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Tuesday, April 29, 2008

Moscow, Athens sign deal on Greek section of South Stream

greeceMOSCOW, April 29 (RIA Novosti) - Russia and Greece signed on Tuesday an intergovernmental agreement on cooperation in the construction and operation of the Greek section of the South Stream gas pipeline, the Kremlin press service said. The deal was signed by the Russian industry and energy minister and the Greek development minister after negotiations between Russian President Vladimir Putin and Greek Prime Minister Kostas Karamanlis. Putin said the South Stream project was by far the most viable, although its implementation "does not mean that we are fighting against any alternative projects." "Our proposal is the most optimal and the most competitive of all," he said. He added that during his negotiations with Karamanlis, the parties also coordinated further steps in implementing the Burgas-Alexandroupolis oil pipeline. Putin said these projects "will help considerably enhance the energy security not only of the Balkans but also of the entire European continent." The Greek section of South Stream will have an estimated capacity of 10 billion cubic meters of natural gas a year, the Russian industry and energy minister said. "The agreement has set the volume of gas shipments via Greek soil at around 10 billion cubic meters of gas a year," Viktor Khristenko said The South Stream pipeline is expected to pump 30 billion cubic meters of Central Asian gas to Europe per year. Serbia and Hungary joined the project, already involving Italy and Bulgaria, earlier this year. Russia, Bulgaria, and Greece signed a memorandum on the Burgas-Alexandroupolis oil pipeline in April 2005. Once completed, the pipeline will pump 35 million metric tons of oil a year (257.25 million bbl), a volume that could eventually be increased to 50 million metric tons (367.5 million bbl).

Russian premier says could head Gazprom board of directors

THE HAGUE, April 29 (RIA Novosti) - Viktor Zubkov said on Tuesday he could head Gazprom's board of directors after he steps down as Russian prime minister next month. "My name has been included in the list of candidates for [Gazprom] Management Committee members," Zubkov told reporters adding the vote could take place in June. The chairman of the board of directors is elected from among committee members. Vladimir Putin will take over the premier's post after his second term as president expires in May. Gazprom is expected to hold an annual shareholder meeting on June 27, 2008. Back in February the gas monopoly approved 19 candidates as new board members. Economics minister Elvira Nabiullina is also on the list. There are 11 members on the board, including six government officials. President-elect Dmitry Medvedev, who currently chairs the company's board of directors, will leave the post after his inauguration as president on May 7. Before his appointment as PM in September 2007, Zubkov was head of the Federal Financial Monitoring Service.

Monday, April 28, 2008

Gazprom 'asks Kremlin for fields favour'

Gazprom 'asks Kremlin for fields favour'25 April 2008 - Upstream OnLine - Russian gas giant Gazprom has asked the Kremlin to hand it the rights to develop six gas fields - which will serve as its future production base - without putting them up for auction first, a government source has claimed. "In February, the head of Gazprom, Alexei Miller, sent a letter to Prime Minister Viktor Zubkov requesting his company be given the fields without an auction," the source told Reuters. He did not name the fields in question, but claimed Miller hoped the Kremlin would exercise a gas supply law which allows the government to transfer gas deposits of state significance to whom it wishes, a Reuters report said. The fields are spread across Russia's resource-rich North, including the Arctic Yamal peninsula and the Karskoye sea shelf, and will serve as Gazprom's main production base after 2020, when its current fields will mature, he added. Gazprom declined to comment. Gazprom has said half of its production will come from new fields after 2020, when the company plans to produce between 650 billion and 670 billion cubic metres of gas per year, up from the 570 Bcm it aims to have by 2010. Earlier this month, Zubkov awarded Gazprom the rights to develop the large Chayanda gas field in Siberia in the country's first tender-free transfer. The world's largest gas company had previously asked the government to give it out-of-competition rights to develop Chayanda, in Yakutia in the country's Far East. Chayanda, which has estimated gas reserves of 1.2 trillion cubic metres, was added to Russia's list of "strategic" assets in December last year. The assets have been deemed necessary for Russia to survive independently and are off-limits for development by foreign companies. Natural Resources Minister Yuri Trutnev has previously said any field containing 70 million tonnes of oil, 50 billion cubic metres of gas, 50 tonnes of gold or 500,000 tonnes of copper should qualify as strategic.

Italian PM formally turns down Gazprom job offer

Italian PM formally turns down Gazprom job offer. © РИА Новости.ROME / MOSCOW, April 28 (RIA Novosti) - Italy's outgoing premier, Romano Prodi, has formally turned down an offer to head South Stream, a natural gas project by Gazprom and Italy's Eni, an Italian government spokesperson said on Monday. "Romano Prodi said he was flattered, but declined the proposal to head the company," the spokesperson said after a meeting between Prodi and Gazprom's CEO, Alexei Miller. He added that Prodi had drawn attention to progress in trade and political ties between Russia and Italy during the meeting. Earlier on Monday, Prodi's press secretary Silvio Siriana said that the Italian premier, also the former head of the European Commission, had turned down the presidency of South Stream and that it was "highly unlikely that anything will change." Prodi steps down in a few days to give way to media tycoon Silvio Berlusconi after his defeat in Italy's general election in mid-April. Gazprom said in a statement that Miller had also met with Eni president, Paolo Scaroni, to discuss ongoing cooperation in the South Stream project - a pipeline expected to pump 30 billion cu m of Russian gas to Europe annually from 2012 with an estimated cost of $14 billion - and joint oil and gas projects in third countries, including Libya. "The companies reaffirmed an interest in mutually beneficial, strategic cooperation in the energy sphere," the Russian monopoly said in a statement. "We are satisfied with the talks with Gazprom," an Eni spokesman said, without giving further details. The 900-km South Stream pipeline will run from Russia across the Black Sea to Europe. The Balkan nations Serbia and Bulgaria, as well as Hungary, have recently joined the project, seen as a rival to the EU and U.S.-backed Nabucco pipeline. Italy is Europe's second largest importer of Russian gas. It also buys gas from Algeria. In November 2006, Gazprom and the Eni group signed a deal allowing the Russian company to provide direct supplies to the Italian market. Supplies are expected to rise by 3 billion cu m a year by 2010. In 2007, the Russian monopoly supplied some 21.9 billion cu m of gas to Italy. Gazprom also plans to launch operations in Libya with Eni after it closed a deal with the African state's National Oil Corporation to engage in upstream and downstream oil and gas production. The deal was finalized during Russian President Vladimir Putin's visit to the country earlier this month.

Gazprom Making a Deal with Serbia?

serbiaApr. 25, 2008 - Kommersant - Russian Minister of Industry and Energy Viktor Khristenko will meet with Serbian Minister of Infrastructure Velimir Ilic, who told Serbian Vecernje Novosti newspaper in advance of the meeting that Russia is promising Serbia advantageous energy impost in exchange for a 51-percent share in the Serbian state-owned oil refinery complex NIS. This is the first time Russia has offered energy supply benefits outside the CIS. According to Ilic, the sides have already agreed on a 15-20 percent reduction in export duties on petroleum and natural gas for Serbia and the benefits will be modeled on the Customs Union with Belarus. Agreements on cooperation in the oil and gas sector were signed during the visit of Serbian President Boris Tadic and Prime Minister Vojislav Kostunica to Moscow in January. They included a supplemental protocol on the purchase of NIS by Gazprom Neft for €400 million and promised investment of €500 million. In addition, Gazprom promised that its South Stream gas pipeline would pass through Serbia and Serbia promised Gazprom two years of market protection for NIS products. Yesterday, the Serbian parliament postponed the possible ratification of the agreements reached in Moscow until a new parliament is formed on May 11. Last month, Serbian Minister of the Economy and Regional Development Mladjan Dinkic suggested that the new parliament should reconsider the deal. The Russian Ministry of Industry and Energy, which is managing energy relations between Russia and Serbia, yesterday would neither confirm nor deny the meeting between Russian and Serbian delegations. A ministry spokesman claimed to be unaware of any benefits offered Serbia.

Thursday, April 24, 2008

Gazprom voices concern over South Stream Serb section delay

MOSCOW, April 23 (RIA Novosti) - Russian energy giant Gazprom [RTS: GAZP] is concerned over delays in the ratification of the South Stream gas pipeline agreement by Serbia, a Gazprom official said on Wednesday. Russia and Serbia signed an agreement on January 25 as part of the South Stream project to construct a pipeline for the transit of Russian natural gas through Serbia to the Balkans and onto other European countries. The Serb section of the South Stream pipeline will be 400 km (250 mile) long. "There is some concern over this delay but we hope that the agreement will be ratified as early as possible," Alexander Medvedev, deputy chairman of the Gazprom management committee said. The Tanjug news agency reported early in April that Serbia's caretaker government had failed to ratify the January gas deal with Russia. Pro-Western ministers blocked a bid by nationalists to launch the ratification process for the key energy deal, stating that parliament and the government did not have the legal authority to undertake strategic agreements. Only six out of 22 ministers voted in favor of the deal, while others refused to discuss it until after early parliamentary elections due on May 11. In March, pro-Western President Boris Tadic dismissed parliament and urged new elections after former-nationalist premier Vojislav Kostunica refused to govern alongside Tadic's Democratic Party over disagreements on EU integration. The South Stream pipeline is expected to pump 30 billion cubic meters of Central Asian gas to Europe per year. Serbia and Hungary joined the project, already involving Italy and Bulgaria, earlier this year. Greece announced plans to join South stream last summer.

Home Gazprom Compensates for Production

Apr. 24, 2008 - Kommersant - The board of directors of Gazprom examined production sources through 2020 yesterday and instructed the company's management to verify the reality of their plans. This is the first time the company has indicated what resources it will use to compensate for the falling production at its current deposits. The monopoly intends to increase production from 548.6 billion cu. m. of natural gas to 650-670 billion cu. m. The government expects it to produce 6-12 percent over that. Western media and analytical agencies have expressed concern in recent years that Gazprom's falling production will endanger its ability to supply gas to the European Union by 2010. The gas fields that provide 550 billion cu. m. of gas today will produce 335 billion cu. m. by 2010. Gazprom explained that it will use its current deposits and fields being developed in the Nadym-Pur-Tazov region through 2010. The South Russia gas fields and the Kharvutinskaya area of the Yamburg field will be brought up to full production capacity in that time as well. Development will be continued at several currently operating fields. After 2010, Gazprom intends to guarantee production levels through the further development of the Nadym-Pur-Tazov region and the launches of the Bovanenkovo filed on the Yamal Peninsula in 2011 and Shtokman in 2013. It will also develop deposits in the Obskoi and Tazov Bays, in Eastern Siberia and in the Russian Far East. Gazprom's plans will be finalized in the general plan for the development of the natural gas sector through 2030, which requires conciliation with the Ministries of Industry and Energy and of Economic Development and Trade. The conception for the socio-economic development of Russia through 2020 suggests that Gazprom will produce 710-730 billion cu. m. of gas by that date. Gazprom stock rose 0.45 percent on the MICEX yesterday, as they MICEX index fell 0.44 percent, and it rose 0.67 percent on the RTS, while that index fell by 0.33 percent.

EU Not to Lower Energy Dependence on Russia

Apr. 22, 2008 - Kommersant - Unstable supplies of the Central Asian gas to Europe is one of the highlights for the EU nations that do utmost to lower dependence on Russia’s gas. But as long as Russia is the owner of the world’s biggest gas wealth, it will remain the key exporter of gas all efforts of the EU notwithstanding, the analysts say. For Europe, the issue turned into a priority in 2006 in the wake of the gas clashes of Russia and Ukraine. Nabucco project was elaborated to diversify the supplies but it won’t be easy to execute it, the analysts predict. The current plans are that Turkmenistan, Azerbaijan, Kazakhstan, Iran, Egypt and even Iraq will take part in Nabucco. But their gas won’t suffice to secure supplies via the pipeline worth $7.21 billion. So, the forecast of the analysts of the International Crisis Group is that big money will be injected in developing new fields and improving the infrastructure in Kazakhstan and Turkmenistan. What’s more, the skyrocketing growth in fuel prices changed force alignment on the global market of raw and the change wasn’t for the benefit of foreign companies, the analysts say, specifying that a nonresident company faces more difficulties in Russia today. In 1970s for instance, global oil giants controlled roughly 75 percent of crude oil fields and 80 percent of production. But they currently control only 6 percent of crude oil resources and 20 percent of the gas ones, and the national corporations have the remainder. For Russia's gas industry, the key problem is the delay in some projects. The launch of Shtokman field in the Barents Sea, which reserves are enough to meet gas requirements of the whole world during a year was slated for 2003. At present, however, Gazprom promised to start gas production in the region no sooner than in 2013. The dragging development of the Arctic shelf is another concern. Gazprom needed roughly 10 years to finally agree on the list of participants and find foreign partners.

What I Say, Not What I Do

// The price of the question
Apr. 21, 2008 - Kommersant by Alexander Gabuev - Russia has had intentions of forming a natural gas OPEC for several years now. Many attribute the idea to Ayatollah Ali Khamenei, who, seeing the success of the oil OPEC, was inspired to crease its gas sister. Tehran's plan, which saw the light of day in 2001, was not initially of great interest in Russia. But that changed in a few years. A reform of the natural gas market began in Europe, where Gazprom and the Russian federal budget along with it, derived a significant share of its income. The Europeans for some reasons adamantly refused to let Gazprom at the final consumer and demanded to dismember the monopoly into parts. That was when Moscow recollected the Iranian ayatollah's idea. A gas OPEC became a symbol the Russian gas industry used to intimidate its uncooperative European partners even as Russian authorities officially disowned all such plans. In 2006, for example, Valery Yazev, main Gazprom lobbyist in the State Duma, threatened that the new gas organization would be more effective and influential than OPEC. At the very same time, Arkady Dvorkovich, head of the expert department of the Russian presidential executive staff, gave assurances that the Kremlin was not going to form any gas OPEC. Meanwhile, relations between Gazprom and the European Union deteriorated sharply and the boogeyman began to take on visible form. At the beginning of last year, Russian President Vladimir Putin publicly supported the idea of an international gas cartel while speaking with the Emir of Qatar. Then Russia got busy with preparations for the forum of gas exporting countries in Doha and even became host of the next forum. Only the most impressionable of American congressmen were frightened by these threats. No one made any serious concessions to Gazprom, even though gas prices rose. Now history has gone so far that Gazprom and the Russian government are writing the charter for a new organization in an urgent rush. The date of the Moscow forum is approaching fast and it is time to have potential projects ready. The most serious problems come up here. Moscow cannot answer the main question – Is the project commercial or political? It is not clear how the new organization can be used to settle economic issues. The main participants in the forum are the current or future competitors with Gazprom in a number of issues – pipeline routes, division of the market for liquefied natural gas, and so on. The formation of a gas OPEC is unlikely to bring political benefits. No one argues the fact that Gazprom has become an important player on the diplomatic field. They await the pronouncements of Gazprom official spokesman Sergey Kupriyanov in Kiev and Tbilisi with as much or more seriousness as they listen to Russian Foreign Minister Sergey Lavrov. The level of relations with Ukraine, Georgia and the EU allows us evaluate the effectiveness of “gas diplomacy.” Paradoxically, it seems that Russia has the power to ruin the Moscow forum, for only rumors f a gas OPEC are in its interest, not a real organization.

Monday, April 21, 2008

Gazprom to exploit new gas reserves in Siberia

Gazprom to exploit new gas reserves in SiberiaApril 19, 2008 - Russia Today - The gas fields of Yamalo-Nenets account for more than 90 per cent of Russia’s gas output and about 20 per cent of global production. The 200 fields in this western Siberian region are owned and operated by Gazprom and its subsidiaries. But Russia’s gas leviathan says it’s time to find fresh reserves of natural gas in the energy-rich region. The Yamal peninsula is at the edge of the Earth, according to locals. But despite the remote location, this automous Russian region is at the heart of the country’s strategic gas reserves. Layers of permafrost hide trillions of cubic metres of gas – both Russia’s and Europe’s energy lifeline for years to come. This makes the Yamal peninsula a strategic gas resource for Gazprom and one of the most promising gas-bearing regions in West Siberia. So far, 26 fields have been discovered in Yamal containing more than 10 trillion cubic meters of proven gas reserves. “Gazprom aims at increasing natural gas output to satisfy both domestic and foreign demand. That’s why the Yamal peninsula is of strategic importance for us,” the company’s representative, Igor Morozov, said. Gazprom teamed up with the government of the Yamalo-Nenets Autonomous district to launch a sweeping development programme for the oil and gas fields of Yamal and its offshore areas until 2030. It starts with the exploration of the Bovanenkovskoye field - one of the peninsula’s largest gas deposits. “Our investment programme includes three stages - construction of field facilities at the Bovanenkovskoye gas deposit, construction of the pipeline of more than a thousand kilometers and a railway line of 500 kilometers,” Dmitry Boikov from the Yamal development department said. Gazprom plans to spend $US 40 billion building the necessary infrastructure. In the next decade, vast areas of wild tundra will turn into an industrial region with an LNG (liquefied natural gas) plant and even its own airport. Gas extraction is set to start in 2011. The potential capacity of the deposit is estimated at 140 billion cubic metres a year - enough to warm up both Russia and the West.

Thursday, April 17, 2008

Gazprom aims to pump African gas to Europe

Gazprom aims to pump African gas to EuropeApril 17, 2008 - Russia Today - Gazprom is in talks with Nigeria about participating in a multibillion dollar project to pipe Nigerian gas to Europe across the Sahara. Company chief Alexei Miller announced that the talks were ongoing while on a business visit to Libya. The Saharan project, with capital costs estimated at about $US 13 billion, would pump up to 30 billion cubic meters of gas to Europe via Niger and Algeria, starting in 2015. Gazprom says it has the expertise and experience to complete such major projects and is therefore naturally attracted to them. Speaking in Libya, Alexei Miller also said that Gazprom and Libya's national oil company decided to set up a joint venture. This will enable the two majors co-operate in oil and gas exploration, production, transportation and sales in the North African country. Miller has pointed out Gazprom would also like to co-operate with Libya in field of liquefied gas.

Merkel votes for Nord Stream

Merkel votes for Nord StreamApril 15, 2008 - Russia Today - German Chancellor, Angela Merkel, has once again defended Nord Stream, a natural gas pipeline that will run along the Baltic Sea bed from Russia to Germany. The Chancellor considers it to be strategically important for Europe's energy security. Speaking to journalists at the European Council’s Parliamentary Assembly in Strasbourg, Merkel said it is pointless to discuss whether the project is viable. From the very start, the project has met with fierce opposition from environmentalists. Russia’s energy giant Gazprom is the primary stakeholder in Nord Stream, while German companies E.ON, Ruhrgas and Wintershall share control over the rest. Construction of the pipeline is scheduled to start in 2010.

Gazprom to take over Serbian state oil firm after election

TRIPOLI, April 17 (RIA Novosti) - Gazprom [RTS: GAZP] announced it will close a deal to buy a controlling stake in Serbia's oil company Naftna Industrija Srbije (NIS) after the May 10 parliamentary election in the Balkan state. Gazprom Neft, the main oil-producing arm of Gazprom, signed a deal on the purchase of a 51% stake in Serbia's state-owned oil monopoly during talks between Russian President Vladimir Putin and his Serbian counterpart Boris Tadic in Moscow on January 25. "The agreement must be ratified. This is just a technical issue," Alexei Miller told reporters in Libya's capital, where he is staying as part of the Russian business delegation during Putin's visit to the North African country. Gazprom reportedly offered $580 million for a 51% stake in NIS, which produces about a million metric tons (7.3 million barrels) of crude annually, refines 7 million metric tons (51 million barrels) and has Serbia's largest network of filling stations.

Tuesday, April 15, 2008

State to seize control of Gazprom

State to seize control of GazpromApril 15, 2008 - Russia Today - The Russian government plans to transfer its gas assets, including those in distribution and refining, to Rosneftegaz and then swap its shares for those of Gazprom, according to reports. The move would allow the state to gain control over the gas giant. The bulk of Gazprom’s companies (it will soon own more than 70) are located in Western Siberia and the Far East, which is precisely what makes them so attractive. Denis Borisov, analyst at Solid Investment Financial Company, says as Russia moves closer to liberalising its domestic gas market, the role of distribution assets in the Far East increases exponentially. “Gas extraction in the Sakhalin area alone will grow significantly in the medium term and Gazprom needs to ensure this gas reaches end consumers,” Borisov said. According to the government decree signed last week, the deal will take place in six months or less. The state currently owns a 39 per cent stake in Gazprom through the Federal Property Agency.

Monday, April 14, 2008

Russian govt. hands major gas field in northeast to Gazprom

MOSCOW, April 14 (RIA Novosti) - The Russian government has decided to give a major natural gas field in the country's northeast to energy giant Gazprom without a tender, Deputy Industry and Energy Minister Andrei Dementyev said on Monday. Gazprom will pay at least $340 million for the license to develop the Chayanda gas field with proven reserves of 1.24 trillion cubic meters of gas and 50 million metric tons (about 370 million barrels) of oil, and will start its development already in 2008, Dementyev said. The deposit was included in the list of the country's strategic deposits in early December last year. The Chayanda field is intended to supply natural gas to Asia and Pacific countries, in particular to China. Alexander Ananenkov, deputy chairman of the Gazprom management committee said in late December that annual gas exports from Russia's Siberian and Far Eastern regions to the Asia-Pacific region could eventually top 50 billion cubic meters.

Austria Is Out of South Stream

Austria Is Out of South Stream// Gazprom can get to Italy through Slovenia
Apr. 14, 2008 - Kommersant by Natalia Grib - Gazprom is discussing a new route for the South Stream natural gas pipeline from Russia to the European Union, across the Black Sea, from Serbia to Slovenia and then into northern Italy. Gazprom head Alexey Miller has already received the support of Slovenian President Danilo Turk and Prime Minister Janez Jansa. The public announcement of those negotiations was meant to show Austria, with which Gazprom's relations had become tense, that South Stream could go around it. On Friday, Gazprom announced that its CEO, Alexey Miller, had been in talks with the president and prime minister of Slovenia in Ljubljana on the implementation of the South Stream project. The prospects for long-term cooperation between the countries in the sphere of natural gas were discussed at the negotiations. Slovenia, which is the chairman of the European Union at the moment, has been received a small supply of gas from Russia since 1978. Gazprom Export supplied the country with 590 million cu. m. of gas in 2007. Gazprom and Slovenian government spokesmen declined to comment on the negotiations in more detail. The possibility of Slovenia's inclusion in South Stream seems unexpected. It had been thought that the land route for the pipeline was decided” emerging from the Black Sea in Bulgaria, it was to cross Serbia into Hungary, then lead into Austria and from there to the north of Italy. Another branch was to cross Greece to the south of Italy. (That agreement is to be signed by the end of the month.) Mikhail Shein of BrokerCreditService, thinks Miller's announcement is a warning to Austria. The essence of the announcement is that the South Stream pipeline will change its course and go from Russia to Bulgaria, Serbia and Hungary, but them not to Austria, but to Slovenia and from there to northern Italy. According to East European Gas Analysis director Mikhail Korchemkin, relations between Gazprom and the Austrian OMV company soured in January just after they signed a cooperation agreement. According to their agreement, Gazprom should receive 50 percent of the Central European Gas Hub (the Austrian trading platform) in Baumgarten, and build an underground gas reservoir with OMV in Austria and neighboring countries. Within a few days, it became known that the monopoly was refusing to sell gas to traders who had reserved capacity on the Trans-Austrian gas pipeline, Korchemkin said. He repeated the words of Gazprom Export department head Vladimir Khandokhin that the company “won't sell gas to owners of pipeline capacity because it contradicts Gazprom's strategy of increasing direct sales to the final consumer.” Korchemkin said that Gazprom and OMV “simply didn't divide up the Austrian domestic market.” The South Stream pipeline project has a capacity of 30 billion cu. m. of natural gas per year. It is being implemented by Gazprom and the Italian Eni as equal partners. The pipeline is to go from Russia, across the Black Sea into Bulgaria and then in two branch into northern and southern Italy. It is due to be completed in 2013. Thus the final transit country for the northern branch of South Stream is in question. Neither Austria nor Slovenia has signed an agreement on entry the project, and Kommersant sources at Gazprom and Russian government agencies say that there may be more than one choice.

Thursday, April 10, 2008

Gazprom and Eni prepare to join forces to pipe natural gas from Libya to Europe

April 9, 2008 - International Herald Tribune by Judy Dempsey - BERLIN: Gazprom of Russia, the world's largest producer of natural gas, and Eni of Italy are preparing to join forces to pipe natural gas from Libya across the Mediterranean to Southern Europe. The ambitious deal would enable Russia to diversify its energy sources but also further increase Europe's dependence on Gazprom, which is state-controlled. After talks between Gazprom and Eni held last week in the wooded surroundings of Novo-Ogaryovo near Moscow, the official residence of President Vladimir Putin, both sides agreed in principle to work together in Libya. Paolo Scaroni, chief executive of Eni, said the deal with Gazprom would involve "the swap of assets outside of Russia." A statement issued by both sides after the meeting referred to "the realization of upstream joint projects in third countries." Upstream refers to oil exploration and production. Eni officials confirmed that these projects referred specifically to Libya. Some analysts describe Gazprom's moves in North Africa as a "pincer" attack on Europe. They say if Gazprom succeeds in Libya and in Algeria, where it is already competing for contracts, it could end up dominating the supply routes to Southern Europe. That would be in addition to its current ambitions in southeastern Europe and parts of Northern Europe, where Gazprom is planning to build an elaborate network of new natural gas pipelines. "Europe is sleeping as Gazprom makes every effort to become a global player and increase its grip on Europe," said Igor Tomberg, an energy expert at the Institute of World Economy and International Relations in Moscow. "It is very important what Gazprom is doing in Libya and other parts of North Africa," he said. "By diversifying its supplies and gaining even more access to European markets, geopolitically, it is surrounding Europe." The European Commission, the European Union's executive body, says it has been monitoring Gazprom's growing interests in North Africa. Andris Pielbags, the EU's energy commissioner, recently said he was concerned that Gazprom might try to create a natural gas cartel that would involve Algeria, where the Russian company is also seeking to win production contracts. Algeria supplies 13 percent of Europe's total natural gas needs. Russia already supplies more than a quarter of Western Europe's energy needs, and nearly 80 percent of Russia's natural gas exports are sold to Europe. But most current pipelines pass through intermediate countries like Ukraine, Poland and Turkey, which charge transit fees. The new Nord Stream and South Stream pipelines being built on the beds of the Baltic and Black Seas are aimed at reducing Russia's dependence on those transit countries. The South Stream pipeline in particular will compete directly with one backed by the EU, known as the Nabucco pipeline. Nabucco is designed to reduce the EU's dependence on Gazprom and Russia by having natural gas sent from Azerbaijan via Turkey across to Europe. But construction has yet to start and supply contracts to feed the pipeline have yet to be signed. Indeed, as talks over Nabucco drag on, several of the EU's 27 member states, particularly Italy but also Germany, Hungary, Bulgaria and Austria, continue to strike their own separate contracts with Gazprom. Such contracts have only weakened the EU's hand in devising a strategy for diversification or dealing with Russia. "As Nabucco shows, the EU has no serious and united energy policy," said Kevin Rosner, energy analyst at the independent Institute for the Analysis on Global Security in Washington. For some countries, including Italy, and most East European countries, the dependence on Russia for energy supplies can be as high a 90 percent. "Europe has few cards now to play," Tomberg, the energy expert in Moscow, said. "Russia wants to get the markets in Europe, like any big company. That is what it will try to do by establishing itself in Libya as well." Gazprom officials said the company was seeking new sources of energy and was behaving like any other big energy company. Libya has the fourth-largest natural gas reserves in Africa after Algeria, Nigeria and Egypt Gazprom bought exploration and development licenses last year in Libya and has said it plans to invest $300 million in the project over the next year. As it does so, Gazprom is getting help from Eni. Along with German and British energy companies, Eni rushed into Libya soon after Libya abandoned its nuclear, chemical and biological weapons program in 2003 and the United States lifted sanctions. Eni already holds a 50 percent stake in the Greenstream pipeline in Libya, which has an annual capacity of eight billion cubic meters, or 280 billion cubic feet. Eni also holds a stake in a liquefied natural gas plant in Libya, for transporting natural gas by ship, and a 33.3 percent stake in the Elephant oil field. Last year, the company said it had agreed to expand its contracts for the production and export of Libyan oil and natural gas for next 25 years. At the same time, Eni has been developing a close relationship with Gazprom. The two companies in 2006 forged a strategic partnership by agreeing to an asset swap. Eni entered the production, or upstream, business in Russia, a rare privilege for a foreign company, in return for Gazprom's entering the downstream, or retailing, distribution and transportation network in Italy. Eni also holds a 50 percent stake in the Blue Stream pipeline, which Gazprom built under the Black Sea a few years ago, and is involved in Gazprom's new South Stream project.

Wednesday, April 09, 2008

Moncrief suing Gazprom

April 3, 2008 - The Associated Press - German-based Moncrief Oil International said Thursday it had filed a lawsuit against Russian energy giant OAO Gazprom in a dispute over ownership rights to a Siberian gas field purchased in the late 1990s. The company, wholly owned by Fort Worth, Texas-based Moncrief Oil, said in a statement that it had filed the suit with the District Court of Tarrant County, Texas, over Gazprom's use of confidential information in a 2005 lawsuit concerning the dispute that was thrown out of the courts. Moncrief maintains it obtained 40 percent exclusive ownership of the Yuzhno Russkoye gas fields from Gazprom in exchange for providing the Russian energy conglomerate with know-how and business plans. The value of the stake is estimated at around $8.5 billion. In the statement, the company said that it "has obtained evidence that during the course of the proceedings, Gazprom used confidential information and exerted its influence on an important industry partner ... demanding that the partner use its influence with Moncrief to pressure (it) to drop the ongoing litigation." It did not identify the partner. Gazprom, the world's largest gas company, produces gas from Arctic and Siberian gas fields and also owns a distribution pipe network in Germany through its Wingas partnership with BASF's Wintershall division. Last year a German court rejected a lawsuit filed by Moncrief against BASF claiming it actively persuaded Gazprom to breach its contract with the Texas company.

Monday, April 07, 2008

Gazprom Chief Defends Company's Image

04/03/2008 - Moscow News by Anne Shupe - On Monday, Gazprom Deputy Chairman Alexander Medvedev addressed colleagues from European energy companies and journalists on the role of Gazprom in European energy security. His speech focused on two pressing questions recently dominating headlines: the way Gazprom sets price policies to CIS countries, and his analysis of the long-term impact of increased participation by Gazprom in European energy markets. Currently, Europe receives 26 percent of gas supplies from Gazprom and by 2020, experts expect this percentage to grow to 33 percent. Lamenting what he called "an absolutely disproportionally negative politicization" of oil and gas issues with Russia in European media, Medvedev accused journalists of creating fear among average citizens about the reliability of energy supplies from Russia. He underlined this point with the contradictory results of two recent opinion surveys: one of regular European citizens conducted by the Financial Times in January-February this year and another at a conference of leaders of European energy companies. While the majority of European citizens held a negative opinion about Russia's reliability regarding gas supplies, almost 60 percent of European energy company leaders said Russia is the most reliable supplier for the next five years. Recognizing the historical link between energy and politics, Med­vedev nevertheless distinguished between political discussion and unfounded politicization, adding that the latter disturbs long-term energy projects between Europe and Russia, which harms the interests of both countries. Denying any political motivation behind the recent March 5 supply conflict between Gazprom and Ukraine's Naftogaz, Medvedev said, "[Gaz­prom's] price policies are built upon universal, non-discriminatory principals" and that his company would "not supply gas without contracts." He attributed price differentiation "during this period of transition" (until 2011) among CIS countries to the length of agreements and their level of control over gas pipelines for transit to other countries. Medvedev furthermore emphasized that Russia will be purchasing supplies from Central Asia at European market prices. By 2011, Gazprom will be supplying all consumers in CIS countries at European market prices. "In the last 40 years, we have not once cut gas supplies to Europe," Medvedev reminded, as he renounced the "myth" of his company's "unreliability." Unlike the Ukraine, Russia has not broken any supply agreements with its partners. As international contracts legally bind Gazprom to fully compensate European buyers for all possible losses in the incidence of default, Gazprom will not and "cannot break its obligations of supplies to Europe." For this reason, Medvedev corrected the term "dependence of Europe on Russia" by deeming the situation "interdependence between Russia and Europe." Medvedev stressed the importance of signing new, long-term contracts with Europe, as these agreements affect plans for increasing internal production in Russia, which is needed in order to meet growing consumer demand. When European countries, however, encourage Gazprom to boost production while they internally discuss reducing reliance on Russian gas supplies, they send mixed signals to which Gazprom has difficulty reacting. Because public opinion influences internal political discussions, Medvedev ascribed particular significance to media portrayals of the company. If the media continues to cultivate a negative image of Gazprom among average European citizens without warrant, Medvedev said, the gas partnership between Russia and European countries could in fact be disrupted. But he stressed it wouldn't be the result of any initiative on Gazprom's part.

Gazprom poised to snap up Siberian gas field

Gazprom poised to snap up Siberian gas fieldApril 3, 2008 - Russia Today - Gazprom is well on its way to taking over the huge Kovykta gas field in Siberia. The deal is part of a strategic agreement between Gazprom, Britain’s BP and TNK-BP signed in June 2007. The current licence holder, TNK-BP, expects the sale to be completed by the end of April. The deadline for the Kovykta deal was put back several times for technical reasons. TNK-BP's management made it clear on Thursday that none of its shareholders were in talks to sell out the company - a joint Russo-British venture. The field’s reserves are estimated at 2 trillion cubic metres of natural gas, 2.3 billion cubic metres of helium and 115 million metric tons of gas condensate. Meanwhile, Gazprom has announced it is issuing a 1.5 billion dollar Eurobond to finance the company’s development and the restructuring of its short-term debt.

Gazprom takes 19th place on 2008 Forbes top 2000 companies

MOSCOW, April 4 (RIA Novosti) - Russian energy giant Gazprom took 19th place in the 2008 list of the world's top 2000 companies compiled by U.S. magazine Forbes. In the list posted on its website, Forbes ranked each company according to sales, profits, assets and market value. The world's top three companies are Britain's banking group HSBC, U.S. General Electric and the Bank of America. Gazprom's sales stood at $81.76 billion, and its net profit reached $23.30 billion. The company's assets were assessed at $201.72 billion. The gas monopoly ranks fifth on the Forbes list for market value with $306.79 billion. LUKoil, Russia's largest independent oil producer, is the second Russian company after Gazprom. There are 29 Russian businesses on the list in all. LUKoil is followed by electricity monopoly Unified Energy System (UES) of Russia, the country's largest state-owned bank Sberbank and the state-owned oil company Rosneft. The publication said the 2008 list includes companies from 60 countries, employing a total of 72 million people. The United States has the most number of listed companies. However 61 U.S. companies are missing from the 2008 rankings compared with 2007. The list also shows the increasing role of Chinese, Indian and Brazilian businesses. The number of Indian companies almost doubled to 48 against the 2004 ranking.

Gazprom promised assets in North Africa

04-03-2008 - MOSCOW. (Igor Tomberg for RIA Novosti) - President Vladimir Putin discussed energy relations with top managers of the Italian companies Eni and Enel at his Novo-Ogaryovo residence near Moscow on April 2. Eni said it would share its development quotas for Libyan gas deposits with Russia's Gazprom. Putin described the two countries' energy relations as a breakthrough. A year ago, Eni and Enel bought several companies, including Arcticgas and Urengoil, at an auction held to sell the assets of bankrupt oil company Yukos, as well as a 20% stake in Gazprom Neft, the oil division of Gazprom. They paid $5.83 billion for these assets. Eni also owns 50% of the Blue Stream gas pipeline under the Black Sea (the rest belongs to Gazprom). Enel holds a 59.8% stake in the wholesale generating company OGK-5 and a 49.5% stake in the Russian power supplier RusEnergoSbyt (RES). Eni is also involved in the South Stream pipeline, which was mentioned at the meeting with Putin as one of the most promising cooperation projects. The list has now been extended to include asset swap deals between Gazprom and Eni. Libya has become a highly promising source of oil and gas supplies for Europe now that sanctions against it have been lifted. Its proven natural gas reserves are estimated at 1.49 trillion cubic meters (the fourth largest in Africa after Algeria, Nigeria and Egypt). Libya annually produces 80.1 million tons (588.74 million bbl) of oil and 7 billion cubic meters of gas. It consumes 83% of its gas and exports the rest. Libya is ranked first in Africa and fifth in OPEC (after Saudi Arabia, Kuwait, the United Arab Emirates and Iraq) in terms of proven reserves of low-sulfur light oil (5.1 billion tons, or 37.48 billion bbl). Gazprom wants to have a share in Libyan deposits. Last year, it bought an exploration and development license for Block 19 there, with gas reserves comparable to the reserves of the South Russkoye gas deposit in the Yamal-Nenets Autonomous Area in the northeast Urals. It plans to invest $300 million in the project within four years. The gas monopoly acquired three projects in Libya in 2007. This March, it signed a production sharing agreement with Libya's National Oil Corporation (NOC) for a 10.3 square kilometer block in the Mediterranean Sea, where it intends to invest $200 million by 2012. Gazprom also recently received a 49.9% stake in two oil concessions from Germany's BASF under last year's asset swap agreements. Gazprom has long been eyeing Eni's projects in Africa, which it discussed in 2006, when Eni wanted to buy Gazprom's stake in the independent Russian gas producer Novatek. Eni holds a 50% stake in the Green Stream pipeline in Libya with an annual capacity of 8 billion cubic meters. It links two offshore deposits in the Mediterranean with Sicily. The Italian company also owns a stake in an LNG plant with a capacity of 3.2 million tons a year, a 33.3% stake in the Elephant oil deposit, whose reserves are assessed at 68 million tons (499.8 million bbl), and four exploration and development licenses for deposits in central Libya. Last fall, the Italian concern strengthened its foothold in Libya by agreeing to prolong its contracts for the production and export of oil and gas for 25 years. The agreements also provide for doubling the facility for Libyan gas exports to Italy by increasing the capacity of Green Stream by 3 billion cubic meters (bcm) (today its annual capacity is 8 bcm) and building an LNG plant with a capacity of 5 bcm. Eni and NOC are implementing these projects and using the reserves needed for them, such as the Bahr Essalam offshore deposit and the Wafa onshore deposit, on a parity basis. Apart from the Libyan projects interesting for Gazprom and its oil subsidiary, Gazprom Neft, Eni can offer them cooperation in Egypt, where it owns a stake in an LNG plant in Damietta. The plant's annual capacity is to be increased to 15 bcm. Eni also owns an exploration license for the El-Bougaz block in the Mediterranean. During the meeting at Novo-Ogaryovo, Eni CEO Paolo Scaroni outlined the assets his company is prepared to turn over to Gazprom. Apart from power plants in Italy, the Russian company can hope to get a third of the Elephant oil deposit in Libya. Gazprom's successful foray into North Africa is worrying Europe, which fears that the Russian gas monopoly will reinforce its already strong presence in the European gas market. Gazprom supplies 25% of EU's gas and plans to increase its share to one-third. The Libyan, and possibly Egyptian, projects will secure enough reserves for Gazprom's emergence on the Italian and Portuguese markets, while the Egyptian assets will help it get a foothold in Spain. Gazprom will greatly benefit from delivering gas to Europe from North Africa and strengthen its presence in the markets of southern Europe. A share in LNG production in North Africa will greatly contribute to Gazprom's plans, recently made public, to account for 25% of the global LNG market by 2030 and to stop using intermediaries for LNG deliveries to and sales in the United States. Igor Tomberg, Ph.D., is a senior research fellow at the Center for Energy Studies, the Institute of World Economy and International Relations at the Russian Academy of Sciences.

Thursday, April 03, 2008

Gazprom Ranked the 19th of Biggest World Companies

Apr. 03, 2008 - Kommersant - Russia’s gas monopoly Gazprom has been ranked the 19th in Global 2000 list of world biggest corporations compiled by the U.S. Forbes. Global 2000 has been made up in view of the aggregate evaluation of the sales, profit, capitalization and assets of each company. Gazprom’s capitalization amounts to $306.79 billion, the worth of its assets is estimated at $201.72 billion and the sales reach $81.76 billion. Gazprom was just the 44th in 2007 list. Britain’s HSBC Holdings leads on the asset worth of $2.349 trillion, yielding in capitalization ($180.81 billion) to Gazprom. U.S. General Electric enjoys the second position. Its assets are evaluated at $795.34 billion and capitalization stands at $330.93 billion. The Bank of America is the third leader with the asset worth of $1.716 trillion and the capitalization of $176.53 billion. The list of ten leaders also includes JPMorgan Chase, ExxonMobil, Royal Dutch Shell, ВР, Toyota Motor, ING Group, Berkshire Hathaway and Royal Bank of Scotland. Global 200 sets forth 29 companies of Russia, including LUKOIL, Sberbank, Rosneft, TNK-BP, Severstal, Baltika, AvtoVAZ, Polus Zoloto and VimpelCom.

Wednesday, April 02, 2008

'Gazprom link' to TNK-BP raids

02 April 2008 - Upstream OnLine - Russian security officers who raided BP's Russian venture's headquarters last month were looking for files relating to state gas monopoly Gazprom, industry sources said today. "They were scanning through pages of documents, looking for the word ' Gazprom'," one source familiar with details of the investigation told Reuters. "The only thing that seemed to interest the officers, based on their questions, was information on Gazprom," a second source said, commenting on March raids by 78 officers at TNK-BP's central Moscow offices. TNK-BP, co-owned by BP and a group of Russian billionaires, is subject of long-running speculation that the Kremlin wants the Russian owners to sell out to a state company to tighten further the state grip over the energy sector. Many analysts interpreted the raids by the Federal Security Service (FSB) and the subsequent arrest of an employee of TNK-BP on suspicion of industrial espionage, as a sign the Kremlin is stepping up pressure on TNK-BP and its owners. Gazprom, whose chairman Dmitry Medvedev will be sworn in as Russian president on 7 May, has long been seen as the main contender for a stake in TNK-BP as part of its drive to become a global energy player. But Medvedev denied last week that the raids on TNK-BP had an ulterior motive. One industry source, speaking on condition of anonymity, told Reuters Gazprom's management was concerned that during recent gas talks with foreign companies, counterparties appeared to have more information about Gazprom than would normally be expected. "This prompted the suspicion that confidential information about Gazprom had been leaked," the source added. Gazprom and TNK-BP declined to comment. A source close to Gazprom described the raids as a "one-off, local incident". "People should not read too much into it," the source said. Although Gazprom is seen as a front runner in the race for TNK-BP, some sources said they did not rule out state-run producer Rosneft as another potential contender. Rosneft's chairman and deputy head of the Kremlin administration, Igor Sechin, is expected to remain one of Russia's most influential men even after President Vladimir Putin steps down to become prime minister under Medvedev. Medvedev and Sechin are often pitted against each other as informal leaders of the so-called liberal and hardliner clans inside the Kremlin, which vie for control of key assets. "The mere fact that the investigators said they were looking for files about Gazprom does not mean that the request for the raid came from Gazprom," said one source. "It may actually mean the opposite because you know well that corporate wars in Russia tend to be very complicated." Putin's administration has poor relations with the UK, following a spat over the murder in London last year of a former Russian agent that provoked a mutual expulsion of diplomats. TNK-BP is the largest single British investment in Russia and Putin blessed the creation of the venture in 2003. "I see very little reasons why Gazprom would want to do it (step up pressure on TNK-BP) now. They are perfectly well positioned to do it after the (Medvedev) inauguration. So I'd rather bet on the other (Sechin) clan," one source said. Another way of looking at the struggle, industry insiders say, is to consider that if Gazprom wants to buy into TNK-BP, then either the Russian billionaires or BP has to sell. Neither group wants to give up its stake in such a large and highly lucrative company so the temptation for both BP and the oligarchs is to try to cut their own deal with the Kremlin, which would involve removing the other shareholder. Some sources claim a dispute between the Russian shareholders and BP has been rekindled. "I would not fully exclude this. The company itself has become a bargaining chip in this game," a TNK-BP source said. TNK-BP Russian shareholders, who include billionaires Mikhail Fridman, German Khan, Viktor Vekselberg and Len Blavatnik, have repeatedly denied plans to sell out.

Gazprom aims to boost gas production

Gazprom aims to boost gas productionApril 2, 2008 - Russia Today - Gazprom has spent the last few years focusing on acquiring new assets - including majority stakes in the Sakhalin 2 project and the Kovykta field in Siberia. But the company is now planning to take a break from its buying spree in order to work on increasing production. The dominant position of the Russian energy giant is set in stone. Gazprom is the world's largest natural gas producer and has a monopoly on exports from Russia. It has been busy increasing its portfolio, but industry experts say the time is now right for the company to change direction. Gazprom is taking a break from acquisitions. Instead, it plans to invest boost inward investment by nearly 40 per cent over the next two years. That’s in order to meet increasing demand for energy at home and abroad. Gazprom’s new strategy means raising production, or maintaining production while they absorb declines in their main fields. It also plans to build up more pipelines in order to ship more products directly to Europe. Although some European clients have been calling for shorter contracts to reduce their dependence on Gazprom, the company itself says the long-term contracts, usually for 25 years, have to stay. Gazprom’s Deputy Board Chairman Aleksandr Medvedev says contract security is essential. “We cannot invest billions of dollars without clarity from our clients. Some in Europe urge us to boost production, while speaking at home of reducing their dependence on Russia,” Medvedev said. Gazprom already has around 25 percent of the European gas market. And this week it announced plans to have the same share in the global Liquefied Natural Gas (or LNG) market by 2030. Industry analysts say Gazprom must stay focused on its core business and pump more pipeline gas to increase profitability in the shorter-term.

Tuesday, April 01, 2008

Gazprom eyes 25% of LNG market

01 April 2008 - Upstream OnLine - Russia's Gazprom wants to supply a quarter of the world's liquefied natural gas needs by 2030 to diversify away from pipeline gas supplies and become a global energy player, a Gazprom executive said today. Gazprom, the world's largest gas producer, will add some 90 million tonnes of the super-cooled fuel to its production by 2030, Gazprom's deputy head Valery Golubev told reporters at an energy forum in Moscow. Gazprom already supplies a quarter of Europe's gas needs via major pipelines but has no LNG production of its own. It will get the first volumes next year when it launches its Sakhalin-2 project together with Royal Dutch Shell and Japanese outfits. The project in the Pacific waters will ultimately produce 9.6 million tonnes, entitling Gazprom to 4.8 million tonnes of LNG per year. It also wants to launch its landmark Shtokman Barents Sea field in 2013 with first LNG production expected at a few million tonnes. The development of Shtokman is expected to take four phases and over $40 billion which should ultimately produce between 30 million and 40 million tonnes of LNG a year. Together with Sakhalin it would represent around half of Golubev's projections, who did not say where the other volumes would come from, reported Reuters.

Gazprom reveals Nord Stream pipe blowout

March 31, 2008 - Russia Today - The cost of the Nord Stream gas pipeline has risen to $US11.7 BLN, according to Gazprom, which has a controlling stake in the project. The original cost was $US6.3 BLN. The increase comes from added expenses in building two lines of the 1,200-kilometre pipeline. Construction of the onshore segment began in 2005 with an estimated total project cost of $US6.3 BLN. Gazprom revised the cost estimate 6 months ago to $US9.5 BLN. Construction of the underwater segment, which will link Russia and Germany across the Baltic Sea, has yet to begin. Nord Stream shareholders will provide 30% of project cots, with the remaining left to be borrowed.

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