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Tuesday, March 28, 2006

Tajikistan, Gazprom ink oil and gas joint venture deal

DUSHANBE, March 28 (RIA Novosti) - The head of Russian energy giant Gazprom and the energy minister of Tajikistan signed a memorandum Tuesday on the creation of an oil and gas joint venture. Gazprom chief executive Alexei Miller, currently on a two-day visit to Dushanbe, told journalists that the statutory documents would be signed soon. "Initially, we are allocating $6 million from our budget to the joint venture," he said. Regarding the parties' shares in the venture's authorized capital, Miller said there was a "principled agreement that Gazprom will hold the JV's controlling stake." Miller also met with Tajik President Emomali Rakhmonov to discuss cooperation in the oil and gas and energy spheres. After the meeting, he told journalists that "priorities on natural gas deposits in Tajikistan, where Gazprom will be involved in prospecting and which will provide for the country's gas needs at the local level" had been set. Under the deal, Gazprom will develop four gas fields - Sarikamysh and Rengan in the west, and Sargazon and Olimtoi in the south. Proven gas resources in Sarikamysh and Rengan total 40 billion cubic meters and Sargazon 30 billion, while the Olimtoi deposit has yet to be prospected.

Wednesday, March 22, 2006

Gazprom could invite foreigners to Sibneft

03-22-2006 Analytical department of RIA RosBusinessConsulting - On 21 October 2005 Gazprom purchased a 72 percent stake in oil company Sibneft from Millhouse Capital for $13 billion. Another 20 percent of Sibneft stock is controlled by YUKOS. Sibneft increased production to 45.12 million tons in 2005 from 45.05 million tons in 2004. Without a 50 percent stake in Slavneft, which is jointly owned by Sibneft and TNK-BP, Sibneft's output stood at 33 million tons, or 2.9 percent down on the previous year. Its production is expected to drop further this year, to 32 million tons. Sibneft President Alexander Ryazanov said the company would seek to buy new oilfield licenses in 2006, allocating $150 million for the purpose. A rumor that Gazprom wants to sell part of its stake in Sibneft spread shortly after the acquisition. The gas company's statements about plans to consolidate its entire oil business around Sibneft failed to dispel the persistent rumor. Meanwhile, Sergei Sergiyenko, business director for fuel and energy market at Development of Business Systems, said billions of dollars in investment were needed to develop Sibneft's oilfields. Many expected Sibneft to invite a foreign investor having access to cheap loans from western banks. The company's recent policy seems to confirm this idea, with Gazprom offering minor stakes in its projects in exchange for foreign assets. Sibneft might also be slated for sale. A source in Gazprom told RBC Daily that the gas company planned to swap a block interest in Sibneft for a foreign asset over the next two years. The insider did not say whether talks with potential partners were underway and what Gazprom wanted in return for Sibneft. Sibneft's press secretary Alexei Firsov told RBC Daily he was unaware of Gazprom's plans to sell a stake in Sibneft. Nadezhda Kazakova, at Alfa Capital Markets, said the market value of a block stake in Sibneft was $5.3 billion, but it could be valued much higher for a swap operation. Observers say Gazprom is primarily interested in liquefied gas projects. "Gazprom is not at all represented on this market, not to mention its agreement to buy a stake in Sakhalin Energy, where production has not yet begun," Alexei Logvin, chief consultant at Interfin Trade, told RBC Daily. In theory, Sibneft may be of interest to all large oil companies operating in Russia, including Shell, Total, Statoil, Chevron and ConocoPhillips, Kazakova believes. Andrei Gromadin, at MDM Bank, agrees, noting that foreigners did not have many opportunities to buy into a Russian oil producer. Maxim Shub, representing Shell in Russia, refused to say whether Shell planned talks with Gazprom. Irina Rybalchenko, a spokeswoman for Chevron, said Gazprom would announce the results of the Shtokman gas field tender on 1 April. Under the terms of the tender, the winner shall offer Gazprom a share of its business. "If we get 49% of the project's shares, Chevron will make a commercial counteroffer to Gazprom," she said. Another analyst, who asked not to be named, did not rule out that some of the failed bidders for Shtokman would offer Gazprom their assets in exchange for Sibneft stock. Gazprom's short list for Shtokman includes almost all potential bidders for Sibneft, among them Chevron, ConocoPhillips, Statoil and Total. The latter has long been eyeing Sibneft, MDM analysts say. Spokesmen for ConocoPhillips, Statoil and Total were unavailable for comment.

Rosneft planning to open gas stations in China in 2007

BEIJING, March 22 (RIA Novosti, Alexei Yefimov) - State-owned oil major Rosneft is planning to open a network of gas stations in China by the end of 2007, the company's president said Wednesday. "Our dream is to enter China's retail market for oil products," Sergei Bogdanchikov told RIA Novosti. He said Rosneft was planning to move from crude exports to sales of oil products, high-quality gasoline, diesel fuel and oil. He said Rosneft had signed an agreement with China National Petroleum Corporation Tuesday on establishing a joint venture this year. Bogdanchikov said Rosneft would account for 73% of oil supplies, or 12.7 million metric tons, to China in 2006. "Overall, Rosneft accounts for 26% of all supplies of Russian goods and services to China," he added. Speaking about the financing of Rosneft projects, Bogdanchikov said China National Development Bank was the company's main partner in the country. "We agreed that the bank would finance not only joint projects with Chinese companies, but also Rosneft's separate projects," he said.

Experts hail Gazprom's China deal as step in right direction

MOSCOW, March 22 (RIA Novosti) - Russian experts hailed energy giant Gazprom's newly signed memorandum on natural gas supplies to China as a stride toward creating a global gas market. The memorandum, which Gazprom signed with the Chinese National Petroleum Corporation on the fringes of President Vladimir Putin's visit to China Tuesday, will "have a positive effect on our state's political and economic image," said economist Yevgeny Zayashnikov, who chairs the natural-gas committee in the State Duma, Russia's lower house of parliament. "This is a good step forward to creating a global gas market, a major element in enhancing global energy security," Zayashnikov said. Vladimir Likhachev, deputy director of Russia's Institute of Energy Studies, described the memorandum as "a breakthrough in Russian-Chinese relations." "Finding the best way to bring our natural gas to the Chinese market will help Russia get big preferences in the future, as energy consumption in China will keep growing and the country's natural gas market has until now been extremely undeveloped," Likhachev said. He said Russian gas supplies to China would be a "powerful response" to recent moves by Western European nations toward energy security. Natalia Volynskaya, director of the Independent Institute for Fuel and Energy, said Gazprom's deal with China in no way encroaches on European interests, and that Europe could even benefit from it as Russian supplies will "alleviate China's pressure on the market." Cooperation will also boost the development of Russia's Eastern Siberia region, she added.

U.S. court rejects U.S. company's claim against Gazprom

  MOSCOW, March 22 (RIA Novosti) - Russia's natural gas monopolist said Wednesday that a Texas court had granted its petition to throw out a claim filed against it by U.S.-based oil company Moncrief Oil International. American billionaire Richard Moncrief, president of Moncrief Oil International, filed the lawsuit in a Texas court against Gazprom, demanding that it either return the right to develop the Yuzhno-Russkoye gas field in Russia or pay several billion dollars as compensation for lost profits. "The court ruled that it had no jurisdiction over Gazprom," a company source said. The Yuzhno-Russkoye gas field, with estimated recoverable reserves of 700 billion cubic meters, is to be the main source of natural gas supplies along the North European Gas Pipeline, set to run under the Baltic Sea to Germany. In the late 1990s Moncrief had signed an agreement with Vladimir Nikiforov, then the director-general of regional energy producer Zapsibgazprom, to set up a joint venture to develop the Yuzhno-Russkoye deposit in the northern Yamal-Nenets Autonomous Area. Moncrief pledged to invest about $1 billion in the project. In 1999, a different company, Severneftegazprom, was established to develop Yuzhno-Russkoye. But in 2001 it emerged that Severneftegazprom was controlled by structures that had close ties to Russia's no.1 independent gas producer, Itera, while Zapsibgazprom was already controlled by Yukos. These companies said that they did not have any dealings with Moncrief over the gas field. By the end of 2002, Gazprom had regained 85% of Zapsibgazprom and control over the license to develop Yuzhno-Russkoye. However, it was not until July 2004 that the company management learned of Moncrief's interest in the deposit.

Thursday, March 16, 2006

Russia Claims to Be Reliable Energy Supplier, Europe Open for Further Cooperation

Photo from www.gettyimages.com14.03.2006 MosNews - At the International conference on energy security which opened in Moscow on Monday, March 13, Russia defended its record as a reliable energy supplier, claiming that January cuts to Ukraine with knock-on effects for the rest of Europe have been portrayed unfairly by the media and some international bodies. Alexander Medvedev, head of Gazprom's export arm, insisted that Gazprom was a commercial organization and not an arm of the Russian state. "Gazprom has been, is, and will be a guarantor of supplies of energy to Europe," Medvedev said, quoted by the British Financial Times. "Gazprom operates as a commercial organization according to international rules of commerce. What happened in . . . January did not undermine the prestige of Gazprom; on the contrary it consolidated Gazprom's prestige." He noted investors had been buying Gazprom shares heavily since Russia lifted restrictions in December on foreigners owning the 49 per cent of shares in the company not held by the state. That had lifted its market capitalization above $210 billion, surpassing that of Royal Dutch/Shell, the Anglo-Dutch oil group. MosNews has reported on Monday about the international conference which gathered the representatives of state authorities, business circles, scientific and technological organizations of G8 countries, as well as from international bodies and organizations. The conference is a run-up to the meeting of G8 energy ministers and Jose Manuel Barroso, the president of the European Commission, which is set to start in Moscow on Thursday, March 16. The ministers will discuss ways to improve global energy security — which Russia has put at the centre of its presidency of the group of leading industrialized nations. On Friday, March 17, Barroso will meet Russian President Vladimir Putin and convey fears across Europe about Russia's own reliability, after its decision to turn off gas to Ukraine resulted in sharp falls in deliveries to the EU. He will discuss with Putin a long-term EU-Russian partnership agreement, which he believes could be a "win-win" deal for both sides. Speaking at a weekend meeting of EU leaders, Barroso said: "My question is whether Russia is ready to be our credible, stable, strategic partner or not? That is the question I will put to President Putin. If this is the case, we will help to make sure we have the same approach on the European Union side." The Europeans want Russia to give access to its pipelines to other gas suppliers and for EU companies to win contracts to help open up Russian reserves. In exchange, EU officials have floated the idea of Russian companies winning access to "downstream" energy companies in the EU, giving them access to the lucrative retail end of a market serving 450 million consumers. On Monday, March 13, Lucia Montanaro-Jankovski of the European Policy Center said energy partnership with Russia had long been a key issue for the EU, and would remain so, as it meets the interests of both sides. The executive branch of the European Union expects Russia to remain the main energy partner of the EU, she said.

OMK and Gazprom hold conference devoted to large-diameter tubes deliveries

16.03.2006 SKRIN - News - At a meeting that was held on March 15, 2006 at Vyksunskiy Metal Works JSC (VMW, incorporetd in United Metal Company JSC (OMK)) Deputy CEO of Gazprom Alexander Ananenkov and Deputy Chairman of the Board of OMK Anatoliy Sedykh discussed the large-diameter tubes deliveries for the North-European gas pipeline, the construction of which began on December 9, 2006, and prospects of tubes supplies for other projects of Gazprom. Following the results of the meeting the parties decided to prepare an agreement on research and technical cooperation, aimed at raising the Russian tubes' quality, OMK press service reported to SKRIN.

TNK-BP and Gazprom to divide Kovykta

3/16/2006 - Analytical department of RIA RosBusinessConsulting - Viktor Vekselberg, executive director of the Russian-British oil company TNK-BP said on Tuesday that his company had offered Russia's gas giant Gazprom to buy a 51 percent stake in the operator of the Kovykta gas condensate project. The other 49 percent will be held by TNK-BP. Experts say this offer was expected, following long negotiations between the two companies. TNK-BP, eager to start production at Kovykta, is ready to make concessions, but analysts say it might in return seek Gazprom's part in its offshore projects or contracts with China. The Kovykta gas condensate field, in the east of the Irkutsk region, is the largest in Russia, its reserves estimated at 2.13 trillion cubic meters of gas, which is equivalent to China's entire probable reserves. According to preliminary estimates, these reserves will ensure annual production of up to 30 billion cubic meters of gas for local consumption for many years. The license for the Kovykta field is held by RUSIA Petroleum, controlled by ?N?-BP (62.89 percent), Interros (25.82 percent) and the State Property Committee of the Irkutsk region (10.78 percent). The project was expected to be launched back in the mid-1990s but this did not happen due to disagreements between the parties, especially over access to the trunk pipeline. A technical and economic feasibility study was written by Russia, China and Korea in 2003. Total investment in the project is expected to be between $15 billion and $18 billion. It might seem that this project must be of interest to Gazprom, but long negotiations produced little results, and the gas monopoly's officials have said recently that Kovykta was not among the company's priorities. But things seem to be changing, with TNK-BP executive director Viktor Vekselberg announcing on Tuesday that his company had offered Gazprom to buy a 51 percent stake in the Kovykta project operator. Vekselberg refused to comment on the price offered by TNK-BP for the stake. He said the Kovykta operator would include four companies, responsible for gas production, transportation, selling and processing. The owners of the project will have different stakes in them. TNK-BP wants RUSIA Petroleum to have a controlling stake in the gas producing company, and it is ready to offer Gazprom full control of the transportation division that will be responsible for the operation of regional and export pipelines. For the sales company the British-Russian group offers the same ownership structure as for the operator (51 to 49). And the gas processing division could be owned by third parties. Experts said TNK-BP's offer was no surprise. "It's long been rumored that TNK-BP is ready to let Gazprom into the Kovakta project. But it seems the gas monopoly has been seeking the best possible terms," says Mikhail Zak, chief analyst at Veles Capital investment consultants. As for TNK-BP, Kovykta is one of its most promising projects, and TNK, keen to start work, is ready to share control with Gazprom. "This proposal is not new. Gazprom's passive stand is understandable – time works for Gazprom. TNK-BP, fearing to lose license for the project, is making more and more interesting proposals to Gazprom," says Anton Rubtsov, at Rye, Man & Gor Securities. Gazprom is expected to accept TNK-BP's offer. "Gazprom will certainly agree to buy a stake in the Kovykta operator – that's what it is seeking. Anyway, Gazprom has to participate in the government's program for providing Siberia and the Far East with gas," Alexander Blokhin, an analyst with Antanta Capital, told RBC Daily. "TNK-BP has given in, but it is likely to ask for something in return. Perhaps, it will want Gazprom to take part in its offshore projects or energy programs in China," he said. Vekselberg confirmed on Tuesday that TNK-BP was considering the possibility of supplies to China.

Gazprom CEO discusses LNG projects in Canada

MOSCOW, March 16 (RIA Novosti) - The chief executive of Russian energy giant Gazprom discussed joint liquefied natural gas projects during his visit to Canada, the company's press service said Thursday. Alexei Miller met with Canada's trade, transport and fishery ministers and the heads of oil and gas companies Petro-Canada and TransCanada during his visit March 13-15. Petro-Canada and Gazprom signed an agreement on initial engineering design of a liquefied natural gas (LNG) plant in St. Petersburg. Under the agreement, the companies will conduct preliminary engineering studies to provide cost and schedule estimates for an LNG plant on the Baltic Sea near Russia's second city. LNG from the plant would be supplied to Petro-Canada's proposed LNG re-gasification facility in Gros-Cacouna, Quebec. Gas from this terminal would be trans-shipped to markets in Quebec and Ontario. Canada is the world's third largest natural gas producer (183.6 million cu m in 2004) after the United States and Russia, and second largest exporter after Russia (102.1 billion cu m).

Petro-Canada, Gazprom sign agreement on LNG plant in Russia

QUEBEC, March 15 (RIA Novosti) - Canadian energy major Petro-Canada has signed an agreement with Russian energy giant Gazprom on initial engineering design of a liquefied natural gas plant in St. Petersburg, the Canadian company said in a press release. Under the agreement the companies will conduct preliminary engineering studies to provide cost and schedule estimates for the LNG plant on the Baltic Sea near Russia's second city. LNG from the plant would be supplied to Petro-Canada's proposed LNG re-gasification facility in Gros-Cacouna, Quebec. Gas from this terminal would be trans-shipped to markets in Quebec and Ontario. "LNG is going to be a big part of the future of the gas market in North America," said Ron Brenneman, president and chief executive officer of Petro-Canada. "We see this agreement as an important part of our overall growth strategy."

Thursday, March 02, 2006

Natural gas major Gazprom's unit opens its first CNG fuel station in Berlin

01.03.2006 IntelliNews Today - According to ITAR-TASS, a Germany-based subsidiary of gas major Gazprom – ZGG-Zarubezhgaz-Erdgashandel-Gesellschaftcompany – opened its first compressed natural gas (CNG) filling station in Germany's capital city. The filling station costing EUR 250,000 (USD 298,500) is located near Berlin's Tegel airport. It will be operated mainly for servicing the city's and the airport's buses, propelled with CNG fuel. As informed by ZGG-Zarubezhgaz-Erdgashandel-Gesellschaft's press service, the company plans to open several more CNG filling stations in Germany .

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