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Energy Blast – Dec 8, 2008

Lukoil’s interest in Spain’s Repsol is continuing to provoke debate, but some warn that the media hysteria over the risks of Russian ownership are overblown, especially if the deal is viewed as an insurance policyBut Lukoil’s Spanish ambitions probably derive in part from the same calculation that has underlain many companies’ foreign expansion since the Yukos affair: that owning high-profile assets internationally is insurance against Kremlin assault.  Perhaps coincidentally, Spanish Foreign Minister Miguel Angel Moratinos is paying a working visit to Moscow today.  Last week Serbia’s state gas company NIS was unable to reach an agreement with Russia for the takeover by Gazprom, but the two countries did sign a number of supply agreements as well as an extension through Serbia of the planned South Stream pipeline.  Earlier the deal went cold when the press leaked the story that the Gazprom proposal was to acquire NIS alone with any guarantee of making Serbia a distribution hub.  The development consortium for the Shtokman Field, comprised of Gazprom, Total, and StatoilHydro are hoping that the banks will lend for the majority of the production costs:  “The plan is for the partners to invest 30 percent (in the project), while 70 percent will come in loans.”  Meanwhile Gazprom is asking the government for 100 billion rubles ($3.58 billion) in loans to invest in its electricity units, and is also thinking of doing another share issue to raise funds.  Yesterday Italian firm ENI released a statement regarding meetings held between CEO Paolo Scaroni and with Russian Deputy Prime Minister Igor Sechin and Energy Minister Sergei Shmatko.