Gazprombank: An Interview with Marc Partridge

Natural Gas Europe recently has the opportunity to visit with Marc Partridge, Managing Director of Gazprombank, who discussed Europe's natural gas market, energy security and Gazprombank's role in EU projects.

How do you view the EU natural gas market being shaped in terms of consumption and usage within the next generation or so?

We believe that most likely the EU demand for gas will certainly grow considerably in the future. It’s an energy commodity which covers needs for efficiency in the energy market which is clean and flexible in market terms. However the natural gas market is to an extent commercially unclear. We are having developments and interactions between North American and Asian markets, the questioning of long-term contracts, the diversification drive and multiple conflicting investments. More importantly, we have the issue of political interference that is blurring the image. For instance in the Blue Stream project, although the fundamental for this pipeline investment were sound we experienced interference mostly for political reasons, although the buyers markets was assured. Non-European countries were asserting at times that pipeline projects such as this were used a political instrument by Russia, and in market’s context that has not been helpful. Currently important projects that will ensure long-term energy security to Europe and elsewhere such as Shtokman and Yamal have excellent cooperation with international energy companies, such as Statoil and Total, and we are certain that all other problems will be dealt with by collaboration in an international context.

Which of the major energy pipeline projects are of outmost importance for the EU's future energy security according to your point of view?

First of all, the further development of the Nord Stream, as well as the, South Stream pipeline project. This will solidify the reliability of long-term supply of Russian gas into the EU in light of the increasing needs of Europe. It is of importance to clearly state that the deliveries of gas are best assured by infrastructure projects such as these. Presently, Europe has a multiplicity of gas sources such as from North Africa, Norway, probably the Caspian region and the diversification already exists in practical terms. Ensuring the security of transportation and the steady and long-term flow of gas via pipeline projects from reliable producers like Gazprom, is the key for the EU’s future energy security I believe.

How do you view the Southern Corridor unfolding in 2012? Will there be any more surprises with new consortiums being announced or merged, or do you think the final selection will be postponed further into 2013?

This corridor like any other pipeline depends on commercial aspects and logic. If you have gas and buyers and producers providing the commodity then it only makes a sense to proceed into considerable investments. The key questions that arises regarding the Southern Corridor, is whether it is a commercial project or a political driven one? Long-term energy investment plans should be free of political intervention and should be examined under terms of economic efficiency and market sense.

Do you estimate that Azerbaijan has the necessary amounts to cover the EU energy needs in the long-term regarding the Southern Corridor project?

I am not expert on reserves gas, but of course I do understand that there are significant gas reserves in Azerbaijan. The important thing is that nothing I have seen seems to question the fundamental balance between the sources of gas for Europe in the long-term. The needs of Europe will grow to a great extent in the following years, the energy mix as envisaged by the EU will rely heavily on gas and for that reason Europe needs to pay attention to large infrastructure plans from reliable suppliers that have both the necessary amounts and the reliability for a long-term exporting of the natural gas needed.

Are there any difficulties in that sector in relation to the Eurozone's debt crisis?

Yes the crisis is already showing effects, European banks are the main sources of funding and they are facing new set problems. Regulatory pressure increases, Basel III, the need to reduce their balance sheets, uncertainty on their own profitability. We are working very closely with the key banks to keep playing a leading role in financing role for big projects. There is need for diversification of new financing sources indeed. I am hopeful that this will be the key element that will assure the banking system in Europe to continue its assistance on large projects as the ones we have already discussed.

How can you envisage the role of Gazprombank in natural gas and oil projects in the EU?

Gazprombank is acting both as a financial advisor and arranger of finance. We have knowledge and expertise both in the Russian aspects of major projects and in the international and European project finance requirements. We are today working as advisor in Sahalin, Yamal,  Stockman and in the various pipeline projects, which are all of international and complex nature. In addition we develop finance innovative solutions, we are working on Russian-Italian projects, and we did the first ever project financing for domestic gas projects. Moreover we are providing new solutions for credit, lending and advisory services, making us amongst the important global players currently in that sector. I would like to add that in this challenging environment we have a world-class creativity and experience to work along the challenges and offer tangible solutions