GDF Chief Says Europe Gas Companies Ready for Russia Disruption

The head of France’s largest gas supplier said it’s working with European counterparts to prepare for any disruptions in supply from Russia as a result of the Ukraine crisis.

“There are ongoing discussions between the big players, now, as there were in 2009, to ensure supply security,” GDF Suez (GSZ) Chief Executive Officer Gerard Mestrallet said in an interview, referring to the last time Russian supplies to Europe through Ukraine were disrupted. He declined to give details of the discussions.

“We are preparing for situations that could be more tense and not only for France, but within the wider European context,” Mestrallet said in Paris today.

President Vladimir Putin said this month outstanding debts mean Ukraine will have to pay for gas up front or risk being cut off, an event that could disrupt supplies in Europe. European customers of Russian export monopoly OAO Gazprom (GAZP) get about 15 percent of their shipments through Ukraine’s pipelines. Russia also supplies Europe using links running under the Baltic Sea and through Belarus.

“We are preparing to start filling” storage installations for next winter, Mestrallet said, adding that GDF also gets supply from Norway, Algeria and the Netherlands. “We have one of the most diversified supply portfolios.”

Russia will honor contracts with European customers, Putin said today, but security of supply depends on Ukraine meeting its obligations, Putin said earlier this month. Gazprom presented Ukraine with a bill for $11.4 billion this week, claiming it owed the money under take-or-pay, where customers must pay for gas whether they use it or not.

“If the flow of gas is interrupted temporarily between Russia and Europe, which no one wishes for, France won’t be the the most affected,” Mestrallet said.

To contact the reporter on this story: Will Kennedy in London at wkennedy3@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Tony Barrett

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