PetroChina’s Gas Deal With Russia Seen as ‘Risk,’ Bernstein Says

PetroChina Co. (857), the country’s biggest oil and natural gas producer, risks losing money on piped gas imports from Russia if a deal with OAO Gazprom goes through, according to Sanford C. Bernstein & Co.

PetroChina and Gazprom, which has a monopoly on Russia’s gas exports, are negotiating prices from $9 to $11 per million British thermal units, compared with a city-gate price of $8.80 per million Btu in Shanghai, Neil Beveridge, a Hong Kong-based analyst at Bernstein, said in an e-mailed report today.

“While a deal looks 50-50 at best, a gas deal with Russia represents more risk than upside in our view,” he said in the report. “Price and upstream participation remain the two most important items remaining for the parties to agree on.”

PetroChina is already losing money on its piped natural gas imports from Turkmenistan, as it pays almost $12 per million Btu, according to Bernstein analysts.

PetroChina is also negotiating with OAO Rosneft, Russia’s biggest oil company, to import piped natural gas, and a deal looks “equally” possible, according to the report.

State-controlled Rosneft is challenging Gazprom, the world’s biggest gas producer, with plans to double its share of the domestic market and sell liquefied natural gas to Asia. President Vladimir Putin has called for the government to loosen Gazprom’s monopoly with a gradual liberalization of LNG exports.

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