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Thursday, February 28, 2008

After Them Come the Stream

Dmitry Medvedev// Dmitry Medvedev visited Europe on his own
Feb. 26, 2008 - Kommersant - Russia’s presidential candidate Dmitry Medvedev made his first independent European tour on Monday. In one day, he visited Belgrade and Budapest, to solve the issues of almost presidential scale. Namely, he was to finish the negotiations concerning the proposed South Stream gas pipeline nurtured by Russian President Vladimir Putin. Besides, Medvedev had to remove an unforeseen difficulty in the Russia-Serbia relations, which appeared due to Rossiya TV channel’s fault. Kommersant’s special correspondent Vladimir Soloviev watched Medvedev’s European debut. Cool Reception Belgrade met Russia’s First Deputy Prime Minister Dmitry Medvedev with 20-degree-Celsius heat. The city tour added positive emotions to the Russian delegation. On the way from the airport to the presidential residence, the cortege could not help driving along Kneza Milosa street, where the U.S. embassy is located. Pointing at it, staff members of the deputy PM’s protocol service, who had arrived to Belgrade a day earlier, were glad to see the Russian embassy look much better in comparison to the scorched mansion of the U.S. diplomatic mission. Medvedev’s first meeting in Belgrade was with Serbia’s President Boris Tadić, recently re-elected for his second term. Medvedev made his acquaintance one month ago, when the Serbian leader, together with PM Vojislav Koštunica, visited Moscow on the eve of the presidential election’s second round. Back then, Tadić needed Russia’s support. Now, however, being re-elected, he was much more confident: he did not come out to meet the Russian guest, and even made the delegation wait for him for a while. Anyway, both the hosts and the guests were aware that coolness was due to Serbia’s feeling offended by Russian television. On Thursday night, Rossiya TV channel’s presenter Konstantin Semin called Serbia’s PM Zoran Djindjic, assassinated in 2003, an “American puppet” while commenting on the mass disorders in Belgrade. So, on the day of Medvedev’s visit to Belgrade, all Serbian newspapers put on their front pages the Russian federal TV channel’s scandalous comments. Tadić was Djindjic’s associate, and thus took the offense against the late PM as his own personal insult. Serbian partners promised to raise the issue during the talks with Medvedev, and did so. Behind closed doors, though. After the negotiations, Russia’s Foreign Minister Sergei Lavrov said that TV presenter Semin’s statements are “nonsense and his own opinion” which sounded especially offensive because they were voiced on air of a federal channel. Lavrov assured the same explanation was given to the Serbian authorities, and they were satisfied with it.
Warming Gas
The negotiations between Medvedev and Tadić went on for about half an hour, after which Medvedev visited PM Koštunica’s villa. There the presidential candidate was treated as president: Koštunica met his guest at the doorstep, and led him into the conference room nearly arm-in-arm. “Nice guy!” whispered the Russian delegation members approvingly. Meanwhile, Koštunica hunted his own line. “Your visit coincided in time with a moment which is very important for is, when Serbia is trying to protect its territorial integrity and insists on preserving the international law’s foundations,” began Koštunica, without saying a word about the notorious TV incident. “Serbia insists that the U.N. Security Council should abolish the creation of that false state, and meeting with you is a chance to thank President Putin for his support,” he added. Medvedev nodded in agreement, waited for his turn to speak, and replied: “We proceed from the fact that Serbia is one whole state whose jurisdiction spreads on its entire territory.” After boding moral and legal support to Serbia in the Kosovo issue, Medvedev moved on to the topics of true interest to him. He said the two countries should keep strengthening their economic cooperation, and, in this sense, the agreement between Gazprom and Serbiagaz could not have come at a better time, for it lays the basis for the energy security regime in united Europe. Besides, Medvedev promised that Russia will soon sign other documents with Serbia, which will concern oil cooperation. Gazprom head Alexei Miller eventually did what he had come for. Together with Saša Ilić, acting director general of Serbiagaz state enterprise, he signed the cooperation agreement between Gazprom and Serbiagaz on implementing the project of gas pipeline construction via Serbia’s territory. Stringing Serbia onto the South Stream pipe was then blessed in St. Savva Cathedral, which is now being built in Belgrade. There, Medvedev once again met with Tadić, who was friendlier this time. Apparently, Russian partners’ explanations satisfied him indeed. Tadić and Medvedev went about the cathedral together, crossing themselves and kissing the icons. “The fate of your St. Savva Cathedral is not as hard as the fate of our Christ the Savior Temple,” confessed Medvedev to the Serbian president. He must have meant that although Belgrade’s cathedral has been under construction for many decades, it has never been destroyed. Moreover, Medvedev promised to commission Zurab Tsereteli to come and help finish the cathedral’s reconstruction. Grateful Luka Novacović, the cathedral’s arch-priest, presented Medvedev with an icon and the coat of arms of Serbia’s Christian Orthodox Church. Just one more member of the Russian delegation, Alexei Miller, received the same gift. Apparently, that should have been regarded as a sign that Russia-Serbia gas cooperation received the highest blessing. At last, Medvedev visited an oil refinery in Pančevo, owned by NIS (National Industry of Serbia), which, in its turn, will be owned by Gazprom soon. The Russian guest promised to invest €900 million in Serbia’s oil-and-gas industry.
Hungarian End
In the evening, Dmitry Medvedev flew to Budapest, where he had negotiations with PM Ferenc Gyurcsány. Hungary is the last missing chain of South Stream. The project does not yet have the country’s final consent to participation. By the way, Budapest was not as stirred as Belgrade over the Russian deputy PM’s coming. While Serbia’s capital shut off its center for Medvedev’s cortege, in Hungary the cortege had to drive among all other cars. The talks between Russia’s and Hungary’s authorities on Budapest’s joining the South Stream project have been going on for a long time. In December 2007, Russian PM Viktor Zubkov met with Gyurcsány, while Hungary’s Finance Minister János Veres visited Moscow last week. However, a high-ranking source in the Russian delegation said that Medvedev was to remove Budapest’s last claims hampering the signing of the agreement on building Hungary’s sector of South Stream. Besides, the visit was to underline Medvedev’s special part in the project’s implementation. When the negotiations were over, their participants looked content: the Russian deputy PM had successfully removed any differences, if there remained such. Gyurcsány said he will come to Moscow this Thursday to sign the final agreement together with the Russian president. Thus, the South Stream project will be completely ready for implementation, and that will be a joint achievement of Putin and his successor on the eve of March 2 elections.

Wednesday, February 27, 2008

Development company for Russia’s largest gas field formed

Development company for Russia’s largest gas field formedFebruary 21, 2008 - Russia Today - Russia's Gazprom, France's Total and StatoilHydro of Norway have signed an agreement to create a joint company to develop the Shtokman gas field in the Barents Sea. Russia’s largest field is to provide gas to European customers through the Nord Stream pipeline. The newly-created company, Shtokman Development, is owned by three companies, with a 51 per cent stake under Gazprom’s control. The board will have five representatives from Gazprom and two each from Total and StatoilHydro. After production at the Shtokman field is launched in 2013, the company is to deliver 23.7 billion cubic metres of gas to Europe yearly. It will produce natural gas for 25 years, after which the Russian giant will buy out Total’s and StatoilHydro’s stakes in the project. The reserves of the Shtokman gas field are 3.8 trillion cubic metres of natural gas and about 27 million tonnes of condensate.

Gazprom and SUEK to form joint venture

RBC, 26.02.2008, Moscow 15:58:56. – Gazprom and Siberian Coal Energy Company (SUEK) have signed an agreement on the creation of a joint venture, the two companies stated in a joint press release today. According to the document, SUEK will issue additional shares, which are to be sold to Gazprom's subsidiaries in exchange for the gas holding's power generation assets, including its 15.61-percent stake in OGK-2, 17.13-percent stake in OGK-6, 5.27-percent stake in OGK-5, and a 5-percent stake in TGK-5. As a result of the deal, Gazprom is expected to hold 50 percent plus one share in the newly-created joint venture. The parties intend to approach Russia's anti-monopoly agencies for a permit to close the deal. However, the Federal Anti-Monopoly Service has not yet given a go-ahead for the deal, insisting that it still needs to carry out an analysis of the situation that is likely to arise in the energy sector in 2011-2012 in light of the two companies' plans.

Tuesday, February 26, 2008

Texas oilman takes on Gazprom over contract claim

A gas flare burning at the Yuzhno Russkoye field in western Siberia. A Texas company is suing Gazprom to try to establish that it owns 40 percent of the fieldFebruary 25, 2008 - International Herald Tribune - by Judy Dempsey - BERLIN: In a court case closely watched by investors, a Texas company is accusing Gazprom of refusing to honor an investment and property agreement in one of the biggest natural gas fields in Russia. Richard Moncrief, chairman of Moncrief Oil International, said he had decided to use the German courts to establish what he said was a 40 percent stake worth $12 billion, in the vast Yuzhno-Russkoye field in western Siberia. The field is intended to supply the underwater Nord Stream pipeline, through which Russia will be able to supply natural gas directly to Germany and Western Europe, bypassing Ukraine, Belarus and Poland. Gazprom, owned by the Russian state, is the world's largest natural gas company, with a vast network of fields in the Arctic and Siberia. Moncrief obtained the stake in the Yuzhno-Russkoye field a decade ago, with a Gazprom subsidiary holding the remainder, according to documents filed in court in connection with the lawsuit and reviewed by the International Herald Tribune. Moncrief insists that his claim is still valid, while Gazprom has neither rejected nor accepted it. His hopes, he said, were now pinned on the Landgericht Berlin, a regional court that will decide within a few weeks whether Moncrief can begin proceedings against Gazprom in the German capital. If so, it could cause Gazprom "just a little embarrassment," according to Anders Aslund, a Russia specialist at the Peterson Institute for International Economics in Washington. "Taking over gas fields one by one has been a standard way of doing business by Gazprom," he said. "Few companies which have dared challenge Russia in the courts have won." Klaus Nieding, the lawyer representing Moncrief in Germany, said he was "cautiously optimistic that the German courts will say 'yes' to German jurisdiction." Under German law, if a foreign company has a subsidiary in the country, which in this case Gazprom has through its subsidiary Gazprom Germania, the courts may choose to exercise jurisdiction. "If the court says yes, we will have an interesting situation, insofar as a Russian party is being sued in a German court," added Nieding. "Justice is not being sought in Russia. We do not have any illusions concerning Russian justice." The case also raises important questions about the validity of contracts, property rights and the treatment of investors in Russia, issues that have been vexing ever since the collapse of the Soviet Union in 1991, legal experts said. Big multinational companies have been venturing into Russia, with varying degrees of success, since the early 1990s. Royal Dutch Shell and BP recently ran into problems with the Russian authorities over the terms of investments and property rights. Those disputes were settled outside court, as the Russians tend to prefer. However, the Kremlin has used the courts when doing so suited its purpose. It took Yukos, the Russian energy company owned by Mikhail Khodorkovsky, to court on charges of corruption and tax fraud. Khodorkovsky, once considered a potential presidential candidate, was sentenced in May 2005 to nine years in a Siberian prison. Yukos was broken up and most of its assets were taken over by Gazprom. Moncrief, 65, a Texan whose private oil and natural gas business was established by his grandfather in 1935, said he did not intend to give up attempts to enforce his company's right to the field. "This is about bringing out the facts about our claim," Moncrief said during an interview. "We do not view our agreement with Gazprom as a memorandum of understanding. We view it as a binding contract." Moncrief was referring to the original contracts signed for a stake in the Yuzhno-Russkoye gas field in 1997 and 1998. He claims his counterpart was Vladimir Nikiforov, then the general director of a Gazprom subsidiary, Zapsibgazprom. Moncrief, however, has been unable to contact Nikiforov, who could be a crucial witness in court. Gazprom declined to answer any questions related to the contracts. "We prefer not to comment on the Moncrief situation," Dennis Ignatiev, a Gazprom spokesman, said in an e-mail. The fate of the Yuzhno-Russkoye field is linked with the Nord Stream pipeline, which was supposed to begin operations in 2010, but which is facing delays in obtaining construction permits. The German-Russian joint venture includes a subsidiary of the German chemical group BASF called Wintershall, and E.ON Ruhrgas, another German company. The deal for the pipeline was signed Sept. 9, 2005, by President Vladimir Putin of Russia and Gerhard Schroder, then the chancellor of Germany. Soon after losing his bid for re-election that same month, Schroder, a friend of Putin, was appointed chairman of Nord Stream, the company overseeing the construction of the pipeline. Wintershall, in addition, became directly involved in Yuzhno-Russkoye. Gazprom offered it a 35 percent stake in 2004 in a deal that was concluded a year later - a deal that came as a surprise to Moncrief and his lawyers. "In 2004, Gazprom silently began to search for new partners for Yuzhno-Russkoye," Nieding said. "It did not tell Moncrief." During this time, Gazprom was doing little drilling in the fields, which the International Energy Agency estimates contains reserves of more than 700 billion cubic meters, or 25 trillion cubic feet, of natural gas. Under the terms of the Moncrief contracts, reviewed by the International Herald Tribune, the Texas company first agreed on Sept. 17, 1997, to provide Zapsibgazprom, the Gazprom subsidiary, with technical know-how and business plans, as well as equity and debt financing from Western financial institutions in return for a stake in the gas field. "It was agreed that Moncrief Oil International provide $1 billion financing for exploration of the field and all other technical support needed, versus a respective interest in the gas field," Nieding said. The documents involving the financing arrangements show that Moncrief lined up Credit Suisse First Boston. By Nov. 12, 1997, the financing was arranged, the documents show. A year later, Moncrief said, his stake was doubled to 40 percent. According to the documents signed at the time, on May 8, 1998, there was a meeting of the Gazprom board at which the deal was approved. "A new company, JSC, was formed for the purpose of holding the license for Yuzhno-Russkoye," Nieding said. The documents stated that Moncrief Oil International was granted 40 percent of the shares in JSC. The deal was never implemented. Moncrief claims the field became the target of corrupt deals and was illegally split from Gazprom. Foreign investors doing business in the late 1990s in Russia had to take enormous risks. Property rights, tenders and legally binding contracts were new concepts. Corruption was rife and a massive transfer of state property to the private sector took place, in many cases under highly dubious circumstances. After being elected president in 1999, Putin started to bring Gazprom under the Kremlin's direct control. "To his credit, Gazprom got the gas field back," Moncrief said. But Moncrief did not get back his stake, even though Gazprom "has never denied or terminated, or attempted to terminate the agreement," he said. When Putin met President George W. Bush in 2002 in the United States, Moncrief said, there was a sense that the tide might turn in his favor. Bush and Putin referred specifically to his company, saying it could serve as a model for future cooperation in the energy sector. But nothing came of it. The Kremlin, asked recently about that meeting, would not comment. "This is a corporate issue," Dmitri Peskov, Putin's spokesman, said. "It has nothing to do with the Kremlin." Moncrief attempted to sue Gazprom in a U.S. court in 2005. The court declined jurisdiction. He sought to sue BASF in a German court two years ago, claiming the company had made a deal with Gazprom over stolen goods. But the Frankenthal district court said that Moncrief had failed to prove that BASF actively persuaded Gazprom to breach its contract. Despite the legal setbacks, Moncrief said he remained determined to establish the title rights over Yuzhno-Russkoye. "We are going to stay in court and pursue this," he said.

Friday, February 22, 2008

Libya signs deal with Gazprom on oil and gas production

MOSCOW, February 22 (RIA Novosti) - Libya's National Oil Corporation (NOC) signed on Friday an exploration and production sharing agreement on an oil and gas field with Russian energy giant Gasprom, the Libyan company said. The deposit is located in the Ghadames Basin, near the North African country's borders with Algeria and Tunisia. NOC said in a news release that Gazprom will invest over $100 million in the project, won in a tender last December. Gazprom is currently running three projects in Libya. The state-controlled gas giant signed a production-sharing agreement with NOC for a sector covering 10 sq km (3.8 sq miles) in the Mediterranean. The company plans to invest $200 million in the project by 2012. Gazprom recently obtained 49.9% in two oil concessions in Libya from Germany's BASF under an asset swap agreement. Libya's proven natural gas reserves total about 1.49 trillion cu m, putting it in fourth place in Africa after Algeria, Nigeria and Egypt. The country's annual oil production is 80.1 million tons (588.7 million bbl), and 7 billion cu m of natural gas. A total of 83% of gas produced in Libya is consumed domestically, and the remaining 17% is exported. Libya takes first place in Africa and fifth place among OPEC countries after Saudi Arabia, Kuwait, the UAE and Iraq in terms of proven reserves of sweet crude, which total 5.1 billion tons (37.5 billion bbl). NOC was founded in 1970. The company owns a petrochemical complex and several oil refineries.

Thursday, February 21, 2008

Gazprom, Total, StatoilHydro sign Shtokman JV deal

MOSCOW, February 21 (RIA Novosti) - Gazprom, Total and StatoilHydro signed on Thursday a deal on a joint venture to develop the Shtokman gas field in the Barents Sea. The ambitious project to develop the Arctic gas field, with estimated gas reserves of 3.7 trillion cubic meters, is intended to supply the Nord Stream pipeline from Russia to Germany currently being built under the Baltic Sea. The Shtokman project cost is estimated at $30 billion. Gazprom has a 51% stake in the project, while France's Total and Norway's StatoilHydro have 25% and 24%, respectively. The newly created JV will own the infrastructure of the Shtokman first stage during 25 years after the deposit is put into operation, following which Total and StatoilHydro will cede their stakes to Gazprom. Investment in the Shtokman first stage will be determined in the second half of 2009, Gazprom CEO Alexei Miller said. "Work will start today to prepare technical documentation and this work will be completed in the second half of 2009 when an investment decision is made," Miller said. The first pipeline gas supplies from the Shtokman deposit will begin in late 2013 and liquefied gas supplies in 2014. The project's first phase is expected to produce a total of 23.7 billion cubic meters of natural gas annually.

Wednesday, February 20, 2008

Gazprom Returns to Iran

Photo: Dmitry Azarov,KommersantFeb. 20, 2008 - Kommersant - Gazprom has reached an agreement with Iran on the development of the country's largest natural gas deposits, Southern Pars and Kish. The Russian monopoly will form one or more joint ventures with the National Iranian Gas Company. This is in spite of competition from the Chinese, with whom Iran negotiated the development of the Kish deposit in 2006 and 2007, and the possibility of Iran's supplying as for the Nabucco pipeline. According to the Iranian Isna information agency, an agreement will be signed in April or May between Gazprom and the Iranian Oil Ministry. The deposit on the island of Kish has reserves of 1.37 trillion cu. m. Gazprom will also agree to build a gas reservoir in Iran and the parties are discussing the construction of an oil refinery in Armenia on the Iranian border. Gazprom began working on the second and third (out of 18) blocks at Southern Pars in 1997 in a consortium with TotalElf (40%) and Petronas (30%). The complex was sold to National Iranian Oil Co. for $2 billion in 2004. The reserved at that deposit are 10 trillion cu. m. Observers note that the present undertaking may be complicated by international sanctions.

Gazprom reaches agreement on crude production in Iran

IranMOSCOW, February 19 (RIA Novosti) - Gazprom has reached a deal with Iranian authorities for its crude producing arm to be involved in oil production in the Islamic Republic, the Russian energy giant said Tuesday. "The parties have agreed to jointly develop two or three sites on the South Pars gas field and for Gazprom Neft to participate in a crude-producing project in Iran," Gazprom said. A Gazprom delegation Tuesday discussed with Iranian Petroleum Minister Gholam-Hossein Nozari "possibilities for developing cooperation between Gazprom and Iranian companies in the oil and gas sphere." "Prospecting and development of gas and oil fields, joint operations in transporting, processing and marketing of gas were named as the key areas for interaction," Gazprom said. Nozari said agreements will be signed within two months. "Talks will be completed within two months, and we will start signing agreements," he told journalists. Iran's proven natural gas reserves total over 28 trillion cubic meters. In 2006, gas production in the republic was 105 billion cu m, with consumption standing at 105.1 billion cu m. Gas accounts for 53% of the country's energy balance, oil 44%, hydropower industry 2% and coal 1%. Gazprom has been taking part in developing the South Pars field's second and third stages together with France's TotalElf and Malaysia's Petronas. The facility is operating in design mode to produce and process 20 billion cu m of gas annually.

Gazprom saddles up in Kyrgyzstan

20 February 2008 - Upstream OnLine - Kyrgyzstan has handed Gazprom exploration licences for two oil and natural gas fields and invited the Russian gas giant to buy stakes in two state-owned energy outfits. Gazprom said it would invest up to $300 million to develop the Central Asian nation's fields within the next four years. "We were given exploration licences today," Gazprom boss Alexei Miller told Reuters after meeting Kyrgyz Prime Miniester Igor Chudinov in the capital Bishkek. "During the second stage Gazprom will invest about $300 million into Kyrgyzstan." Chudinov said the government had also invited Gazprom to take part in the planned privatisation of two state-owned oil and gas companies - Kyrgyzgaz and Kyrgyzneftegaz.

Gazprom makes a move at South Pars

19 February 2008 - Upstream OnLine - Russia's Gazprom is set to develop more phases of Iran's giant South Pars gas field and enter the country's oil sector, it said today. Gazprom said in a statement s it clinched the deal today during talks with company boss Alexei Miller and Iran's Oil Minister Gholamhossein Nozari. It did not give any figures for investment commitments. "The two sides have agreed to jointly develop two or three blocks of South Pars as well as Gazprom Neft's participation in oil production projects in Iran", the statement said. Gazprom is already involved in phases two and three of South Pars together with France's Total and Malaysia's Petronas. "In today's negotiation, agreements for the joint development of two phases of South Pars, development of oilfields and setting up a joint company between Iran and Russia's Gazprom have been almost finalised," Nozari was quoted by ISNA news agency as saying. The minister said working groups had been set up to "finalise talks within two months and we move in the direction of signing agreements". He added: " Gazprom has expressed a desire to be present in the upstream sector and also (liquefied natural gas) projects." At least one LNG unit would use gas from two phases of South Pars, Nozari said. Russia has been reluctant to impose more United Nations sanctions on Iran although it has voiced some concerns about Tehran's nuclear ambitions. Russia is building Iran's first nuclear power plant and has supplied the fuel it will use, despite U.S. concerns that Tehran is seeking to build atomic bombs. Iran denies any such intentions. Iran produces 100 billion cubic metres of gas per year, less than a fifth of Gazprom's production of 550 Bcm, but has ambitious plans to boost output further mainly due to larger output from South Pars, believed to be the world's largest gas field. The agreement takes place as Iran is calling on Russia to set up an Opec-style gas cartel, an idea that has sent jitters among top customers and politicians in Europe. Moscow says better co-ordination is needed between key gas producers and consumers but rebuffs the idea of a cartel which would influence prices.

Shtokman company 'off the blocks'

20 February 2008 - Upstream OnLine - Russian gas monopoly Gazprom looks set to set up a company to handle the first phase development of the gigantic Shtokman gas field, in the Barents Sea. The move, expected tomorrow, follows a two-month delay. Gazprom said today that company boss Alexei Miller is due to meet Christophe de Margerie, Total's chief, and StatoilHydro chief executive Helge Lund, a Reuters report said. Total and StatoilHydro are Gazprom's partners in Shtokman's first development stage. The operating company was meant to be operational by 20 December last year, but was hit by delays that caused concerns among Gazprom's Western partners. Gazprom will own 51% of the new company, Total 25% and StatoilHydro the remainder. Gazprom wants to develop Shtokman, which has reserves estimated at 3.8 trillion cubic metres of gas and about 37 million tonnes of gas condensate, in four stages. The first stage is expected to cost $15 billion. The project is expected to start producing between 23 billion and 24 billion cubic metres of natural gas per year by 2013, while liquefied natural gas deliveries are seen starting in 2014, a Reuters report said.

Gazprom 'may revive Sonatrach deal'

19 February 2008 - Upstream OnLine - Russian gas giant Gazprom and Algeria's state-owned Sonatrach could revive a production agreement both sides had previously abandoned, Russia's Energy Minister Viktor Khristenko said today. "Gazprom and Sonatrach are now working on options to swap assets and take part in extracting and transporting gas," Khristenko told Reuters after Algerian President Abdelaziz Bouteflika met with Russian president Vladimir Putin. Bouteflika flew to Moscow yesterday for a two-day state visit with a group of Algerian ministers, including Chakib Khelil, current Opec president and the country's energy minister. A co-operation deal in which the Algerian player would take a stake in gas exploration deals in Russia fell apart at the end of last year when both Gazprom and Sonatrach backed out, declining to give a reason. The proposed partnership further raised a long-held fear in the European Union over potential fixed prices by two of Europe's top gas suppliers. As well as Gazprom, Stroitransgaz, Gazprom's main building contractor, could extract at least 3.5 million tonnes of oil per year in Algeria from 2011, Russian media reported Khristenko as saying, adding that the Russian company acquired deposits in Algeria one week ago. Both Khelil and Khristenko avoided questions on the possible creation of an Opec-style gas charter, which would make the informal club of major gas exporters official, a suggestion which market talk and media reports have recently bolstered. Russia, together with Iran, Qatar, Venezuela, Nigeria and Algeria have said their annual gas forum aims at increasing co-operation between key producers. Russian officials have consistently denied any possibility of an "Opec gas" charter, but experts and analysts believe it could happen in the medium to long-term, a Reuters report added.

Gazprom profits beat forecast

15 February 2008 - Upstream OnLine - Russian gas export monopoly Gazprom said today that its profit stood at 124.44 billion roubles ($4.878 billion) in the third quarter last year compared to $4.089 billion predicted by a poll of analysts. Gazprom said its revenues amounted to 516.175 billion roubles in the period, higher than the average forecast of $20.025 billion. In the first nine months last year, net profit stood at 454.49 billion roubles versus 460.27 billion roubles in the first nine months of 2006, reported Reuters. An average rate of 25.51 roubles per dollar for the third quarter of last year was used to convert the results.

Gazprom eyes foreign assets

Gazprom eyes foreign assetsFebruary 15, 2008 - Russia Today - Gazprom made third quarter profits of $US 4.8 billion for 2007 – that’s down 6% on last year, but above forecasts. The firm blamed the falling profits on lower fuel prices in Europe. The third quarter is normally the weakest for the gas monopoly. Those profits, however, came on the back of rising revenues of $US 20.2 billion dollars, which are just a little above forecasts. Over recent years, the company's capitalization has increased twenty fold to reach $US 350 billions. Such rapid growth and the resulting financial strength translates into great potential stability. Putin speaks As Russia's largest energy company Gazprom is rarely far from the news, but the week has seen it thrust into the spotlight once again. After threatening Ukraine with a turn down of the taps Tuesday saw agreement reached on payment of an outstanding debt, with Gazprom and its Ukrainian counterpart agreeing to set up new trading intermediaries in future, which should resolve supply issues. The heart of that issue was referred to once again in President Putins question and answer session on Thursday. “We are two different states, we want to sell gas at market prices. We are gradually introducing market based prices, even domestically. Yes, gas will always be cheaper in Russia - minus export duties, transit costs, but the principle will remain the same both for us and for out international partners. And I was very pleased that Ukraine understands it,” Putin said. Foreign assets eyed But the handling of the matter added to nervousness about Gazproms as a gas supplier for Europe, despite its never having failed to deliver on a contract. With Gapzrom looking to establish a greater downstream presence in Europe in exchange for access to upstream in Russia, the President noted that one came with the other, and that Europe and Gapzrom need each other. Market analysts agree, that security of supplies not just profits, are the main motive for Gazprom to look for assets abroad. Those assets will ensure Europe’s energy security as well the security of Gazprom.

Gazprom to spend $300 mln on Kyrgyz natural gas exploration

kyrgyzstanBISHKEK, February 13 (RIA Novosti) - Kyrgyzstan expects Russian natural gas monopoly Gazprom [RTS: GAZP] to invest some $300 million in prospecting in the Central Asian country by 2012, the Kyrgyz prime minister said on Wednesday. Igor Chudinov said at a government session that a Gazprom delegation would arrive in Bishkek on February 24 and is expected to be granted a license for gas deposits in southern Kyrgyzstan. The premier said the country's annual production could eventually be raised to about 300 million cubic meters of natural gas from the current 30 million cu m. The country buys around 800 million cu m each year from neighboring Uzbekistan. Gazprom earlier said it was ready to start prospecting work in Kyrgyzstan, which will be followed by a decision on setting up a joint venture to develop deposits. Gazprom and the Kyrgyz government signed a 25-year deal on gas cooperation on May 16, 2003. In May 2007, the parties signed another deal on common principles of geological exploration in coordinated sectors in Kyrgyzstan. Kazakhstan's proven reserves of natural gas are estimated at 6 billion cu m. The development of gas fields has been held back by geological complications and undeveloped infrastructure. The country is expected to raise its annual gas output to 40 million cu m by 2010. Gazprom is currently developing oil and gas fields at offshore areas in Venezuela, India, and in the Caspian Sea, and is also considering participation in oil and gas projects in Algeria, Bolivia, Egypt, Libya and Pakistan.

Gazprom, Naftogaz to form two companies to secure gas deliveries

MOSCOW, February 12 (RIA Novosti) - Russia's energy giant Gazprom and Ukraine's national energy company Naftogaz have agreed to create two new companies to facilitate natural gas deliveries to Ukraine, Gazprom's CEO said on Tuesday. Alexei Miller said the companies would be created on the basis of parity. He also said the issue of Russian gas supplies to Ukraine would be "straightened out" before March. Moscow and Kiev reached an agreement on gas supplies earlier on Tuesday, Russian President Vladimir Putin announced after talks with his Ukrainian counterpart Viktor Yushchenko in Moscow. Intermediaries will not be used for Russia's natural gas deliveries to Ukraine, the head of Naftogaz said. "Gas will be supplied [directly] by Gazprom to Natfogaz," Oleh Dubyna said. Gazprom said on Monday that it had postponed until Tuesday evening its deadline for Ukraine to pay its $1.5 billion natural gas debt, after which the Russian energy giant had threatened to begin to reduce supplies. "We have worked out a general short-term roadmap. We heard our partners say today that the debt will soon be paid off, and we agreed on the principles for cooperation in 2008 and consecutive years," Putin told a news conference. Yushchenko said that he expected that 2007 prices would be used to calculate his country's gas debt, referring to $179 per 1,000 cubic meters.

Gazprom ‘set to snap up Sakhalin 1 output’

07 February 2008 - Upstream OnLine - Russian gas export monopoly Gazprom will sign a deal to buy the entire annual gas output from the Sakhalin 1 project led by US supermajor ExxonMobil in April or May, senior executive Alexander Ananekov said today. "The dynamics (of talks) have recently been positive and we hope to sign a binding agreement with ExxonMobil to buy 11 billion cubic metres of gas in April-May," Alexander Ananekov told Gazprom chairman and Russian First Deputy Prime Minister Dmitry Medvedev. Medvedev said he supported Gazprom's request to transfer to the gas export monopoly all three blocks of the neighbouring Sakhalin 3 field for exploration without holding a state auction. "Get the documents ready. We, in the government, will do what we can," he said.

Gazprom Neft racks up replacements

06 February 2008 - Upstream OnLine - Gazprom Neft, Russian gas giant Gazprom's oil arm, has booked a reserves replacement ratio of more than 350%, adding that the figure was even higher with acquisitions. Gazprom Neft said in a statement its oil and gas condensate recoverable reserves rose by 148 million tonnes last year under the Russian C1+C2 classification compared to production of 32.7 million tonnes. Gazprom Neft said it represented a 386% replacement ratio, although Reuters calculations showed replacement stood at 353%. Either of the two figures would be the highest organic replacement ratio by any Russian company in the past years. Last year, Gazprom Neft also acquired half of Tomskneft - which has total reserves of 415 million tonnes - from Rosneft as well as several deposits for exploration at state auctions. With half of Tomsneft's reserves of 207.5 million tonnes and 23 million tonnes of newly acquired deposits last year's additions would be as high as 378.5 million tonnes or 2.78 billion barrels. Gazprom Neft has been fighting falling production since it was bought by Gazprom from the former owner, billionaire Roman Abramovich, in 2005. Last year's production was flat on 2006. The company plans to almost double output by 2020. Gazprom Neft gave no figure for its overall reserves and added gas reserves increased by 8 billion cubic metres last year.

Naftohaz denies Gazprom debt claims

russiaukraine08 February 2008 - Upstream OnLine - Ukrainian state-run gas outfit Naftohaz Ukrainy today claimed it owed no debt to Russian giant Gazprom, and pledged that it would ensure the uninterrupted transit of Russian gas to European customers. "Naftohaz Ukrainy has no debts to Gazprom... Naftohaz will carry out its obligations to Gazprom and RosUkrEenergo by ensuring transit of all volumes in full to European countries," the company said in a statement. It said any suggestion of a debt of $500 million was a question to be addressed to RosUkrEnergo, an intermediary which oversees supplies of imported gas to Ukraine. Yesterday Gazprom said total debts amounted to $1.5 billion and threatened to cut supplies from Monday unless arrears were paid. President Viktor Yushchenko, due to visit Moscow next week, implicitly criticised the Ukrainian government of Yulia Tymoshenko last night for the new threat to supplies. Without naming the prime minister, he said suggestions that Ukraine abandon intermediaries and seek higher rates for transit would not necessarily achieve Ukraine's aim of reliable supplies and advantageous prices. Tymoshenko, who is to hold talks in Moscow later this month, has long sought to abandon the use of RosUkrEnergo and other intermediaries and wants discussions on new rates for Gazprom's gas using Ukrainian pipelines to supply Western Europe, Reuters reported. yesterday she said Ukraine had sufficient gas for its needs and for transit and pledged no interruptions in supplies. The Naftohaz statement said that last month it had received 4.72 billion cubic metres of gas against planned volumes of 4.85 Bcm. Volumes to be provided to Ukraine for the year through RosUkrEnergo, it said, totalled 58 Bcm, including 55 Bcm from Central Asia. "Only after the needs of Ukrainian consumers are met will RosUkrEnergo have the right to export to Europe 3 Bcm of remaining gas," it said. Nearly half that sum had already been exported, it said. Meanwhile, Gazprom said today it hoped to settle the gas dispute. "We hope that we will be able to reach an agreement," Itar-Tass news agency quoted Gazprom boss Alexei Miller as saying.

Gazprom pushes for Sakhalin III geological prospecting

KHABAROVSK (Far East), February 8 (RIA Novosti) - Russian energy giant Gazprom [RTS: GAZP] has requested the government's permission to prospect three natural gas blocks of the Sakhalin III project in the Far East, a company official said on Thursday. "We would like to resolve the issue of allowing geological prospecting at the Ayashsky, Odoptinsky and Kirinsky blocks of the Sakhalin III project by the end of the first quarter," Alexander Ananenkov, deputy chairman of Gazprom's management committee, said at a meeting in Khabarovsk chaired by Board Chairman Dmitry Medvedev. Ananenkov said the Kirinsky block had probable natural gas reserves of 930 billion cubic meters, while the Ayashsky and Odoptinsky deposits had reserves of 400 billion cubic meters. The Sakhalin-III oil and gas project's estimated reserves in the Sea of Okhotsk total over 800 million metric tons (5.86 billion bbl) of oil and more than 900 billion cubic meters of gas. The project includes the East-Odoptinsky, Ayashsky, Venin and South-Kirinsky blocks. State-controlled oil company Rosneft holds a license to develop the Venin block off Sakhalin Island. It holds a 49.8% in the block's operator, Venineft. The region's Sakhalin Oil Company and China's Sinopec each own 25.1%. U.S. companies Mobil, Texaco, and Exxon won a tender for licenses on the three remaining blocks of the field in 1993 under a production-sharing agreement (PSA), but the Russian government annulled the results of the tender in 2004, citing changes in tax laws on PSAs. At a government session held on June 15, 2007, Gazprom requested that the government transfer to it the licenses for Sakhalin-III deposits without competitive bidding. Gazprom plans in April-May 2008 to sign an agreement with Exxon Neftegas Limited, a subsidiary of U.S. oil major ExxonMobil, which operates the Sakhalin I project on Sakhalin's northeastern shelf, on buying the project's natural gas for gas supplies to Russian regions. The Sakhalin I project has estimates reserves of 500 billion cubic meters, with the capacity to produce about 11 billion cubic meters annually, Ananenkov said, adding that the energy giant wanted to purchase the entire natural gas output under the project. Ananenkov said the demand of Russia's Far Eastern regions for natural gas would total 25 billion cubic meters by 2020. "We see a shortage of reserves under Sakhalin projects. Even the purchase of the entire gas output under the Sakhalin I project will not resolve the problem completely by 2015-2020," Ananenkov said.

Gazprom confirms Zubkov nomination

04 February 2008 - Upstream OnLine - Russia's Gazprom has confirmed that Prime Minister Viktor Zubkov was the top ranked official running for its board after sources said he was set to become chairman of the company. Gazprom's current chairman, First Deputy Prime Minister Dmitry Medvedev, is poised to become Russia's next president after the 2 March election, meaning the top job at Gazprom will become vacant. Zubkov - a former head of Russia's financial intelligence agency - might chair Gazprom after June's shareholder meeting, sources said last week. Today, Gazprom said the state, which controls the company, had nominated Zubkov as well as Energy Minister Viktor Khristenko, chief executive Alexei Miller and Economy Minister Elvira Nabiullina to the 11-seat board. Other state nominees include Khristenko's deputy Andrei Dementiyev, former Property Minister Farit Gazizullin, Russia's energy envoy Igor Yusufov and the deputy head of the property agency, Yuri Medvedev, who is not related to Dmitry Medvedev. Gazprom as a holder of treasury stock has itself nominated the head of Gazprombank Andrei Akimov, deputy chief executives Alexander Ananekov and Mikhail Sereda, and the head of economic department Yelena Karpel. Germany's Ruhrgas, which has a 6% stake in Gazprom, proposed to re-elect its head Burckhard Bergmann to the board. Other candidates include the head of the St Petersburg Stock Exchange Viktor Nikolayev, Micex exchange head Alexander Potyomkin, investor Boris Fyodorov, Bob Foresman from Renaissance Capital, the head of the Russian entrepreneurs lobby Alexander Shokhin and Yevgeny Yasin from the High School of Economy, a Reuters report said. Gazprom's daily operations are run by chief executive Alexei Miller but Medvedev as chairman has approved all major deals signed between Gazprom and Western governments and companies. Gazprom said the new board would be elected at the 27 June annual general meeting. The register to participate in the meeting will close on 8 May.

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