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Gazprom Seeks Strong Carbon Position, Others Weigh In

Russian-based natural gas behemoth Gazprom has added a new wrinkle to its all-out plunge into North American energy markets by riding the climate change wave and the focus on reducing carbon emissions, according to John Hattenberger, president and managing director for Gazprom Marketing and Trading USA Inc.

He reiterated the firm's carbon interest as part of his keynote address to the LDC Gas Forum: West & Rockies in Irvine, CA, last Tuesday after first emphasizing that business expansion at GasMart in Chicago last May. Separately, a panel at the LDC Forum examined the topic of "Carbon Strategy -- Ready of Not, Here It Comes."

In the panel discussion BP Energy Vice President Mark Stultz said his company is a member of the U.S. Climate Action Partnership and advocates a national U.S. cap-and-trade system. Recognizing it is a global problem, BP eventually sees what he called "an international, or broadest possible, market for carbon offsets."

Gazprom has a carbon trading desk as part of the marketing/trading operation it opened Oct. 1, Hattenberger said (see related story). Overall, Gazprom has a team of 14 professionals concentrating on nothing but carbon in its London office, and it has a small team in its Houston office that he said it working "to establish a strong position in the global emissions trading in North America."

Hattenberger said Gazprom has been working on harnessing carbon dioxide for some time, and it is a very big trader of carbon emissions worldwide. He said the company maintains a "strong physical play" in the carbon markets.

"Everybody should be concerned about how they are going to get into compliance with coming regulations," he said. "So we have an active carbon business already up and running, and we have low-cost throughout the market all around the world.

One of the areas on which Gazprom is concentrating in anticipation of U.S. carbon legislation is to join others in the industry calling for carbon standards. Whether it is liquefied natural gas or carbon there are now much more fully international markets in play, Hattenberger said, and thus "we can no longer sit here in North America and look only at domestic solutions."

Michael Walsh, executive vice president with the Chicago Climate Exchange, strongly advocated a national cap-and-trade programs, rather than a "mish-mash" of various regional efforts. Walsh said his Chicago exchange has an ongoing "voluntary, but legally binding" carbon cap-and-trade market. He thinks basically the "science" debate over whether global climate change was a real phenomenon or not is over, but whether a national cap-and-trade system can be in place by 2012 is becoming "more doubtful."

In response to a specific question, Stultz, Walsh and a third panelist, Craig Breslau, Societe Generale commodities trading managing director, all agreed that some form of carbon capture and storage (CCS) was still possible within the next five to eight years. Both carbon and renewable energy-focused bills in both houses of Congress are "throwing a lot of money" potentially at CCS, Breslau said.

Stultz said a "clear, certain carbon pricing mechanism is what is eventually needed to allow markets to work, and CCS development is tied to that."

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