July 10, 2008

Gazprom, Libya Agree on Cooperation in Gas Sphere

MOSCOW. July 9 (Interfax) - Gazprom (RTS: GAZP) CEO Alexei Miller reached several important agreements with Libya on the purchase, refining and transportation of gas during a meeting with Libyan National Oil Corporation Chairman Shokri Mohamed Ghanem on Wednesday, the company's press service said.

The two officials also agreed to set up a joint venture to modernize existing oil refining capacity and create new refining facilities.

"The parties gave a positive assessment to the realization of the provisions of a memorandum on cooperation signed by the two companies. In addition, they discussed further steps to develop cooperation in the oil and gas sphere, including issues related to the creation of a joint venture to carry out exploration and development projects at oil and gas fields as well as the construction of energy infrastructure facilities in Libya," the company said.

Miller also met with Libyan Leader Muammar Qadhafi to discuss preparations for the next session of the Gas Exporters Forum in Moscow in November.

The coordination of a marketing policy was also discussed at the meeting. "Libya gave a positive appraisal to Gazprom's proposal on the acquisition of all gas, oil and liquefied natural gas intended for export from Libya at competitive prices in the future," Gazprom said.

Miller said yesterday that "given the favorable, successful experience of gas purchases in Central Asian countries in recent years, Gazprom will consider expanding the geography of purchases, buying gas in other gas-producing countries."

Russia and Libya also agreed to start talks on the acquisition of Libya's currently available hydrocarbons.

"Global oil market trends were discussed during the talks, and the parties agreed that the cost of hydrocarbons will grow, while gas prices will continue to close in on world oil prices," the company said.

Gazprom specialists said earlier that gas prices are currently 38%-47% lower than oil prices in terms of thermal value.

"Gazprom accepted Libya's proposal to discuss the possibility of building new gas transportation capacity from Libya to Europe," the company said.

Miller had said earlier that Gazprom was interested in taking part in a project to expand an underwater pipeline from Libya to Sicily.

As part of agreements reached during the Russian president's visit to Libya in April, the parties agreed to create a joint venture in the nearest future to work in third countries, in particular Africa. A delegation of Gazprom specialists will visit Libya before the end of July to work out the details of all the agreements the two countries have reached in the gas sphere.

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