Russ Oil-Gas

02-27-2006 Analytical department of RIA RosBusinessConsulting -
The gas monopoly’s share market is expected to shift from RTS to MICEX.
The Moscow Interbank Currency Exchange (MICEX) is starting to trade in Gazprom stock. Until now, the company's shares were traded on the St. Petersburg Stock Exchange and the classic market of the Russian Trading System (RTS). The liberalization of Gazprom's share market will fuel the fight between the country's two leading stock exchanges. Operations with Gazprom shares currently account for 80 percent of the total amount of operations on RTS, but some investors are likely to move to MICEX now. RTS is already preparing to fight for Gazprom stock, reducing the price of operations with the company's shares last week and promising a ten-fold cut in trading lots for Gazprom stock. But it won't be easy for RTS to hold onto the attractive stock. The volume of Gazprom stock trading on the St. Petersburg Stock Exchange, part of RTS group, amounted to RUR 1.092 trillion last year, which is 80 percent of the total share trading on the RTS. Operations with Gazprom shares made up 41.5 percent of the total turnover in one week of trading (January 13-20) on the RTS classic market. But the most popular stock with investors were shares of RAO Unified Energy Systems of Russia, with trading on RTS totaling $1.56 billion last year and almost $43 billion on MICEX (a total of about RUR 1.26 trillion). MICEX analysts expect high liquidity in Gazprom stock during the first few days of trading. Alexander Potemkin, President of the stock exchange, thinks the appearance of Gazprom stock on MICEX will boost the price of the company's shares and its capitalization. Following Gazprom's liberalization, monthly sales of the company's shares on Russian and foreign exchanges surged from between $1.5 billion and $2 billion to between $6 billion and $7 billion. "And this is not the end. We hope that Gazprom shares will catch up with RAO UES stock in terms of liquidity, or even overtake it," Potemkin said. MICEX set standard tariffs for operations with Gazprom shares, at 0.01 percent of the transaction value, including commission for clearing and other services. Alexei Rybnikov, General Director of the MICEX Stock Exchange, said trading would proceed as usual, and trading lots for Gazprom stock would be 100 shares. The National Depository Center, which provides services for MICEX, is also preparing for operations with Gazprom stock. It has opened securities accounts in the Payment and Depository Company and Gazprombank, and also the nominal holder's account with the registrar SR-DRAG, which keeps the register of Gazprom securities' holders. Market traders say MICEX could claim the bulk of Gazprom stock operations from RTS. "Transactions on MICEX could be larger given the range of its clients," says Konstantin Batunin, an analyst with Alfa Bank. And Andrei Suverov, at Gazprombank, says daily sales of Gazprom stock on MICEX could rise to $40 million. RTS operators dealing with Gazprom shares find it difficult to forecast investors' behavior. Some of them do not expect great interest in Gazprom shares on MICEX. "Investors will move from RTS to MICEX, but their number will be insignificant. Fifty percent of the market will certainly remain on RTS over the next three months," one trader told RBC Daily. But Ivan Tyryshkin, the former RTS President and now Senior Executive Director of UFG, does not think so. The first three or four weeks of trading will show everything," he told an online conference hosted by RBC on January 20. "The market will form where liquidity is higher. It is unlikely that there will be two high liquidity centers in the long term," he said. Traders expect competition between MICEX and RTS to go onto a new level. "Each stock exchange has its advantages. RTS offers lower commission than MICEX. But the Depositary and Clearing Company, servicing RTS, has a more complicated account opening procedures compared with the National Depositary Center, which cooperates with MICEX. In addition, the money supply is higher on MICEX, and investor opportunities are also greater there," says Maxim Volkov, an analyst at ATON investment consultants. Besides, Gazprom stock trading is so important for RTS that its flow to MICEX could be a heavy blow to RTS. RTS managers understand it, and they are not giving up. The stock exchange has already taken some preemptive measures designed to attract investors: last week it lowered commission on operations with Gazprom stock to 0.095 percent of transaction value. RTS President Oleg Safonov also said on January 20 that trading lots for RTS shares will be lowered from 100 to 10 shares. There is no panic at RTS over the start of Gazprom share trading on MICEX. "This is a normal process," Igor Polishchuk, representing RTS, told RBC Daily. He thinks Gazprom stock trading will now be divided between the two stock exchanges. "When Gazprom stock trading began on RTS's classic market, some liquidity moved from the St. Petersburg Stock Exchange to it," Polishchuk told RBC Daily. But he could not say how many investors will move to MICEX. Meanwhile, if we compare trading in the most liquid stock on the Russian market – ordinary shares of RAO Unified Energy Systems of Russia and LUKoil, this comparison won't be in RTS's favor as more than 90 percent of operations with the two companies' stock concentrates on MICEX.

RBC, 26.02.2006, Moscow 19:35:11.The drafting of a master plan for gas industry development in Russia is expected to be completed in April 2006. A statement to this effect was made today at Gazprom's Board of Directors meeting, the gas holding's press service reported. Gazprom's management had been instructed to present for the Board of Directors' consideration in May the company's comprehensive gas production, transportation and supply program up to 2020 based on the master plan. The Board of Directors also took into consideration Gazprom's strategy in the sphere of gas production and the holding's comprehensive industrial development of fields on the Yamal peninsula and the surrounding water areas. Gazprom plans to increase its gas output to 550-560bn cubic meters by 2010 and 580-590bn cubic meters by 2020 to provide for the needs of the domestic market and to honor contractual obligations in export gas supplies.

MOSCOW, February 26 (RIA Novosti) - The board of directors of Gazprom approved Sunday a plan for its subsidiary Mezhregiongaz to buy stakes in six regional gas companies, the Russian energy giant said in a press release. These are joint-stock companies Ivanovoregiongaz, Kirovregiongaz, Udmurtregiongaz, Vladimirregiongaz, Mosregiongaz, and Bashkirgaz. The acquisition of additional stakes in regional gas companies is aimed to tighten corporate control, the press release said. Furthermore, the board of directors deemed it expedient to increase Gazprom's stake in Rosshelf, a closed-type joint-stock company.

MOSCOW, February 26 (RIA Novosti) - The board of directors of Russian energy giant Gazprom agreed Sunday to purchase controlling stake of North European Gas Pipeline Company from its affiliated company in Germany, the company's press release said. Gazprom board of directors agreed to purchase 51% of NEGP Company from its affiliated German company ZGG GmbH. The joint Russian-German NEGP Company was formed for the construction of a naval stretch of the North European Gas Pipeline project. Construction under the 4.7-billion euro project, which is managed by Gazprom, began last year. The pipeline, which is to include two parallel legs measuring 750 miles each, will connect the Baltic seashore near the Russian city of Vyborg with the Greifswald region on the German coast. The first leg of the pipeline is expected to have an estimated capacity of 27.5 billion cubic meters, and the second will double the NEGP capacity to 55 billion cu m annually. Under the agreement to build the North European Gas Pipeline, signed by Gazprom and Germany's BASF AG and E.ON September 8, 2005, the parties intended to set up a Russian-German joint venture in which a 51% stake would belong to Gazprom, while BASF and E.ON would each hold stakes of 24.5%.

Feb 13 (Interfax) - Russian oil company has reached an agreement with Societe Generale according to which a claim against OAO Yuganskneftegaz over guarantees on debt on a credit to Yukos of $1 billion will be regulated no later than April 30 this year, according to the Rosneft U.S. GAAP report for the first nine months of 2005. According to the report, the unpaid debt on the principal of the credit amounted to $455.124 million on September 30, 2005. The estimated loss arising from the implementation of this agreement is reflected in the company's report. According to the report, the bank's claim may be regulated by offering the creditors acceptable proof of the regulation of Yuganskneftegaz tax debt for 2004, which should not exceed a set limit. Societe Generale's claim on another credit to Yukos, for $1.6 billion, also guaranteed by Yuganskneftegaz, should be regulated by June 30, 2006. Rosneft hopes to provide the creditors with acceptable proof of the regulation of Yuganskneftegaz tax debt for the periods prior to 2004. The company's management believed that these conditions will be met," the report said. In the third quarter 2005 Rosneft received approval from creditors to exempt the company from liabilities arising from the violation of conditions, and also changes in the conditions of covenants, taking the new changes in the company's structure and the scale of its activities into consideration. Rosneft subsidiary OAO Yuganskneftegaz acted as guarantor for Yukos (RTS: YUKO) for a pre-export credit of $1 billion provided by Western banks headed by Societe Generale, and also for a pre-export credit of $1.6 billion provided by one of the structures in Menatep Group. The total unpaid debt on the two pre-export credit amounted to about $1.1 billion on September 30, 2005.

02-03-2006, Kommersant -For the second time in a fortnight, Gazprom said yesterday it considers whether to acquire the U.K. largest gas distributor Centrica plc. Gazprom needs an end user in Great Britain to provide economical substantiation for extending the North European Gas Pipeline from the continental Europe to the British Isles. Meanwhile, Centrica's capitalization rose 16 percent to ?11 billion on aggregate on statements of the gas monopoly of Russia. "The issue [a stake in Centrica] is currently analyzed and considered. No decision has been taken," Alexander Shkut, deputy director of Gazexport, told foreign investors over the phone conference Thursday, having fueled Centrica quotes on LSE. "Shkut was misinterpreted, no deals are planned," press service of Gazprom announced some time later, driving down the quotes of Centrica, which closed 8 percent up just the same. Apart from Centrica, Gazprom is eyeing another U.K. operator, Scottish Power, which capitalization stands at $19 billion. We have good retail business in Great Britain with large industrial consumers and power plants and hope to get control over 20 percent of that market by 2015, Gazprom deputy board chairman Alexander Medvedev said in January as quoted by The Guardian. Both Centrica and Scottish Power were mentioned in the interview. Gazprom intends to launch offshore construction of North European Gas Pipeline in 2007 and connect Russia and Germany in the end. The second branch of the pipeline will be laid by 2013 to take gas to the United Kingdom provided Gazprom finds annual users for 20 billion cubic meters there.

Friday, February 3, 2006

Gazprom Holding Negotiations on Direct Access to Italian Market

01/02/2006 (17:04) RZD Partner News - - Russia's Gazprom gas giant is holding negotiations on the direct access to the Italian gas market, Finance Minister Alexei Kudrin told a Tuesday press conference in Rome. Italian Economy Minister Giulio Tremonti and Kudrin told the press conference about results of their negotiations. Kudrin did not give any details of the negotiations between Gazprom and ENI, which has leading positions on the Italian retail gas market, as well as intergovernmental negotiations to the effect. ENI CEO Paolo Scaroni thinks that Gazprom wish to sell natural gas directly to Italian clients is legal but the agreement will not be reached in the near future. Italian Minister of Productive Activities Claudio Scajola said that Italy is ready to open the domestic gas market to Gazprom in the future. Kudrin did not comment on the Gazprom possible interest in buying stock of the Snam Rete Gas company that operates Italian gas pipelines. Snam Rete Gas is a subsidiary of ENI, whose main shareholder is the Italian government. The government has decided that ENI will stop controlling Snam Rete Gas in 2008 and stock will be sold to private investors. Privatization of the gas transport company should be analyzed anew bearing in mind the recent gas crisis in Italy, Tremonti said. He did not say whether privatization of Snam Rete Gas will be delayed, reports ITAR-TASS.

February 1, 2006 - Bloomberg – Gazprom will expand oil and gas exploration in Algeria and Libya to secure access to reserves in Africa. Gazprom and Sonatrach, Algeria's state oil company, agreed "to develop full-scale cooperation in exploration, production, transportation, processing and marketing" of oil and gas, Gazprom said Tuesday. The company also wants to produce oil and gas in Libya and market the fuel, Gazprom said Tuesday in a separate statement. Libya holds 5 billion tons of proved light-grade oil reserves (37 billion barrels), the largest in Africa and the fifth-largest among the Organization of Petroleum Exporting Countries. Gazprom plans to expand in Algeria, which holds 4.6 trillion cubic meters of gas reserves, Africa's second-largest after Nigeria, the Russian producer said. Gazprom's pipeline construction unit, Stroitransgaz, last year signed a contact with Sonatrach to build a $226 million gas pipeline to feed Algerian power generators. Algeria also holds 1.5 billion barrels (11 billion barrels) of proved oil reserves, the largest in Africa after Libya and Nigeria. Zarubezhneftegaz, a unit of Gazprom, plans to invest in oil and gas exploration in Pakistan and may buy stakes in the South Asian nation's energy companies.

02.01.2006 - [Neftegaz.ru] - Russia's state oil company Rosneft has invited India's Oil and Natural Gas Corporation to underwrite part of its multi-billion dollar IPO which is set to take place later this year. In return Rosneft offers ONGC long-term strategic partnership, MosNews reported. Earlier Rosneft plans to hit the London capital markets with an IPO of between $15 billion and $20 billion sometime in the middle of the year. The placement is part of the effort to retire the $7.6 billion debt Rosneft had acquired while taking over Yuganskneftegaz, core production asset of the dismantled Yukos Oil Company. The Indian public sector explorer was also open to offering Rosneft a stake in its refining and gas sector projects in India which use oil and gas from the Russian company's properties. Various options are being considered while structuring the deal. According to officials of the Petroleum Ministry, which has just been taken over by Mumbai-based Murli Deora after former minister Mani Shankar Aiyar was shifted out, India would like to receive as much as one million barrels of oil a day from Russia, either directly or through swap deals. "ONGC and its group companies are looking at a $15-$20 billion investment globally, of which a significant portion could be in Russia," the source revealed. After getting into the Sakhalin-1 project, ONGC Videsh had originally proposed acquiring participating interest in two major Russian assets — Sibneft and Yuganskneftegaz — in partnership with Rosneft and Gazprom.

RBC, 01.02.2006, Moscow 09:36:56 - Moscow is to host a regular meeting of Gazprom's Board of Directors today. The Board is expected to handle the preliminary results for 2005, as well as the company's draft investment program, budget (financial plan) and cost reduction program for 2006. Apart from that, the Board proposes to consider issues related to Gazprom's annual general shareholder meeting, candidates for the Board of Directors and the Supervisory Board, and proposals for the meeting's agenda. Besides, the Board will also look at the role of independent gas suppliers on the home market.