Russia's Gazprom looks to benefit from Shell's BG Group acquisition

Russian gas giant Gazprom would be able to penetrate newer markets under a new global strategic alliance with Royal Dutch Shell, which is acquiring British peer BG Group.

Gazprom earlier said it would construct two threads of a new gas pipeline, connecting Russia to Germany, under an agreement reached with Shell, Germany's E.ON and Austria's OMV.

The four companies have signed a memorandum of intent to create infrastructure to ensure direct gas supplies from Russia to European consumers.

"The memorandum demonstrates the intention of the sides to construct the two threads of the pipeline from the coast of Russia through the Baltic Sea to the coast of Germany. The capacity of the new pipeline will be 55 billion cubic meters annually," Gazprom said in a statement.

In a follow-up interview, Gazprom CEO Alexei Miller told Reuters that his company has more plans behind the agreement.

He said the agreement with Shell also foresaw an expansion of the firms' joint $20bn liquefied natural gas plant on the eastern island of Sakhalin as well as global upstream asset swaps.

"Documents of such significance are signed only once every five years or maybe even 10," Miller said on the sidelines of Russia's top forum for investors in Saint Petersburg.

"Many of our traditional partners are positioning themselves as strong regional players... Shell is a global player. And as the global gas markets develop... we will be creating a global strategic partnership."

The European Union has not imposed sanctions on Gazprom like the US due to the political spat over Ukraine, as millions of Europeans are depending on gas supplies from Russia to a large extent. However, the Russian firm is facing stiff competition in the market, and has been looking for winning more market share.

Gazprom is also putting high expectations on Shell's imminent acquisition of Britain's BG Group. Miller noted that the deal was adding extra potential to cooperation, such as upstream asset swaps between Gazprom and the Anglo-Dutch giant.

"The deal will take some time to materialize. Shell for instance needs to become the full owner of BG," he said.

Shell earlier received approval from the US for the purchase, but it still needs anti-monopoly clearance from authorities in Brazil, Australia and China.

"We know about Brazil, Australia and about the Asian market. And that allows us to talk about a global partnership," Miller said.