Gazprom Eyes Libyan Gas, Oil Exports

Gazprom's headquarters in Moscow

MOSCOW/LONDON -- Russian gas export monopoly Gazprom wants to buy any additional natural gas produced by Libya and some of the country's oil, the North African country's top oil official has said.

"Gazprom has expressed its willingness to buy Libyan oil and any available quantities of gas," Shokri Ghanem told Reuters, adding it did not mean Gazprom would buy all of Libya's oil.

Earlier on July 9, Gazprom said in a statement after its chief executive Alexei Miller met with Libyan leader Muammar Gaddafi that it hoped to buy "all future volumes" of gas, oil, and liquefied natural gas available for export -- at market prices.

A cooperation agreement signed in 2006 between Gazprom, which supplies about one-quarter of Europe's gas, and Algeria prompted fears that Europe's biggest two suppliers could work together in a similar way to the OPEC group of oil exporters.

No Surprise

State-run Gazprom's latest bid to strengthen its grip on gas supplies around Europe comes as no surprise, David Cox, the president of Poyry Energy Consulting said.

"It fits with their strategy of, if not forming a gas OPEC by discussion, then doing it by just cornering all the resources," he said. "Hydrocarbons is where they want to be and having as much of it as possible. And the amount of money they must have sloshing around in their coffers."

Cox said it was unlikely that Libya would want to commit to selling its oil to one buyer and would most likely stick to selling its crude on the open market.

The world's largest gas firm is also planning a joint refining venture with Libya's National Oil Corporation (NOC), Gazprom said, and to build pipelines.

"[The two] sides agreed to create a joint venture which will involve both modernising existing refineries and also creating new refineries," it said.

Build Pipelines

Gazprom also accepted Libya's offer to build pipelines to Europe from the North African state, and said that a second, possible joint venture is also being looked at, focusing on gas and oil exploration and development.

Gazprom and Italian energy major Eni formed a strategic partnership in 2006, which allowed for energy asset swaps, including those Eni has in Libya.

Gazprom's interest further cemented in April, when it signed a memorandum of cooperation with NOC in Tripoli. At the time it said it wanted to develop infrastructure including pipelines.

The North African country aims to become a major gas producer and expand production to 3 billion cubic feet per day (bcfd) by 2010, with a potential for 3.8 bcfd by 2015 versus 2.7 bcfd now.