Italian energy giant offers Gazprom energy-for-gas deal

Italy’s energy company Enel is offering Gazprom a minority stake in an Italian power plant in exchange for Russian gas. But experts say Enel underestimates Gazprom’s appetite.

Enel has put on the table a $US 250 million stake in one of five Italian power stations.

Meanwhile, Gazprom is keen to reach Europe’s end consumers and the Italian offer is part of a series of asset swaps between European energy firms and the Russian gas monopoly.

“It’s a minority stake in a generation plant in Italy that is being given to them in the list of five plants they can select from. It will give them an opportunity to become a player in the Italian market, as we are becoming a player in the Russian market,” said Enel CEO Fulvio Conti.

Last year Enel bought former Yukos gas fields in the Yamalo-Nenets Autonomous Area, together with Italy’s ENI, though Gazprom has a call option to buy out 51%.

Those same fields will supply the OGK-5 electricity generator, which is 60% owned by Enel.

“The first gas may become available in the very early part of 2010 – to supply, as far as we are concerned, a good portion, more than 50%, of the gas requirements of the OGK-5,” Conti said.

Enel needs access to gas supplies in order to build an integrated electricity business in Russia.

“Enel initially desired to enter all segments of the Russian energy business. They started with the retail market, buying half of RusEnergoSbyt. Then they went for generation assets, and the logical end of this is penetration into the fuel base,” commented Dmitry Tsaregorodtsev, Kit Finance senior analyst.

But experts say Gazprom is not likely to accept the current Italian offer.

Enel is offering a share in a power plant, while Gazprom has been buying into the distribution and supply business across Europe.

If Enel plans to stay in the upstream generation business in Russia, it’s likely it will have to offer Gazprom something more substantial.