Gazprom makes advance payment to Gaz de France

Dec 20, 2006 01:00 AM

Gaz de France has received direct supplies of 50 bn cm of natural gas by 2030 in addition to the 140 bn cm agreed on in that period. That is advance payment to the French state concern from Gazprom in expectation of the purchase of a number of its assets.
Gazprom head Alexey Miller and Gaz de France general director Jean-Francois Cirelli signed an agreement extending gas supplies in their present volume of 13 bn cm per year through 2030. They also held pre-contract negotiations on the delivery of 2.5 bn cm per year through the Nord Stream pipeline under the Baltic Sea.

Gazprom has already entered the French market with the recently founded Gazprom Marketing & Trading France, which will sell 500 mm cm of gas in France next year, and 1.5 bn cm in 2008. Last year, Gazprom tried to buy a share in the Gaz de France distribution network. It is the largest network in Europe, embracing 98 % of all distribution networks in France and servicing 13.8 mm consumers, including 2.7 mm outside the country.
Gazprom chose a third foreign partner for Nord Stream at the same time, and the French company competed with the Dutch Gasunie. The Dutch swung the Russians in their direction by offering a share in the BBL pipeline, which connects Belgium and Great Britain, and the promise of access to the Dutch market. They received a 9-% share in Nord Stream.

French authorities held the position that foreigners cannot own pipelines within the country. Gaz de France spokesman Jean-Marie Dauger told that that position has not changed and the liberalization of the gas market that will take effect in France on July 1, 2007, will not impact the company's property rights over trunk and distribution lines. Gaz de France will remain the owner of practically all gas networks in the country, but will be required to transport all contracted gas to the final consumer.
Cirelli noted, however, that Gaz de France will “sell several assets” in the course of the expected merger of Gaz de France and Suez assets.

The European Commission has required them to give up a number of assets in France and Belgium if they merge and so the companies agreed to sell the Belgian Distrigaz (including its French assets), SPE( an electric company co-owned by Gaz de France and the English Centrica) and Cofathec Coriance, a heating network in France owned by Gaz de France.
A source close to the Russian-French negotiations said that all of those properties were discussed in detail. The merger itself has not been finally decided on, however, and will not take place earlier than the middle of next year.

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