Gazprom, Mol drafting plan to extend Blue Stream link to Europe

Energy Trade

OAO Gazprom, the world's biggest natural gas exporter, and Hungary's Mol Nyrt are drafting a plan to extend a gas pipeline to supply European countries through southeast Europe. Gazprom and Budapest-based Mol, eastern Europe's largest oil company, plan to extend the Blue Stream pipeline, which ends in Turkey, through to Austria, Hungarian Economy Minister János Kóka said in Moscow on Friday. Moscow-based Gazprom supplies a quarter of Europe's gas, about 80% of which is shipped across Ukraine. The company cut supplies to its western neighbor in January after a price dispute, which caused shortages in several European countries. Gazprom has since sought alternative routes, such as extending the Blue Stream. „It may be feasible to turn Hungary into the distribution center for the Balkan countries and Central Europe,” Kóka said after on Friday's meeting of the Russian-Hungarian intergovernmental commission in Moscow. Gazprom plans to extend the 1,200-kilometer (746-mile) Blue Stream pipeline it built with Italy's Eni SpA and Turkey's state monopoly Botas to European Union markets. The current pipeline will carry 16 billion cubic meters of gas a year to Turkey under the Black Sea from 2010.

Kóka said on June 21 the pipeline extension will go through Italy, Serbia and Croatia and cost €5 billion ($6.3 billion). He said it would take five years to complete. Kóka said other companies may join Gazprom and Mol in the pipeline extension. He declined to name potential candidates. Gazprom and the Hungarian unit of Germany's E.ON AG are in talks to lower the price for the natural gas Hungary receives from Russia, Kóka said. „Hungary, as the best partner, is interested in getting the best price in the region,” he said. Gazprom spokesman Sergei Kupriyanov declined to comment on the price negotiations. Hungary uses more gas per capita than any European Union country except the Netherlands. It imports about 80% of its gas, mostly from Russia, and was one of the countries whose supplies were reduced after Gazprom cut shipments to Ukraine on January 1. Kóka said he was assured by Russian authorities that Hungary will get full supply of gas in the winter. (Bloomberg)

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