MOSCOW, July 18 (Reuters) - Russian President Dmitry Medvedev goes to Germany to meet Chancellor Angela Merkel with a stronger hand than ever to win a long-held aim: closer access to consumers in the biggest market for Russian gas.
The host is also Russia’s third-largest trading partner, and the relationship has intensified since Germany announced the phaseout of nuclear power by 2022, increasing its need for alternatives.
Last week Gazprom, Russia’s gas export monopoly and the world’s largest gas company, announced exclusive talks with Germany’s RWE for a joint venture in power generation, with an implied promise of fatter margins on its German sales.
On Tuesday, Medvedev will meet Merkel in Hannover to discuss stronger energy ties, ready to meet a potential increase in German demand for Russian gas.
"Germany’s decision to close its nuclear industry by 2022 opens up new partnership opportunities … including increasing Russian gas deliveries using the capacity of the Nord Stream pipeline," the Kremlin said in a briefing paper.
Nord Stream, which runs under the Baltic Sea to Germany, will transport 55 billion cubic metres (bcm) (not 63 billion) of gas per year to Europe, around transit countries Belarus and Ukraine, where pricing conflicts have posed a threat to European supplies.
POLITICAL ANGLE
Russia, for its part, will make sure the ex-Soviet republics — now pressing weak cases for a cut in subsidised prices on Russian gas — take note of its expanded opportunities in a top-paying European consumer country.
The talks will also serve as a signal to China, which is driving a hard bargain in long-running price talks on up at 68 bcm per year in Russian gas deliveries to China, 30 bcm of which would come from the same fields which supply European clients.
Gazprom says it should receive the same netback on deliveries to China as it does to Europe, and sources have said that means a price gap of at least $100 per thousand cubic metres in negotiating positions.
The first line of Nord Stream, which will carry 27.3 bcm — 70 percent of the volume Germany imported from Russia in 2010 — will be launched in October and the second one next year.
"There may be yet another line (added to) North Stream," Russian Prime Minister Vladimir Putin said on Friday.
Gazprom, fighting pricing pressure from spot markets and weak sales due to Europe’s economic downturn, has enjoyed its resurgent position in Europe since the Fukushima nuclear crisis in Japan, saying consumers would be happy to accept new 20-year take or pay deals.
Europeans have been more receptive to Gazprom’s overtures, which have in the past been read in European capitals as an effort by Russia to gain political clout through increasing the continent’s reliance on Russian gas.
Reflecting unease about Russia’s politics, a prominent German prize for freedom and democratic change will not be awarded this year after criticism of the award committee’s choice of Putin as one recipient.
ELECTRIC DREAMS
"We always said we are happy about each Russian investor who secures jobs in Germany and creates new ones. Russians are just as welcome here as Americans and French," said Eckhard Cordes, the chairman of Metro who also heads up an influential lobby group representing businesses investing in eastern Europe.
"This is also true for participations in the energy sector," he said. "The decisive factor is just that adheres to the legal framework set for instance by the Federal Cartel Office."
Trust concerns are viewed as a possible stumbling block for Gazprom’s potential deal with longtime partner RWE, but it is now rich in options should that fall through.
CEO Alexei Miller met French energy group GDF Suez , a fellow investor in Nord Stream, to discuss new areas of power cooperation in light of a projected increase in Europe’s gas demand following the March nuclear disaster in Fukushima, Japan.
Miller has also said Gazprom was in talks with E.ON and Wintershall to develop gas-fired plants.
The interest in power marks a turnaround for Gazprom, which just a few years ago took a billion dollar writedown on its generation base but this month moved to expand them, buying power assets from billionaire businessman Viktor Vekselberg.
That deal has also raised anti-monopoly concerns in Russia.
