Eni SpA Chief Executive Paolo Scaroni said Thursday that the cost of natural gas supplies by OAO Gazprom to the Russian company's planned liquified natural gas Baltic sea project will be crucial to the deal.
Eni, along with Petro-Canada , BP PLC and Mitsubishi Corp., has been shortlisted for 49% of the LNG Baltic plant to be build on the Russian coast near St. Petersburg.
"We are looking at the terms on which the gas will be sold to the LNG project," Scaroni told reporters ahead of his meeting with Gazprom officials.
Gazprom is due to choose its partner for the LNG Baltic project in December.
"We certainly have the technology, we have the know-how and we have the market (for this project)," Scaroni said, adding he is pleased that the Italian company has been shortlisted by Gazprom as its possible partner.
However, he stressed that it is important to assess how profitable the Baltic LNG project would be for Eni.
"We aren't yet able to say it is exactly what we expect from a project like this one," he said, adding that Eni will closely study the pricing structure of gas supplies for the LNG plant.
The multibillion dollar Baltic project is expected to have a capacity of 5 million metric tons of LNG.
Earlier this week, Gazprom's Deputy Chief Executive Alexander Medvedev said the company may consider developing St. Petersburg as a "strategic hub" from which it could export gas to take maximum advantage of fluctuations in demand in its various markets.
Industry insiders and energy analysts expect a huge increase in demand for both natural gas and LNG in North America and other markets in the next two decades.
The move to invite a foreign energy company to join the Baltic LNG plan would follow similar concessions by state-owned Gazprom at its massive Shtokman offshore natural gas project in the Barents Sea.
France's Total S.A. and Norway's StatoilHydro ASA have now joined that project as minority partners following years of negotiations.