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Friday, June 27, 2008

Gazprom votes in new board

Gazprom votes in new boardJune 27, 2008 - Russia Today - Russian energy giant Gazprom has announced its new board of directors. Russian First Deputy Prime Minister Viktor Zubkov, who was elected Chairman of the Board, and Economic Development Minister,Elvira Nabiullina, are the only new faces following Friday's election. They have replaced Dmitry Medvedev, who as Russian President is not allowed to fill any other posts, and former Trade and Economic Development Minister, German Gref, who now heads the Management Committee of Sberbank. The other nine members of the board have kept their posts: Gazprom’s head Aleksey Miller, who got most votes, Aleksandr Ananenkov, Deputy Chairman of Gazprom's Management Committee, Burckhard Bergmann, Chairman of the Executive Board of E.ON Ruhrgas AG, member of the Executive Board of E.ON AG, Boris Fyodorov, Gazproms shareholder, Farit Gazizullin, former Property Minister, Elena Karpel, Head of the Department for Pricing and Economic Expert Analysis, Viktor Khristenko, the Industry and Energy Minister Mikhail Sereda, Deputy Chairman of Gazprom’s Management Committee, Head of Administration of Gazprom’s Management Committee Igor Yusufov, Special Envoy of the Russian President for International Energy Cooperation and Ambassador at Large of Russia’s Ministry of Foreign Affairs.

Gazprom has cash waiting for TNK-BP gas field

Gazprom has cash waiting for TNK-BP gas fieldJune 26, 2008 - Russia Today - Gazprom says it has the money to buy the Kovykta gas field from owners TNK-BP. The state-controlled energy giant says it will not need to borrow to make the purchase. Despite being in debt to the tune of US$ 37 billion, experts say Gazprom has enough cash for the deal. Gazprom has accumulated massive debt after aggressive acquisitions over the past two years, including a share in the Sakhalin-2 gas project and power generating assets. The billion-dollar Kovykta gas field is near the top of the list of Gazprom’s possible purchases. Gazprom’s deputy CEO, Andrey Kruglov, says it’s not a matter of money, but getting an agreement. "We don’t need to attract any loans. We're ready to pay for it whenever our negotiating parties and colleagues are ready,” said Kruglov. It seems that Gazprom isn't planning any large acquisitions till the end of the year and won’t attract significant loans. “The volume of Gazprom's net debt of 37 billion dollars may decrease slightly by the end of 2008. We plan to refinance or redeem with our own funds the bulk of loans raised in 2007,” said Kruglov. Market watchers say even if the company doubles its net burden it won’t undermine its credibility as a borrower. “Amid growing energy prices, Gazprom’s net profit this year may reach 30 billion dollars and EBITDA of 45 billion. A borrower is regarded as reliable if its debt to EBITDA ratio is two to one. So Gazprom could borrow twice as much,” says analyst Denis Borisov. However, experts warn Gazprom may face problems with refinancing if the global liquidity crisis worsens. They see a debt of around 25 billion dollars as an optimal level for the company in the current market environment.

Gazprom to Open Stations in Europe

June 27, 2008 - Kommersant - Gazprom intends to contact its European partners with the proposal to develop a project to create a joint network of natural gas filling stations in Europe, Alexey Miller told the monopoly’s annual meeting today. He also said that Gazprom intends to acquire and build electric facilities abroad. Miller said that Gazprom plans to “develop a presence in electric energy both in Russia and abroad.” “We plan to study investment in foreign electric assets with the goal of strengthening Gazprom’s position,” Miller said. Gazprom is prepared participate independently in the construction of combined-cycle gas turbine plants abroad. The success of the projects will be determined by the growth of profitability of gas deliveries to the region and receipts from the sales of electricity, Miller said. According to Miller, Gazprom will acquire and build assets in regions with rapidly growing demand for electricity, high electricity prices and a shortage of generating capacity.

Gazprom chief sets out world vision

June 26 2008 - Financial Times by Ed Crooks, Carola Hoyos and Catherine Belton - Gazprom set out a vaulting vision of its future status as the world’s most powerful energy company on Thursday as it belittled Opec, saying the oil producers’ cartel had in effect lost control of the market. Alexey Miller told the Financial Times that the world was undergoing “a great surge in oil and gas prices . . . which will end with prices at a radically new level”. He added that even Opec had no real influence on prices. “Not a single decision has been passed of late that would really influence the global oil market.” Mr Miller continued: “In the coming years Gazprom will be not just a major company in the world, but the most influential in the energy business,” adding that its target was to reach a market capitalisation of $1,000bn. He also said inter­national energy companies should invest in Russia only alongside state-controlled companies, such as Gazprom, if they wanted to succeed. He stressed that the Russian market was increasingly attractive to Gazprom as domestic gas prices rose, but also talked of plans for expansion in the Americas, Asia, Europe and Africa. “We see North America as a region of our strategic interests,” he said, arguing that Gazprom was “creating a new configuration of gas supplies” to the US and Canada. Gazprom hopes to serve the North American market from 2014 with liquefied natural gas from its proposed Shtokman project off Russia’s north coast. “We are currently assessing several options of accessing the North American market,” he said, adding that Gazprom had received “many interesting proposals” from Canadian companies. He also confirmed that Gazprom was interested in the proposed Alaska gas pipeline. Mr Miller said Gazprom was “quite close” to deals in Nigeria on joint ventures for production, gas utilisation to avoid flaring, and electricity generation. It also hopes to join in building a gas pipeline for exports from Nigeria. But competition for gas and other energy resources was growing, he said, and stood by his prediction that the price of oil would hit $250 a barrel next year. He also warned that Russian domestic demand was an increasingly potent destination for Gazprom’s production. “Europe and Asia [have] encountered a new, powerful competitor, which is the Russian domestic market,” he said.

Gazprom eyes Asian LNG partners

24 June, 2008 - Upstream OnLine - Russian gas monopoly Gazprom will consider inviting South Korean and Japanese partners to process gas in the country's far east as it prepares to become a major supplier of liquefied natural gas. Gazprom executives said today that it was also exploring ways to supply gas to South Korea from the Russian city of Vladivostok, as part of an agreement with state-run Korea Gas that will run until 2013, wrote Reuters. Deputy chief executive Alexander Medvedev told a news conference a pipeline would be the cheapest way for Gazprom to move gas to South Korea, but that the division of Korea made this difficult. North Korea lies between Vladivostok and South Korea. "The idea of sending gas by pipeline to South Korea clashes with the divison of the two Koreas," Medvedev said. "The economical delivery of gas by pipeline needs to be resolved by the Koreans, and that's also a question of their relations with the United States," he said. Korea Gas is seeking to import 1.5 million tonnes a year of natural gas from Sakhalin-2. Gazprom plans by 2020 to supply 21 billion cubic metres of LNG from a new plant on the island of Sakhalin to countries in the Asia-Pacific region. By 2030, it plans to raise supplies to 28 bcm per year. In a statement distributed to reporters at the news conference, Gazprom said it was considering partners for gas projects in the Russian Far East. "We are working out the possibility of the participation of Japanese and South Korean companies in projects to create gas processing and petrochemical production in the east of Russia," Gazprom said in the statement. Gazprom plans to start shipping LNG from its Sakhalin-2 project by the beginning of 2009. Meanwhile, from Sakhalin-1, Medvedev said it was unlikely gas would be sent to China, contrary to a preliminary agreement signed by its partner in the development, ExxonMobil. "We don't see any prospects for sending gas from Sakhalin-1 to China," Medvedev told the news conference. ExxonMobil said in February gas from Sakhalin-1 could be exported as the Russian market would not require all of the gas produced there. The US company signed a preliminary agreement in 2006 to sell gas to China, but Gazprom last year asked the Russian government to block ExxonMobil from selling Sakhalin gas in Asia, saying production was required for the domestic Russian market.

Italian firm signs deal to lay Nord Stream gas pipeline

Saipem logoMOSCOW, June 24 (RIA Novosti) - An Italian engineering company said Tuesday it had signed a contract to lay the first section of the Nord Stream gas pipeline. Saipem, 43% of whose shares are owned by the Italian energy giant Eni SpA, agreed the deal - worth more than $1 billion - with Nord Stream AG, the operator of the pipeline construction project. The first part of the 1,200 km (746-mile) pipeline, which will run from Russia to Germany under the Baltic Sea, is scheduled to start pumping gas in 2010. Russian energy giant Gazprom holds a 51% stake in operator Nord Stream AG, with Germany's BASF and E.ON each holding 24.5%.

German firm wrangles with Gazprom over gas field

German firm wrangles with Gazprom over gas fieldJune 24, 2008 - Russia Today - Germany energy company E.On Ruhrgas is hoping to finalise an asset swap with Gazprom for 25 per cent of the Yuzhnorusskoe gas field by the end of the year. But the chairman of E.On says it may drop the idea of buying a stake in one of Russia’s larges gas fields if Gazprom rejects its new offer. For four years E.On Ruhrgas has been trying to become Gazprom's partner in developing Yuzhnorusskoe. The gas field has proven reserves of 700 billion cubic metres of gas. In principle Gazprom have agreed to exchange a 25 per cent stake in Yuzhnorusskoe for E.On assets in Europe but so far the two parties have failed to agree terms. Bernhard Reutersberg, Chairman of E.On Ruhrgas, says the value of Yuzhnorusskoe depends on oil prices. “If you look at the development of these prices within the last four years, then of course you’ll see that this gas field is increasing in value. And, of course, you need to fill the gap with new assets”. In December last year E.On offered Gazprom its European electricity production assets and underground gas storage facilities. After almost six months Gazprom announced that the structure of the assets had once again been changed. E.On’s Reutersberg says the negotiations can’t continue forever. “They will be over when we come to a solution or if we have no hope that there will be a solution. Both options are possible, but I’m positive that we’ll come to an agreement this year”. Gazprom says it will finalise the deal with E.On this year. But as energy prices continue to grow, market watchers doubt that the two parties will agree on asset valuation any time soon.

Monday, June 23, 2008

S.Stream to supply over 50% of gas under current Gazprom contracts

MOSCOW, June 23 (RIA Novosti) - Natural gas to be supplied by the South Stream pipeline that Gazprom is building under the Black Sea will meet more than 50% of the energy giant's existing obligations, a Gazprom official said on Monday. The $14 bln South Stream pipeline is expected to annually pump 30 billion cubic meters of Central Asian gas to southern Europe. Serbia and Hungary joined the project, already involving Italy and Bulgaria, earlier this year. Greece announced plans to join South Stream last summer. Sergei Korovin, deputy head of the Gazprom department for foreign economic relations, said that the remaining part of the natural gas would be supplied under new contracts for gas consumption in Europe. Korovin said the South Stream gas supplies were expected to begin in 2013-2014, adding that Gazprom intended to set up joint ventures with all the countries involved in the project.

Dutch join Gazprom’s pipeline project

Dutch join Gazprom’s pipeline projectJune 20, 2008 - Russia Today - The Dutch national gas company Gasunie has joint the Nord Stream gas pipeline project. The announcement came from Russian gas giant Gazprom. The Dutch company gets 9% in the joint enterprise, reducing the shares of E.On Ruhrgas and Wintershall Holding to 20% each. Gazprom keeps its 51% stake. The Nord Stream pipeline is to transport Russian gas to European customers, bypassing transit countries. It will run over the seabed of the Baltic Sea. Gasunie is the operator of one of the biggest European gas networks with a total length of over 12,000 kilometres.

Gazprom Neft eyeing foreign assets

RBC, 20.06.2008, Moscow 16:25:27.Gazprom Neft is looking at the possibility of acquiring production and refining assets abroad in an urge to expand its oil processing business, the company's President Alexander Dyukov told the annual general meeting. Dyukov did not specify the exact locations, but confessed that the company was interested in all the three major export directions: Bourgas, Primorsk and the eastern direction (ESPO). In addition, Gazprom Neft is interested in some projects in Iraq, Venezuela and Africa. Dyukov noted that the company's priority areas will be set forth in its development strategy until 2020, which is to be finalized this year. When asked about the possibility of asset swaps, Dyukov said that in theory such an option was possible, but he was not aware of any such talks. He assumed that Gazprom would most likely want to retain control over Gazprom Neft.

Gazprom Neft, Chevron negotiate new joint venture in West Siberia

MOSCOW, June 20 (RIA Novosti) - Gazprom Neft [RTS: GAZP], the oil arm of Russian energy giant Gazprom, is negotiating a second joint venture with Chevron to develop an additional oil field in West Siberia, its president said on Friday. Gazprom Neft and the U.S. oil major opened their first joint venture, Severnaya Taiga Neftegaz, last November, and hold 75% and 25%, respectively. "We are negotiating another area in West Siberia, Russia. Although we have received no notification from Chevron on the issue, on the whole they are ready [to set up a joint venture]," Alexander Dyukov said. The official said Gazprom Neft was keen to develop offshore areas in the Barents and Kara seas in northwest Russia, and had also been eyeing oil fields in Venezuela and Africa. Gazprom Neft, in which Gazprom has a 75% stake and Italy's ENI another 20%, produced 42 million metric tons [308 million barrels] of crude in 2007. Gazprom blocked Chevron from the Shtokman project to develop the Arctic gas field with estimated gas reserves of 3.7 trillion cubic meters last October. The U.S. oil company has long been seeking to enter Russia's lucrative oil and gas market.

Gazprom Comes Up in WTO Negotiations

June 19, 2008 - Kommersant - The latest obstacle on Russia’s long road to World Trade Organization membership has been put there by Germany, which raised the question of Gazprom’s status as a state trade organization with a trading policy that should be regulated by the WTO. The law limiting foreign investment in strategic sectors in Russia, which came into force last month, also elicited a howl of protest. It had not been translated into English. European Trade Commissioner Peter Mandelson will discuss Russian duties on timber in Moscow today. Russia does not intend to make concessions. Alexey Portansky, head of the information bureau for Russia’s accession to the WTO, commented for Kommersant, “As for Gazprom, the question is not likely to be as pressing for Europe. That is more a question for Saudi Arabia and the United States. Gas supply is the only thing that might be of interest to Germany, but the status of the enterprise is not within the sphere of Germany’s competence!” The discussion of Gazprom is not welcome news for Russia. Russia does not acknowledge Gazprom as a state trading organization, even though it is legislatively defined as the monopoly natural gas exporter. “State trading organizations” are regulated by the so-called GATT 1994 agreement, which makes export prices and subsidies subject to WTO negotiations. It also requires that such organizations make imports and exports exclusively on a commercial basis. The new format for cooperation between Gazprom and German energy giant E.On will be announced today, while Mandelson is in Moscow. It is possible that the discussion of Gazprom in the WTO context was part of the trading over that new format. Observers say the discussion of Gazprom could last for some time.

Friday, June 20, 2008

Gazprom Offered Role in U.S. Plant

16 June 2008 - The Moscow Times - ExxonMobil offered Gazprom a role in a liquefied natural gas re-gasification terminal on the U.S. East Coast, Gazprom deputy chief executive Alexander Medvedev said Wednesday, Itar-Tass reported. Medvedev said Gazprom could have a role in the terminal's facilities or become an investor, Itar-Tass reported. ExxonMobil hopes to build a $1 billion terminal off the New Jersey coast to receive and re-gasify LNG. The company has not yet received the permits for the BlueOcean Energy terminal, which would have the capacity to supply about 1.2 billion cubic feet of gas per day to New Jersey and New York. Exxon was not immediately available for comment. But Andrew Swiger, the executive who runs Exxon's natural gas business, said last week that the company was looking at a number of options to secure a gas supply for the terminal. "It may well wind up being an integrated value chain project. It may be something else," he said.

Wednesday, June 18, 2008

Miller distances Gazprom from TNK-BP row

BRIEFLY 17 June 2008 - Upstream OnLine - Gazprom boss Alexei Miller said the company had never never offered to buy a stake in oil producer TNK-BP and denied any link to the intensifying row between TNK-BP's Russian co-owners and UK supermajor BP. "Gazprom has never offered and has never received offers to buy TNK-BP's shares and has no links to the conflict at the company," Miller told Reuters.

Gazprom expects $64 bln gas sales outside CIS in 2008

MOSCOW, June 18 (RIA Novosti) - Gazprom plans to export over 163 billion cubic meters of natural gas worth an estimated $64 billion to non-CIS countries this year, the Russian gas monopoly said on Wednesday. The average export price is expected to stand at $401 per 1,000 cu m. The company delivered 150.5 billion cu m of gas to central and western Europe in 2007, a 0.4% decline on the previous year due to the warm winter. However, sales revenue increased 5% to a record $39.5 billion last year, with the average export price at $272.8 per 1,000 cu m. In 2007, natural gas accounted for 13% of income from Russian exports.

Gazprom to increase gas reserves by 10 trln cubic meters by 2020

MOSCOW, June 17 (RIA Novosti) - Russian energy giant Gazprom will increase its natural gas reserves by 10 trillion cubic meters by 2020, Vlada Rusakova, a board member, said at a conference on Tuesday. "The average increase of [natural gas] reserves will reach 10 trillion cubic meters by 2020," she said. Rusakova said Gazprom expects its natural gas output to be 640 billion cubic meters by 2020, while its gas production could reach 670-680 billion cubic meters through new projects. Investment has been fixed at 700 billion rubles ($29 billion) annually for 2009-2010. The Russian gas monopoly has also forecast an increase in natural gas exports to northeast Asia by 2020, which should be the equivalent of around half of its European supplies. Rusakova added that China was a lucrative market, where demand for natural gas could reach 250 billion cubic meters by 2020. Gazprom is also eyeing Japan for LNG supplies, the official said. The energy giant also plans to increase oil production by 4% annually. Under an oil business development program, Gazprom should raise crude output from 46 million metric tons (338 million bbl) in 2006 to 100 million metric tons (735 million bbl) in 2020, the official said. The company produced 548.6 billion cubic meters of gas in 2007, and expects a 2.3% rise this year.

Monday, June 16, 2008

Gazprom to invest up to $420 billion in projects by 2020

MOSCOW, June 16 (RIA Novosti) - Russian energy giant Gazprom intends to invest between 8 and 10 trillion rubles ($338-422 billion) in a range of projects between 2009 and 2020, a company spokesman said on Monday. "According to our forecasts, investment will be between eight and ten trillion rubles by 2020, and annual investment is estimated at some 700 billion rubles," Sergei Pankratov, the head of Gazprom's further development department, said during a briefing. He said most of the funds would be invested in transportation projects. He also said that no more than 30% of the sum would be invested in production. Up until 2013, new projects related to development on the Yamal Peninsula in northwest Siberia, which holds Russia's largest natural gas reserves, and on the continental shelf, will be the main target for investment, the official said. The company plans to increase its annual natural gas output by 100 billion cubic meters by 2020 via its new projects, which are expected to account for about a half of Gazprom's gas production by that time. The company produced 548.6 billion cubic meters of gas in 2007, and expects a 2.3% rise this year.

Sakhalin Energy Raised $5.3bn

June 16, 2008 - Kommersant - Sakhalin Energy, Japan’s JBIC and an international consortium of commercial banks have agreed in Tokyo on the project funding of the second stage of Sakhalin-2, Sakhalin Energy announced. Under the agreement, JBIC will loan $3.7 billion to Sakhalin Energy and another $1.6 billion to the consortium of Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank Ltd, Sumitomo Mitsui Bank Corp and BNP Paribas. The money will go to fund the final stage of construction, testing and putting into operation the infrastructure of Sakhalin-2 second stage. The amount is the record in Russia raised for project funding. Sakhalin-2 project, which budget is estimated at roughly $20 billion, provides for development of Piltun-Astokhskoe and Lunskoe fields with the aggregate recoverable reserves of 150 million tons of crude oil and 500 billion cu meters of gas. The natural gas from Sakhalin will go to energy companies of Japan, Korea and the United States. The current holders of Sakhalin Energy are Gazprom (50 percent + 1 stock), Royal Dutch Shell (27.5 percent), Mitsui (12.5 percent) and Mitsubishi (10 percent).

Gazprom to boost gas production

RBC, 16.06.2008, Moscow 16:32:53.Gazprom plans to increase natural gas production by 100bn cubic meters by 2020 thanks to the development of new gas fields, the deputy head of the Russian energy holding's strategic development department Sergei Pankratov told a press conference in Moscow today. He explained that the implementation of new projects, for which Gazprom had already received licenses, was expected to result in a rise in gas output by 300bn cubic meters. However, the total increase in gas production will amount to a mere 100bn cubic meters, due to a reduction in gas output in already existing gas fields.

Sakhalin II operator secures $5.3 bln in project financing

MOSCOW, June 16 (RIA Novosti) - Sakhalin Energy said on Monday it had signed a $5.3 billion deal to finance the 2nd phase of the Sakhalin II oil and gas project off Russia's Pacific Coast. Under the deal, the Japan Bank for International Cooperation, Japan's leading financial institution, will provide $3.7 billion for Sakhalin II. A consortium of international commercial banks will contribute an extra $1.6 billion, Sakhalin Energy, which is the project's operator, said. The Sakhalin II oil and gas fields have estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas. "The funds will finance the final stages of construction, testing and commissioning of Sakhalin II, Phase 2, which will soon start delivering liquefied natural gas to customers in Japan, Korea and the North American West Coast," Sakhalin Energy said in a statement. The Sakhalin II project, with an estimated cost of $20 billion, is designed to produce LNG at two fields off Sakhalin. After Russian energy giant Gazprom bought a 50% stake plus one share in the project for $7.45 billion in late 2006, Royal Dutch/Shell, Mitsui and Mitsubishi now own 27.5%, 12.5% and 10%, respectively. Japanese, U.S. and South Korean companies have already paid for the bulk of the Sakhalin II project gas 25 years in advance. Sakhalin is some 10,000 km (6,200 miles) east of Moscow. The island was once a Soviet military outpost and was off limits to foreigners for many years. The development of the oil and gas fields has been criticized by environmental groups who say that it could lead to the extinction of the world's last Western Pacific gray whales.

Gazprom ditches Yamal LNG plans

16 June 2008 - Upstream OnLine - Russian gas export monopoly Gazprom said today it has dropped plans to produce liquefied natural gas on the Yamal peninsula with Anglo-Dutch supermajor Shell. Vasily Podyuk, head of Gazprom's production department, told Reuters tough weather conditions would make production of LNG too complicated on the gas-rich Arctic peninsula. "This option has been discussed, but at the moment we have dismissed the project due to complicated ice conditions," Podyuk said during a news briefing. Shell said this month it had signed a memorandum with Gazprom on co-operation on the development of gas reserves on the Yamal peninsula and elsewhere, including the possible construction of gas liquefaction facilities. Speaking at the energy forum in St Petersburg this month, Shell chief exectuive Jeroen van der Veer said Shell and Gazprom were discussing the possibility of working together on the construction of an LNG plant on Yamal. Shell declined to comment on Podyuk's remark. Gazprom views Yamal as its key source of future gas output as production is falling at mature deposits in West Siberia. The company has said new deposits on Yamal and in East Siberia and the Russian Far East will account for half of its output by 2020. Podyuk said Gazprom planned to produce between 250 billion and 300 billion cubic metres of gas on Yamal after 2020. The company expects its total gas output to rise to between 650 Bcm and 670 Bcm by 2020, up from 561 Bcm forecast for this year. Gazprom is operating Russia's two first LNG projects: Sakhalin 2 on the Pacific, which is scheduled to start LNG exports early next year, and Shtokman on the Barents Sea, to be launched in 2013. Shell became Gazprom's partner in Sakhalin 2 in 2007, when Shell - then the project leader - agreed to sell control to the gas giant following a protracted dispute with the Russian authorities.

Thursday, June 12, 2008

Gazprom to Increase Nord Stream Capacity if Needed

BRIEFLY 11.06.2008 - RZD News - Gazprom does not rule out the possibility of raising the capacity of the Nord Stream gas pipeline, if needed, the gas holding's chief executive Alexei Miller told reporters as part of a meeting of the European Business Congress (EBC). Once Nord Stream is built, it will deliver at least 55bn cubic meters of gas per year to a number of European markets, such as Belgium, France, Great Britain, Germany, among others, he said, adding that, if needed, that capacity could be increased, reports RBC.

Exxon offers Gazprom LNG terminal deal - Itar-Tass

MOSCOW, June 11 (Reuters) - Exxon Mobil Corp offered Russia's Gazprom a role in a liquefied natural gas regasification terminal on the U.S. East Coast, Itar-Tass quoted Gazprom Deputy Chief Executive Alexander Medvedev as saying on Wednesday. Medvedev said Gazprom could have a role in the terminal's facilities or become an investor, according to Russian news agency Itar-Tass. Russia's Gazprom, the world's largest natural gas producer, has been expanding steadily around the globe, with projects in the Middle East, Africa and Europe. Exxon Mobil hopes to build a $1 billion terminal off the New Jersey coast to receive and regasify liquefied natural gas. The company has not yet received the permits for the BlueOcean Energy terminal, which would have the capacity to supply about 1.2 billion cubic feet of natural gas per day to New Jersey and New York. Exxon was not immediately available for comment. But Andrew Swiger, the executive who runs Exxon's natural gas business, told Reuters last week that the company was looking at a number of options to secure a gas supply for the terminal. "It may well wind up being an integrated value chain project. It may be something else, but we are working a number of things," he said. (Writing by Melissa Akin and Michael Erman in New York; Editing by Robin Paxton and Gerald E. McCormick)

Gazprom poised to be world’s biggest company: CEO

Gazprom poised to be world’s biggest company: CEOJune 10, 2008 - Russia Today - The Chief Executive of Gazprom says the state-run energy giant will become the world’s largest company. Speaking at a European Business Congress in France, Aleksey Miller said Gazprom will be worth a massive $US 1 trillion in seven to eight years. According to the company’s financial report for first quarter 2008, its current market capitalisation stands at $US 298 billion. Miller predicted that oil prices will keep climbing to reach $US 250 per barrel in the near future. He has also said that Gazprom’s average gas delivery price for Europe has soared up to $US 410 per 1,000 cubic meters. Earlier, Aleksey Miller told Le Figaro newspaper that Gazprom plans to increase its presence in France and deliver more gas to the country. He said Gazprom is orientated mostly towards small enterprises. Gazprom now controls 1% of the French gas market, according to Miller. "Gazprom intends to consolidate its positions in the sphere of the sale of gas, electricity and hydrocarbons," Miller added. Another company representative has revealed Gazprom's plans to step into the U.S. energy market. Chief executive of Gazprom Marketing and Trading, Vitaly Vasiliev, told the Financial Times that a takeover is one of the ways to gain entry to the American market.

Gas will be sold in roubles: Gazprom CEO

Gas will be sold in roubles: Gazprom CEOJune 7, 2008 - Russia Today - Gazprom aspires to sell gas for roubles outside of Russia after trade on the St. Petersburg bourse starts, the head of the oil, giant Alexey Miller, has said. Its launch is planned for 2009. According to Miller, the company has started the creation of the bourse to trade gas futures. Miller has said St. Petersburg will soon become a major gas trade centre. However, the finance minister Alexey Kudrin told Russian broadcasting station “Business FM” that raw materials will be sold for roubles but in a long-time perspective. He said roubles has become a convertible currency only 18 months ago and dozens of years must pass until roubles will be stable enough for all of the market participants. The source in Gazprom which spoke to Interfax news agency said several changes must occur before large-scale gas trades happen on the exchange. These are: the internal and external gas prices approach, Nord and South Stream pipelines launch, facilities and resources allocation for spot deals, creation of plant to liquefy natural gas in Kola Peninsula, customs rules formulization and the supplies of gas acquired on the bourse through the sole agent.

Gazprom and Germany's Wingas to extend contract

BRIEFLY RBC, 11.06.2008, Moscow 17:35:50. – Alexander Medvedev, Deputy Chairman of Gazprom's Management Committee and CEO of Gazprom Export, and Rainer Seele, a member of the Board of Directors of Wintershall Holding AG and Chairman of Wingas GmbH, have signed an agreement of intent today, the Russian energy holding's press office reported today. The agreement provides for a 35-year prolongation of the natural gas supply contract between Gazprom Export and WIEH, Wintershall Holding and Gazprom's joint trading company. As a result of the move, Gazprom is expected to provide WIEH with more than 500bn cubic meters of gas.

Gazprom to extend contract with Germany's WIEH by 35 years

MOSCOW, June 11 (RIA Novosti) - Gazprom will extend its gas supply contract by 35 years with Germany's Wintershall Erdgas Handelshaus GmbH (WIEH), trading in natural gas in a number of European countries, the Russian energy giant said Wednesday. A Gazprom delegation led by CEO Alexei Miller in Germany took part Wednesday in festivities devoted to the 35th anniversary of natural gas deliveries from Russia to Germany. The contract is the biggest in the history of the Russian-German energy partnership. Its extension will provide WIEH with over 500 billion cu m of gas from Russia overall. "Europe was and remains our key market; Germany is not only the largest consumer of Russia's natural gas among European countries, but also a time-tested partner... I am convinced that our cooperation will strengthen, including thanks to the Nord Stream joint project," Miller said. The Nord Stream pipeline, which Gazprom is building together with Germany's E.ON under the Baltic Sea at an estimated cost of $12 billion, will pump Russian natural gas directly to Germany. Wintershall Holding AG is a 100% subsidiary of BASF. Gazprom and Wintershall have cooperated for over 15 years and the companies have established the Wingas and WIEH joint ventures. BASF is also a partner of Gazprom in exploration of northwest Siberia's Yuzhno-Russkoye oil and gas deposit and in construction of the Nord Stream pipeline. Wintershall Erdgas Handelshaus GmbH (WIEH) was founded in 1990. It is responsible for the purchase, transportation, storage and sale of natural gas in different European countries. Wingas GmbH, formed in 1993 as a strategic alliance between Gazprom and Wintershall, supplies oil and gas to clients in Germany, Belgium, France, the U.K., Austria, the Czech Republic and Denmark. Wingas clients include urban and regional gas companies, industrial enterprises and electric power plants. In line with an asset swap agreement between Gazprom and BASF, Gazprom raised its share in Wingas GmbH authorized capital late last year to 50% minus one share.

Wednesday, June 11, 2008

Gazprom to Stick to Britain’s Model in U.S.

Open Gallery...June 11, 2008 - Kommersant - Russia’s gas monopoly Gazprom is in talks with holders of a few gas traders in the United States about the buyout of the majority stakes from them. The monopoly applies the same methods to pave the way to Britain’s market of gas retail, which has been thoroughly protected against its expansion. Gazprom has covered 1.5 percent of it, stepping up the supplies from 2 percent to 8 percent in the last six years. The company is studying chances for the first acquisition in the United States, Vitaly Vasiliev, who is the CEO at Britain’s subsidiary of Gazprom, Gazprom Marketing & Trading (GMT), made clear in the yesterday’s interview with The Financial Times. The project could start from scratch, or via the partnership or through the acquisition, Gazprom will make the final decision by this year-end, the official specified. The monopoly “is eyeing stakes in traders,” Gazprom spokesman Sergei Kupriyanov confirmed yesterday, adding that the final agreements haven’t been attained yet. The negotiator is the U.S. division of GMT, GMT USA, which office opened in Texas in 2006. "We are trying to build the capability for Gazprom to place its volumes in the market in the most profitable way, to gain the value that Gazprom lost by simply selling at the border or to somebody in the middle," The Financial Times quoted Vasiliev as saying. And the promotion experience of this top manager is inspiring. Vasiliev took over GMT in 2002, when Gazprom covered around 2 percent of Britain’s market. Since then, however, the monopoly has extended to above 8 percent on wholesale gas market and reached 1.5 percent on retail market. The progress appears even more impressive given the general antagonism of Britain’s authorities to Gazprom. Now Gazprom is apparently eager to apply its British business model in the United States. In view of the tough opposition of the U.S. authorities, the analysts find those methods quite justified, speculating, however, that they will hardly allow to grab a sizeable portion on the market.

Tuesday, June 10, 2008

Gazprom signs deal to prospect four deposits in Tajikistan

MOSCOW/DUSHANBE, June 10 (RIA Novosti) - Russian energy giant Gazprom [RTS: GAZP] said on Tuesday it had signed a deal with the government of Tajikistan on prospecting four oil and gas fields in the Central Asian country. Valery Golubev, deputy chairman of the Gazprom management committee, said after his meeting with Tajik President Emomali Rakhmon that Russia was willing to help the country develop its energy independence. According to Golubev, Tajikistan's total oil and gas deposits are estimated at 3 trillion cubic meters of natural gas. Under the agreement, Gazprom will carry out a range of geological prospecting projects at the four deposits that the company considers to be the most promising. "Each of these deposits has its own specifics, including low depth, and a natural gas structure with sulfur admixture. Therefore, Gazprom specialists estimate all geological prospecting at the four deposits at $500 million, to be contributed to the charter capital of future joint ventures with Tajikistan," Golubev said, adding that the Russian energy giant would also engage in the development of Tajikistan's gas transportation and distribution system. Tajikistan currently consumes 800 million cubic meters of natural gas per year. The four deposits are expected to reach their target production capacity in three to five years, to bring Tajikistan's annual natural gas output up to 2 billion cubic meters and ensure the republic's energy independence.

Gazprom gas price to Europe hits $410 per 1,000 cu m - CEO

Gazprom gas price to Europe hits $410 per 1,000 cu m - CEOMOSCOW, June 10 (RIA Novosti) - Gazprom's gas delivery prices for Europe have reached $410 per 1,000 cubic meters, the Russian energy giant's CEO said on Tuesday. "Today, the average price of our deliveries to Europe has reached $410," Alexei Miller told the European Business Congress in France. Miller also said that there had been a number of comments from Europe proposing a diversification of energy supplies. "Europe's desire to diversify energy sources is understandable. But it seems that such statements are based on the somewhat strange idea that any alternative is preferable to Russian energy supplies. This flawed viewpoint cannot be justified," he said. The bulk of Russia's gas supplies to the European Union, which account for one quarter of the 27-nation bloc's consumption, run through Ukraine. A gas pricing dispute with Ukraine at the start of 2006 prompted Russia to briefly cut supplies off to the former Soviet republic. Europe-bound exports were also affected. Miller also said Slovenia could take part in the South Stream project to build a European gas pipeline. "At meetings during the St. Petersburg International Economic Forum, we agreed that Slovenia and Austria could participate in the project," the Gazprom chief executive said, adding that Gazprom was successfully implementing this project together with Italy's Eni. "We have already concluded agreements with Bulgaria, Hungary, Serbia and Greece and held successful talks with other potential transit countries," he said. The South Stream project is expected to transport 10 billion cu m of Russian gas annually across the Black Sea to the Balkans and onto other European countries, with the first deliveries scheduled to start in 2013. Miller also said Gazprom was considering further extending the capacity of the Nord Stream pipeline above the previously announced annual 55 billion cu m. The Nord Stream pipeline, which Gazprom is building together with Germany's E.ON under the Baltic Sea at an estimated cost of $12 billion, will pump Russian natural gas directly to Germany.

Gazprom decides on South Stream gas pipeline route

RBC, 10.06.2008, Moscow – Gazprom has finally determined the route of the South Stream gas pipeline, the Russian energy holding's CEO Alexei Miller said during the 11th annual meeting of the European Business Congress in Deauville today. Miller reiterated that the holding had earlier signed agreements on the construction of the pipeline with Bulgaria, Hungary, Serbia, and Greece. He added that Gazprom agreed with its partners during the St. Petersburg International Economic Forum on June 7-8 that Slovenia and Austria would also join the project. Miller stressed that the South Stream project did not compete with the Nabucco pipeline project, thanks to the rising demand for gas in Europe.

Monday, June 09, 2008

Gazprom Finds a Way to America

AlaskaJune 09, 2008 - Kommersant - Gazprom is prepared to participate in a 6000-km. Prudhoe Bay, Alaska-Alberta-Chicago natural gas pipeline, Gazprom CEO Alexey Miller stated at the St. Petersburg International economic Forum. It has sent a proposal to ConocoPhillips and BP, which are implementing the project, but there has been no reply yet. Therefore, Gazprom is covering its bases and has begun negotiations with TransCanada on a different pipeline from Alaska to Canada. ConocoPhillips and BP announced the project on April 8. The new pipeline is planned in two stages, the first stretching 3400 km. to the Canadian province of Alberta, and the second extending another 2400 km. to Chicago. The pipeline will have a capacity of 41.36 billion cu. m. of gas annually. Alaska has estimated gas reserves of 1 trillion cu. m. The project will cost about $30 billion to implement, $5 billion of which will go to build a gas processing plant in Alaska. In the first three years, costs will be low ($600 million) while the companies conciliate the project with regional authorities and the U.S. and Canadian governments. The project should be completed within ten years. Gazprom was unwilling to specify the size of the share in the project it is pursuing, or how much money it is willing to invest in it. BP declined to comment on Gazprom’s offer, and no ConocoPhillips spokesman could be reached on Sunday. Gazprom deputy chairman Alexander Medvedev said unofficially at the forum that Gazprom is negotiating with TransCanada for a $26-billion Alaska-Alberta project.

Gazprom, Austria Sign Papersl on South Stream Project

austria09.06.2008 - [Neftegaz.RU] - Russia is planning to sign an intergovernmental agreement with Austria on its joining the South Stream gas pipeline construction project, Chairman of the Executive Board of Gazprom Alexander Medvedev told journalists during an international economic forum in St. Petersburg. He pointed out that the management of the Russian energy holding held talks with Austria's authorities, adding that the parties agreed to sign the document in the nearest future. According to the document, the oil and gas company OMV will be appointed as the project's coordinator on behalf of Austria.

Gazprom, Shell to Exploit Outside Resources

June 09, 2008 - Kommersant - Shell will probably join Gazprom project for constructing LNG facilities in Yamal, for which Yuzhno-Tambeiskoe field will be the resource base. Russia’s monopoly owns just a blocking stake in the field, while the firms of Alisher Usmanov’s Gazmetall hold the remainder. According to Shell's Executive Officer Jeroen van der Veer, the company that sold a stake in Sakhalin-2 to Gazprom in 2006 has sealed with Russia’s monopoly a protocol for joint exploitation of LNG in Russia and third states. The matter at stake is construction of LNG plant in Yamal. Speaking about the definite production amount or costs would be too early, as the protocol doesn’t specify any final date, Jeroen van der Veer said. According to Alexander Medvedev, who is the deputy head of Gazprom Management Committee, they intend to make Yuzhno-Tambeiskoe field the resource base of the project. A firm affiliated with monopoly owns 25 percent plus a stock in it and Gazprombank is elaborating a feasibility study already. The reserves of Yuzhno-Tambeiskoe field are estimated at 1.3 billion cu meters of gas and the annual output is planned at between 20 billion cu meters and 25 billion cu meters. In 2005, Gazprombank-Invest acquired from NOVATEK 25.1 percent in Tambeineftegaz (license holder) and Alisher Usmanov’s Gazmetall bought 75 percent less a stock in it in 2006. In Gazprom they refuse to explain the choice of the field that is beyond the monopoly’s control. The reason could be that the relations of Gazprom and Usmanov are very close. Usmanov, for instance, heads Gazprominvestholding, where the monopoly owns 100 percent and which concern is to resume Gazprom’s control over a number of assets. Gazprom may buy out Tambeineftegaz any time, a source familiar with the situation said. Last year, however, the stocks of the company were pawned to secure the VTB loan worth 50 billion rubles.

Nord Stream gas project serves Europe's energy interests - Medvedev

BERLIN, June 5 (RIA Novosti) - The Nord Stream pipeline being built under the Baltic Sea to pump natural gas directly from Russia to Germany serves the interests of European energy security, Russian President Dmitry Medvedev said Thursday. Medvedev arrived in Germany on Thursday on his first European trip since his inauguration as Russian president. "This project serves equally the interests of reliable energy supplies and energy security for all the countries on the European continent," Medvedev said after talks with German Chancellor Angela Merkel. Russian energy giant Gazprom is building the Nord Stream pipeline together with Germany's E.ON at an estimated cost of $12 billion. The first of Nord Stream's two parallel pipelines, approximately 1,200 kilometers (750 miles) long, with a transport capacity of some 27.5 billion cubic meters per year, is to become operational in 2010. In the second phase, capacity should double to about 55 billion cubic meters per year. Medvedev said that he had also discussed the South Stream gas pipeline project with the German chancellor. The South Stream project is expected to transport 10 billion cubic meters of Russian gas annually across the Black Sea to the Balkans and onto other European countries, with the first deliveries scheduled to start in 2013. Medvedev said that the Nord and South Stream projects would be completed on schedule.

Thursday, June 05, 2008

Gassy Friendship in the Baltic

// Russia and Germany confirm their friendship with pipelines
June 05, 2008 - Kommersant by Alexander Gabuev - The summit and business forum of the Baltic countries ended yesterday in Latvia. Moscow’s energy policy, especially toward the European Union and Baltic countries, was a key topic at the events. The hottest disputes arose over the Nord Stream project, which was bravely defended by Russian First Deputy Prime Minister Igor Shuvalov, Gazprom executives and German officials and businessmen. It seemed to Kommersant correspondent Alexander Gabuev that Russia and Europe were conducting the energy dialog in different languages.
:: Difficulties of Translation :: The current, seventh, Baltic summit was notably different from previous ones. The heads of state met behind closed doors before, but this time the meetings were made maximally public. “This is the first time the political summit was open for the business community and for the media and the business forum was organized parallel to it for the first time,” noted Alexander Shenkman, one of the organizers. “The main task was to create a place where representatives of Russia and the EU could exchange opinion calmly.” The Riga forum gave them the opportunity to discuss the problems that have built up, three weeks in advance of the Russia-EU summit in Khanty-Mansiisk. The heads of the delegations of all 11 Baltic Council countries spoke in English about how to solve the region’s problems. Danish Prime Minister Anders Fogh Rasmussen set the tone of the discussion when he said that energy security was one of the key issues for the Baltic countries. The speakers that followed developed the Danish Prime Minister’s thoughts until they came to Russian First Deputy Prime Minister Igor Shuvalov. Shuvalov announced that he would speak Russian because a large part of his audience knows the language. He began by saying that many Russian businesses are prepared to invest in the Baltic region, and the Russian government is ready to help them. “But do we understand each other well?” he asked. “No. There is great distrust in both sides.” Shuvalov took the example of Germany, with which Moscow established “the necessary political dialog to create conditions for mutual investment.” “We are holding a dialog with Germany on issues of energy security,” Shuvalov pointed out. “We consider it to be a partner that can be absolutely reliable for us and can guarantee its reliability within the framework of the EU.” The questions why Russian President Dmitry Medvedev will visit Berlin first among the European capitals and why Russian Prime Minister Vladimir Putin followed German Chancellor Angela Merkel in declining to come to Riga thus answered themselves. The Russian Deputy Prime Minister spoke passionately about energy security. “We repeat, and will keep repeating: Russia is the most reliable supplier of energy resources in the world. We hear criticism that Russia uses energy as a political cudgel. It’s not so! Don’t be afraid of Russia!” he exclaimed. Toward the end of his speech, Shuvalov talked about the 2020 plan and announced that, in 12 years, Russia intends to propose to the world “a new quality of values.” Several participants showed a desire to accept those values on the spot. “Allow me to speak German, since Mr. Shuvalov spoke Russian,” German State Minister for Europe Guenther Gloser, showing the advances Shuvalov had made just then in Russia’s political dialog with Germany. “Europe's energy consumption will continue to rise through 2050 and so Europe needs natural gas. If we want to lower our carbon dioxide emissions, we will have to meet our energy needs using Russian gas. And even if we do increase our dependency on a single supplier that way, we should just accept it.” Then the German minister criticized the Nabucco project, which is competing with the Moscow-endorsed Nord Stream, saying it is “abortive.” Most of his speech was devoted to Nord Stream. “Some countries and politicians in the Baltic region oppose this project,” Gloser said. “That is why I see our task as expelling any doubts.” First, he tried to convince his audience that Nord Stream is not a Russian-German state project, but a private deal among the commercial companies that are stockholders in the pipeline. Then he sought to prove that any alternative overland route would be much more expensive. “The compressor stations that would serve such a pipeline would require as much energy in a year as all of Estonia!” he exclaimed at Estonian Prime Minister Andrus Ansip. After that demonstration, even Polish State Secretary for European Integration Mikolaj Dowgielewicz was forced to speak Russian, giving the surprised Shuvalov cause to smirk. But with that the affair ended. It was clear from the tension looks on the faces of the prime ministers that they were not convinced of Berlin and Moscow’s good intentions.
:: Gas Reserve :: Energy discussions at the business forum were no less heated. The forum was opened by Latvian President Valdis Zatlers, who declared that “The EU needs a single energy policy.” The president’s thought was developed by Latvian Minister of Economics Kaspars Gerhards, who urged Europe to “resist increasing dependence on energy suppliers.” “To do so, it is important for us to understand what Russia’s energy strategy will be in the next decade, Gerhards continued. Then everyone was told what kind of supplier they were talking about. Representatives of E.ON and BASF, shareholders in Nord Stream, undertook to defend Russian interests. Nord Stream financial director Paul Corcoran most graphically described the benefits of the project for Europe. No one engaged him in argument. They were all waiting for Gazprom deputy chairman Valery Golubev. His appearance at the forum was one of the most discussed events there. In the corridors, European Commission representatives talked about how the presence of “someone like that” is a sign of the seriousness of Gazprom’s intentions for the Baltic states. Western journalists repeated the magic letters KGB. (Golubev worked in state security organs and in the St. Petersburg mayor’s office before joining Gazprom.) The gas giant’s deputy chairman was very late to the energy section of the forum (he flew in from Ashgabat) and addressed his audience only toward evening. Although everyone before him spoke English, Golubev spoke Russian and immediately gave his listeners an idea of the might they were contending with. “Russia has access to the Baltic Sea, and so it is part of this club, although the other side of it ends at the Pacific Ocean,” he explained. Golubev then gave a concise understanding of what Russia considers energy security. It insists on concluding contracts with a price formula that reflects world price growth for energy sources. In addition, Moscow is paying particular attention to controlling transport routes. In that connection, he talked about the merits of the Nord Stream project. According to Golubev, the main one is the following: “The project will allow gas to be provided from the producer to the consumer without any transit territories, which are sometimes complicated in their political aspects.” After his speech, he explained that idea in more detail to Kommersant. “The political processes taking place on transit territories,” he said, “are often nontransparent. That is connected with the fact that transit countries such as Ukraine lack democracy in their development. For some countries, transit tariffs become an object of political manipulation. There is no evil design in the Nord Stream project. They have begun to give it political overtones for some reason, but it is an economic project. Producers and consumers affect the price of gas themselves, and determine its income and bear its transit costs without anyone along the way sharing it with them.” After that explanation, Medvedev can visit Germany calmly. Moscow and Berlin have something to share with each other to their mutual advantage. But there is no assurance of the success of the EU-Russia summit in Khanty-Mansiisk. In the EU, even the countries that it is not pleasant to share the gas business with have a voice in policy.

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