Bloomberg: Rosneft’s China Gas Ambitions Said to Hit Bureaucratic Setback

OAO Rosneft’s gas ambitions suffered a setback as the Russian government failed to back the state-controlled company’s push for the right to use OAO Gazprom’s planned natural gas export pipeline, according to two people with knowledge of the matter.

With Gazprom fighting to defend its export monopoly from Rosneft, the government refused to choose between Russia’s two biggest companies in a report to President Vladimir Putin last week, the people said, asking not to be identified as talks aren’t public.

Rosneft and OAO Novatek, Russia’s second biggest gas producer, chipped away at Gazprom’s dominance last year, gaining the export rights for planned liquefied natural gas projects as Putin turns toward Asian markets to diversify supplies from the world’s biggest energy-exporting nation. In June, Putin ordered the government to consider opening access to Gazprom’s future pipelines from eastern Russia and report back by Sept. 1.

The Energy Ministry proposed three options in its report to Putin, and neither backed Rosneft nor closed the door on export access, the people said. A final decision may take years, one of the people said.

The Energy Ministry suggested preserving the status quo with Gazprom building export pipelines and filling them with its own gas; having Gazprom buy gas at a netback price that would allow sellers the same export profit it earns; or creating a venture of gas producers to build links and produce fuel for export, according to the people. MORE