Gazprom Leveraging Europe

Due to increasing oil prices caused by global conflicts and growing demand, Europe, together with the most important importers regard as important that their energy policy be reviewed and the reliability of their suppliers be re-examined. For several decades, Gazprom has been an organic part of European energy security; it provided stable natural gas supplies under all circumstances.

Hungary is an important partner of Gazprom, with its share of 7.5bn cubic metres it was the fifth largest buyer in 2007. In addition to outstanding business relations, Hungary also serves as a gas distribution centre of strategic significance for Gazprom. Not too long ago we started a joint venture with MOL (Hungarian Oil Company) to construct an underground gas storage tank, large enough to store no less than 1bn cubic metres of natural gas. To satisfy Europe's growing natural gas needs we secure several sources for the exploration of new gas fields, for the construction of new transportation routes and for the establishment of new, underground gas storage tanks on the Continent. By exploiting the Shtokman gas field in cooperation with our European partners, we are opening the world's largest natural gas reserve in the sea, thus further increasing Europe's gas supply security.

The two basic pillars of energy security for areas in need to import natural gas - including Europe - are reliable supplies provided at economically still rational prices. The term energy security means to us reliable profit acquired by way of predictable demand based on long-term contracts and mutual participation in pipeline construction. This enables us to take part in several billion euros worth of investments through which European consumers can access reserves from natural gas fields in the most remote corners of the world. For this reason we are somewhat concerned about recommendations made by the European Commission for reforming the EU energy market, because these raise questions about investments needed for the development of the European energy infrastructure as well as common energy security goals. This is one of the reasons why we initiated constructive dialogue with EU institutions.

Gazprom is fully aware of, and many from Brussels to Budapest are concerned about the fact that disputes that erupted between Gazprom and the transit countries about the price of gas could unfavourably influence the EU's energy security. Recent negotiations with the Ukrainians and the Belarusians prove that it is possible to reach agreements and that nothing threatens deliveries to Europe. Our commitment to greater transparency is also indicated by the fact that we have informed our European partners of these throughout the negotiations.

The two gas pipelines - the Northern Stream and the Southern Stream - that significantly increase the quantity of gas that can be transported to Europe are the most visible and most promising indications of increased cooperation and mutual dependence between Europe and Russia. During the past several months Gazprom conducted countless negotiations with governments and other interested parties affected by these projects. A few weeks ago the Russian and the Hungarian delegations have conducted rather successful negotiations about extending the Southern Stream pipeline into Hungary. I believe that the Southern Stream - whose supplies are already guaranteed - could be an important step towards establishing energy security in the area.

The key to Gazprom's long-term profitable and reliable functioning is mostly based on the well-considered selection of our business partners. The booming and stable European economy with its 500 million consumers and with an easily predictable energy need, already linked to us also with a huge network of existing pipelines, as well as successful economic relations make Europe one of our most important business partners. But could this judgment change? It is the common goal of both Europe and Gazprom that energy security could only be realized if the seller and the buyer develop relations based on mutual confidence and on rational economic decisions. Gazprom has committed itself to transparency and is prepared to conduct open dialogue with Hungary, with the EU, with any member state of the EU and with their European business partners to ensure energy security, our common goal for decades ahead.