Novatek and Gazprom to partner petrochem projects

08-Jul-05

Fast growing gas and condensate producer Novatek and state owned Gazprom are regarded to have signed a partnership agreement to cooperate in diverse areas from oil pipelines to petrochemicals. This joint effort is likely to enable the creation of a civilized and competitive gas market in the country and may also enable Novatek to double output in the next few years to about 50 billion cubic meters a year nearing France's annual gas consumption. Novatek is predicted to have gained some reassurance ahead of its big share offering in London this month, amid rumors that the state-controlled Gazprom may try to claw back some assets from Novatek that were under its control in the 1990s. Gazprom however is not considered to look upon Novatek as the next target in its list of independent gas producers, of whom it has regained control over the past few years. Both the companies are to cooperate on domestic issues that would include a joint building of gas pipelines, cooperation in the gas condensate business, construction of ethylene, polyethylene, propylene and polypropylene plants and sales of a part of gas production by Novatek to Gazprom. Novatek is a fast-growing gas and condensate producer, and it wants to double output in the next few years to 50 billion cubic meters a year -- equal to France's annual gas consumption. Gazprom is planning investments in these projects in the hope that developing foreign markets might create an expansion opportunity for Russia's domestic gas companies, of which Novatek is considered one of the largets.