Announcement

Collapse
No announcement yet.

Germans Question $1Bln For Gazprom

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Germans Question $1Bln For Gazprom

    GERMANS QUESTION $1BLN FOR GAZPROM
    By Stephen Boykewich
    Staff Writer

    The Moscow Times, Russia
    April 3 2006

    The government of German Chancellor Gerhard Schroder approved a $1
    billion loan guarantee to Gazprom, German officials said over the
    weekend, adding fuel to critics' claims that Schroder improperly
    benefited from a joint Russian-German pipeline project.

    The German Finance Ministry on Saturday confirmed media reports that
    Schroder's government had approved a 900 million euro ($1.09 billion)
    loan guarantee to Gazprom for the North European Gas Pipeline project
    on Oct. 24, 2005, four weeks before Schroder left office and six
    weeks before he accepted a key post in the pipeline consortium.

    Schroder said Saturday that he had only learned about the loan
    guarantee from media reports, and rejected renewed criticism by
    opposition German politicians as politically motivated, the newspaper
    Deutsche Welle reported on its web site Saturday.

    The web site also published excerpts from an interview due to appear
    in the newspaper Handelsblatt on Monday in which Schroder said
    he initially declined an offer to head the pipeline consortium's
    shareholders committee in November, but reconsidered in December
    after a personal request by President Vladimir Putin.

    "On Dec. 9, I then accepted the offer. I do not see that I did anything
    wrong," Schroder said.

    While visiting Moscow on Thursday to officially assume the post,
    Schroder insisted that any German government would have supported the
    $5 billion pipeline project and denied that he had had any insider
    information while in public office. The post comes with a 250,000 euro
    ($301,000) annual salary.

    "This affair stinks terribly," German Free Democratic Party chairman
    Guido Westerwelle said Saturday, Deutsche Welle reported.

    investigate the circumstances of the loan guarantee.

    "If Schroder has any respect for himself, he must immediately resign
    his post on the supervisory board of the gas consortium," Green Party
    leader Reinhard Butikofer said, the newspaper reported.

    Other German officials said the parliament's budgetary committee would
    review the loan guarantee this week, Reuters reported. One official
    said, however, that immediate action was unlikely and that it was
    unclear whether the committee had the power to block the deal.

    Several hours after German media first reported the loan guarantee
    on Friday, Gazprom released a brief statement saying it had rejected
    the proposed German loan and would finance construction of the first,
    above-ground section of the pipeline on its own.

    "Gazprom wants to send a signal to avoid any negative political
    fallout," Steven Dashevsky, head of research at Aton brokerage, said
    by telephone Sunday. "They tried to pre-empt any potential negative
    decision by saying they didn't need the German money, which really
    they don't."

    With estimated cash flow generation of $20 billion to $25 billion
    this year and the ability to easily raise foreign capital, "Gazprom is
    more than able to pay for its share of construction of the pipeline,"
    Dashevsky said.

    The pipeline -- which is to carry up to 55 billion cubic meters of
    natural gas per year under the Baltic Sea from Vyborg to Greifswald,
    Germany -- is a cornerstone of Gazprom's plan to expand its stake in
    Western European energy markets and diversify its export routes.

    Russia currently supplies 25 percent of Europe's natural gas needs
    though pipelines in Ukraine and Belarus, both of which have sought
    to leverage their role as transit states in recent price disputes
    with Gazprom.

    Natural gas is expected to be the European Union's fastest-growing fuel
    source in coming decades. Brussels projects that the EU's dependence
    on imported gas will rise from more than 40 percent currently to
    about 70 percent by 2020.

    "It's a fact of life for Europe that the only place they're going
    to get a substantial amount of energy in the future is Russia," said
    Chris Weafer, chief strategist at Alfa Bank. "Europe already accepts
    that it is going to have to become more dependent on Russia's energy
    imports. It has no choice."

    Schroder enthusiastically advocated the pipeline project during his
    chancellorship and signed off on the deal with Putin several weeks
    before leaving office. He is considered a close friend of Putin,
    as is Matthias Warnig, an official at Dresdner Bank who was named
    managing director of the pipeline's shareholders committee.

    Dresdner Bank bought one-third of Gazprombank in December for $800
    million, and also advised Gazprom on its $13 billion acquisition of
    Sibneft last year.

    Gazprom controls 51 percent of the pipeline consortium, while German
    partners E.On and BASF each have a 24.5 percent stake. The pipeline
    is expected to begin shipping gas in 2010.

    Armenia began paying about twice its previous price for Russian natural
    gas on Saturday, while talks continued between Gazprom and Armenian
    officials on ways to ease the blow for the country, The Associated
    Press reported.

    Gazprom initially demanded that Armenia pay $110 per 1,000 cubic
    meters as of Jan. 1, but the company later agreed to hold off on the
    increase until April 1.

    "You don't need to be an economist to figure out how much the chain
    reaction will affect the [pocketbooks] of citizens," said Ashot
    Aramyan, editor of Basis, an Armenian economic magazine.

    Gazprom has extended a temporary deal to supply gas to Moldova until
    the end of June, the AP reported Friday.

    Under the terms of the deal, Moldova will pay $110 per 1,000 cubic
    meters of natural gas, the same as in the first three months of the
    year, Moldovan Economy Minister Valeriu Lazar said. Moldova paid $80
    per 1,000 cubic meters in 2005.

    In January, Gazprom cut off gas to Moldova after it rejected an initial
    demand of $160 per 1,000 cubic meters of gas. Moldova accused Russia
    of using its gas monopoly to punish former Soviet countries such as
    itself, Georgia and Ukraine, which have moved to establish closer
    ties to the West.

    From: Emil Lazarian | Ararat NewsPress
Working...
X