* Gazprom says has resources to back LNG swap idea
* Operation requires support from Brussels
* Putin proposed raising EU exports by 60 mcm per day
(Adds EU comment, analyst estimate on additional gas demand)
By Jessica Bachman and Pete Harrison
MOSCOW/BRUSSELS, March 21 Russian gas export
monopoly Gazprom (GAZP.MM) said on Monday it was ready to boost
supplies to Europe under a proposal by Prime Minister Vladimir
Putin that involves rerouting liquefied gas from Europe to
Last weekend Putin proposed raising Russian gas exports to
Europe by 60 million cubic metres per day to allow higher flows
of liquefied natural gas to Japan, which is battling a nuclear
power crisis after a March 11 earthquake. [ID:nLDE72I0LK]
Analysts questioned, however, whether more volumes were
needed in Europe after Gazprom had already stepped in to cover
the loss of 2 percent of Europe's supply caused by the conflict
in Libya. [ID:nLDE71N13V]
"Gazprom has enough resources to accomplish Putin's proposal
on a swap operation in Europe," a spokesman for Gazprom Export
"Gazprom increases gas deliveries through pipelines to
Europe, so some LNG cargoes directed to Europe could go to
Japan. If additional need of Japan will be confirmed, our
representative will immediately contact our European partners."
Russia is the world's largest natural gas producer, but the
lion's share of its exports is pumped by pipeline to the
European Union and Turkey, to which it exported 139 billion
cubic metres (bcm) of gas last year.
It has a single operational LNG project, Sakhalin-2, which
is located close to Japan but whose annual production of 10
million tonnes is already largely committed under long-term
Deputy Prime Minister Igor Sechin, who has sweeping powers
over the energy sector, has said Russia could ship an additional
200,000 tonnes of LNG to Japan in the form of energy aid.
Russia's proposal to ramp up pipeline exports would require
the support of the European Union as well as a concrete need on
the part of the Japanese, to be workable, Gazprom Export said.
The EU said the issue could be resolved on commercial terms.
"The Russian proposal on swaps of LNG gas for pipeline gas
is first and foremost a matter for gas companies to decide on,
in view of their existing gas supply and transportation
contracts and existing legislation," European Commission Energy
Spokeswoman Marlene Holzner said.
"So far, we are not aware of any requests for swaps of LNG
gas made by Japan."
Gazprom meets around a quarter of Europe's gas needs, but
its exports have been hit by the global recession and a glut of
LNG from Qatar. It aims to claw back some of those losses this
year by boosting exports by 15 percent to 152 bcm.
"There could be additional demand for gas in Europe due to
the temporary shutdown of seven nuclear reactors in Germany and
potentially other countries," said Renaissance Capital,
estimating world LNG demand could rise by 10 million tonnes this
year as a result of the Japanese plant's shutdown.
"However, there should be enough flexibility among the
largest LNG suppliers to meet this additional demand in the
medium term before spot prices rise too sharply."
Analysts also said Japan's nuclear crisis coincided with the
end of Europe's winter heating season, when gas demand falls.
Japan's capacity to ramp up imports of LNG is limited, and
analysts at Societe Generale estimate its incremental import
needs at a relatively modest 5 bcm this year, rising to 10 bcm
in 2012. [ID:nLDE72G1G8]]
"Japan has neither enough regasification capacity nor
storage facilities. This should be taken into account," said
Valery Nesterov, an energy analyst at Troika Dialog in Moscow.
Among major European buyers of Russian gas, Germany's E.ON
(EONGn.DE) said its needs were well covered by supplies from
Russia, Norway, the Netherlands and domestic German production.
"The additional volumes which Putin mentioned for Europe are
meant to compensate for lost LNG volumes to Europe," said a
spokesman at E.ON headquarters in Essen, Germany. "The Russian
government will talk to the EU in this context."
(Additional reporting by Vera Eckert in Frankfurt and
Vladimir Soldatkin and Melissa Akin in Moscow; Writing by
Douglas Busvine, editing by Jane Baird)