Russia’s Gazprom to Open Brazilian Office

By Bruno De Nicola, Contributing Reporter

RIO DE JANEIRO – Russian state-owned energy company Gazprom will soon open a Brazilian office in order to follow Petrobras’s moves in the pré-salt area. According to Board Member Alexandre Medvedev, all Gazprom’s Latin American ventures will be coordinated from here, mainly concentrated in Argentina, Perú and Venezuela.

Since President Lula’s discovery announcement in 2006, a long list of foreign private and public corporations have set their eyes and hands on the pré-salt area, which is known to be the most important source of oil ever discovered by mankind. It was just a matter of time for the Russian state-owned company to invest in the enormous potential of the Brazilian land and offshore oil wells.

Medvedev’s announcement arrived at the beginning of this month, during the 24th Global Gas Meeting in Buenos Aires. Gazprom’s Export Manager said that the company is finalizing the paperwork and awaiting for authorization to enter the Brazilian market. Medvedev believes the pré-salt area to be a “great business opportunity”, which could add to its successful energy deals in Argentina, Bolivia, Perú and Venezuela.

In a press conference, after the global meeting, Medvedev stated that the cooperation process between Petrobras and Gazprom is successfully proceeding on many energy frontiers, however the new partnership seems to rely especially on the LNG (Liquid Natural Gas) sector.

Gazprom’s latest Latin American steps represent an important part of the company’s global strategy, which is to obtain a 25 percent share of the world market by the year 2020. By that time, the state-owned Russian corporation aims to reach a yearly liquid natural gas production of 80 to 90 million tones.

Gazprom is already a member of a Consortium, currently leaded by Venezuela’s state-owned energy company PDSVA (Petroleo de Venezuela, Sociedad Anonima), in the Orinoco Basin in the northwestern part of South America. The Russians and the Venezuelan companies, together with the other members of the Orinoco energy group, are currently focusing their efforts on the exploration of hydrocarbons.

Thanks to the newly born partnership, Brazilian state-owned Petrobras plans to build two new LNG terminals. The first one should be operational in about three or four years, according to what Petrobras directors stated in Buenos Aires, during the Global Gas Meeting.

The Russian energy giant started setting the conditions for a partnership with Petrobras in February 2007, when the two companies signed a treaty for the identification of cooperative opportunities in the gas and oil sectors. However, the partnership was solidified following Russian President Dimitri Medvedev’s first official visit in Brazil in 2008.

Gazprom was created in 1989 when the Ministry of Gas Industries of the Soviet Union transformed itself into a corporation, keeping all its assets intact. The company was later privatized in part, but currently the Russian government holds a controlling stake.

In 2008, the company produced 549.7 billion cubic meters (BCM) of natural gas, amounting to 17 percent of the worldwide gas production. In addition, the company produced 32 million tons of oil and 10.9 million tons of gas consendate. Gazprom’s activities accounted for 10 percent of Russia’s gross domestic product in 2008.