Derek Brower in London -

Assets owned by TNK-BP "would fit well" with Gazprom and if the opportunity to buy a 50% stake in the company arises, the Russian gas monopoly "will investigate it," according to Alexander Medvedev, head of the firm's Gazexport division.

Medvedev said the Russian shareholders in TNK-BP could sell their stake next year. Although there is "no proposal and nothing to discuss" yet, he admitted that Gazprom would be interested in becoming BP's partner in the Anglo-Russian oil company.

Speaking at a briefing to selected journalists in London on Tuesday, November 27, senior managers from Gazprom also warned European consumers that they could expect prices for their wholesale natural gas to rise to $300-350 per 1,000 cubic metres. However, Medvedev said any rises would come on the back of higher oil prices - given that Europe's pricing mechanism for natural gas continues to be based on costs for oil and oil products - and not because of any decisions made by Gazprom. "It is impossible for Gazprom to manipulate prices," he said.

But there was also good news for Europe: the continent will remain Gazprom's most important market. "One old friend is better than two new friends," said Medvedev. "Europe will remain our friend and our main market. Even if we met all demand of the Asian market, Europe would still be more important."

That should scotch theories that the company might divert gas intended for Europe to markets in China. Those theories have always been rather far-fetched, notwithstanding the paranoia about Gazprom in EU capitals, given the lack of infrastructure linking Western Russia, where the reserves that supply Europe are based, and China and the east.

In any case, the company emphasised its commitment to remain Europe's most important gas supplier. "All our priority projects are for export to Europe," said Vlada Rusakova, head of Gazprom's strategic development. She also rejected claims by some analysts close to the company that Gazprom would only ever export 200bn cubic metres a year (cm/y) to Europe. Through to 2020, she said, Gazprom would increase exports up to 250bn cm/y, including new piped gas and liquefied natural gas (LNG). Sales to Europe are now at around 156bn cm/y.

The news for buyers in Ukraine was less encouraging. Following Turkmenistan's decision November 27 to increase the price it sells its gas to Gazprom, which then sells it on to Ukraine, to $130 per 1,000 cm in the first half of 2008 and $150 after, Medvedev said the extra hit would be passed on to consumers in Ukraine. "We are not in the business of subsidising [other countries]," he said.

Gasfield development

Meanwhile, development of two new large gasfields continues apace. The first, the Bovanenskoe field in the Yamal peninsula, will be on stream by the end of 2011. Rusakova said that there were no opportunities for foreign companies to partner Gazprom at the field, but for others in the Yamal peninsula the company would welcome offers. Analysts have said previously that the Russian company will struggle to develop fields in the Yamal - which is critical to domestic and foreign supplies - without foreign capital.

The Shtokman gasfield will come on stream in 2013 with the first deliveries of LNG starting a year later, Medvedev said. Gazprom recently selected Norway's StatoilHydro to help develop the project. France's Total has already signed up to the venture. However confusion remains about whether the foreign companies will be able to book the reserves from the field. Total claims that it will book almost a quarter of the field's 3.6 trillion cm.

However, Medvedev said that Gazprom will "own 100% of the hydrocarbons." How the two foreign companies could expect to book any of the reserves was, he said, a question for them. "But at the same time, the practice of double-booking exists. This relates to corporate governance." That ambiguity might worry shareholders of both companies - and stock market authorities that govern such matters.

On the progress of Nord Stream, the Baltic pipeline that will link Russia with Germany, Medvedev said he was confident the development would get approvals from littoral states and begin supplying Germany in 2011- despite opposition in Sweden, Estonia and elsewhere in the region. However, Finland said November 27 that it doesn't expect its environmental evaluation of the pipeline that will run under the Baltic Sea before late 2008, putting pressure on the pipe's tight building schedule.

Medvedev warned these opponents who are trying to stop it: "If somebody for political reasons will take responsibility for blocking 55bn cm/y to Europe then that person will have to assume responsibility for a shortage in the region."

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