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Money Focus: Gazprom, Putin and Schroeder

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MOSCOW, August 29 (RIA Novosti commentator Peter Lavelle). Russian President Vladimir Putin will visit Germany on September 8 to sign an agreement to formalize a deal to build the long-awaited gas pipeline from Siberia to northern Germany, passing under the Baltic Sea.

The natural gas line is projected to cost almost $5 billion, and is part of the larger North European Pipeline that will also eventually deliver substantial volumes of gas to the UK.

Putin will be arriving two weeks ahead of Germany's parliamentary elections, with his political ally Chancellor Gerhard Schroeder's Social Democrats trailing in the polls. It is widely assumed that the opposition Christian Democrats, if they win, will be "more pragmatic" and less friendly with Putin's Kremlin. However, German-Russian relations cannot possibility be anything less than pragmatic given Europe's dependence on Russia energy. Thus, media reports claiming Putin is going to Germany help Schroeder's political fortunes are merely an exaggeration.

The volume of gas exports to Europe has increased by 11% in the first seven months of 2005 compared to the same period of 2004. In total Gazprom exported 101.2 billion cubic meters of gas, with 66 billion going to Western Europe and 26.2 billion to Eastern Europe. Germany is the company's biggest customer (24.4 billion cubic meters), followed by Italy (13 billion), Turkey (10.3 billion), France (7.7 billion), Hungary (5.4 billion), Czech Republic (4.9 billion), Slovakia (4.7 billion), Poland (4.3 billion), Austria (3.8 billion) and Ukraine 3.6 billion.

Data source: Alfa Bank research

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