Rosneft Says Gazprom Monopolizing China Pipeline Would Break Law

OAO Gazprom’s plan to monopolize a pipeline to be built as part of a $400 billion deal to supply Russian gas to China would be illegal, rival OAO Rosneft said.

While Gazprom is Russia’s pipeline export monopoly, it must allow others access to the network to supply domestic customers in the east of the country, Rosneft said today in a statement on its website.

“We will protect the rights of our citizens,” Rosneft said in the statement. “Gazprom, being an infrastructure monopoly, is obliged to guarantee independent producers access to the transport system.”

Gazprom’s press service today referred to comments on the pipeline by Chief Executive Officer Alexey Miller. The company plans to use only its own gas to fill the pipeline and for its contract with China, Miller told journalists that day.

Gazprom and Rosneft are jockeying for position as Russian President Vladimir Putin pivots to China as a buyer of gas to cut reliance on the European Union. The U.S. and EU have threatened to broaden sanctions against Russian companies and officials, saying Putin is supporting separatists in Ukraine. The U.S. blacklisted Rosneft CEO Igor Sechin but not his company.

Gazprom agreed a 30-year natural-gas deal with China overseen by Putin in May after a decade of negotiations. The accord includes plans for the pipeline and will allow the company to invest $55 billion to develop gas fields.

Rosneft, Russia’s largest oil producer, said today it could contribute at least 40 billion cubic meters of gas a year to the pipeline from fields in eastern Siberia, and other producers an equal amount. That’s about the same as Algeria’s 78.6 bcm of output in 2013, according to BP Plc data.

Rosneft will seek access to the network through corporate negotiations and regulatory authorities, the company said.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

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

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