RWE and Gazprom may produce natural gas jointly as demand rises

May 02, 2005 02:00 AM

RWE, Europe's third-largest utility, may produce natural gas with Russia's Gazprom as demand for the fuel rises and its availability shrinks.
The two companies are discussing other possible joint projects such as natural-gas pipelines, transport and sales, said Michael Rosen, spokesman for Essen, Germany-based RWE.

RWE and Gazprom haven't started any projects, Rosen said, confirming comments by CEO Harry Roels.
"Whoever wants to grow in the natural-gas business can't do it without Gazprom," Roels told. "We are talking about production, pipelines, transport and distribution -- in Germany as well as outside the country."

The comments come three weeks after the natural-gas unit of BASF, the world's largest chemicals company, announced it agreed with Gazprom, the biggest natural-gas company, on a $ 1 bn joint venture to exploit a Siberian gas field. The German association of natural-gas suppliers forecasts that the country's use of natural gas will rise almost 40 % by 2020.
RWE aims for a "substantial" involvement in Russia in the form of a joint venture with Gazprom, Roels said. These ventures may involve other companies, he said.

Like bigger German rival E.ON, RWE wants to produce itself more of the natural gas it sells with the help of oil and natural gas production unit RWE DEA, the CEO said.
RWE can offer access to customers in countries where Gazprom wants to expand, Roels said. He reiterated RWE is considering small and medium-sized takeovers in Germany and adjacent countries, the UK or Eastern Europe.

Source: Bloomberg
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