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Thursday, January 31, 2008

Zubkov 'in line for Gazprom job'

30 January 2008 - Upstream OnLine - Russian gas giant Gazprom said today it was closing the list of nominations to its board, while a source close to the company said Prime Minister Viktor Zubkov was among those put forward, with the chairman's post looking set to become vacant after the country's March presidential elections. Gazprom's current chairman, First Deputy Prime Minister Dmitry Medvedev, is the favourite to become Russia's next President after March elections, meaning the top Gazprom job will become vacant. Speculation about who will succeed him is intense. "Zubkov is on the list. Putin is not," the source told Reuters, confirming reports by Russian news agencies which quoted a government source as saying Zubkov - a former head of Russia's financial intelligence - may chair Gazprom after June's shareholder meeting. The news followed a report in the Kommersant business daily, which resurrected an often-heard rumour that Vladimir Putin would chair Gazprom himself after he leaves the Kremlin following presidential elections in March. A Gazprom spokesman declined to comment on potential board candidates. These are nominated by the state, which controls Gazprom, and minority shareholders such as Germany's Ruhrgas. "Today is the last day to submit applications. It will close at six o'clock," he said declining to disclose the number of contenders for an 11-seat board. Kommersant said the list was unusually long and included 42 names this year. Gazprom's daily operations are run by chief executive Alexei Miller but Medvedev as chairman has blessed all major deals signed between Gazprom and Western governments and companies. Russian media have earlier speculated that energy minister Viktor Khristenko or former Prime Minister Mikhail Fradkov could also get the top job. Current Gazprom chairman Medvedev is widely expected to win the presidential elections. He enjoys Putin's strong support, is way ahead of all rivals in pre-election opinion polls and gets blanket coverage from state-run media. Putin's selection of Medvedev as his successor prompted some analysts to suggest the rivalry between Kremlin clans would come to its end after the elections. Medvedev, who is widely seen as a standard-bearer for the Kremlin's liberal wing, is often pitted against the so-called "siloviki" or hardliners, whose unofficial leader is often cited as the Kremlin's deputy chief of staff Igor Sechin. Sechin also chairs state-run oil producer Rosneft . Other market insiders have suggested that Putin might want to maintain rivalry between the two groups after the election and allow Sechin a tighter grip on the economy as Medvedev will gain more political influence as president. Zubkov is occasionally cited as an ally of Sechin, although most analysts and insiders argue he does not belong to any Kremlin clan and is simply personally loyal to Putin, Reuters reported.

Russian PM to head Gazprom?

January 30, 2008 - Russia today - Russia's current Prime Minister Viktor Zubkov might be the next chairman of Gazprom's board of directors, according to Russia's RIA news agency, quoting a source from within the government. Viktor Zubkov became Prime Minister last year after being nominated by president Putin. Dmitry Medvedev, who's favourite to be Russia's next president, currently heads the board of the state giant. And with Putin likely to take-over as Prime Minister, the three could all switch positions

Tuesday, January 29, 2008

Austria Signed a South Stream Deal with Gazprom

Austria29.01.2008 - [Neftegaz.RU] - Russia's gas monopoly Gazprom signed an agreement with the Austrian company OMV for the transfer of 50 percent of the Central Europe Gas Hub, a subsidiary of OMV Gas International. U.S. officials are reported by Reuters to have expressed their dismay at the recent deals at a meeting between U.S. and Serbian officials in Belgrade, saying that the move increases Europe's dependence on Russia for gas. The U.S. expressed its preference for the Nabucco pipeline, which will run through Austria, Bulgaria, Romania and Hungary and will be completed in 2011, that is, two years ahead of South Stream.

Serbia Signed 30 year Gas Deal with Russia

29.01.2008 - [Neftegaz.RU] - Russia and Serbia have signed an interstate agreement on cooperation in gas and oil on Friday during the visit of Serbian President Boris Tadic and Prime Minister Vojislav Kostunica to Russia. The agreement will be in force for 30 years, at which time it will be automatically renewed for five years unless one side breaks it off. Russian President Vladimir Putin reported that, in addition to that agreement, an agreement was signed on the purchase by Gazprom of 51 percent (4,158,040 shares) in NIS by the end of the year for 400 million euros.

Monday, January 28, 2008

Russia plays down talk of gas cartel

24 January 2008 - Upstream OnLine - Russia has played down fears it would back the creation of an Opec-like gas cartel at a meeting in Moscow in June after a newspaper reported Iran had urged turning an informal gas club into a more powerful body. "It would be a different structure to Opec with completely different goals," a spokesman for Gazprom told Reuters. "If one of Opec's key goals is to set production volumes to influence prices, we have a different goal - to co-ordinate investment strategies and make sure there is a balance between production capacities and market needs in the long-term," he said. The Kommersant business daily on Thursday quoted Russian industry sources as saying Iran had made a proposal last year to turn the so-called Gas Exporting Countries Forum, an informal club of the world's major gas exporting nations, into a more formal organisation.

OMV and Gazprom eye Baumgarten pact

25 January 2008 - Upstream OnLine - Russia's Gazprom will sign an agreement with OMV today which will boost co-operation at the Austrian producer's Baumgarten gas hub, Gazprom's deputy chairman Aleksandr Medvedev said. In May, Gazprom and OMV signed a memorandum of understanding for the Russian gas export monopoly to take a stake in OMV's trading platform, Central European Gas Hub, in Baumgarten on the Slovakian border, and to establish joint storage projects. Medvedev wrote in the Presse daily on Friday that the Russian company welcomed OMV's invitation to strengthen its participation in Baumgarten, a Reuters report said. "OMV's pipeline intersection in Baumgarten is today one of the most important gas transit points in Europe, through which around one third of all Russian gas exports to Europe are distributed," Medvedev wrote. OMV has scheduled a news conference with Gazprom in Vienna at 1630 GMT. Russia supplies a quarter of the European Union's gas. The Baumgarten hub handled 7.7 billion cubic metres of gas in 2006 and 1.3 Bcm per month ilast year, according to OMV.

Gazprom ponders LNG partner

24 January 2008 - Upstream OnLine - Russia's Gazprom will choose a partner next month for its $3.5 billion project to build a liquefied natural gas plant on the Baltic Sea. "The Gazprom board of directors will most likely make a decision on their partner in February," a spokesman for the company said. Speaking at an event to introduce two new E.On board members in Russia, the spokesman said the LNG project, to be built in the St Petersburg area by 2013 was down to five possible partners. Previously Gazprom officials have mentioned Petro-Canada, BP, Italy's Eni, Japan's Mitsui and Mitsubishi, Spain's Iberdrola and a Malaysian company for Baltic LNG. Kupriyanov did not name the partner candidates, and told reporters the list of possible partners was trimmed to four in December, and that one new candidate had recently emerged.

Russia: Gazprom's Advance Into Europe Continues

Gazprom welders work at the pipe during the construction works on the pipeline Middle Asia - Center in Aleksandrov Gai village at the border between Kazakhstan and Russia, 13Sep2007January 25, 2008 - RLS by Brian Whitmore - Advantage, Russia - Moscow has taken a giant leap toward solidifying its role as Europe's dominant energy supplier by securing two key pipeline deals over the past two weeks. On January 18, Bulgaria signed a deal with Russia's state-controlled natural-gas monopoly Gazprom to join its South Stream pipeline project. which would transport gas from Russia deep into the heart of Europe. And now, in an ornate Kremlin signing ceremony a week later, Serbia joined the project as well. "With the signing of these agreements Serbia becomes a key transit junction in the emerging system providing energy supplies from the whole European continent," Russian President Vladimir Putin said after the signing ceremony. At one level, the South Stream pipeline project is designed to get Russian gas to Europe while bypassing former Soviet transit countries like Ukraine and Belarus. But more importantly, analysts say it is part of an ongoing Russian effort to stifle the European Union's efforts to diversify its energy supplies and lessen dependence on Moscow. In the process, the Kremlin and Gazprom are using Russia's energy might to establish a strategic foothold in Europe and expand Moscow's influence on the continent. "This is part of a larger strategy," says Fyodor Lukyanov, editor in chief of the Moscow-based journal "Russia in Global Affairs." "Wherever possible, it is necessary to increase Russia's presence in Europe, either inside the EU or in countries that have a chance to join." The fear is that this could leave Europe vulnerable to energy blackmail. "There is the possibility that Russia could start using energy as a political tool in parts of Central Europe, like it has done in the East with Ukraine," says Mark Hester, editor of the U.K.-based journal "Oil and Energy Trends." Gazprom cut off gas supplies to Ukraine for several days in January 2006 after a price dispute. The cutoff followed Ukraine's 2004 Orange Revolution, which brought a pro-Western government to power, causing many to suspect Russia of using energy as a political weapon. So does this mean that Russia -- which has been in an increasingly anti-Western mood -- will soon be in position to halt Europe's heating supply in the dead of some future winter? Hester says it's "not quite that scary yet" but that such a "worst-case the way we ought to look at it."
Requiem For Nabucco?
Gazprom's South Stream project, which officials say would begin deliveries in 2013, would pump 30 billion cubic meters of gas a year under the Black Sea to Bulgaria. The pipeline would then branch off in two directions: north to Austria and south to Italy. Energy analysts say it is aimed at undermining the Nabucco pipeline, an EU-backed project that would circumvent Russia by transporting gas from the Caspian and Central Asian regions to Europe via Turkey and the Balkans. In May, Moscow dealt a major blow to Nabucco when it signed an agreement with Turkmenistan and Kazakhstan to build a pipeline along the Caspian Sea coast to transport their natural gas to Europe -- via Russia. In June, Gazprom and Italy's Eni further undermined Nabucco by signing the initial deal to build South Stream. Now, many observers fear that with Bulgaria and Serbia joining South Stream, Nabucco could be on its death bed. "Nabucco is not dead, but it is a patient that risks dying," says Federico Bordonaro, a Rome-based energy analyst with the "Power and Interest News Report." "The simple fact that the South Stream is the project that everyone is discussing and it is the project that has been successfully approved, is not per se a reason to say that Nabucco is dead. But the economic viability of Nabucco now comes into question." Russia is pushing hard to assure that gas from Turkmenistan will be delivered to Europe via Russia and South Stream -- not via Nabucco. Analysts say it is doubtful that there is enough gas in the Caspian region for both pipelines. Gasprom's foray into Europe is not confined to pipelines. The company is also busily acquiring energy infrastructure throughout the continent. As part of the South Stream deal with Serbia, for example, it also acquired the country's largest oil company, NIS.
Austro-Hungarian Waltz
Gazprom also made a deal last year with Austrian energy major OMV to buy a 50 percent stake in the company's Baumgarten gas-storage and -distribution center near Vienna. Gazprom is negotiating agreements to build other gas-storage facilities in Belgium, Hungary, and Austria. But the Baumgarten deal with OMV is particularly important: the Baumgarten facility was the planned termination point for the Nabucco pipeline. Under the Nabucco plan, it was to have its storage capacity expanded and would be fitted with pipeline links to carry Caspian gas to other European countries. Since Gazprom itself wants to supply these countries, its control of the facility would throw the plans for Nabucco into disarray. According to media reports, Gazprom has also been enticing OMV with a pledge to make it the leading distributor of natural gas in Europe. Moreover, OMV has been buying up shares in Hungary's energy major MOL in an attempt at a hostile takeover. Media reports and energy analysts say the move has Gazprom's tacit support. "Austria's gas-transit and -storage network will be more integrated with Gazprom's network," Bordonaro says. "If Austria enters Gazprom's orbit, and then if the Austrian major [OMV] takes over the Hungarian major [MOL], then it is like you scored two goals with only one strike. Then, via Austria, you also control Hungary."
European Disunion
Gazprom has very skillfully exploited divisions among EU member states by striking bilateral deals that undermine Brussels' efforts to forge a common energy policy. "Russia knows very well that Europe lacks real political unity. It is always possible to use bilateral agreements in order to advance Gazprom's interests," Bordonaro says. "The Europeans need the gas, the Russians can provide this gas, and because of the political and economic decision-making structure, Russia is much faster than the European Union in making key decisions." In an interview with RFE/RL in Brussels, EU Energy Commissioner Andris Piebalgs said legislation is in the works to prevent Gazprom from gaining control of strategic energy assets within the European Union. Most importantly, he is proposing "unbundling" -- or separating -- energy suppliers from distribution networks. "I believe strongly that network infrastructure should be separated from upstream activities [and] downstream activities. It think that is the crucial issue," Piebalgs said. "It's not only [important] from the security point of view, but also from the normal market point of view." Piebalgs said he hoped the legislation would be passed before 2009. Will that be enough to stop the Gazprom juggernaut from dominating the continent's energy market? Hestert, for one, thinks the EU needs to come up with a comprehensive strategy before it is too late. "In terms of reaching the worst-case scenario, it really depends on how the U.S., the European governments, and the EU actually react," Hestert said. "If they haven't got a strategy in place, an expectation that this is going to happen, then they really need to start thinking of one."

Serbia, Austria Signed onto South Stream

Jan. 28, 2008 - Kommersant - Russia and Serbia have reached an agreement that will guarantee Gazprom an easy time in that country. It will buy into the state Naftna Industrija Srbije (NIS) cheaply and thus have an advantage in access to the Serbian portion of the coming South Stream Gas Pipeline, which Gazprom is implementing with Italian partner Eni. Gazprom has also received Austria's support, and half of one of Europe's largest gas markets with it. Now all Gazprom needs is Hungary. An interstate agreement on cooperation in gas and oil was signed on Friday during the visit of Serbian President Boris Tadic and Prime Minister Vojislav Kostunica to Russia. The agreement will be in force for 30 years, at which time it will be automatically renewed for five years unless one side breaks it off. Russian President Vladimir Putin reported that, in addition to that agreement, an agreement was signed on the purchase by Gazprom of 51 percent (4,158,040 shares) in NIS by the end of the year for €400 million. Under the interstate agreement, a gas pipeline with a capacity of no less than 10 billion cu. m. per year will be built across Serbia and an underground gas reservoir will be built. They will become part of the South Stream system. NIS, which produces 1 million tons of oil and refines 7 million tons per year, will be modernized. Gazprom will invest €500 million in NIS by 2012. Gazprom will have control of 78 percent of the Serbian retail market for petroleum products after the deal is completed. Russian business as a whole will control over 90 percent of that market, since LUKOIL is already the second largest presence there. NIS was estimated to be worth €1.9 billion at the end of last year. Also on Friday, Gazprom signed an agreement with the Austrian OMV for the transfer of 50 percent of the Central Europe Gas Hub, a subsidiary of OMV Gas International. U.S. officials are reported by Reuters to have expressed their dismay at the recent deals at a meeting between U.S. and Serbian officials in Belgrade, saying that the move increases Europe's dependence on Russia for gas. The U.S. expressed its preference for the Nabucco pipeline, which will run through Austria, Bulgaria, Romania and Hungary and will be completed in 2011, that is, two years ahead of South Stream. Gazprom has been unable to come to an agreement with the Hungarian MOL, which is eseential for the South Stream project. analysts say that Hungary will now be able to “name any price” for its cooperation.

Gazprom strikes deal on European gas hub in Austria

MOSCOW, January 25 (RIA Novosti) - Russia's state-run gas giant Gazprom and OMV, an Austrian oil and gas company, signed a cooperation agreement in Vienna to set up a gas trading platform and storage facility in Europe. The agreement signed by Alexander Medvedev, deputy chairman of the Gazprom management committee, and Wolfgang Ruttenstorfer, OMV's CEO, will give Gazprom a 50% stake in one of the largest gas hubs in Europe - the Central European Gas Hub (CEGH) in Baumgarten, Austria. "The agreement signed with OMV is a substantial contribution to securing natural gas supplies to Europe," Medvedev said. OMV Gas International deals with the group's activities in the natural gas sector and is focused on marketing, trading and logistics. The CEGH in Baumgarten was established as a logistical and commercial trading platform by OMV and has a capacity of 1.3 billion cu meters per month. The agreement is based on the Memorandum of Understanding signed in May, 2007 by Ruttenstorfer and Alexei Miller, Gazprom CEO, during a visit to Austria by Russian President Vladimir Putin.

Russia, Serbia sign agreement on South Stream section

MOSCOW, January 25 (RIA Novosti) - Russia and Serbia signed Friday an oil and natural gas cooperation agreement on the construction of the Serbian section of the South Stream gas pipeline system. South Stream is designed to supply natural gas to the Balkans and on to other European countries from Russia across the Black Sea. The South Stream agreement with Serbia envisions transportation of 10 billion cu m of Russian gas annually, Gazprom CEO Alexei Miller said. Russia's Gazprom Neft signed a deal on the purchase of a 51% stake in the Serbia state-owned oil monopoly Naftna Industrija Srbije (NIS) during talks between the two countries' leaders in Moscow. Miller said Gazprom will not require any loans to finance the 51% stake. "We have sufficient resources of our own," he said. The chief executive said regardless of political developments, Gazprom will remain Serbia's reliable partner in energy deliveries. Gazprom had reportedly offered $580 million for a 51% stake in NIS amid fears in Europe over perceived growing energy dependence on Russia. Russian First Deputy Prime Minister Dmitry Medvedev has described the newly signed Russian-Serb energy agreements as "a brilliant breakthrough." "The mutually beneficial investment that will be made as a result of these protocols ensures the interests of our countries, our peoples, and are ultimately aimed at strengthening the energy security system in Europe," he said. The joint construction of a stretch of a natural gas pipeline with Russia's Gazprom under the South Stream project will turn Serbia into a regional economic leader, Serbia's prime minister said. The South Stream pipeline proposed by Russia's Gazprom and Italy's Eni is a rival project to the Nabucco pipeline backed by the European Union and United States, which will pump Central Asian gas to Europe via Turkey bypassing Russia. The pipeline will run from Russia's Black Sea coast under the sea to Bulgaria, where it will branch off to different destinations in the European Union, supplying 30 billion cubic meters of gas annually. Serbia initially planned to sell a 25% stake in NIS for $300 million and oblige the buyer to invest another $250 million in the development of the company. The company is estimated as being worth $1.2 billion.

Gazprom set to close deal on 51% stake in Serbian oil company

MOSCOW, January 24 (RIA Novosti) - An agreement to sell 51% in Serbia's NIS oil company to Gazprom Neft, the oil arm of Russian energy giant Gazprom, will be signed on Friday, a source in the Kremlin said on Thursday. "Intergovernmental agreements on cooperation in the oil and gas sphere and a protocol on the basic terms of Gazprom Neft's acquisition of a 51% stake in Naftna Industrija Srbije (NIS) will be signed in the presence of Russian President Vladimir Putin, Serbian President Boris Tadic, and Serbian Prime Minister Vojislav Kostunica in Moscow on January 25," the source said. He said the sale of a controlling interest in Serbia's largest oil company would open up prospects of the company's development on a mutually advantageous basis, and guarantee long-term and stable supplies of energy products to the Serbian market.

Gazprom winning pipeline war with EU

Gazprom winning pipeline war with EUJanuary 28, 2008 – Russia Today – Gazprom has come a step closer to controlling the entire European gas supply chain after buying a 50% stake in a pivotal storage and transit route. The half share in the Central European Gas Hub was sold by Austria’s OMV Group, which also leads the Nabucco pipeline project. It's financed by the EU to rival Gazprom's South Stream. OMV now refuses to rule out Gazprom taking a share in Nabucco as well. The Austrian hub is playing a high-stakes game with Gazprom. OMV will get the three billion cubic meters of gas it wants to overtake Belgium within two years as the continent’s biggest trading platform. A leaked transcript shows the U.S. is so worried about Gazprom’s power it held a top-level meeting to warn top Serb officials against Friday’s sale of their oil monopoly to Russia. The U.S. side questioned whether Serbia took into consideration possible economic dependency and political control. They were especially concerned with Bulgaria’s decision to join Gazprom, because it undermines attempts to diversify European gas supplies. By contrast the very existence of the U.S.’s rival Nabucco pipeline is in doubt. Gazprom chief Aleksey Miller claims Nabucco has “no resources, and no gas reserves either”. Nabucco operator OMV claimed it did have a future, but admitted that may now lie with Gazprom. OMV cheif executive Dr. Wolfgang Ruttenstorfer says there are huge quantities of gas available to Europe from both the Middle East and teh Caspian area. “As soon as the South Stream project is developed as far as the Nabucco project, it will be very natural that the two projects are discussed and if there are any synergies - we are not against using any of them,” Ruttenstorfer said. Gazprom says Nabucco is not that attractive at the moment, but hinted it could step in with supplies if offered the right terms. “We have been in discussion in respect of if it has sense to join Nabucco for Russia, maybe for Nabucco it has sense, but we still don’t see any sense for us, but we will continue this discussion,” Aleksandr Medvedev, deputy CEO of Gazprom said. Chief strategist at Uralsib Bank Chris Weafer says the current situation is a pipeline war, and it looks set to get even worse for Gazprom’s opponents. On Saturday Qatar’s Energy Minister Abdullah Al-Attiyah revealed the world’s leading gas-producing nations will meet in Moscow in June to discuss an Opec-style cartel.

Gazprom buys chunk of EU gas hub

Gazprom buys chunk of EU gas hubJanuary 26, 2008 – Russia Today – Gazprom has bought a stake in one of Europe's largest gas distribution centres - the Central European Gas Hub. The centre is the proposed terminus for the EU-backed Nabucco gas pipeline. Gazprom's Deputy Chairman, Aleksandr Medvedev, signed the agreement with Austrian energy group OMV in Vienna on Friday. RT has been in Vienna, and asked Medvedev whether Gazprom has plans to join the Nabucco project. “Maybe for Nabucco it has sense, but we still don’t see any logic for us, but we will continue the discussion,” he said.

Gazprom rules out Poland gas idea

Gazprom rules out Poland gas idea January 21, 2008 – Russia Today – Poland’s new Prime Minister Donald Tusk claims it would be three times cheaper to expand capacity through Poland than building the huge Nord Stream undersea pipeline from Russia to Europe. Now Gazprom’s deputy CEO and export chief has revealed why he will reject Warsaw’s overtures. Gazprom is also claiming Ukraine’s new Premier Yulia Tymoshenko will fail in her challenge to their gas price deal, agreed last month. Gazprom's CEO, Aleksandr Medvedev, has disclosed that Gazprom is in talks with shareholders of the Shah Deniz gas field to buy gas from it. The Shah Deniz field in Azerbaijan is one of the world’s biggest untapped gas deposits. Aleksandr Medvedev: We started to discuss with Shah Deniz shareholders potential forms of co-operation, including the taking of gas from second phase. RT: Poland says the Nord Stream will be three times cheaper if it goes over the country, not underwater, but has the route already been fixed? A.M.: It’s not correct to compare Nord Stream with the potential extension of the Yamal Europe pipeline. From the very beginning the condition of execution of the 2nd Yamal Europe pipeline was increased demand in Poland for an additional 12 billion cubic metres of gas. We do not see it today, that’s why we’re not discussing this project. RT: The new Ukrainian Prime Minister says she will re-negotiate the Ukraine-Gazprom agreement for 2008. Can she do this? A.M.: No, legally not.

Friday, January 25, 2008

Putin trip is next step in Gazprom's march west

January 14, 2008 - International Herald Tribune by Judy Dempsey - BERLIN: Gazprom, the Russian state-owned energy company, is making a big bid to build and control natural gas routes in southeastern Europe in a move that could leave the European Union's energy policy in the region in disarray, according to Balkan analysts. The move by Gazprom could be sealed this week when President Vladimir Putin of Russia begins on Thursday a two-day visit to Bulgaria, a country that depends almost entirely on Russia for its energy but that has been seeking ways to diversify its natural gas sources. At the same time, Gazprom is poised to take control of the state-owned Petroleum Industry of Serbia, known as NIS, despite divisions within the Serbian government over the price and terms of the takeover. NIS consists of two oil refineries, a crude-oil supply pipeline and the bulk of Serbia's distribution networks for oil products and fuels. The $400 million contract - which other energy companies, including OMV of Austria and MOL of Hungary have said is underpriced - would give Russia a big advantage over the EU in the region. Analysts said the deal would allow Gazprom to build a pipeline across Serbia, construct a large storage facility for its natural gas and turn that part of the western Balkans into a hub for Russian energy. By establishing a foothold there and signing long-term supply contracts with countries in the region, Gazprom could further weaken the EU's goal of building the Nabucco natural gas pipeline. The Nabucco pipeline, still awaiting financing and construction permits, is intended to provide Europe with alternative sources of natural gas instead of increasing the bloc's dependence on Russia. "There is a clear connection between Putin's visit to Bulgaria and Gazprom's recent offer to take over 51 percent of NIS," said Dick de Jong, an energy specialist at Clingendael, the Netherlands Institute of International Relations. "Both deals are important for Russia's plans to build the South Stream pipeline, which when completed would strengthen Russia's influence in the region." Putin was to arrive in Sofia, the Bulgarian capital, to start the "Year of Russia" celebration and observe the 130th anniversary of Bulgaria's liberation from the Ottoman Empire. He wants to use the visit to confirm the participation of Sofia in the South Stream pipeline. This ambitious but costly project, estimated to cost as much as $10 billion, is being built by Gazprom and Eni of Italy but requires the participation of Bulgaria and Greece. Gazprom and Eni signed a memorandum of understanding in June to build the 900-kilometer, or 550-mile, pipeline from Russia to Bulgaria via the Black Sea. Such a project would weaken Gazprom's dependence on Turkey, which is a major transit country for Russian natural gas. It could also hinder Turkey's own ambitions to become a hub for energy from Russian and the Caspian region. In Bulgaria, the pipeline would have two spurs, one going westward to Greece and Italy, the other traveling north to Serbia and possibly into Austria or Hungary. So far, Russian negotiations have proved difficult for Bulgaria. The country joined the EU a year ago and is still eager to prove its European credentials, despite its dependence on Russia for energy. "Bulgaria is in a very tricky situation," said Plamen Pantev, director of the Institute for Security and International Studies in Sofia. "On the one hand, if the government agrees to the deal with Gazprom, it would mean we would become an important transit country. And that would be lucrative. On the other hand, we would become even more dependent on Russia for our energy. It will be very difficult to get the balance right." Since the end of the Cold War in 1991, successive Bulgarian governments have sought, but failed, to diversify their energy imports. Bulgaria is already a member of the Nabucco consortium. The other countries in the consortium are Romania, Hungary, Turkey and Austria. The idea behind Nabucco is that Europe would reduce its own dependence on Russian natural gas by building a 3,300-kilometer pipeline that would carry natural gas from Iran and Azerbaijan via Turkey, up through Bulgaria to southern and western Europe. The €5 billion, or 7.4$ billion, project, however, has faced several delays, with disagreements over the route and the costs. Above all, there is the political aspect. Iran is supposed to supply natural gas to Nabucco, something the United States opposes. Analysts say that the EU delays in forging contracts with the countries around the Caspian Sea has proved to be a bonus to Gazprom. "The longer the delay in getting Nabucco off the ground, the greater the chance that Gazprom will consolidate its grip over southeastern Europe and the rest of the Balkans," said Borut Grgic, director and founder of the Institute for Strategic Studies in Ljubljana, Slovenia. "That is why Putin's visit to Bulgaria is so important." Last month, Russia signed a major deal with the Central Asian republics of Kazakhstan and Turkmenistan to build a natural gas pipeline along the Caspian Sea, a move that could strengthen Russia's monopoly on energy exports from this region and, at the same time, undermine Nabucco.

Wednesday, January 16, 2008

Iran, Gazprom agree to expand oil and gas cooperation

TEHRAN, January 15 (RIA Novosti) - Russian energy giant Gazprom [RTS: GAZP] is planning to offer Tehran new prospects of oil and gas cooperation, Iran's oil minister said on Tuesday. "We have held serious talks with Gazprom officials and agreed that the Russian company will present its proposals on bilateral energy cooperation by mid-March," Gholam-Hossein Nozari said. The minister said the Russian company could be interested in oil and gas prospecting, the construction of pipelines, and development of oil and gas deposits in Iran. Iran and Gazprom previously discussed prospects of bilateral cooperation in December last year when Iranian Deputy Oil Minister Hossein Noghrehkar Shirazi and Gazprom Chief Executive Officer Alexei Miller met in Moscow. The parties identified oil and gas deposit exploration and development - in particular the further development of the energy-rich Southern Pars deposit in Iran - as priority areas for cooperation. Stages 2 and 3 of the Southern Pars gas field in the Persian Gulf were initiated by the international consortium of France's Total (which holds a 40% stake), Malaysia's Petronas (30%) and Russia's Gazprom (30%) in 1997. The consortium built two offshore platforms with 10 production wells each, two 100-km (62-mile) underwater gas pipelines and an onshore gas plant with annual capacity of 20 billion cubic meters. Iran's proven gas reserves total more than 28 trillion cubic meters. In 2006, Iran produced 105 billion cubic meters of gas.

Wednesday, January 09, 2008

S&P raises Gazprom Neft rating to "BBB-", outlook stable

MOSCOW, January 9 (RIA Novosti) - Standard & Poor's said Wednesday it had raised Gazprom Neft's [RTS: SIBN] corporate rating to "BBB-" from "BB+", with a stable outlook, after the company confirmed the acquisition of 50% in Russian oil producer Tomskneft. The company's Russia national scale rating was affirmed at "ruAA+". "The upgrade reflects Gazprom Neft's strengthening stand-alone credit quality due to a more diversified business profile and still-robust financials," S&P credit analyst Yelena Anankina said. "It also reflects greater clarity about Gazprom Neft's financial policy and about the commitment of Gazprom Neft's 76% parent, OAO Gazprom, to expand its oil activities," she said.

Gazprom boosts gas supplies to Greece and Turkey

RBC, 09.01.2008, Moscow 17:52:09.Gazprom has increased Russia's gas supplies to Turkey and Greece above the amount stated in the contract since December 2007 at the countries' request, the gas holding reported today. According to preliminary estimates, Russia's gas supplies to Turkey rose from 19.9bn cubic meters in 2006 to around 22bn cubic metres in 2007. Meanwhile, Greece requested additional gas supplies from Gazprom in late December, and Gazprom hiked daily gas imports to the country by 1.5m cubic meters.

Russia-EU seeking compromise on energy

Russia-EU seeking compromise on energyJanuary 7, 2008 - Russia Today - The EU-Russia energy partnership has become more of a power struggle over the past year. Although some major cross-border deals were signed in the electricity and gas sectors, politicians from both the EU and Russia were looking for compromises that neither side was prepared to make. The European Union imports around a quarter of its gas needs from Russia, although it’s keen to start getting more from elsewhere. Russia needs the EU too, as most of its pipelines point West, not East. In addition, Europe is buying around two thirds of what Russia produces and needs to sell on. The relationship is inter-dependent, but it 's a delicate balance and over the last year it’s become even more fragile, with Russia criticising the European Commission for blocking Gazprom's expansion in Europe. In autumn, the European Commission proposed legislation on unbundling the gas and electricity sectors throughout Europe to increase competition. Speaking at a Russia-EU meeting in Brussels last October, Andris Piebalgs, EU Energy Commissioner, said, “The reason for our proposal is that we'd like a very clear separation between transport and supply.” In Russia, this has been happening in the electricity sector, with the former monopoly Unified Energy System spinning off many of its assets into separate companies in 2007. Germany's E.ON took control of the generating company OGK-4 and Italy's Enel bought 25% of OGK-5. However, Gazprom has no plans to separate its extraction and distribution businesses. The Russian government says the nature of the gas market means it makes sense to keep the company together. “The short-term market rules the situation in the electricity sector to a considerable extent, whereas it is the long-term market and long-term supply schemes that apply to the natural gas industry, with a different scheme of guaranteeing, insuring and crediting the investment,” said Viktor Khristenko, Russia’s Industry and Energy Minister. Economic protectionism in strategic sectors - particularly energy - is on the rise across the globe and it’s got experts concerned. “In order to surmount this slowdown in the global economy you need more open markets, including being open to foreign investment. But this is not the signal we're seeing - whether it’s from the leading economies like the EU or the U.S. or whether it’s the developing world,” said Yaroslv Lissovolik, an economist from Deutsche Bank in Russia. Although deals between companies from both sides continue to go ahead, on a political level the EU and Russia are struggling to find legislation they can agree on. Russia wants assurance it won't be blocked in Europe, and the EU remains committed to the International Energy Charter. But Russia is refusing to sign up to the latest version, as it would open up its gas pipeline network to foreign competition.

Nord Stream does its sums

07 January 2008 - Upstream staff The Nord Stream consortium, which is building a subsea gas pipeline from Russia to Western Europe, said today that project costs look likely to exceed €5 billion ($7.35 billion), adding that it will release new cost figures in the coming months. Nord Stream director Dirk von Ameln repeated that plans still call for gas shipments to start at the beginning of 2011. "It is quite clear that the cost will be higher than earlier calculated," he told Reuters. "We will come up with new figures in, let's say, March." Switzerland-based Nord Stream, majority owned by Russian gas export monopoly Gazprom , plans to build a 1200 kilometre pipeline under the Baltic Sea from Russia to Germany. Work is due to begin in 2009 and be completed in 2010. The Nord Stream consortium, apart form Gazprom, which owns 51%, involves German players BASF and E.ON, with 20% each, and Dutch outfit Gasunie with 9%.

Gazprom targets 10% of French supply

03 January 2008 - Upstream OnLine - Russia's gas export monopoly Gazprom wants 10% of the French gas market within four or five years but has no current acquisition plans in Europe, its vice-chairman said today. "This year (2007) we delivered about 500 million cubic metres of gas directly to final (French) consumers," Alexander Medvedev told French daily La Tribune. "It's a volume that will grow. We hope to reach a 10% market share within four to five years. The French market is among the top five for Gazprom," he added. Asked if Gazprom had any acquisition plans in Europe, he said: "There is no concrete plan at the moment, but we would consider such a possibility, if certain conditions are met." He said the acquisition price needed to be "reasonable", the buy "strategic" and "in line with regulators' demands". He also said Gazprom did not plan at this stage to swap assets with Gaz de France . "We are trying to assess how to co-operate efficiently all the more since the ongoing merger between GdF and Suez will create a leader in liquefied natural gas." He said it was too early to provide details on future co-operation between Gazprom and French oil group Total to develop the Astrakhan gas field in Russia. "We are still in preliminary talks. The Astrakhan field presents specific technical difficulties... and we are looking at the technological details of this co-operation. It's too early to give details on the form this co-operation will take." Gazprom said in November it was considering teaming up with Total on the Astrakhan field, one of its 10 biggest, with potential reserves of 2.5 trillion cubic metres under Russian classification, Reuters reported.

Gazprom sparks 2008 capital spree

28 December 2007 - Upstream OnLine - Russia's gas export monopoly Gazprom will increase capital investment by 43% in 2008 to a record level of almost $20 billion as it speeds up development of Arctic fields and new pipelines. Gazprom has prioritised equity investment over capital expenditures for several years because of massive new asset purchases despite investor criticism over inadequate new -production investment amid stagnant mature-field output in Siberia. Yesterday the world's largest gas producer said its state-controlled board had approved its capital investments, which will rise to a record of 479.4 billion roubles ($19.41 billion) in 2008 from 335.5 billion roubles in 2007 and 324.9 billion in 2006, Reutes reported. The capital investments will be equally split between gas production and transportation. Long-term financial investment will fall by 48% to 230.7 billion roubles from a record of 443.86 billion in 2007 and 133.7 billion in 2006. Capital investment will go toward the Bovanenkov and Kharasavei fields on the Arctic Yamal peninsula, the company's next source of big gas output, and Shtokman on the Barents Sea. More funds will also be invested in new pipelines to connect Yamal to the existing system of trunk pipelines, which also needs to be expanded, Gazprom said. Gazprom's 2007 financial investments soared after the company agreed to buy 50% in the Sakhalin 2 oil and gas project, previously led by Anglo-Dutch supermajor Shell for $7.45 billion, and a controlling purchase of Moscow utility Mosenergo. Next year Gazprom said it will have to buy a 50% stake in state oil company Rosneft's unit Tomskneft in a deal valued at $3.66 billion, and pay $625 million to further increase its stake in Belarus' national pipeline network. The company said some of the financial investment will also go toward Sakhalin 2, its new Nord Stream pipeline to Germany and Shtokman, but gave no details and did not explain why those were rated as financial rather than capital investment. The company, which has a total long-term debt including affiliates of around $45 billion, making it Russia's most indebted company by far, will borrow 90 billion roubles next year. Gazprom's investment plans are regularly revised and approved by the state, even after the financial year is over. It has repeatedly failed to cap borrowing at the pledged levels of 90 billion roubles in previous years. This year, it has said its total borrowing needs stood at 420 billion roubles.

Gazprom's Tomskneft Deal Approved

Andrei Tkachenko / Itar-Tass
The deal resolves months of uncertainty over the ownership of Tomskneft after its sale in a state auction in May.

December 27, 2007 - Bloomberg, Reuters - Gazprom's oil arm, Gazprom Neft, has received approval from the Federal Anti-Monopoly Service to buy half of Tomskneft, a Rosneft unit that once belonged to bankrupt oil firm Yukos, as the gas giant seeks to expand oil output. Gazprom Neft will pay 90.5 billion rubles ($3.66 billion) for half of Tomskneft, Kommersant reported, citing an unidentified person close to Gazprom's oil arm. The two state-controlled companies reached an agreement on the sale of the stake, Natalya Vyalkina, a spokeswoman for Gazprom Neft, said by telephone Wednesday. She declined to name the price or a time frame. Gazprom, which failed in an attempt to acquire Rosneft in 2005, has been expanding its oil business since the purchase of Sibneft from billionaire Roman Abramovich and his partners after they unraveled a merger with Yukos. The unit was renamed Gazprom Neft the same year. President Vladimir Putin's administration has used former Yukos assets to build up Rosneft and Gazprom's dominance of the oil industry. Rosneft bought Tomskneft and Yukos' other east Siberian oil assets at a $6.8 billion bankruptcy auction in May to become the country's largest crude producer and refiner after leading the bankruptcy case against Yukos last year. Rosneft said in July that it sold half of Tomskneft to the new Development Bank, formerly called Vneshekonombank, for $3.4 billion. The bank denied taking ownership of the stake. Rosneft said the sale occurred June 25, the same day it bought Yukos' trading house, Moscow headquarters and other property for the same amount. Gazprom Neft last week applied to the anti-monopoly service for permission to buy the stake in Tomskneft, Kommersant reported Monday. The Tomskneft deal ends a guessing game over the real owners of the 240,000-barrels-per-day oil producer. Rosneft had said it sold half of Tomskneft in July after buying the unit at a state bankruptcy auction in May. Tomskneft would become the first Yukos asset that Rosneft has agreed to share. The sale comes shortly after Putin blessed Gazprom chairman Dmitry Medvedev's candidacy to succeed him in the March presidential election. But the Development Bank said it was not involved in the deal, prompting analysts to speculate that it was a warehousing transaction. Rosneft produces around 2.3 million bpd, and the sale would reduce its output by about 5 percent. The addition of 120,000 bpd would increase Gazprom's oil production by 14 percent, bringing it very close to the landmark figure of 1 million bpd. Rosneft has to redeem $17 billion of short-term debt over the next year and has just decided to postpone a eurobond issue until next year due to volatile global markets.

Gazprom against sharing Russian resources with foreigners

December 27, 2007 - Russia Today - Russia’s Gazprom opposes foreign participation in the country’s oil and gas projects, according to a senior official of the gas giant. But additional pressure on foreign energy companies working in Russia could prove detrimental for the country’s investment climate. Aleksandr Ananenkov is Deputy Chairman of the management committee. “A handover of control over the Far Eastern projects to foreigners led to an infringement of Russia's national interests, an attempt to turn Russian gas consumers in the area into "poor relatives" who see their gas siphoned off,” he said Ananekov sighted Sakhalin-I and Sakhalin-II oil and gas projects and the Kharyaga oil field in northern Russia as examples of negative experiences. Officials have repeatedly voiced concern about Sakhalin-I's output growing abroad instead of the growing domestic market, where gas prices are a fraction of those in Europe. Konstantin Simonov of Russia’s Energy Security Fund says foreigners have a lot to offer in the oil and gas sector. “It’s impossible to speak about development of Russian oil and gas sectors without foreign companies because of the lack of technologies and money. And main Putin’s idea is exchange of assets,” he said. Experts say the statement could signal that Gazprom, which last year took control of one of the world biggest fields Sakhalin-II from Royal Dutch Shell, is now eyeing Sakhalin-I, currently run by Exxon Mobil. Exxon’s subsidiary, Exxon Neftegas, and Japan's Sodeco have 30% each in the project, while Russia's Rosneft and India's ONGC hold 20% each. According to business daily Vedomosti, earlier this year Gazprom held talks with Exxon and Rosneft on entering Sakhalin-I project, but failed to reach an agreement. Experts repeatedly said if the state - through Gazprom - continues to flex its muscle in the energy sector, could hurt Russia’s investment climate.

‘Putin may take Gazprom reins’

21 December 2007 - Upstream OnLine - President Vladimir Putin may become the next chairman of Russian gas export monopoly Gazprom when he steps down following a presidential election in March, Vedomosti business daily reported. The newspaper cited two sources close to Gazprom and one source close to first deputy prime minister and current Gazprom chairman Dmitry Medvedev, whom Putin has designated as a preferred candidate to succeed him. Gazprom and the Kremlin declined immediate comments.

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