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UPDATE 1-Gazprom sees deal to build pipeline to Britain in 2013

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Wed Nov 14, 2012 10:10pm IST

* Gazprom says BP interested in Nord Stream extension

* BP free to pursue new business in Russia after agreeing sale of TNK-BP

* Gazprom agreed longest-ever spot based term deal with Centrica

* Seeks more European storage

By Denis Pinchuk

MOSCOW, Nov 14 (Reuters) - Russia's Gazprom could sign a preliminary deal to extend its export pipelines to Britain next year, a project in which the Russian gas export monopoly has attracted interest from BP, it said.

Gazprom's Chief Executive Alexei Miller said in June the British major was interested in participating in an expanded Nord Stream pipeline which would deliver Russian gas straight to Britain.

At the time, industry sources said BP's interest in Nord Stream brought objections from its partner in TNK-BP, which had insisted on sticking to an obligation to explore business opportunities only in Russia through their joint venture.

But BP and the four tycoons who share control of the No. 3 Russian oil producer agreed to drop that obligation after agreeing to sell TNK-BP to Russian state oil company Rosneft , leaving BP free to pursue new ventures in Russia.

A BP spokesman was not immediately available for comment.

Nord Stream's first two phases, with a total capacity of 55 billion cubic metres of annual export capacity, stretches from Russia's Baltic coast to Germany. The second phase was launched last month but is not pumping at full capacity.

On a practical level, sources in British energy circles in Moscow say Nord Stream is unlikely to reach Britain before 2018.

Gazprom's marketing and trading division has business in Britain, and Gazprom's export division, which is highly critical of low liquidity on spot markets on the European continent, says it views Britain's National Balancing Point as viable for pricing of its gas.

Gazprom M&T signed its longest-ever spot indexed contract with Centrica in September, selling 2.4 billion cubic metres of gas for delivery to the British utility via the sub-sea interconnector between Belgium and Britain over three years starting in 2014.

In the report, it also said it aimed to increase its European storage capacity to 4.8 billion cubic metres in the coming two years. Its main European storage asset is a 2.8 bcm underground storage facility at Haidach, Austria.

In an asset swap with BASF, Gazprom will take full control of that facility and two European storage facilities as well as European trading units in return for an increased role for BASF's oil and gas unit in a Siberian upstream project.

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