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Russian O&G firm to buy gas from Brunei

19th July 2012

World’s top gas producer Gazprom to purchase gas from Brunei LNG, amid tightening competition from US and Africa.

Russian O&G firm to buy gas from Brunei
Gazprom is currently struggling with fierce competition which has emerged within the gas sector, as major gas finds have been made in the US and Mozambique which could weaken the firm’s stake on European needs.

Russian O&G firm has been in talks with Brunei to acquire gas supplies, Russian daily Vedomosti reported on Thursday.

Gazprom, a state-run oil and gas company, has approached gas firm Brunei LNG for possible purchases.

The Brunei government owns a 50 per cent stake in the company, with Britain’s Shell and Japan’s Mitsubishi Corp each owning 25 per cent. More than 6.71 million tonnes of LNG per year are shipped to its costumers in Japan and South Korea.

Gazprom will not comment on the reports, a spokesperson for Gazprom Group’s Information Directorate told OGT.

Gazprom is the world’s largest holder of gas reserves, with 22.8 trillion metric tons of proved and probable gas reserves for 2011. However, the Russian O&G major is currently struggling with fierce competition which has emerged within the gas sector.

Major shale gas finds in the US and Mozambique have forced the company to lower its contract prices in order to stay competitive. Gazprom’s exports account for about a quarter of the Russian government’s budget.

In reaction, Russian President Vladimir Putin held talks with Chinese Vice Foreign Minister Cheng Guoping in May in an attempt to secure an agreement which would redirect a portion of Gazprom’s gas to China.

Furthermore, Gazprom inked last month a deal with the world’s largest operator of nuclear power plants, French EDF to invest in gas-fired power plants in Europe. The region has looked agreeably upon recent discoveries in the US and elsewhere, as it seeks to ease its reliance on Russian gas. Currently meeting around 25 per cent of Europe’s gas needs, Gazprom grants Russia considerable political leverage in Europe.

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