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Thursday, September 27, 2007

Gazprom Might Have to Pay More for Turkmen Gas

Putin and Berdymukhammedov// The price of Turkmen natural gas might rise to $150
Sep. 27, 2007 - Kommersant by Natalia Grib - Turkmen President Gurbanguly Berdymuhammed began his first visit to the U.S. by acknowledging there is tension in the gas talks with Russia. According to unofficial data, the tension is caused by Turkmenistan’s wish to raise the price of natural gas for Gazprom up to $150 per 1,000 cubic meters. It can be done only with violation of the current agreements. However, if Russia eventually agrees to the price growth, so as to preserve its energy alliance with Turkmenistan, Ukraine will be the first to pay for it. Turkmen President Gurbanguly Berdymuhammed arrived to New York to speak at the UN General Assembly on Wednesday night. In response to a very warm welcome he received in the U.S., Berdymuhammed unequivocally hinted that Turkmenistan might change its strategic partner in the gas sector. Turkmen leader told U.S. businessmen that difficulties have appeared in the Russia-Turkmenistan energy relations. “The Caspian Shore Gas Pipeline, our new joint project with Kazakhstan, will allow supplying additional amounts of Turkmen natural gas [30-40 billion cubic meters.--Kommersant] to Russia and other countries. The process of negotiating the gas prices both for the new project and for the current agreements is tense,” said Berdymuhammed, but did not specify what the tension lies in. Sources close to the Turkmen authorities said that the president wants to raise gas prices for Russia. Energogaz company’s owner Roman Matsuev said, with reference to Turkmenistan’s Deputy PM and Oil and Gas Minister Tachberdy Tagiev, that Turkmenistan intends to raise the price of gas sold to Gazprom from $100 to $150 per 1,000 cubic meters since January 1, 2008. Matsuev said that Dushanbe justifies the initiative by mentioning Gazprom’s plans to increase gas prices for Lithuania, Latvia, Estonia, Hungary, and Belarus. The expert believes it is the gas price that is the stumbling block in negotiations over the Caspian Shore Gas Pipeline’s construction. Presidents of Russia, Turkmenistan, and Kazakhstan initiated the project in May, by signing a memorandum of intent. By September, they planned to sign a four-sided binding agreement (Uzbekistan was to join it). However, it did not happen. Turkmenistan’s Oil and Gas Ministry and the country’s embassy in Russia refrained from giving comments to Berdymuhammed’s statement in New York. Gazprom said “the documents concerning the pipeline are being coordinated”. Yet, the monopoly does not know the new deadline for signing it. Gazprom refused to discuss the issue of Central Asian gas prices in 2008. Meanwhile, the monopoly has grounds to insist on keeping oil prices. In 2006, Gazprom head Alexei Miller signed with late Turkmenbashi Saparmurat Niyazov an agreement on buying up to 162 billion cubic meters of natural gas in 2006-2009 for $100 per 1,000 cubic meters. Yet, Turkmenistan’s new president finds more and more new strategic allies against Russia. At his meeting with Great Britain’s Energy Minister Malcolm Wicks last week, Berdymuhammed invited British companies to join the extraction of energy resources from the Turkmen shelf of the Caspian Sea, and to create refineries in the country. “We discussed the possibility of creating a southern corridor [Nabucco pipeline.—Kommersant] for transporting gas from Turkmenistan across the Caspian Sea to Azerbaijan, and then to Turkey and the EU. I was greatly impressed by the president’s positive stand on the issue,” said Wicks. Berdymuhammed also confirmed his predecessor’s agreements on supplying gas to China and granting it access to Turkmen resources. Thus, Russia will either have to resort to methods of political pressure on Turkmenistan, or to agree to higher prices, as it already happened in August 2006 (from $65 to $100 per 1,000 cubic meters). However, Ukraine, and not Gazprom, will suffer the economic consequences of the price raise. Ukraine buys all Turkmen gas from the Russian monopoly through Rosukrenergo. Ukraine’s Deputy PM Andrei Klyuev calmed the country’s population on Wednesday, saying that the talks on buying 34 billion cubic meters of Turkmen gas for $100 per 1,000 cubic meters are already over. Yet, Gazprom and Rosukrenergo do not confirm the information. “We are now in working consultations with our partners. Hopefully, the talks on the Central Asian gas price will be over in October-November, after which Ukraine will know its gas price for 2008,” explained Rosukrenergo’s spokesman Andrei Knutov. Another source close to the company believes that if Turkmenistan succeeds in raising the gas price, Kazakhstan and Uzbekistan, which also secure supplies to Ukraine, will do the same.

Gazprom eyeing control of OGK-2

RBC, 27.09.2007, Moscow 11:07:31.Gazprom has placed a bid for OGK-2's additional share issue, the Russian gas holding's press office told RBC today. The submission stipulates a $0.16-$0.20 price range, which corresponds to $515-$631 per kW. The bid was placed by a Gazenergoprombank affiliate. Gazprom's information management department reported that the amount of shares would depend on the flotation price, but that the company would secure no less than 50 percent plus one share in OGK-2, as the power generation company is considered to be one of the target assets in the RAO UES restructuring process. The maximum number of OGK-2 shares Gazprom can buy is not to exceed 51 percent after the additional issue.

Monday, September 24, 2007

Europe Drops Energy Curtain

EU Competition Commissar Neelie Kroes // Gazprom Told to Split
Sep. 20, 2007 - Kommersant by Dmitry Butrin - The European Commission’s proposed energy reforms seemed shockingly strict toward investors outside of the EU. The energy reform suggested by Europe and the reform United Energy Systems of Russia (UES), would close the door on Gazprom buying energy networks in the EU until Russia and the EU sign a cooperation agreement and Gazprom is divided into production and transportation components. The project was presented yesterday by the European Commissioner for Competition Neelie Kroes and must still be ratified by the countries of Europe. The reforms’ primary concern is Europe, not Russia. Three European Commissioners, Commission President Jose Manuel Barroso, EU Competition Commissar Neelie Kroes and EU Energy Commissar Andris Piebalgs, presented the project to reform the energy market of Europe, initiated in accordance with a European Commission ruling in June. Vladimir Putin, during a visit to Australia, expressed suspicion that the project would include protectionist measures against investment by Russian companies. His suspicions were overwhelmingly justified. The document, if ratified by the Council of the European Union’s 27 energy ministers and the European Parliament, would block Gazprom from investing in European energy. Kroes began work on the current reform package in June 2007 after the Council of the European Union rejected a previous version. Yesterday Kroes presented the reform package, which is made up of five documents. Two suggest amendments to directives 2003/54/ec and 2003/55/ec concerning EC-wide antimonopoly rules on the electric power and gas market. Another two amend the rules of transborder networks and gaslines (1228/2003 and 1775/2005), while the last would create an Agency for Cooperation among Energy Regulators (ACER). The idea behind Kroes’ package is to create ACER, a supranational organ with powers to set a single tariff, as well as regulatory and competition policies for the national regulators of EC members, thus managing the flow of energy in Europe. The same principle served as the basis for reforms in UES. The amendments to 2003/54/ec and 2003/55/ec forbid one company to simultaneously manage the production and transport of electric power or gas. The amendment would split regional energy companies (Gaz de France, Electricite de France, E.ON, RWE, Endesa) into generation and distribution companies. The European Commission does not intend to unite the distribution companies into an analogue of the Federal Grid Company, as did UES. Investment in electric power generation and gas production is not limited. The package does, however, put forth limitations on buying controlling stakes in the grid and pipeline companies; these limitations are extended to third-party nations as well. Barroso explained that division leads to a decrease in size. The energy reform will make them the “pinky” for mergers by companies from third-party countries. “We’re open, but we must not be naïve,” the head of the European Commission said. In order to receive the sanction of ACER and the European Commission to buy shares, companies from third-party countries must operate by the same principles in their home country. Gazprom many lay claim to Britain’s Centrica, in which case United Supply System will be removed and handed over to be managed by an independent company or sold. Discussion of the amendments will begin in early October 2007. If the amendments make it through the bureaucracy they could begin to affect investors beginning in May 2008. The European Commission’s initiative shocked Gazporm. The company declined to criticize the proposals, although earlier it commented on them negatively. Sergei Kupriyanov, press-secretary for Gazprom, announced yesterday that “We share the main goal of the EU – to provide longer-term, reliable gas supplies to the EU. Gazprom plans to bring constructive input into the discussion about energy regulation in Europe and is confident that its voice will be heard.” The company said it has begun a “detailed analysis” of the proposal’s text (about 200 pages) and is consulting with the EU. The government has also begun a careful study of the document. Spokesman for the Ministry of Industry and Energy of Russia Vasily Osmakov said that “we welcome any initiative aimed at increasing transparency in the energy sector,” but demurred that adding new administrative barriers on the EU market would serve this purpose. The head of RSPP, Alexander Shaahin, said the regulations were non-constructive. Formally, the structures created in the division of UES meet the EU rules. “We are not planning to buy anything in the EU, and therefore are not commenting on the document,” Intera announced. Inter UES is taking a wait-and-see position. “The project of reforming the European energy sector is too serious to comment on it extemporaneously. We should wait to see how things pan out, wait for the final iteration,” Boris Zverev, council to the head of the company said. The documents don’t directly explain how companies will be certified by the European Commission. Barroso explained that in the European Commission’s plan only entities whose home countries have the appropriate agreement with the EC will have access to European consumers. The “Kroes-Piebalgs amendments” are more serious for Russia than the passage of the Energy Charter, which doesn’t envision dividing Gazprom. However, the question was discussed within the Russian government from 1995-2003, when the management of Gazprom and the Ministry of Industry and Energy declare the topic closed. Gazprom can only hope for disagreement within the EU. Piebalgs admitted yesterday that within the EU there was not yet “full agreement” about how and for how long energy companies will be separated, but said that all 27 countries agree that it is something that needs to be done. The protectionist measures defending the European energy market will not likely be overturned, but the “Kroes-Piebalgs package” may not pass discussion in the EU Council as happened in June.
History: What has Europe demanded from Gazprom
October 8, 2003: during negotiations about accession to the WTO EU Commissar for Trade Pascal Lamy made a “gas ultimatum” to the Minister of Economic Development and Trade containing six components: raise domestic gas prices, equalize domestic and foreign gas tariffs on gas transport, cancel or radically reduce export taxes on gas, provide oil and gas transportation freedom through Russian pipelines, allow for private pipeline construction and breakup Gazprom’s monopoly on gas exports.
May 21, 2004: Russia had undertaken only two of the six components: raising domestic gas prices and opening Russia’s pipe system to all producers.
March, 2006: The European Commission presented Europe’s new energy strategy (The Green Book), which rejected long-term bilateral agreements on gas shipments. Instead, the EU suggested a single framework contract by which Gazprom would sell gas across the EU border and its further delivery would be taken over by European companies.
Summer 2006: The European Commission worked out a plan for obligatory split of energy entities into production and transportation companies.
February 22, 2007: European Commission Spokesman (….) emphasized that if these rules are adopted then “Gazprom will not be an exception.”
June 16, 2007: EU Competition Commissar Neelie Kroes announced that according to the new plan Gazprom will have to sell its stake in the Northern European gas pipeline that is under construction.

Friday, September 21, 2007

Rosneft Gets Yukos Licenses

09-21-2007 - Bloomberg - Rosneft, the country's state oil producer, acquired for free $400 million of licenses to oil and gas fields held by bankrupt Yukos, Kommersant reported Thursday. The country's resources law gives companies that buy property at deposits through bankruptcy proceedings the right to the license as well, Kommersant said. The licenses used to belong to Yukos itself, rather than production units, the newspaper said.

Gazprom and Venezuela discuss joint infrastructure projects

RBC, 20.09.2007, Moscow 19:55:56.During a working meeting today, Gazprom President Alexei Miller and Venezuelan Vice President Jorge Rodriguez considered the prospects of the Russian gas holding's participation in building oil and gas infrastructure facilities in Venezuela, as well as the possibility of cooperation in on- and offshore production projects, Gazprom's press office reported. Moreover, the officials discussed development of long-term Russian-Venezuelan energy cooperation and commended the joint work of Gazprom and Venezuela's state oil and gas company PdVSA as part of natural gas exploration and development projects in Venezuela.

E.On, Gazprom Join Forces to Get Power

09.18.2007 - The St. Petersburg Times By Yuriy Humber - MOSCOW — German utility E.On and Gazprom agreed to spend a combined 217.6 billion rubles ($8.6 billion) to gain control of a power generator apiece as the state exits the industry. The companies made the highest offers in separate bids for shares in two units of national utility Unified Energy System. E.On bid for at least 69 percent of OGK-4 and Gazprom for a minimum of 47 percent in TGK-1, UES chief executive Anatoly Chubais said Saturday. “The Russian, or Soviet, power industry has never seen anything like this; it’s a record,” Chubais told reporters Saturday. E.On offered $753 per kilowatt of installed power capacity, the highest bid ever submitted in Russia, he said. The government will split up UES by July to increase competition and raise $120 billion needed to upgrade and expand power generation and the grid. The state utility raised more than $8 billion from four share sales in three generating companies, or gencos, before Saturday’s transaction. “With increases of 5 percent annually, Russia is one of the largest and fastest growing energy markets in the world,” E.On said in a statement. “E.On’s long-term goal is to build up a strong position” in Russia. Sales of Moscow-based OGK-4 and TGK-1, based in St. Petersburg, are being conducted in two parts. The next stage will be the sale of new shares by the power companies. The government on Friday auctioned its stakes, which it owns via a 52 percent holding in UES. The country’s power industry needs more investment in its infrastructure, said Lьder Schumacher, an analyst with Dresdner Kleinwort in London who has a “buy” rating on E.On shares. “President Vladimir Putin has said that not having sufficient power capacity has cost the country 5 percent of GDP growth in recent years,” Schumacher said. “An awful lot of investment is needed in the power sector in Russia. I think this gives you a certain amount of political protection.” E.On offered 3.35 rubles (13 cents) per share in OGK-4. The Dьsseldorf-based utility will pay Russia 100 billion rubles for 29.8 billion state-owned shares and bid for all of the newly issued shares. UES will retain 22.5 percent in OGK-4. E.On probably made the investment because of OGK-4’s earnings potential in four years, said Dmitry Tsaregorodtsev, an analyst with KIT Finance. “Once Russia liberalizes electricity prices by 2011, the company is not a golden hen but a diamond one.” Apart from selling power plants, UES has also put its 23-story Moscow headquarters up for sale. Spokesman Timur Belov said in August that the company plans to sell the building and the lease to the 2.5-hectare lot on which it stands in the fourth quarter. Gazprom offered 0.035 rubles per share for TGK-1, or $710 per kilowatt of capacity. The gas producer will pay the state 38.7 billion rubles ($1.5 billion) for 1.1 trillion shares and seek to buy as many as 925.7 billion new shares. UES’s stake will drop to 13.6 percent in TGK-1. “I’m happy with the OGK-4 price, it’s an old asset and there are a lot of uncertainties,” said David Herne, a former UES director who manages $500 million including power assets at Halcyon Advisors in Moscow. “This is embarrassing” for TGK-1, he said. Herne estimated TGK-1’s value at $900 per kilowatt of capacity. Enel, Italy’s biggest utility, paid $669 per kilowatt of installed capacity for genco OGK-5 in a June auction. Norilsk Nickel’s price for genco OGK-3 was $601 per kilowatt, and the rest were sold at about $500. The final figures for the size of the stakes Gazprom and E.On will acquire will be announced Sept. 25, Yury Makushin, chairman of OGK-4, said at Saturday’s briefing. “UES wants to see one, single strategic investor acquire control in each company,” Makushin said.

EU Moves to Tackle Gazprom

09.21.2007 - Reuters, Bloomberg - BRUSSELS — The European Commission took on Russia and dominant European power giants Wednesday in a new move to open gas and electricity markets to more competition while limiting foreign ownership of EU assets. The European Union executive adopted hard-fought energy proposals aimed at forcing big utilities such as Germany’s E.On and Electricite de France to separate power generation from their distribution networks. Under the plan, generators will be forced to sell their transmission networks or hand over control to an independent operator, which the Commission argues will boost investment in infrastructure and allow new entrants into the sector. But gas monopoly Gazprom, which supplies about one-fourth of the 27-nation bloc’s gas, and Algeria’s state-owned Sonatrach will not have free rein to buy pipelines and power grids. In a statement issued before the proposals were published, Gazprom stressed that it was a reliable gas supplier to the EU and wanted a say in future regulation. “Gazprom has an important contribution to make to the debate about regulation of the energy sector in Europe and feels certain that its voice will be heard,” company spokesman Sergei Kupriyanov said. The new rules will bar foreign firms from controlling European energy networks unless they play by EU rules and their home country reaches an agreement with Brussels, Commission President Jose Manuel Barroso said. “In practice, third-country individuals and companies should not be able to acquire control over Community transmission networks unless there is agreement between the Community and their country of origin,” he said. A Commission statement said Brussels could intervene when a potential purchaser “cannot demonstrate both its direct and indirect independence from supply and generation activities.” The Commission argued over details of the package up to the last minute in a sign of their political sensitivity.

Nord Stream Out of Estonian, Into Finnish Waters

Sep. 21, 2007 - Kommersant - Estonia has refused to allow Nord Stream AG to carry out geological exploration in its territorial waters and economic zone. The official reason for the refusal is that activity might lead to the disclosure of the volume of resource reserves in Estonia, which is a state secret. Nord Stream responded that it would lay its natural gas pipeline in Finnish waters. The Estonian cabinet came to its decision yesterday. Oddly, the Estonian Foreign Ministry had prepared a draft of a decision in favor of Nord Stream, which cited the “long-term interests of the Estonian people and state.” Estonian Foreign Minister Urmas Paet stated that “We decided to say no a long time ago.” Paet explained that, while the overwhelming majority of the 20 ministries and other organizations consulted for the decision were in favor of allowing the pipeline to be laid, the majority of the ministers were against it, many for openly political reasons. It was also pointed out that the pipeline would require increased border patrols and give Russia, which would have the right to defend the pipeline with weapons, control over shipping in the Baltic Sea as well. Only the gas company, Eesti Gaas, supported the pipeline. Eesti Gaas is controlled by Gazprom and E.On. Finnish Prime Minister Matti Vanhanen stated in Tallinn last week that Finland was prepared to grant Nord Stream all necessary permits to use that country's waters.

Putin Opposes Gazprom-Rosneft Merger

Sep. 21, 2007 - Kommersant – President Vladimir Putin has opposed the plans to create an oil and gas monster by merging Rosneft into Gazprom. Putin made clear his views on September 14, 2007, when meeting members of Valdai International Discussion Club in Sochi. Asked about the rumored plans to merge two biggest companies of Russia’s fuel and energy sector, Putin said: “I know nothing about the rumors related to the merger of our two companies with government’s share and I don’t think we should create a monster that will dominate all economy of Russia and that, as a vacuum cleaner, will be pumping out all resources, including the bank ones.” ”If anyone is apprehensive about the growth in capitalization of Russia’s companies and in their influence on global economy, I must say that apprehension is quite justified. This influence will be going up, but not for account of Russia’s companies’ merger but rather on their capitalization in the natural way, for account of increase in their market value by results of their business, on production expansion and development of overseas markets, on optimization of spending and revenues.” From time to time, however, Putin went on, the questions arise about efficiency of companies’ work and to what extent the prices and budgets of projects are justified. ”Let’s say Transneft is constructing a pipeline. I have a question whether the pipe to the Pacific Ocean is too expensive. But I made them go bypassing the Lake of Baikal, it is 400 kilometers of the water intake area. It is in taiga that is difficult of access, in the mountain conditions, there is even no technology for laying a pipe in such regions. It will make the project more expensive, of course,” Putin explained.

Gazprom Will Control Energy Network Assets in EU

21.09.2007 - [Neftegaz.RU] - Gazprom and other non-European Union businesses will control energy network assets in the EU only if they meet tough conditions under proposals set out on Wednesday. The move by the European Commission drew a sharp reaction in Moscow, amid concerns that Gazprom. Konstantin Kosachev, head of the Russian parliament’s international affairs committee, said: “In the same way they are going to try to stop us entering market sectors of the western European economy, we will have to limit access for our foreign partners to the corresponding strategic sectors of the Russian economy.”

Wednesday, September 19, 2007

Eni ‘could join Gazprom Neft board’

17 September 2007 - Upstream OnLine - Gazprom Neft, the oil arm of Russian gas export monopoly Gazprom, could soon have directors from Italian producer Eni on its board, Russian media reports have claimed. The Eni representatives could join the board in November, news agency Interfax quoted an unnamed source in Gazprom as saying. In April, Eni bought 20% of Gazprom Neft, previously billionaire Roman Abramovich's Sibneft, at a state-forced auction of assets of bankrupt Russian oil company Yukos. Gazprom has an option to buy back the stake from the Italian company at any time over the next 15 months, a Reuters report said. Gazprom Neft has an extraordinary shareholders' meeting in November, when it will elect new directors. In July media speculation surfaced that Gazprom wanted to take over Eni, rumours which were later denied.

Gazprom ready for dialogue on EU energy supply reliability

MOSCOW, September 19 (RIA Novosti) - Gazprom [RTS: GAZP] is ready for constructive discussions on Russia's reliability as an energy supplier to Europe, the Russian gas giant's press secretary said Wednesday. Sergei Kupriyanov's comments follow the European Union's announcement earlier this week that Gazprom and other companies outside the EU would face restrictions in buying up energy assets in the 27-nation bloc. The state-controlled giant currently supplies 25% of Europe's gas, and has purchased stakes in EU energy companies. "Gazprom is a reliable supplier of gas to the EU and a large investor in the infrastructure that delivers gas to Europe. We share the main aim of the European Union - to ensure long-term reliability of gas deliveries to the EU," he said. Kupriyanov said that after a thorough analysis of European Union initiatives and consultations with key EU bodies, Gazprom would present its own assessment on how the proposed measures will tell on supply reliability, competitiveness of the European energy market, and ultimately on hydrocarbon prices in Europe. On Tuesday, the president of the European Commission, Jose Manuel Barroso, said Gazprom would face tough restrictions if it decides to acquire energy assets in EU countries, and that the EU favors openness of the international energy resource market, but would not be "naive" as regards acquisition of energy assets by foreign companies. "In practice, third-country individuals and companies should not be able to acquire control over community transmission networks unless there is agreement between the community and their country of origin," Barroso told journalists. The European Commission, the EU's executive body, published draft documents restricting investment in the EU energy sector from third countries on Wednesday. The documents, aside from restricting non-commercial investment into the European energy sector by non-EU state-controlled companies, also envision the "reciprocity principle", which means the bloc could impose restrictions in regard to countries who themselves limit EU companies' investment. A source in Russia's Economic Development and Trade Ministry said the EU-proposed measures could backfire at the EU, and that the ministry hoped the EU restrictions would not be implemented. "In our opinion, damage from such politicizing of investment issues will be reciprocal, but will hit the European Union more severely," he said. The source said the European Commission's initiative had been met with negative responses from large European energy companies, in particular Gaz de France and Germany's E.ON, and a number of European economic analysts. However, Barroso insisted that the draft measures are not aimed against Russia, but at creating equal competition terms for the EU and foreign investors. In August, the European Commission had intended to convene a group of government experts and representatives of fuel producers and consumers from EU member states to discuss Russian energy supply reliability, shortly after Gazprom threatened to cut its natural gas deliveries to Belarus by 45% as of August 3 over the country's outstanding debt. However, Minsk backed down to Gazprom's demands at the last minute, drawing on government reserves to pay the debt in full. Gazprom's threat had sparked fears that Belarus could tap gas from pipelines transiting Russian gas to Europe in a replay of a bitter price dispute with Ukraine in early 2006, which affected supplies to European consumers. The dispute raised concerns in Europe over excessive dependence on controlled Gazprom as a supplier.

Spain Wants a Piece of Baltic LNG

spainSep. 17, 2007 - Kommersant - Spanish Prime Minister Jose Luis Rodriguez Zapatero will come to Moscow on September 28 to discuss Spanish companies doing business in Russia. In particular, he will press for the inclusion of the Spanish electric company Iberdrola in Baltic LNG, the joint construction with Gazprom of a liquefied natural gas project in St. Petersburg. Fourteen companies took interest in Baltic LNG when it was founded in late 2005 as a joint venture between Gazprom (80%) and Sovkomflot shipping line (20%). The new company is to produce 5 million tons of liquefied natural gas per year for 25 years, beginning in 2011-2012. In April, the number of contenders, according to Baltic LNG chairman Alexander Krasnenkov, had been reduced to four “Canadian, European and Japanese” companies. That list is said unofficially not to include the Spanish company. Iberdrola operates in Spain, the United States, Great Britain and Latin America, selling electricity, as well as 4.3 billion cu. m. of natural gas per year. The company's receipts for the first half of the year were €6.7 billion, and its profit €1.1 billion. Deputy chairman of the Gazprom management board Alexander Medvedev stated in June that the decision on investment in the project would be made “in the next few weeks,” the illness of Gazprom head Alexey Miller delayed that decision, and a number of others. Valentin Golubev, another member of the Gazprom board, stated that the decision may now be made on September 25, that is, before the Spanish prime minister's arrival. Spain has a selling point, however. That is that Gazprom has not yet entered the Spanish market. Delivering gas to Spain by pipeline of railcar would be unprofitable, but liquefied natural gas, delivered by sea in tankers is possible.

Medvedev Forecasted to Leave the Govt

Sep. 17, 2007 Kommersant - The strength of new cabinet could be announced already on Tuesday, September 18, Vedomosti reported. Not all ministers of Fradkov’s government will retain offices in the cabinet led by Viktor Zubkov. First Vice Premier Dmitry Medvedev, for instance, is forecasted to vacate his post, Vedomosti reported with reference to the sources aware of progress in new cabinet’s creation. Medvedev is expected to replace Alexey Miller as Gazprom CEO. His social section of the government may go to Valentina Matvienko, who is St. Petersburg governor now, but who could be offered to advance to the vice premier's rank. At the same time, the analysts expect Matvienko to refuse to join Zubkov’s cabinet, which she views of transition nature. Industry and Energy Minister Viktor Khristenko will hardly sail to the new government, while his ministry will be divided into the industry and energy components. Oboronprom chief Denis Manturov is well expected to take over industry, and Viktor Khristenko could be offered to head Rosneft. Health and Social Protection Minister Mikhail Zurabov, Culture and Mass Communication Minister Alexander Sokolov and Regional Development Minister Vladimir Yakovlev won’t have seats in the new cabinet, the sources say. But First Vice Premier Sergey Ivanov, IT and Communication Minister Leonid Reiman and Education Minister Andrey Fursenko are likely to maintain today’s employment.

EU Told to Be Nice to Gazprom

Sep. 12, 2007 - Kommersant - Cambridge Energy Research Associates consulting company published a report yesterday on perspectives for cooperation between Russia and the European Union in natural gas. CERA analysts call for a more pragmatic view of Gazprom and Russia in general and opine that the EU is taking substantial risks in liberalizing the energy market because growing demand for gas inside Russia may make Russia itself Europe's main competitor for Gazprom's gas. The CERA report is timed to the release of the European Commission's initiatives on the liberalization of the European energy market, in which restrictions are proposed on investments by third countries that are not equally open to European investment. Besides Russia, those restriction could affect Saudi Arabia, Iran and the United Arab Emirates. CERA is critical to the European Commission's initiatives, calling them politicized. The CERA analysts say that liberalization of the European energy market, combined with the EU ecological policy may lead to a situation in which the EU becomes more dependent on Russian gas and simultaneously more isolated from Russia politically and economically. The analysts say that supplies of liquefied natural gas from the Persian Gulf area will increase, but tensions with Russia will drive up prices on all forms of gas.

Monday, September 17, 2007

Gazprom weighs up Shtokman options

11 September 2007 - Upstream OnLine - Russian gas giant Gazprom will decide by the middle of next month whether it will involve more partners in the massive Shtokman development, the company's deputy chairman Valery Golubev said today. "We can expand the list of partners by selling 24% in the project's managing company to a partner which has experience in working in hard climate conditions and has relevant technologies," Golubev told Reuters. "I think the decision will be taken in September, mid-October at the latest," he added. Gazprom has already teamed up with France's Total, which will get a 25% stake in the managing company overseeing the Barents Sea project. Other hopefuls include Norway's Statoil and Norsk Hydro, as well as US supermajor ConocoPhillips.

Surgutneftegaz Eyed by Govt

Sep. 11, 2007 – Kommersant – Buying out Surgutneftegaz would be of interest to Russia’s government, forecasted Boris Jordan, chief of Sputnik Investment Ltd. Surgutneftegaz could be bought out by either Gazprom or Rosneft, the financier forecasted during the Reuters Russia Investment Summit on Monday. But the emerged giant would be too big, he signaled predicting that only three oil giants would be left in Russia in the long-term. “Something has to happen around Surgut… There is probably a fit with Gazprom, or with Rosneft, although it creates a too big company,” Jordan said as quoted by Reuters. His reason for such forecast is the recent surge in Surgutneftegaz quotes. Surgutneftegaz is one of Russia’s biggest oil companies, covering exploration, construction and development of oil and gas fields, as well as production and sales of oil and petrochemical product. Its recoverable reserves are estimated at around 2.5 billion tons of the oil equivalent. The company has stock capital of 43,427,992,940 rubles split into 35,725,994,705 common and 7,701,998,235 preferred stocks, 1 ruble par value each. Surgutneftegaz Pension Fund has 8.1 percent in the company, and other holders own the remaining 91.9 percent.

Nord Stream plans 'on track'

11 September 2007 - Upstream OnLine - Plans for the $7 billion Nord Stream gas pipeline is on schedule, consortium chief former German chancellor Gerhard Schroeder said today. Schroeder is the supervisory chief of the German-Russian consortium building the subsea pipeline, which includes Russian gas export monopoly Gazprom, Germany's E.ON and chemicals group BASF's oil and gas arm, Wintershall. The project still faces several hurdles but the operators are aiming for construction to start next year and for the first gas to be shipped to Germany's Baltic Sea coast in 2010. "We're in line with our plan, it's going ahead as envisaged," he told Reuters in response to a question during an energy conference today. Schroeder brushed aside concern about the possible dominance of the European gas market by Russia. Trade and investment between the two have been booming but diplomatic relations have soured over the past year. "This dominance talk is nonsense," he said, adding the pipeline would at best deliver 55 billion cubic metres of gas, a tenth of what Europe needed. Russia has shown that it is willing to cut energy supplies to force neighbouring countries to accept its price demands. Poland, a new European Union member, has put pressure on the bloc to protect its interests. It fears Russia might use the new link to divert gas away from transit pipelines across Polish soil, potentially undermining the security of its gas supplies. Schroeder attacked Poland's stance, saying Warsaw had to show solidarity with Nord Stream, which was a pan-European project. "Poland is trying to make the EU a hostage of a national, anti-German and anti-Russian policy," Reuters quoted Schroeder sa saying. "The EU has to reject one single country acting like that," he said. Schroeder also defended Russia's record as a supplier of gas to Europe for over 40 years and said the discussion about Europe's over-reliance on the country was mirrored by Russia sending 73% of its gas to Europe. "It's a two-way street," he said.

Gazprom in LNG swap talks

11 September 2007 - Upstream OnLine - Russian gas monopoly Gazprom is in talks with a number of Australian energy companies about a possible swaps arrangement for international sales of liquefied natural gas, according to reports. A report published in the Australian newspaper said the talks were announced by Gazprom deputy chairman Alexander Medvedev, in Sydney for meetings of the APEC Business Council. Medvedev said gas swaps were one area of potential co-operation between Gazprom and "leading energy producers of Australia", which he declined to name. "We haven't completed any projects with Australian companies, but we have common interests in order to optimise our resource base and to optimise our trade flows," the newspaper quoted him as saying. Meanwhile, Medvedev said the deal signed last week between PetroChina and Australia's Woodside Petroleum to supply between 2 million to 3 million tonnes of LNG per annum from the Browse development was not a threat to Gazprom. "I consider it a positive event because finally China had bought LNG at the prevailing market price," he said. He added that the demand for LNG in China was so large that there was plenty of business for both Gazprom and Australian suppliers.

Shtokman door still open

06 September 2007 - Upstream OnLine - US supermajor ConocoPhillips and Norway's Statoil have a chance to join in the development of Russian gas monopoly Gazprom's giant Shtokman field, local media said today. Vedomosti business daily quoted sources close to Gazprom as saying ConocoPhillips could get 14% in Shtokman's first phase development while Statoil would get 10%. The newspaper quoted sources as saying Gazprom thought it was important to invite the ConocoPhillips into the project to avoid a further souring of Russian relations with the US, Reuters reported. Gazprom has so far invited only one partner to Shtokman, French oil major Total, which agreed to take a 25% stake in the operating company of the $18 billion first phase Shtokman development. Gazprom has said it would keep 50% of the operating company but would continue talks with both ConocoPhillips and Statoil on the remaining 24%. Shtokman, in the Barents Sea, is one of the world's biggest gas fields with enough reserves to supply the world for over a year.

Gazprom to pick another partner for Shtokman by mid October

ST. PETERSBURG, September 11 (RIA Novosti) - Gazprom [RTS: GAZP] plans to pick another partner in a project to develop the Shtokman natural gas field in the Arctic, a top manager of the Russian energy giant said Tuesday. Speaking at an Arctic oil and gas conference in St. Petersburg, Valery Golubev said: "The decision will be made in the near future, in September or by mid-October." The natural gas monopoly has so far invited France's Total to join in the ambitious $30-billion project to develop the Barents Sea field, with estimated gas reserves of 3.7 trillion cubic meters, designed to supply the Nord Stream pipeline from Russia to Germany under the Baltic Sea. "We could expand the number of partners in the [charter] capital of the [operator] company. About 24% could be allocated to a new partner," Golubev said. Golubev said the company has made up a shortlist of five companies that could be involved in the offshore project, but did not give further details. Under a July agreement with Gazprom, Total has a 25% stake in the operator, which will own the infrastructure, including production facilities, pipelines and an LNG plant for 25 years, with the Russian monopoly holding a 75% share. Gazprom's share would shrink to 51% if a third partner emerged. Another Gazprom manager, Alexander Ananenkov, earlier said the company would only work with foreign partners in the first phase of the project, and would carry out the second and third phases on its own. Gas production estimated at 23.7 billion cu m and supplies are planned to be launched by 2013, liquefied gas production and supplies are scheduled to start in 2014 as part of the first phase. Last year, Gazprom turned down Shtokman partnership offers from Total, U.S. ConocoPhillips and ExxonMobil, and Norway's Norsk Hydro and Statoil, and company CEO Alexei Miller said Russia would develop the field alone. Golubev said in St. Petersburg that by 2030 Gazprom plans to raise output at Shtokman to 100 billion cu m a year. "By late 2009 or early 2010, we are expecting to start construction," Yury Komarov, the general director of Sevmorneftegaz, the Gazprom subsidiary running the project, told reporters after the conference. Komarov said the project feasibility study would be completed late this year and the site would start to be prepared in the second half of 2008. He also said a site for the LNG plant would be selected in November. Komarov also said contracts for tankers to deliver liquefied gas would be allocated in 2009.

Gazprom gets Karachaganak gas date

03 September 2007 - Upstream OnLine - Russian gas giant Gazprom will not gain access to gas from the huge Karachaganak field in Kazakhstan before 2012, the company said today. Gazprom is counting heavily on imports of gas from Central Asia as its own production stagnates and new fields are not expected to come on stream before the middle of next decade amid rising demand for gas in Europe and at home. Gazprom and Kazakhstan's state producer KazMunaiGaz agreed last year to set up a 50-50 venture at the Russian Orenburg plant and invest $1.5 billion in its expansion. But both Gazprom and KazMunaiGas have said they needed to persuade Karachaganak's operators to sell gas at mutually acceptable prices before the venture starts working, a Reuters report said. Karachaganak is co-led by Italy's Eni and Britain's BG Group, which each hold a 32.5% stake, while US supermajor Chevron owns 20% and Lukoil 15%. In June, Gazprom and the Western venture agreed on pricing of gas, after years of talks, paving the way for Central Asian gas to flow to Russia. Gazprom never disclosed details of the pricing agreement but said the partners would process 16 billion cubic metres of sulphur-laden Karachaganak gas at Orenburg for 15 years. Gazprom supplies Europe with a quarter of its gas needs at an average price of between $230 per 1000 cubic metres and $250 per Mcm. Prices in Russia are capped at around $40 per Mcm, but they are set to more than double by 2011 as it embarks on a major reform of its gas and power markets, Reuters said.

Rosneft to drill exploratory wells on Kamchatka shelf in 2008

VILYUCHINSK (Kamchatka Region), September 5 (RIA Novosti) - Rosneft [RTS: ROSN] will start drilling exploratory wells at a giant western Kamchatka shelf in Far Eastern Russia as early as next year, the head of Russia's largest crude producer said Wednesday. "All the preliminary work to start drilling the first prospective sites has been completed, and the drilling will start in two wells in 2008," Sergei Bogdanchikov said. State-controlled Rosneft holds a 60% stake in the project, which is comparable in scale to major oil and gas projects like Sakhalin I and Sakhalin II. The Korea National Oil Corporation (KNOC) holds a 20% stake. The Kamchatka shelf is about two-thirds the size of South Korea and is estimated to hold about 900 million metric tons of fuel equivalent at 26 sites. "The project is comparable with, or could even outstrip Sakhalin I and Sakhalin II," Bogdanchikov said. "The shelf has probable reserves of 3.8 billion metric tons of hydrocarbons but we cannot say yet how much of it is oil and how much gas." A Russian-South Korean commission on economic, science and technical cooperation signed a memorandum of understanding to develop the shelf in September 2004. The Rosneft president said work on the shelf started in 2005, and $90 million had been invested since then. "In 2008, we will invest about $270-300 million, and further investment will depend on the prospecting results." Total investment could hit $24 billion, he said. Bogdanchikov declined to comment on where the oil and gas from the shelf would go afterwards. The other shareholders in the project are a consortium of Korea Gas Corp., GS-Caltex Corp., SK Corp, Daewoo International Corp. and Kumho Petrochemical and Hyundai Corp.

Wednesday, September 05, 2007

Sakhalin Energy to reshuffle management

Sakhalin Energy CEO Ian CraigRBC, 04.09.2007, Moscow 18:56:42.Sakhalin Energy will replace some of its Shell-appointed managerial staff with Gazprom representatives over the next 12 months, the company's CEO Ian Craig said in a statement at the Sakhalin Oil and Gas Conference 2007 in Yuzhno-Sakhalinsk today. Craig claimed that Gazprom's arrival as the major stakeholder in the Sakhalin-2 project had been the most significant corporate event of 2006. He emphasized that the shareholders' objective was to maintain continuity in corporate activity in case of an ownership transfer and phases to follow. However, Sakhalin Energy will remain the project operator, while Shell will continue as the project's technical advisor, he added.

Sakhalin-1 to be Russian Far East's only gas source

RBC, 04.09.2007, Moscow 14:12:07.Gas produced during the Sakhalin-1 project will be the only source of natural gas to meet the demands of the Khabarovsk, Primorsky and Sakhalin regions, as well as the Jewish Autonomous District in the mid term until at least 2015, according to a Gazprom report released during today's Sakhalin Oil and Gas Conference 2007 held in Yuzhno-Sakhalinsk. The report also mentioned that the Far East's gas demand was likely to rise until 2013 due to the recently launched government program of social and economic development of the Far East and Transbaikalia. In this connection, the report suggested measures for sustained development of stable gas supply to the Russian Far East, considering the potential of the Sakhalin-1 project and emphasizing the pressing need for the development of the general plan of gas supply and gas service in the Sakhalin region. Gazprom also noted in the report that development of Sakhalin's own resources and construction of a gas pipeline system was one of the most important objectives in the gas holding's activity. In order to implement investment projects in the Far East, Gazprom established the Gazprom Invest Vostok sponsoring company. investment projects in the Far East, Gazprom established the Gazprom Invest Vostok sponsoring company.

Yuzhno-Russkoye deal 'in sight'

04 September 2007 - Upstream OnLine - German player E.ON said today it hopes to reach an agreement with Russian giant Gazprom about jointly developing the Yuzhno-Russkoye gas field by the end of this month. The company made the annuoncement in a statement confirming comments made by company boss Wulf Bernotat to Russian news agency Interfax. Last month, E.ON said it was considering giving Gazprom stakes in gas-to-power plants in the UK as part of asset swaps under discussion.

Gazprom turns screws on ExxonMobil

04 September 2007 - Upstream OnLine - Russian gas giant Gazprom said today it needs gas from ExxonMobil's Sakhalin 1 project for domestic use, adding to pressure on the US supermajor to drop its plans to export the development's gas to China. "Given that nearly all the gas from the Sakhalin 2 project has already been sold under long-term contracts, and other Sakhalin projects are not expected to start production in the middle term, the gas from Sakhalin 1 can be the only source for domestic supplies until at least 2015," Vladimir Kozlov, head of Gazprom's Sakhalin office, told Reuters. Speaking at the annual oil and gas conference in the island's capital of Yuzhno-Sakhalinsk, Kozlov said the growing domestic demand for gas in Russia's four Far Eastern regions will reach 13.1 billion cubic metres by 2010 and grow to 16 Bcm by 2015, hitting 19.2 Bcm by 2020. He added that Sakhalin 1 alone could supply the regions with 3.2 Bcm of gas by 2010, and 11.4 Bcm from 2015 to 2020. "We are in discussions with Gazprom and have regular meetings with them to explore various options and find ways of mutual co-operation," an ExxonMobil spokesman told the news agency. Sakhalin 1 is being developed via a production sharing agreement, which excludes the project from Gazprom's legal monopoly on gas exports. It gives ExxonMobil the right to sell the gas to a consumer of its choice, such as China, with which the US supermajor reached a preliminary agreement in 2004 on annual supplies of 8 Bcm of gas. "Our main principle is economic profitability. So far, we consider the Chinese direction to be the most attractive from the economic point of view," Margarita Tsoy, ExxonMobil's government and public affairs manager, told Reuters.

Bid to break Yuzhno-Russkoye deadlock

31 August 2007 - Upstream OnLine - The deputy head of Russian gas giant Gazprom Alexander Medvedev will meet with officials from German utility E.ON in a bid to break the deadlock over a proposed deal covering the Yuzhno-Russkoye gas field, Medvedev was quoted as saying today. The main issue they will discuss is Gazprom's agreement from last year to sell a stake of 25% minus one share in Yuzhno-Russkoye to E.ON's Ruhrgas unit. E.ON agreed to pay Gazprom €1.2 billion ($1.60 billion) and to give it just under 50% of its Hungarian gas trading and storage units. E.ON holds around 6.4% of Gazprom's stock. "I will meet with the management of Eon Ruhrgas before this week is over," Medvedev said in an interview with Suddeutsche Zeitung. "There is still hope that we can find agreement on the difficult issues." Among the difficult issues is the fact that Gazprom is not entirely happy with developments in Hungary's energy sector. "Unfortunately the situation in Hungary is not developing as expected. It's not just the price of the assets, but also the regulation of the Hungarian gas market and the role of other market participants," Reuters quoted him as telling the Munich-based daily. He said without elaborating that this was forcing Gazprom "to look for other solutions". Asked if Gazprom now wanted E.ON to offer it something else, Medvedev said: "I don't want to name any specific assets." Russia has been criticised for making it difficult for foreign companies to participate in Russia's energy market. Medvedev dismissed this idea. "It's absolutely untrue that foreign companies are barred from getting access to Russian resources," he said. "But there are rules for working in this market." One such rule, he said, is that with gas fields of "particularly strategic importance" Gazprom or another Russian state enterprise has to have a stake of at least 51%. He reiterated that Gazprom would like to take stakes in European companies but named no specific targets. Medvedev also said that construction on the Baltic sea gas pipeline being built in a joint venture with E.ON and BASF was on schedule despite a recent change in the route of the pipeline.

Rosneft eyes $1.76bn bond move

31 August 2007 - Upstream OnLine - Russia's state-controlled oil producer Rosneft plans to issue rouble-denominated bonds worth 45 billion roubles ($1.76 billion) in 2007-08, a banking source said today. "They will be issued in three tranches," the source told Reuters. The source said the company mandated Troika Dialog, VTB and Gazprombank to organise the issue. The first will be issued by the end of this year, the other two sometime next year, the source added. The bonds will have a duration of up to seven years. But Rosneft made it clear the decision is not yet final. "Directors at Rosneft need to take the decision to issue the bond and they haven't yet met on this," a Rosneft spokesman told Reuters. In July Rosneft postponed a planned dollar bond up to $5 billion due to market volatility. The bond was part of a $15 billion medium-term note programme to help recover debts stacked up from acquiring most of bankrupt Russian oil giant Yukos. At the start of 2007 Rosneft had debts of $13 billion and has since raised a further $22 billion loan from a consortium of international banks. When delaying the bond Rosneft said it would utilise other funding options. "Rosneft is probably thinking the situation on the international market will not improve in the medium term," analyst Mikhail Nikitin at Raiffeisen Bank in Moscow told Reuters. "They were not happy with the eurobond terms, and local borrowing is less expensive." Other analysts feel state-controlled Rosneft could be under pressure from the government to keep its finances closer to home.

Yukos lawyers win first round in new battle

31 August 2007 Upstream OnLine by Vladimir Afanasiev - Lawyers for jailed Yukos founder Mikhail Khodorkovsky have been granted a subpoena by a US judge which will give them access to due diligence documents related to Yukos from US supermajor Chevron, a move they believe will help refute claims of embezzlement and money laundering levelled at both Khodorkovsky and the bankrupt company by Russian authorities. Khodorkovsky's lawyer Robert Amsterdam and his team said that documents that Chevron collected from various analysts and sources at the end of 2002 and 2003 as it considered buying a 25% stake in Yukos will help them clear Lhodorkovsky's name and remove the shadow over Yukos' reputation. The filing to a court in the Northern District of California said that “were there any truth to the accusation, Chevron would have undoubtedly detected the widespread criminal misconduct alleged, and would not have continued to pursue the acquisition”. Amsterdam said: “This is just the beginning of a global evidence-gathering process that is necessary because the procuracy of the Russian Federation is not a fact-gatherer but rather, an enforcement arm of a Kremlin bent on consolidating the state theft of Yukos." Industry insiders said that several due diligence reports that were ordered by Chevron, described Yukos as a quickly growing and reliable operation though pointed on Khodorkovsky as an independently minded person interested in politics and having too much control over the company. Chevron had to stop its negotiations with Yukos on the buy-out in July 2003 when Russian prosecutors arrested Khodorkovsky’s colleague and Yukos shareholder Platon Lebedev. Besides the need to refute claims against Yukos by Russian authorities, Yukos lawyers are apparently seeking to prove the validity of company’s annual reports that were prepared with the help of international auditors Pricewaterhousecoopers (PWC). In June, PWC withdrew its signature from Yukos financial reports in the period from 1995 to 2004, apparently to be enable it to continue working with other major clients in Russia, local media reports claimed. PWC denied these accusations. Earlier, Russian authorities charged PWC in hiding important information from Yukos’ reports and threatened to withdraw its licence.

BP Offers Gazprom Trinidad LNG for New Joint Venture

 © MN23/08/2007 – MOSCOW (Reuters) - Oil major BP Plc has offered to contribute part of its liquefied natural gas business in Trinidad and Tobago to its global venture with Russia's gas monopoly Gazprom, a Russian business newspaper reported on Thursday. Gazprom, BP and TNK-BP agreed to set up a global venture earlier this year following Gazprom's acquisition of the giant East Siberian Kovykta field from TNK-BP. The three firms agreed they would set up a bigger gas venture. Gazprom's contribution would be represented by Kovykta, TNK-BP would contribute its other Russian gas assets, including Rospan, while BP's contribution has yet to be defined. Gazprom, the world's largest gas producer, already supplies a quarter of Europe's gas needs, but wants to expand into the fast growing United States LNG market.

Gazprom 'fine tunes' gas prices

30 August 2007 - Upstream OnLine - Russia's gas monopoly Gazprom said today it planned no major revisions of gas prices for its neighbours in 2008, saying instead it would "fine tune" tariffs, in a move to help soothe fears over new disputes and supply disruptions to Europe. "We are definitely not planning any major revisions as all revisions have been done in the past. Now it is all about fine-tuning," Reuters quoted Gazprom spokesman Sergei Kupriyanov as saying. The comment follows a statement by Lithuania last week that Gazprom may sharply raise prices to between $312 per 1000 cubic metres and $320 per Mcm from the current $190 per Mcm. Today Moscow-based business daily Kommersant reported today that Ukraine and Belarus may also face big price hikes. Both countries are the most important transit routes for Russian gas to Europe and previous pricing disputes have led to supply disruptions as Gazprom accused Kiev and Minsk of siphoning off gas from transit pipeline. Gazprom sold 101 billion cubic metres of gas to former Soviet Union states in 2006, earning $6 billion. It sold over 150 Bcm in Europe, earning over $37 billion, and has said it long-term goal was to bring prices in former Soviet states closer to European levels. Kupriyanov said talk of big price hikes was exaggerated but declined to comment on specific pricing discussions. "It all differs very much from country to country," he said. He said volumes and prices for Belarus and Moldova were already fixed in term deals, signed last year or early this year. "No additional talk is needed. There is a simple pricing formula, which depends on global prices. This has been agreed by all sides," he said. Belarus currently pays the lowest price among ex-Soviet republics of $100 per Mcm. Gazprom threatened to cut gas to Belarus in July after Minsk failed to cover debts for deliveries in the first half of 2007. The dispute was solved after Minsk paid back the debt. Kupriyanov said the same mechanism applied to prices in Lithuania, Estonia and Latvia. "The price will be fine-tuned depending on the global energy prices," he said. As for Ukraine, he said Gazprom had yet to finish relevant talks with Uzbekistan and Kazakhstan. Gazprom sells gas to Ukraine via trader RosUkrEnergo by mixing its own gas with gas bought from Central Asian producers Turkmenistan, Kazakhstan and Uzbekistan. It buys the biggest volumes from Turkmenistan, but Kupriyanov said a deal to buy gas from Ashgabat at $100 per Mcm would expire only in 2009. Deutsche UFG brokerage said in a research note that Gazprom's export prices are based on a formula linked to a basket of oil products, except for Ukraine and Belarus, Reuters said. "Given that the 2007 prices of crude oil and refined products have remained largely unchanged from 2006, we do not expect gas prices for European consumers to alter significantly: $267 in 2007 and $259 in 2008," it said. But it forecast that imports of central Asian gas will become more expensive for Gazprom from next year, resulting in a price growth for Ukraine to $150 from the current $130. "The price for Belarus will continue to be the subject of special negotiations. For the next year, we forecast the gas price for Belarus of $143," said Deutsche. UralSib said in a note it expected Gazprom's revenues from this region to rise by 30% in 2008 to $9.4 billion. But it said that buyers would resist sharp price hikes as both Belarus and Ukraine had substantial bargaining power through their control over Gazprom's gas transit to Europe.

Miller climbs back in Gazprom saddle

28 August 2007 - Upstream OnLine - Gazprom boss Alexei Miller is set to return to work on Monday, his spokesman Sergei Kupriyanov said today. Miller has been on sick leave since early June after being treated in hospital for kidney stones, a Reuters report said.

Ministry says Gazprom should compete for new fields

MOSCOW, August 30 (RIA Novosti) - Russian natural gas giant Gazprom [GAZP] should only be granted licenses to develop new oil and gas fields through competitive bidding, the natural resources minister said Thursday. "We have yet to discuss this matter in the government. I consider it illogical to allot natural resource deposits on an uncontested basis," Yury Trutnev said in response to a question from the Kommersant business daily concerning Gazprom's recent request that the license to the Chayanda gas field in Yakutia, in the country's Far East, be granted to it without competition. Alexander Ananenkov, deputy head of the state-controlled gas giant, approached Prime Minister Mikhail Fradkov in June with a request that license be issued through the Federal Strategic Deposits Fund. Ananenkov said Gazprom needs a resource base to meet the Far East's natural gas requirements, and that by 2011, the Primorye Territory will need an estimated 2-2.5 billion cubic meters. The Chayanda field has proven reserves of 1.24 trillion cubic meters of gas and 50 million metric tons (about 370 million barrels) of oil. The Gazprom top manager said earlier that 25% of Russia's gas reserves, or more than 59 trillion cubic meters, was concentrated in the eastern part of the country, where four large gas production centers could be formed in the future: in the Irkutsk Region, the Krasnoyarsk Region, on Sakhalin Island and in Yakutia. All four centers will eventually be connected by a unified gas transportation system, as part of the national gas transportation network, he said.

Russia vents fury at Yukos funds move

27 August 2007 - Upstream OnLine - Russia's Prosecutor General Yuri Chaika has hit out at a Swiss court's decision to lift a freeze on funds related to bankrupt Russian oil producer Yukos, branding it an unfriendly move toward the country. "We consider this decision as politically motivated. This is a move of non-respect towards our country and an attack on its sovereignty," Reuters quoted Chaika telling a news conference in Moscow today. He said his deputy would fly to Switzerland for consultations this week. Last week, Swiss judicial authorities said they had lifted a freeze on all funds related to Yukos, worth between 200 million and 300 million Swiss francs ($165.8 million to $248.8 million). The move followed a ruling by Switzerland's highest court blocking a Swiss government bid to give Russia documents linked to bank accounts held by former Yukos owners, including Mikhail Khodorkovsky and Platon Lebedev, and several companies. The landmark ruling by the Lausanne-based Tribunal Federal, or Supreme Court, halted Swiss co-operation with Russia in a criminal case which the five judges said seemed aimed at ousting "political rivals". The Swiss ruling concluded "that the (Russian) penal procedure in the case at hand is being manoeuvred by the powers that be with the intention to rein in the class of rich 'oligarchs' and sideline potential or declared political adversaries." Lawyers for Khodorkovsky and Lebedev welcomed the decision, noting it was the first time the top Swiss court had invoked political persecution and human rights violations as grounds for not helping foreign authorities to pursue a criminal matter. Khodorkovsky and Lebedev are each serving an eight-year prison term in Siberia on charges of fraud and tax evasion. The Swiss court said the two should not have been sent to prison camps in Siberia as Russian law provided for the place of detention to be close to their home or place of trial. Earlier this month Russia sold the last big asset of Yukos, once the country's largest oil producer. State-controlled Rosneft bought assets from Yukos at a state-forced auction earlier this year.

Swiss lift Yukos funds freeze

24 August 2007 - Upstream OnLine - Swiss judicial authorities today said they had lifted a freeze on all funds related to the Russian bankrupt oil company Yukos, about $165.8 million to $248.8 million. The move follows a ruling by Switzerland's highest court on Thursday blocking a Swiss government bid to give Russia documents linked to bank accounts held by the former Yukos owners, including Mikhail Khodorkovsky and Platon Lebedev, and several companies. "I can confirm we have lifted the freeze on the 200 to 300 million Swiss francs ($165.8 million to $248.8 million) frozen in Swiss banks," Maria Schnebli, a federal prosecutor in the Swiss attorney general's office said. "That is the end of it," Reuters reported her as saying.

Transaero carrier becomes Gazprom, Rosneft minority stockholder

MOSCOW, August 20 (RIA Novosti) - The air carrier Transaero has acquired 94,000 shares in the state-controlled energy giant Gazprom [RTS: GAZP] and 124,000 shares in the Rosneft oil company [RTS: ROSN], Russia's private carrier said Monday. "We believe that given the current market situation, the purchases are attractive investment options," press secretary Sergei Bykhal said, without giving the price of the deals. Gazprom's ordinary shares as of the end of Monday's session traded at $10.20 per share at the Russian Trading System (RTS) stock exchange, and at 261.4 rubles ($10.14) at the Moscow Interbank Currency Exchange (MICEX). Rosneft ordinary shares traded at $8 and 205.80 rubles ($7.98) per share at the RTS and MICEX respectively. Established in 1991, Transaero was Russia's first private airline. Its net profit, calculated to Russian Accounting Standards, was 304.8 million rubles ($11.9 million) last year, up 70% against 2005. International destinations account for over 80% of passenger traffic and the airline's fleet comprises 27 aircraft: one Tu-214, six Boeing 747s, seven Boeing 767s, and thirteen 737s. Bykhal also said the air company planned to set up a fleet of cargo aircraft by transforming its Boeing-747-200s, in use since 2005, into cargo versions to increase its freight traffic. The company also plans to replace all its Boeing 747-200s with Boeing 747-400s by 2010. And this fall, Transaero will receive the first of six Boeing 747-300s it has ordered, Bykhal said.

Russia offers new deposits for geological prospecting

MOSCOW, August 20 (RIA Novosti) - Russia's Natural Resources Ministry is offering 93 new deposits for prospecting, including fields in East and West Siberia, the ministry's press office said Monday. "The ministry has approved new lists of deposits offered for geological prospecting in 2007 at the expense of natural resources companies," the ministry said in a statement. The ministry will offer 38 hydrocarbon deposits with total reserves of about 100 million metric tons of oil (733 million barrels) and 500 billion cubic meters of natural gas, and also 55 fields with solid minerals, including diamonds (more than 40 million carats) and gold (over 400 million metric tons), the statement said. The list also includes four deposits with spring water and therapeutic muds, the statement said. The ministry is offering companies licenses to prospect oil and gas in the Khanty-Mansi and the Yamalo-Nenets Autonomous Districts in West Siberia, solid minerals in the Arkhangelsk Region in northern European Russia, diamonds and gold in Yakutia in the Far East, gold in the Irkutsk Region in East Siberia, the Magadan Region in the Far East, and the Murmansk Region in the Arctic, and coal in the Kemerovo Region in West Siberia. According to Russian law, companies that obtain the right to carry out geological prospecting of deposits automatically receive the right to develop these fields, if their reserves are proved.

Little-known company buys Yukos overseas assets for $307 mln

MOSCOW, August 15 (RIA Novosti) - A company earlier believed to be affiliated with Russian state-owned crude producer Rosneft [RTS: ROSN] bought overseas assets of bankrupt oil company Yukos for 7.8 billion rubles ($307 million) at an auction Wednesday. The auction was won by Promneftstroi, which competed for the Yukos assets along with Versar, another little-known company that previously made unsuccessful bids at Yukos sell-offs, through which the company's remaining assets are being liquidated to meet creditors' claims. Rosneft has so far been the ultimate buyer of all main Yukos assets sold at liquidation auctions, many of which have featured previously unknown bidders, making it a leading Russian oil producer. At Wednesday's auction, the starting price for Netherlands-based Yukos Finance, the owner of the bankrupt firm's overseas assets, was set at 7.6 billion rubles (about $298 million), with bid increments of 40 million rubles (about $1.6 million), according to auction organizers. After the auction, Rosneft denied that Promneftstroi was in any way affiliated with the company. "Rosneft did not participate in this auction," a company spokesman said. Monte Valle, which won the fourth auction held on April 17 for the Yukos energy assets in the Tambov and Belgorod Regions in central and southwest Russia by offering 3.56 billion rubles (about $140 million) for the lot, up from the starting price of 2.64 billion rubles (about $102.2 million), said it purchased Promneftstroi from Rosneft recently for participation in the trading. Monte Valle's ownership structure has not been disclosed. Yukos Finance holds a 49% stake in Slovakian pipeline operator Transpetrol. Yukos, once Russia's largest oil company, was declared bankrupt August 1, 2006, after three years of litigation with tax authorities over arrears. Its founder, Mikhail Khodorkovsky, is serving an eight-year prison sentence in Siberia for fraud and tax evasion.

Gazprom's 1H07 unconsolidated earnings up 4.5% y-o-y to $34 bln

MOSCOW, August 14 (RIA Novosti) - Gazprom's [RTS: GAZP] said Tuesday its unconsolidated earnings calculated to Russian Accounting Standards increased 4.5% year-on-year to 865 billion rubles ($34 billion) in the first half of the year. The natural gas monopoly's income from sales of goods, products, work and services gained 9.4% to 370 billion rubles ($14.5 billion) during the reporting period. Gazprom attributed the relatively modest rise to the exceptionally cold winter of 2006, compared to this year's abnormally high winter temperatures. "Such a negligible increase in profit from sales of goods, products, work and services is mainly due to the decrease in natural gas sales due to the abnormally warm winter," the statement said.

Belgium against Gazprom investment in gas depot

BRUSSELS, August 14 (RIA Novosti) - Belgium's energy regulator, CREG, is opposed to plans by national company Fluxys and the Russian energy giant Gazprom to build a gas storage facility in the country, local media reported Tuesday. In April, Gazprom announced plans to build a 0.5 billion cubic meter underground gas storage facility in the Campine area, near the Belgian port of Antwerp. The announcement came after the plans were approved at talks between Russian President Vladimir Putin and Belgian Prime Minister Guy Verhofstadt in Moscow March 2, at which time the premier also visited Gazprom's headquarters. "While CREG welcomes the emergence of additional gas storage capacities in the country, it opposes the Russian company's proposal to provide 100% funding for the project," the media said. The facility was designed to ensure Russian gas deliveries to Western Europe, and was to be wholly owned by Gazprom. CREG already informed Belgium's energy minister, Marc Verwilghen, of its opposition to Gazprom's plans in April, but made its assessment public Tuesday. Gazprom first entered the Belgian market in 2006 with exports of 300 million cubic meters of natural gas. Belgium does not have proven natural gas reserves and is strongly dependent on energy imports.

Rosneft oil firm files for auction to sell Yukos foreign assets

MOSCOW, August 13 (RIA Novosti) - Russian state-controlled crude producer Rosneft [RTS: ROSN] said Monday it had filed an application for an auction to sell an overseas subsidiary of the now bankrupt oil firm Yukos. Rosneft did not specify whether its parent company or its subsidiary, Neft-Aktiv, which has experience participating in Yukos auctions, would bid for Dutch-based Yukos Finance, which owns the bankrupt firm's overseas assets. Russia's federal property fund has set the auction for August 15, with a starting bid price of 7.6 billion rubles (about $298 million). The parent company Yukos, once Russia's largest oil company, was declared bankrupt August 1, 2006, after three years of litigation with tax authorities over arrears. Its founder, Mikhail Khodorkovsky, is serving an eight-year prison sentence in Siberia for fraud and tax evasion. Through a series of liquidation auctions, Yukos has repaid around 400 billion rubles ($16 billion) to creditors. The company's key production and refining assets have been bought up by Rosneft at or following auctions, making the state-controlled company one of the country's leading crude producers.

Gazprom Approved New Investment Program

08.14.2007 - [Neftegaz.RU] - Russian gas monopoly Gazprom's Board of Directors has approved the company’s restated investment program, which will see total investments of 779 billion rubles in 2007, up 47% on the sum approved in December 2006, according to Russian daily RIA Novosti. The company said that, at the same time, capital investments will account for 335.5 billion rubles ($13,14 billion), which is 25 billion rubles ($980 million), or 7%, less than the investment program approved in December 2006. According to the Gulf Times, the investment cuts will be in field and pipelines developments. Meanwhile, Gazprom’s long-term financial investments will amount to 444 billion rubles ($17,4 billion), which represents a 275 billion rubles ($10,77 billion), or 11%, increase on the investment program approved in December 2006. The Gulf Times said that this will see an increase in investments in acquisitions. The company also restated its budget, and said that overall cash income and revenues will amount to 2.3 trillion rubles ($900 billion), which is a 255 billion rubles ($9,98 billion), or 9%, decrease on budget approved in December 2006. Gazprom also revealed that its financial borrowings will total 420 billion rubles ($15,74 billion), which, according to RIA Novosti, is a 366% increase. Gazprom said that the increase in borrowings has been driven by the need to finance the acquisition of oil- and gas-fired power generation assets.

Gazprom boosts 2007 investment program by 47% to $30 bln -1

MOSCOW, August 10 (RIA Novosti) - Russian gas monopoly Gazprom announced Friday an increase in allocations for its 2007 investment program to 779 billion rubles ($30 billion), 47% more than the figure agreed on last December. The energy giant's revised investment strategy and budget for 2007 have been approved by the company's board of directors. Under the new document, capital investment for the year has been brought down by 7% to 335 billion rubles ($13 billion), while long-term investment spending has been raised 11% to 444 billion rubles ($17 billion). Gazprom cut budget income for the year down to 2.3 trillion rubles ($89 billion), 9% less than the earlier-approved amount. Loans will increase 366% to 420 billion rubles ($16.2 billion). The company said the changes in its investment program and budget were related to the purchase of stakes in Sakhalin Energy, the operator of the Sakhalin II oil and gas project in Russia's Far East, Belarusian pipeline operator Beltransgaz, and Mosenergo, the capital's territorial generating company. In addition, Gazprom said the changes followed a review of the company's investment projects and figures for the year.

Gazprom could become world's richest company-Medvedev

MOSCOW, August 9 (RIA Novosti) - Russian gas giant Gazprom could become the richest company in the world, a Russian first deputy prime minister said in an interview with a German magazine Thursday. "Gazprom has the largest natural gas reserves in the world. When I joined the board of directors (in 2000), the concern was worth about $8 billion, but today it is more than $250 billion. One day it could become the world's most valuable company," Dmitry Medvedev, who is also chairman of the Gazprom board of directors, said in an interview with Stern magazine. He said enterprises that own strategic resources must be under state control. "The entire country, its population, depends on Gazprom. We do not want to risk an economic or political collapse that could occur should the enterprise be sold to a dozen or so private owners," he said. Medvedev said Gazprom has always honored its contractual delivery obligations, and nothing in the future would change in this respect. "And please don't forget that German firms have a 6% share in Gazprom," the first deputy prime minister said.

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