Eni is seeking resources as demand for oil rises and prices surge. The company proposed an interim dividend of 60 cents a share last month, an increase of 33% from a year earlier, as H1 profit rose on higher crude prices. Scaroni has expanded Eni's business by developing crude and gas deposits such as Kazakhstan's Kashagan oil field. The company is seeking to diversify its sources by exploring for gas in countries like Egypt, where it signed an agreement for a new exploration concession in June. The company also operates a gas liquefaction plant there with partner Union Fenosa SA. (Bloomberg)

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