Italy’s Enel undaunted by Russia political risks

World

The head of Italy’s Enel, Fulvio Conti, sees no political risks facing his company in Russia, despite Moscow’s weakened relations with the West after the war in Georgia, he said on Saturday.

“There are no reasons for the political situation to impact our projects... I am not concerned and not worried, and don’t see anything terrible. Russia is a part of Europe, and relations will develop,” Conti told reporters. The energy major plans to invest a total of $8 billion into its projects in Russia, including in the gas and electricity sectors, where some of Enel’s work has been given the blessing of Prime Minister Vladimir Putin before going forward. “When we work in this country, we feel like Russian citizens,” Conti said, adding that Enel had already invested €3.3 billion ($4.62 billion) in Russia, and would pour in another €2.2 billion before 2012.

The Russian investment climate suffered a massive blow from last month’s war in Georgia. The conflict, fought over Georgia’s pro-Russian separatist regions of Abkhazia and South Ossetia, heightened political risks as falling commodities prices and a weakening ruble were already weighing down on Russia’s economy. Danske Bank estimated last week that increased political risk premiums have cost the Russian stock market 15-20% in losses out of a total of almost 50% that Russian indexes have shed since May.

 
GAZPROM COOPERATION

Conti spoke at the groundbreaking ceremony for the construction of a 410-megawatt turbine unit at the Sredneuralsk Power Station in a suburb of the city of Yekaterinburg in the Ural mountains. The power station is owned by electricity generator OGK-5, which Enel acquired in February for $4 billion. Half of the fuel for the new turbine will come from a joint natural gas venture between Enel and another Italian energy giant, Eni.

Last April, Enel spent $852 million creating the venture to acquire gas fields previously owned by bankrupt Russian oil firm Yukos. “The first gas will start flowing in 2010,” Conti said. Enel and Eni are cooperating on this project with Russia’s natural gas export monopoly Gazprom, which has long been seeking access to European energy assets and infrastructure. In March, Conti said Enel would give Gazprom a stake in an Italian power plant to reciprocate for gas supplies to OGK-5. “We let Gazprom choose between stakes in three electricity stations. So far there is no decision.

Gazprom is looking at the options, but there is still enough time to make a choice,” Conti said on Saturday. Eduard Rossel, the governor of the Sverdlovsk region, where the ceremony was held, offered Enel another project in the Urals -- to increase the generating capacity of OGK-5’s Reftinsk power station. Rossel said that the project would open the door for Enel to cooperate on electricity supplies to United Company RusAl, the world’s largest aluminium producer, which is considering plans to build a new smelter in the area. (Reuters)

ADVERTISEMENT

Business confidence falls slightly in June Analysis

Business confidence falls slightly in June

Lawmakers approve 2022 budget Parliament

Lawmakers approve 2022 budget

Duncan Graham reelected as BCCH president Appointments

Duncan Graham reelected as BCCH president

Budapest launches revamped coupon card for visitors City

Budapest launches revamped coupon card for visitors

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.