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    Hungary's MOL Group seen as investor, consumer in Blue Stream-2-1

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    IRKUTSK, September 21 (RIA Novosti) - Gazprom [RTS: GAZP] could choose Hungary's MOL Group as an investor and consumer in an extension of an ambitious pipeline project with Turkey that will boost natural gas supplies by 50%, a senior company official said Thursday.

    The Blue Stream pipeline, which carries Russian natural gas to Turkey, is the largest Russian-Turkish joint energy project to date. The $3.2 billion pipeline transported 5 billion cubic meters of natural gas in 2005 and is expected to carry 16 billion cubic meters annually by 2010. The second stretch of the pipeline under consideration is expected to increase the capacity by 8 billion cu m.

    "MOL is likely to become an investor and consumer of natural gas [in the project]," said Bogdan Budzulyak, a member of Gazprom's management committee and the head of the department of gas transportation, underground storage and utilization.

    High demand in southern Europe for gas supplies from Russia, which has the world's largest reserves of natural gas, has led the Russian concern to consider extending the major pipeline with Turkey on to Italy and Greece. Gazprom chief executive Alexei Miller said last week that the company was in talks with Italian and Greek partners and that supplies to Bulgaria, Romania, Hungary and Austria were also under consideration.

    Miller said during a meeting with President Vladimir Putin that a consortium had been established with MOL Group - a leading integrated group of oil and gas companies in central and eastern Europe - which will undertake a feasibility study for the project by the end of the year.

    "We are [also] considering the construction of a sea pipeline from Turkey to Israel, and the Israeli side must make a final decision on the purchase of Russian gas," Miller said.

    Gazprom, the world's third largest company by capitalization, and MOL Group signed an agreement June 21 to establish a company on a parity basis to implement gas projects in Hungary.

    Gazprom spokesman Sergei Kupriyanov said at the time that the project, called the South European Pipeline, aimed to create new transnational gas transportation capacities and an underground gas storage facility in Hungary.

    "The project aims to create a new system to transport gas from Russia and third countries to European markets," Kupriyanov said, adding that the Blue Stream pipeline under the Black Sea could be used for the project.

    Kupriyanov also said the diversification of gas routes was a common element in Russia's and Europe's energy strategies.

    "Considering Gazprom's resource base, the existing portfolio of contracts and the prospects for concluding new export contracts, this is the only realistic project for gas deliveries to southeast Europe. Hungary is a key point for such projects," Kupriyanov said.

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