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Tuesday, October 31, 2006

Gazprom Delays Shtokman Offshore Gas Field to 2013

31.10.2006 The St. Petersburg Times - Gazprom delayed the start of production at its giant Shtokman offshore natural gas field in the Arctic by two years, to 2013, Interfax said Sunday.The company had planned to produce its first liquefied natural gas, or LNG, at the field in July 2011, deputy CEO Alexander Ananenkov said in Ufa on Sunday, Interfax reported. Gazprom this month said it would develop the $20 billion field itself, spurning offers from Western producers including Chevron and Total to exploit the country's biggest untapped gas deposit. Gazprom initially planned to ship Shtokman's output as LNG to theUnited States to break into the world's largest energy market. The field has 3.7 trillion cubic meters of gas, enough to supply the United States for more than five years. Gazprom will concentrate instead on supplying Europe via a pipeline to Germany being built under the Baltic Sea.

Gazprom to Cross Turkey

Oct. 30, 2006 Kommersant - Gazprom set to elaborating feasibility studies for gas pipelines running through Turkey in an effort to triple the Blue Steam’s shipment. The aim of this move of the gas monopoly of Russia could be preventing Iran, Transcaucasia and Middle Asia from delivering gas to Europe. And the fears of Gazprom appear well-justified. The first Azeri gas will reach Turkey in a fortnight.
On Friday, Gazprom BOD focused on the foreign economic strategy of the monopoly in time when the transit role of Turkey is stepping up. After Germany and Italy, Turkey is the third buyer of Russia’s gas in terms of the volume. Gazprom spokesman Sergey Kupriyanov said the matter at stake is creating a South European Corridor based on the existing Blue Stream that will run under the Black Sea to Turkey's Samsun port. Gazprom is elaborating feasibility studies for two gas pipelines. The first one is expected to cross Turkey from east to west, shipping gas to northern Italy via the Bosphorus Strait. The second pipeline will run from southern to northern Turkey and connect the Black Sea’s Samsun with Ceyhan of the Mediterranean Sea. The facility could be used to ship gas to Israel. The BOD’s decision was to recommend improving the Samsun-Ceyhan feasibility study in tandem with Israeli partners. The feasibility study for Italian pipeline is to be perfected in cooperation with Hungarian MOL till late this year. MOL could be both the project investor and consumer of gas, Gazprom representatives said some time earlier.

Gazprom Neft to Cross the Border

10-30-2006 Kommersant - Gazprom Neft is negotiating for creating crude oil production ventures with Shell, Total, Statoil and Chevron in an effort to get cross-border assets in future. At the same time, Gazprom’s subsidiary joined the battle of Rosneft and LUKOIL for refineries in Europe and Middle East.
The company “is considering a raft of proposals for joint activities to explore and produce crude oil abroad,” said Gazprom Neft Vice President Reval Mukhametzyanov, meaning the assets in the Arab states, Africa and Kazakhstan.
In return, the foreigners are offered joint projects in traditional area of Gazprom Neft – Yamal-Nenets Autonomous District, Khanty-Mansi Autonomous District and Tomsk Region. Gazprom Neft possesses no assets in the far abroad countries yet. Past summer however, the company acquired a retail chain of 77 petrol stations in Kyrgyzstan. The negotiations are underway with French Total, Britain’s-Dutch Shell, Norwegian Statoil and U.S. Chevron, Mukhametzyanov specified.
The talks with Chevron have reached the final stage, a source familiar with the situation said on condition of anonymity. Chevron neither confirmed nor denied the information. Shell said it is permanently in talks with Russia’s partners about joint projects, and Statoil and Total declined to comment.

Gazprom urged to double investment

29–10–2006 RBC News – To ensure sufficient gas supplies, Russian gas giant Gazprom has to at least double its investment, Economy Minister German Gref told reporters on Tuesday. Not only Gazprom but also other gas companies need a clear development strategy, Gref said, noting that it should be aimed at increasing gas production. In 2007 Gazprom will increase its investment program by 42.5 percent to RUR 531.8 billion (approx. $20bn), including RUR 360.56 billion in capital investment and RUR 171.22 billion (approx. $13.5bn and $6.4bn) in long-term financial investment. In 2008 and 2009, Gazprom expects to invest RUR 623.73 billion and RUR 702.95 billion (approx. $23.3bn and $26.2bn), respectively. Capital investment is projected to be RUR 521.63 billion in 2008 and RUR 588.5 billion (approx. $19.5bn and $22bn) in 2009, and long-term financial investment will be RUR 102.1 billion in 2008 and RUR 114.45 billion (approx. $3.8bn and $4.27bn) in 2009. Gazprom’s 2007 investment program focuses on the Yamburg, Bovanenkovskoye, Kharasaveiskoye, Yuzho-Russkoye, Shtokman and Prirazlomnoye fields. Long-term investment will be made in Gazprom’s projects abroad (in Tajikistan, Kyrgyzstan, Uzbekistan, Vietnam and India). Gref said the Economy Ministry was against plans to change the tariff policy in the gas industry in 2007. He stressed that the Economy Ministry was for increasing free trading on the gas market. The Industry and Energy Ministry said earlier that gas prices would rise by more than 15 percent in 2007. According to the 2007 federal budget, gas prices for all gas consumer categories will not rise by more 15 percent next year. In 2008, the average price for natural gas will rise by no more than 14 percent, and by no more than 13 percent in 2009, in accordance with the maximum prices (tariffs) for the products and services of Russia’s natural monopolies as approved by the government.

Gazprom to sell stake in its banking arm

10/29/2006 RBC News – Russian gas company Gazprom said its Board of Directors has approved the planned sale of Gazprom’s 24.9 percent stake in Gazprombank to the non-governmental pension fund Gazfond. The necessary changes to Gazprom’s 2006 budget will be prepared by the Executive Board and submitted to the Board of Directors. The Board of Directors has also determined Gazprom’s position on voting in Gazprombank on increasing its authorized capital through issuing new shares. According to unconfirmed reports, Gazfond will pay for the Gazprombank shares with Mosenergo shares. Gazprombank plans to issue RUR 6 billion (approx. $223 million) worth of new shares before the end of this year. The bank will issue 6,665,926 ordinary registered shares, with a face value of RUR 1,000 (approx. $37) each. Gazprombank was set up in 1990. Its main shareholders are Gazprom (87.49 percent) and New Financial Technologies (12.55 percent), owned by the bank itself. Gazprombank’s authorized capital is worth RUR 13.33 billion (approx. $498 million). It has over 300 offices in 48 regions of Russia. The company also has a stake in a foreign bank in Belarus. Gazfond was founded in October 1994 to ensure pension provision for gas industry workers. The founders are Gazprom, Urengoigazprom, Yamburggazdobycha, Yugtransgaz, and Gazprombank. The fund has a state license for non-governmental pension provision. Mosenergo, Moscow’s power utility, has an authorized capital of RUR 28,267,726,000 (approx. $1.04 billion), divided into the same number of ordinary shares with a nominal value of RUR 1 (approx. $0.037). RAO Unified Energy Systems of Russia has a 50.87 percent stake in the company, and Gazprom controls about 30 percent.

Friday, October 13, 2006

Gazprom To Takeover Portugal Energy Giant

10.10.2006 [] - Russian gas monopoly Gazprom may buy a stake in Portugal's Amorim Energia, the second-biggest shareholder of Galp Energia, Portugal's leading energy firm, the head of Amorim Energia said in a newspaper interview. "There would be no problem if Gazprom were to take a minority stake in Amorim Energia," he added Monday. Amorim Energia is 55 percent owned by Amorim Investimentos Energeticos, in which Americo Amorim has about 75 percent and Spanish savings bank Caixa Galicia the remainder. The remaining 45 percent of Amorim Energia is held by Sonangol. Galp Energia is discussing the possibility that Gazprom could supply it with natural gas and an agreement between the two firms could be reached within 30 to 60 days.

Gazprom Bears Like a Bear: Shtokman

10.10.2006 [] - Russian gas giant Gazprom made a sensational announcement: it wouldn't involve other oil and gas firms in the development of the huge gas project Shtokman in the Barents Sea. We remind, that Gazprom was to choose partners a year ago, in September 2005, but postponed that decision twice: to April 2006 and then to October 2006. Gazprom's CEO Alexey Miller said, that the reason was in that the candidates, among which were France's Total, US Chevron and Conoco and Norwegian Statoil and Hydro, couldn't meet Gazprom's conditions. Norway said that Russian gas giant "offended all the world and acted as a bear". Shtokman gas and gas condensate project has 3.7 bln cu.m. of gas and over 30 mln tons of gas condensate.

Thursday, October 12, 2006

Putin meets German business community, focuses on energy

MUNICH, October 11 (RIA Novosti) - Russia's president met with members of the German business community Wednesday, touching on sensitive energy and economic issues in relations between Russia and Germany, and Europe at large. Addressing European concerns of a growing energy dependence on Russia and the reliability of its supplies, Vladimir Putin said his country will never let down its foreign partners who rely on its energy resources. Putin also promised to redirect gas from the ambitious Nord Stream pipeline being built on the Baltic Sea floor from Russia to Germany, highlighting its role as Russia's main energy partner in Europe. "They [partners] do not have to fear any form of dependence on Russia," Putin said. "Russia supplied energy resources on time in the most difficult period in the early 1990s, when its statehood was being rebuilt." Germany, which currently consumes 40 billion cubic meters of Russian gas a year, will receive an additional 50-55 billion cubic meters in the next 50-70 years from the vast Shtokman deposit in the Barents Sea, the president said. "Germany will evolve into a major consumer, as well as a major gas transit and distribution center," Putin said, and further praised Russia's long-standing business cooperation with the country, saying bilateral trade amounted to $32.9 billion at the moment, and could hit $40 billion shortly. Earlier gas supplies from Shtokman were mainly intended for the United States. But Russia's gas monopoly said Monday it will pump most of the deposit's gas to Europe. State-owned Gazprom also said it will develop the deposit on its own, a move that stunned Norway's Statoil and Norsk Hydro, France's Total, and U.S. giants Chevron and ConocoPhillips, the companies on a shortlist of contenders for the project. Putin earlier said Gazprom was not after investment in the project, but a swap for assets in Europe. He said none of the companies offered Gazprom adequate assets in exchange for a share in the deposit. But he added the monopoly will consider a role for foreign companies in the development of Shtokman and liquefying natural gas. Gazprom, which has said in turn it wants reliable consumers, has moved to buy pipeline assets in Europe and integrate its networks with the European ones, which has been met with apprehension by many countries. But Putin said Russian businessmen are not entering European markets in tanks or with Kalashnikov assault rifles. "Those who want to come to Europe are not the Red Army, they are businessmen like you are," he said. "I hope our business in Europe will be treated fairly. I hope we will not hear shouts in horror like 'The Russians are coming!'"

Gazprom seeks no partners in developing Shtokman field not to risk

10–10–2006 Regnum News – Gazprom’s decision to develop Shtokman gas field on its own without participation of foreign partners “is connected with high risks,” Research Supervisor of Economics High School (Moscow) Yevgeny Yasin is quoted as saying on air of Ekho Moskvy Radio. “To develop Shtkamn field, high expenditures are needed; the question is whether Gazprom has enough resources for it,” Yasin says. Earlier REGNUM reported that on October 9, Gazprom CEO Alexei Miller announced Gazprom would develop the gas field on its own. “For a long period Gazprom has been considering a possibility of selling 49% in the Shtokman project to foreign companies. However, foreign companies failed to provide assets corresponding in their amount and quality with the Shtokman gas field. In development of the field modern technologies and technical decisions will be used, particularly in extraction of natural gas. For this aim respectable international companies will be engaged as contractors. The most important condition of these contracts will be observance of time limits and cost of works. The decision is an extra guarantee of reliability of Russian gas supplies to Europe for long-term perspective and evidence that the European market is most important for the company,” Miller is quoted as saying.

Thursday, October 05, 2006

Eni Says Oil Pressure Delaying Swap Deal

October 5, 2006 Reuters - By Ian Simpson - MILAN, Italy -- Rising pressure against Western energy companies in Russia has delayed a deal between Italy's Eni and natural gas giant Gazprom, Eni chief executive Paolo Scaroni said Wednesday. Although the Italian oil group, Europe's fourth-biggest, was still working toward closing an asset swap accord with Gazprom by its announced signing date of Oct. 15, that was not a deadline, Scaroni said in Rome. "Certainly when we see the problems encountered by our colleagues that operate in Russia, that raises some grounds for reflection, because we don't want to get into the upstream and encounter the problems these gentlemen are finding," Italy's Ansa news agency cited Scaroni as saying. He gave no details on the talks but called relations with Gazprom excellent. "If instead of the 15th [of October] it's the 21st, it won't be a problem," Scaroni told reporters before a Senate committee hearing in Rome. However, Gazprom export chief Alexander Medvedev said the company was still aiming at an Eni deal before Oct. 15. He denied Italian media reports that it was delayed. The accord on oil, gas, power and liquefied natural gas was to be signed after months of talks. It was expected to give Eni access to Russian oil and gas fields and let Gazprom sell gas directly in Italy. A source in one of the companies said Tuesday that Eni was not ready to let newcomers into its market, and that Gazprom did not want to see new companies in Russia's oil and gas fields. Other oil majors have faced increasing difficulties with their Russian operations in the past month. Royal Dutch Shell and ExxonMobil have come under pressure for cost overruns at their multibillion-dollar projects on Sakhalin Island. Officials also have suggested BP joint venture TNK-BP could lose the license for its giant Kovykta gas field in Siberia. "The experiences of BP and Shell show there are issues you have to be aware of in Russia. Clearly, before you made any major investment, you'd need to make clear that the guidelines are very certain," said an analyst who asked not to be identified. Arkady Dvorkovich, head of the Kremlin's economic research department, said Russia was not trying to oust foreign oil majors with big production sharing agreements but would not agree to large cost overruns. Eni shares were off 0.35 percent at 23 euros ($29) on Wednesday afternoon. Gazprom shares were up 0.96 percent at 285 rubles ($10.63).

Russia, Kazakhstan Form Gas JV for Giant Karachaganak Field

Photo from MosNews - On Tuesday, Oct. 3, Russia and Kazakhstan signed an agreement for creation of a joint venture that would process natural gas from the Central Asian state’s giant Karachaganak field. Officials said they hoped to finalize the venture, based on Russia’s Orenburg gas processing plant, by the year’s end after the bilateral declaration was signed at talks between presidents Vladimir Putin and Nursultan Nazarbayev in Uralsk, Kazakhstan. But loose ends remain to be tied up after more than a year of talks, with pricing terms for the processing of up to 15 billion cubic meters of sulfur-laden Karachaganak gas still to be agreed with Western energy majors. “Kazakhstan and Russia will become 50-50 owners of the Orenburg plant, and will invest $1.5 billion in its expansion —- half of which will come from Kazakhstan,” Kazinform news agency quoted Kazakhstan’s Nazarbayev as telling reporters. Russia will be represented by gas monopoly Gazprom, while Kazakhstan’s KazMunaiGas state energy firm will own the other half. Gazprom is keen to contract incremental supplies of gas from Central Asia to cover Russia’s domestic needs, freeing up its own production to supply to lucrative European export markets. Karachaganak is co-led by Italy’s ENI and Britain’s BG, which both hold 32.5 percent stakes, while U.S. Chevron owns 20 percent and Russia’s Lukoil has a 15 percent interest. Russian madia reported last month the Russian-Kazakh venture may face problems because the Karachaganak group was not prepared to sell gas at low prices, although it mainly focuses on gas condensate production. The venture between Gazprom and KazMunaiGas would deliver some of the processed Karachaganak gas back to the Kazakh market, KazMunaiGas’s first vice-president, Zhaksybek Kulekeyev, said earlier in Almaty. The Kazakh side proposes paying $54 per thousand cubic metres to the venture to supply 6 billion cubic meters of processed gas per year to Kazakhstan, Kulekeyev said. But it remained unclear what the pricing terms would be for the remaining 9 billion cubic meters — enough to supply a country such as Austria for one year — that both sides have said they want to put through Orenburg. Gazprom, the world’s largest gas producer, supplies Europe with a quarter of its gas needs at average price of $230 per 1,000 cubic meters. Separately, Kazakhstan, neighboring Uzbekistan and Russia continue to negotiate the terms of a swap deal under which Uzbekistan would supply gas consumers in southern Kazakhstan and Kazakhstan would in turn export gas to Russia, Kulekeyev said. The three partners set up the deal to swap 3.5 billion cubic meters per year of gas in 2007-2009 by signing a memorandum of understanding in the Uzbek capital, Tashkent, last month. “We are still at the discussion stage on the Uzbek gas swaps,” Kulekeyev said, quoted by Reuters. “Talks will continue —- we have time until the end of this year. I think we will be able to achieve a result on this question.”

Gazprom makes public its draft eastern strategy

27/ 09/ 2006 YUZHNO-SAKHALINSK, September 27 (RIA Novosti) - Gazprom [RTS: GAZP] made public Wednesday a draft of its eastern strategy at an international conference in Russia's Far East. "Taking into account the fuel and energy balance in the country's Far East, where coal is dominant, complete gasification is not planned," Viktor Timoshilov, head of the Russian energy giant's eastern projects department, said. Nonetheless, in its strategy Gazprom proposes establishing a unified gas transportation system on the basis of four gas-producing centers in Siberia and the Far East. The company said the system will provide for the country's domestic needs and will be involved in exporting natural gas and liquefied natural gas (LNG) from Sakhalin Island. "We plan both pipeline deliveries to our consumers and LNG deliveries, and we intend to significantly increase our production capacity and build new plants in other Far Eastern regions," Timoshilov said. He also said natural gas would be delivered to China from West and East Siberia, and that LNG would be supplied to Japan, Korea and other Asia Pacific countries. Russia's Sakhalin II project, which is run by the Sakhalin Energy Investment Company and operated by Royal Dutch Shell, comprises an oil field with associated gas, a natural gas field with associated condensate production, a pipeline, a liquefied natural gas plant and an LNG export terminal. The two fields hold reserves totaling 150 million metric tons of oil, and 500 billion cubic meters of natural gas. The Russian energy giant has been pursuing a 25+1% share in the Sakhalin project in return for a 50% stake in the massive West Siberian Zapolyarnoye-Neocomian project.

Russia's Gazprom, Spain's Repsol mull oil and gas cooperation

10/05/ 2006 MOSCOW, October 5 (RIA Novosti) - Gazprom [RTS:GAZP] and Spanish multinational Repsol [YPF] have signed a memorandum of understanding on cooperation in oil and gas projects, the Russian energy giant said Thursday. Under the document signed by Gazprom chief Alexei Miller and Repsol CEO Antonio Brufau, the companies will investigate possibilities for cooperation in Europe, Latin America and Africa, and liquefied natural gas (LNG) production using Russia's resource base, including the Baltic LNG project. Repsol YPF, which operates in more than 30 countries, is one of the world's 10 largest private oil and gas companies, and is the biggest in Spain and Argentina. Gazprom and Repsol will form a coordination committee to see through the document's implementation. Gazprom plans to build an LNG plant on the Baltic Sea coast near St. Petersburg to produce 5 million tons of LNG a year by 2009, and it is looking for a partner with relevant expertise. Italy's Eni and Algeria's Sonatrach are also among Gazprom's possible choices.

Sakhalin-I energy project launches oil terminal in Siberia

10/04 / 2006 KHABAROVSK, October 4 (RIA Novosti) - Sakhalin-I, an ambitious energy project in Russia's Far East, has finished the construction of a new oil terminal, representatives of the companies running the project said Wednesday. U.S. oil major Exxon Neftegas Limited operates the project under a production-sharing agreement (PSA). Apart from the American giant, the Sakhalin-I international consortium comprises Russia's state-controlled Rosneft (20%), India's ONGC (20%), and Japan's Sodeco (30%). Sergei Bogdanchikov, the head of Rosneft, said that the new on-shore terminal in De-Kastri in the Khabarovsk Territory is the largest in Russia's Far East and serves three deposits on the Sakhalin's northeastern shelf. He called it an "energy bridge between Russia's Far East and the Asian-Pacific region." The recoverable reserves of the deposits are estimated at 2.3 billion barrels of oil and 484 billion cu m (17.1 trillion cubic feet) of natural gas. The deposits so far yield about 60,000 barrels per day, but output will be increased to 250,000 in January after the commissioning of new onshore facilities and annual output in 2007 will be 11.5-12 million metric tons (about 8.8 million barrels). Bogdanchikov said Sakhalin I would deliver initial supplies of oil from Russia's Far East and West Siberia to Asian Pacific countries under current export agreements. "Up to 80-90 million tons [588-661million bbl] of oil and oil derivatives will be exported [annually] in 2015-2020 from deposits in Russia's Far East and West Siberia to Asian Pacific countries," Bogdanchikov said. Capital investment in the development of Sakhalin-I deposits has reached more than $12 billion, about $8 billion less than Royal Dutch Shell-led Sakhalin II, a sister project that has been plagued by problems in recent months.

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