Russ Oil-Gas

Russian major oil-gas ...

  Gazprom    RusEnergy    World    Pipeliners  Zee Beam 







Tuesday, July 29, 2008

Britain’s BP, Gazprom Continue Alliance Talks

July 29, 2008 - Kommersant - Britain’s BP and Russia’s Gazprom proceed with the talks about final execution of the deal to set up an international alliance, said BP CEO Tony Hayward. The talks about executing the deal that was announced far back in June 2007 aren’t very active but they go on, Mr Hayward made clear. BP’s relations with Russia’s state-run Rosneft are good; both companies jointly execute a few projects in Sakhalin, the official pointed out. BP and TNK-BP concluded the understanding memorandum for setting up a strategic alliance with Gazprom in June of 2007. The purpose of partnership is to invest in joint energy projects and to swap assets worldwide.

Italy throws its support behind Gazprom’s search for downstream markets in Europe

 Italy throws its support behind Gazprom’s search for downstream markets in EuropeJuly 29, 2008 - Russia Today - Italy has shattered hopes of a united European front against Gazprom after throwing "unquestionable" support behind its bid to buy EU energy companies. The EU's Reciprocity Clause bans Gazprom buying its energy grids until European firms can do the same in Russia. However in an interview with Business Today, Italy's Industry Minister claimed Russia had promised him to open its gas market to foreign investors. Italy is unquestionably one of the biggest supporters of boosting Gazprom's downstream presence in Europe. Our biggest energy company Eni's had terrific results with Gazprom on the South Stream project. Today Energy Minister Shmatko assured me that he'll further liberalize the Russian energy market.

Gazprom looking for ways to keep Turkmen gas cheap

Gazprom looking for ways to keep Turkmen gas cheapJuly 29, 2008 - Russia Today - Gazprom is offering interest-free loans to Turkmenistan hoping to keep the price for Central Asian gas low. The Russian oil giant suggested it could finance Turkmen gas infrastructure projects in an effort to keep the price below European levels. Gazprom will annually provide $240-480 mln to Turkmenistan. The company would have to borrow the money at 6%-8% annual interest. Gazprom suggested two formulas for calculating the price. One takes in equal proportions the average European wholesale price, Ukraine's domestic price and the price in southern Russia for the previous six months. The other takes the European wholesale price and the Ukrainian price.

Monday, July 28, 2008

Treaty Is a Treaty

Dmitry Medvedev and Gurbanguly Berdimuhammedow// Gazprom becomes Turkmenistan’s donor
July 28, 2008 - Kommersant by Natalya Grib, Olga Mordyushenko - Gazprom to pay Turkmenistan for its gas at a market price and give it a 0% credit Gazprom has signed an agreement about Turkmenian gas pricing principles. Starting from 2009 its cost for Russia will be counted basing on the European and Ukrainian prices, and thus rise from the current $140 per thousand cubic meters to $225–295. Besides doubling the purchasing price under the circumstances of an increase in financial resources price, Gazprom will pay for its maintaining control over Turkmenistan’s gas giving 0% credits to a number of local projects. Friday, in the course of Gazprom CEO Alexey Miller’s official visit to Turkmenistan two basic agreements about a new scheme of gas purchasing were concluded. They feature price formation principles and, according to Mr Miller, envisage a transition to market principles of pricing in the framework of a long-term contract of Gazprom and Turkmenistan till 2028. The second agreement binds Gazprom to allocate 0% credits for different Turkmenian projects. A high-ranking official told Kommersant that the draft agreements about pricing principles stipulate a different base for calculating the price formula. In the first case the base price is a mix of an average wholesale price in Europe, prices in Ukraine’s home market and in Southern Russia in equal proportions, that is in 33% - for the six previous months. According to the second variant, the base price consists of wholesale gas prices in Europe and Ukraine in the 50/50 proportion. The official explained it to Kommersant that transportation costs are deducted from this base price and “various coefficients are also introduced.” Valery Nesterov from Troika Dialog considers that “Gazprom won’t lose anything whatever the variant because it’ll impose extra costs on Ukraine when purchasing gas.” Depending on whether the low gas price in the south of Russia ($70–80 per thousand cubic meters) is included in the formula, the expert opines that with the present price in the EU at $410 the purchasing price in Turkmenistan can range from $225 to $295 per thousand cubic meters in 2009. In the first case Gazprom will have to pay for Turkmenistan’s gas $9.45 bln more than this year, and in the second case - $12.4 bln more. However, these are not the only extra costs. According to Turkmenistan’s television, Gazprom will finance and build gas transporting facilities and construct gas-fields in the country as well. “We have reached agreements about Gazprom’s financing and building new gas-main pipelines from the East of the country, constructing gas-fields and boosting the capacity of the Turkmenian sector of the Caspian gas pipeline to 30 bln cubic meters,” confirmed Alexey Miller. There’s been no information about the volume of the credit. East European Gas Analysis director Mikhail Korchemkin estimates that the listed projects will cost Gazprom $4–6 bln, and the Russian gas monopoly will have to borrow the money in the market on 6-8%, so, Turkmenistan will get $240–480 mln for free. On the other hand, Russia will keep control over Turkmenian gas exports. Gurbanguly Berdimuhammedow, the President of Turkmenistan, confirmed maintaining friendship with Russia during his meeting with Alexey Miller. He remembered his meeting with Russia’s President Dmitry Medvedev on July 4-5 and assured that “Gazprom is the leading strategic partner of Turkmenistan, as it’s always been.” Gazprom’s top-manager told Kommersant that the negotiations with Turkmenistan had been tough, and deputy president of the Russian monopoly Valery Golubev had spent a week in Ashgabat clearing the details of the agreement. “There were a few variants there. I don’t know which of them was signed,” the top-manager told Kommersant, “The Turkmen wrangled till the last minute. I think Alexey Miller had to concede in something to buy up all the gas and fulfil the political agreements of Moscow, Ashgabat and Kiev.” Interestingly, it’s been the third visit of Gazprom’s delegation to Turkmenistan since the beginning of summer. Nevertheless, the terms can’t be rendered crushing for Gazprom. Early this year officials with Turkmenistan’s government spoke about plans to sell gas at $350–360 per thousand cubic meters. That is why lowering the price to $290 at least can be regarded improvement. In this case the 0% credit will cost the monopoly less than a single-stage transition to average European prices when trading with Central Asia. “The main question is the period the formula has been set for. It’ll determine the time Ukraine’s economy will have to adjust itself to market conditions,” stressed Valery Nesterov. At the same time Mikhail Korchemkin calls the agreements reached on Friday “an allocation of political capital, since Gazprom may get no revenue from reselling Turkmenistan’s gas.” The expert believes this policy risky – after Gazprom constructs the transporting infrastructure Ashgabat may consent to building a European gas pipeline Nabucco omitting Russia and, as it is able to choose from different export routes, it’ll even more raise the gas price. “Starting from this day there is no cheap gas in the region any longer, because Gazprom will have to offer the same terms to Kazakhstan, which lies between Russia and Turkmenistan,” Mikhail Korchemkin thinks, “Perhaps, Uzbekistan will also want 0% credits, but it’ll be possible to omit it.” The only thing that, in the view of the expert, can play into Russia’s hands is that purchasing Turkmenistan’s gas by Gazprom solely can foster the prices in the world oil and gas market.

Friday, July 25, 2008

Gazprom works to let business partners be its European lobbyists

July 25, 2008 – International Herald Tribune by Amie Ferris-Rotman and Dmitry Zhdannikov Reuters - MOSCOW: Gazprom is working to turn its Western partners into a lobbying network to try to overcome the European Union's worries about its aggressive expansion plans. Companies working with Gazprom in its Siberian fields may be happy to oblige, analysts say, eager to strengthen their positions in Russia and in turn help the company, the world's largest gas producer, gain assets in Europe to achieve its dream of becoming a trillion-dollar company. Chris Weafer, chief strategist at the UralSib bank in Moscow, said: "Gazprom is creating a lot of lobby groups in the form of its partners. Instead of Gazprom having to knock on the door of the European Parliament, Total and BASF will do it on their behalf." Gazprom and BASF, the German chemical company, recently started production at their joint pas project in Siberia called Achimgaz, which will ultimately produce 7.5 billion cubic meters, or 265 billion cubic feet, per year. That is equal to almost a tenth of the gas consumption in Germany. Eni, the giant Italian energy company, recently signed an agreement with a Russian power generator to sell gas it will produce from Arctigas, its future venture with Gazprom. Valery Nesterov, an energy analyst with the Troika Dialog investment house in Moscow said: "It may be a paradox, but Gazprom's top lobbyists in Europe are its competitors such as Eni or GDF. They suffer themselves from gas market liberalization and understand Gazprom better than government officials." Tanya Costello, the director for Europe and Eurasia at the Eurasia Group, a consulting firm, said in London, "For Gazprom, one of the benefits of the cooperation is access to downstream assets in Europe." The ambitious chief executive of Gazprom, Alexei Miller, knows better than anyone else the importance of cross-border ventures to open the door to the EU in return. "We believe that success rests in organizing vertically integrated chains that run from the point of production to the end user, with each link in the chain representing a joint business between energy resource producers and consumers," Miller said. But he has a long way to go before he manages to soothe European concerns once described by Vladimir Putin, the former president and now prime minister, as fears of a Red Army comeback. Those fears heightened when Gazprom cut supplies to Ukraine in a pricing dispute and reduced exports to Europe in 2006, prompting the United States to call on Russia to stop using gas as a tool of intimidation and blackmail. Nesterov, the Troika analyst, said, "The level of mutual suspicions is still very high. I don't see a breakthrough any time soon." In early July, Gazprom said it would begin supplying Ireland in the fourth quarter, bringing the number of European countries it supplies to 23. Such a wide supply network has set off alarm bells through Europe, where some believe the countries rely too heavily on Russian gas. European Union efforts to diversify its energy supply away from Russia have suffered in recent months, as more countries joined the South Stream pipeline, a major project intended to take Russian gas to Europe. Analysts say the South Stream project will pose a challenge to the rival Nabucco pipeline, backed by the United States and the European Union, which would take gas from the Caspian Sea to Southern Europe. Weafer, the UralSib strategist, said Gazprom's ambitions in Europe were far larger than what European companies could do in Russia. "There's the fear that Gazprom could become too dominant," he said.

Tuesday, July 22, 2008

Gazprom to Pump Gas of Other Nations to Spain

Gas Natural SDGJuly 22, 2008 - Kommersant - Britain’s division of Gazprom, Gazprom Marketing & Trading, and Spain’s Gas Natural SDG have clinched a deal for the LNG supplies to Spain. People in Gazprom said this move will help build up a flexible system for supplying the gas acquired, for instance, in Libya or Azerbaijan. GM&T and Gas Natural SDG inked July 2 a framework agreement on the terms for LNG supplies to Spain, GM&T reported in its press release yesterday. According to Frederic Barnaud, GM&T's LNG director , the project is a good chance to widen the LNG sales before the launch of Shtokman in April 2013. The plans are that the Shtokman gas will be delivered via pipelines and by tankers to the United States and the EU. The framework agreement also promotes the strategic cooperation in part of the energy sales and quotas on greenhouse gas. In GM&T, they didn’t specify the exact amount of deliveries yesterday. Of interest is that so far, the laws of Spain had prevented Gazprom from entering the country’s market on fears of the price collision with Algerian Sonatrack. Under the EuroGas report, Spain consumed 37.7 billion cu meters of gas in 2007, and LNG covered two thirds of it. Algeria (37 percent) is the key supplier of gas to Spain. But unlike Sonatrack, Gas Natural SDG is the main division of Spain’s Gas Natural. The biggest holders of GN are La Caixa Bank (35.5 percent in the company) and Repsol YPF (30.5 percent).

Monday, July 21, 2008

Gas Natural and Gazprom strike LNG deal

exclamation sign 21 July, 2008 - Upstream OnLine - Spanish energy company Gas Natural said today it had signed a deal to work with Russian gas giant Gazprom on liquified natural gas projects. Gas Natural said in a statement that the deal would allow them to take advantage of any opportunities in the LNG market as they came up. It gave no financial details of the agreement, a Reuters report said.

Federal AntiMonopoly Service ready to start talks with Gazprom on equal access to pipes

Federal AntiMonopoly Service ready to start talks with Gazprom on equal access to pipes.July 21, 2008 - Russia Today - The Federal Antimonopoly Service says it's ready to start negotiating with Gazprom on giving independent gas companies equal access to pipelines. The announcement comes after prime minister Vladimir Putin urged the FAS to resolve the access problem. FAS head Igor Artyemyev told Business Today he's ready for a "serious dispute" adding, The papers are ready, the problem is to understand what is acceptable and what is not for Gazprom and why, because we need to provide equal access to gas pipelines, while Gazprom says it will never agree to this principle, and the prime minister says - no, you will agree as it's in the national interests to settle the issue. So apparently first there'll be a serious dispute between our service and Gazprom, then the issue will move to the level of deputy prime minister Igor Sechin, and at his suggestion it will be considered by the government.

Sakhalin-1 allowed to export gas

// Though Gazprom will probably hold control
July 18, 2008 - RBC News - The Sakhalin-1 consortium will sell an additional 1.5bn-2bn cubic meter of natural gas to Russia’s Far-Eastern regions, Deputy Prime Minister Igor Sechin has announced. The price of supplies will be no lower than export prices minus transportation costs. Rosneft will step in to help Gazprom in negotiations with the project’s owners. From now on, it will be possible to export part of the natural gas produced at Sakhalin-1, whereas previously, Gazprom had wanted to use all the gas from the project for supplies to the domestic market, experts say. Igor Sechin has reported to President Dmitry Medvedev on the progress made with an order given during a meeting on the Far East’s regional development in Khabarovsk in February. He said that an agreement between Gazprom and Rosneft on interaction in providing gas supply to Far-Eastern regions had been signed. Under its terms, the two state companies were to lift any previous disagreements and join their efforts to modernize the existing gas supply system, as well as join in the talks with the Sakhalin-1 project’s consortium. “An agreement in principle has been reached with the consortium to sell surplus volumes of the project’s gas in the amount of 1.5bn-2bn cubic meters at a price that would not be lower than that for gas sold under contracts,” Sechin stated. By limiting Gazprom’s share - previously the company had wanted to receive all of Sakhalin-1’s gas for the domestic market - the government has made an attempt to level out the relative positions of the gas monopoly and Rosneft, a source at Gazprom told RBC Daily. However, the fact that a certain surplus quota will eventually go towards providing the region’s gas supply system, is good news, as otherwise it was impossible to strike a balance, the source said. Only the lower end of the gas price has been fixed, to be no lower than the price of gas intended for exports, minus transportation costs. No upper end has been set, and further discussions are to follow to take into consideration the consumption structure, which is yet to be determined. If gas is to be supplied at regulated prices, then Gazprom will not be able to pay too much for it – otherwise it would be operating at a loss. Both Gazprom and Rosneft declined to make a formal comment. As RBC Daily was told by Dilyara Sadykova, a representative of the Sakhalin-1 project operator, ExxonMobil, under the current contracts, Sakhalin-1 is planning to double its supplies to 3bn cubic meters per year. “As to additional gas supplies to the domestic market, I can confirm that we are in talks with Gazprom and are considering all the options available to us regarding gas sales,” Sadykova said. Gas output from Sakahlin-1 is expected to increase to 11.4bn cubic meters per year by 2009, 3bn cubic meters of which was intended for the domestic market, analysts reiterated. The parties have now agreed to expand that figure by 2bn cubic meters, leaving 6.4bn cubic meters for exports, which is not bad, considering that Gazprom previously wanted to scoop up all of the gas produced at the project. To say more, the gas monopoly did not want the gas in order to provide it to Russian consumers, but to ensure that there is no other alternative for China to receive Russian gas but through Gazprom. Experts are convinced that the gas concern wanted to be the monopoly supplier of gas from Russian to China. The price of gas to be exported under contracts, net of transportation costs, is estimated at nearly $80 per 1,000 cubic meters. Sakhalin-1’s gas operations will inevitably be controlled by Gazprom, and any price offered by the monopoly is certainly going to be considerably lower than the market price, as such are the rules of the game on the Russian gas market, analysts believe.

Gazprom to buy 25% in Far East gas supplier from Rosneft

MOSCOW, July 19 (RIA Novosti) - Gazprom said on Saturday it will buy a 25% stake in Daltransgaz, the owner of a natural gas pipeline in Russia's Far East, from the country's largest state-owned crude producer Rosneft. Gazprom CEO Alexei Miller met with Rosneft chief Sergei Bogdanchikov, and the sides signed a cooperation agreement. The acquisition will give the Russian state gas monopoly access to the pipeline's spare capacity on the route from the island of Sakhalin to the port of Vladivostok via Khabarovsk. Russia's Federal Property Management Agency holds a 27.39% stake in the pipeline, and the Khabarovsk Territory controls the remaining 47.59%.

Gazprom weighs up Turkey move

turkey17 July, 2008 – Upstream OnLine – Russian gas player Gazprom has proposed setting up a company in Turkey to handle urban gas distribution and a planned extension of the Blue Stream pipeline to Israel, a senior Turkish Energy Ministry source said today. The proposed company would also build new gas storage facilities in Turkey, the source told Reuters. Separately Russia, Turkey's largest natural gas supplier, also wants to renew a contract under which it exports 6 billion cubic metres of gas annually to Turkey, Turkish Energy Minister Hilmi Guler told reporters. The contract expires in 2011 and either Turkey's pipeline company Botas or a private company would be eligible to renew the contract. Guler also said Gazprom is interested in carrying out other energy projects with Turkey, including the expansion of the capacity of the Blue Stream pipeline. Ankara has been trying to get Russia to put supplies through an oil pipeline running from the Black Sea to the Mediterranean Sea.

Gazprom and Wintershall begin gas production from Achimov field

Gazprom and Wintershall begin gas production from Achimov fieldJul 16, 2008 - Scandinavian Oil-Gas Magazine - The joint venture of Gazprom and Wintershall Holding AG – ZAO Achimgaz – launched test production at section 1А of Achimovskoe formations at Urengoi gas and oil condensate field in Yamal-Nenets autonomous district. At present a complex gas treatment facility and three gas condensate wells are operating at the section providing daily gas production of 2.3 million cubic meters. It is planned to produce by the end of 2008 531 million cubic meters of gas and 188.7 thousand tons of condensate. “A new quality stage in the expansion of the resource base and of Gazprom’s production capabilities has begun today. For the first time in the history of the company we began producing gas jointly with our German partners from Achimovskoe formations, which are much more difficult for production than traditional Cenomanian and Valanginian. Moreover, it was at the moment of Achimgaz creation that Gazprom for the first time applied the new principle of cooperation with foreign partners: the joint venture receives profit from the implementation of the project, while Gazprom holds the field license. It is exactly this principle, which comprises the model for Gazprom in building relations with foreign companies. The result accomplished by our joint venture today confirms the correctness of our choice and the efficiency of such a business model,” said Gazprom CEO Alexei Miller. “The successful partnership established in gas trading with Gazprom was consequently extended to the production of natural gas in 2003. In ZAO Achimgaz the know-how and expertise of the two partners complement each other perfectly for the difficult-to-recover Achimov formation in Western Siberia: Gazprom specializes in producing gas in the Extreme North, while Wintershall has many years of experience working in challenging geological conditions. In this ideal partnership risks and rewards are equally shared. With the joint venture Achimgaz BASF/Wintershall and Gazprom extend their more than 17-year-old successful co-operation along the entire value chain, stretching from the gas wells in Siberia over pipelines and a gas distribution and trading joint venture to the customers in Europe”, said Dr. Hans-Ulrich Engel, member of the Board of Executive Directors of BASF SE and chairman of the Supervising Council of Wintershall Holding AG.

Wednesday, July 16, 2008

Miller names Prirazlomnoe date

16 July, 2008 - Upstream OnLine - Gazprom boss Alexei Miller has confirmed that the Prirazlomnoe oilfield in the Barents Sea will come on stream in 2011, according to reports. Miller told Prime Minister Vladimir Putin that the $2 billion Prirazlomnaya platform, currently under construction at the Sevmash shipyard outside Arkhangelsk, will be completed in 2010. It will be moved to Prirazlomnoe and first oil will flow in 2011, the Barents Observer said. Prirazlomnoe, which lies in the Pechora Sea, will be the first Russian Arctic offshore oilfield to come into production.

Gazprom and Wintershall Begin Test Production from Urengoi Gas Field

July 16, 2008 - Oil Voice - The joint venture of Gazprom and Wintershall Holding AG – ZAO Achimgaz has launched test production at section 1À of Achimovskoe formations at Urengoi gas and oil condensate field in Yamal-Nenets autonomous district. At present a complex gas treatment facility and three gas condensate wells are operating at the section providing daily gas production of 2.3 million cubic meters. It is planned to produce by the end of 2008 531 million cubic meters of gas and 188.7 thousand tons of condensate. "A new quality stage in the expansion of the resource base and of Gazprom's production capabilities has begun today. For the first time in the history of the company we began producing gas jointly with our German partners from Achimovskoe formations, which are much more difficult for production than traditional Cenomanian and Valanginian," said Gazprom CEO Alexei Miller. "Moreover, it was at the moment of Achimgaz creation that Gazprom for the first time applied the new principle of cooperation with foreign partners: the joint venture receives profit from the implementation of the project, while Gazprom holds the field license. It is exactly this principle, which comprises the model for Gazprom in building relations with foreign companies. The result accomplished by our joint venture today confirms the correctness of our choice and the efficiency of such a business model," continued Miller. "The successful partnership established in gas trading with Gazprom was consequently extended to the production of natural gas in 2003. In ZAO Achimgaz the know-how and expertise of the two partners complement each other perfectly for the difficult-to-recover Achimov formation in Western Siberia. Gazprom specializes in producing gas in the Extreme North, while Wintershall has many years of experience working in challenging geological conditions. In this ideal partnership risks and rewards are equally shared. With the joint venture Achimgaz BASF/Wintershall and Gazprom extend their more than 17-year-old successful co-operation along the entire value chain, stretching from the gas wells in Siberia over pipelines and a gas distribution and trading joint venture to the customers in Europe," added Dr. Hans-Ulrich Engel, member of the Board of Executive Directors of BASF SE and chairman of the Supervising Council of Wintershall Holding AG.

Gazprom expansion moves to Africa and Iran

Gazprom expansion moves to Africa and IranJuly 15, 2008 - Russia Today - Russian natural gas monopoly Gazprom will develop oil and gas together with Iran’s state oil company. The decision came after Gazprom`s recent offer to buy all of Libya’s spare exportable gas volumes. Gazprom is extending its international reach day by day. Right after opening its first African office in Algeria - the company offered to buy all of Libya’s spare oil and gas exports. Elsewhere on the same continent, it is looking at exploration licenses in Nigeria and possibly to build a pipeline from the West African state to Algeria in the north. Spokesman Sergey Kupriyanov explained, We are interested not only in the Middle East and Africa, but also in expanding our strategy beyond them. The target is to create full production cycles located in Russia and in other regions of the world. That’s what has attracted Gazprom to Iran’s energy market. Not long ago Gazprom was included in the development of one of the biggest gas fields in the world. The South Pars gas project situated in the Persian Gulf is expected to produce more than 750 million cubic meters of natural gas a day when completed by 2014. The visit of Gazprom executives to Iran on Sunday comes days after French energy company Total postponed plans to invest in the project. And some experts say Gazprom`s Middle East bid puts further pressure on any U.S. attempt to weaken Russia’s influence over Europe’s energy supplies. Gennady Shmal, the President of the Oil and Gas Producers Union agrees, but says that Iranian gas will serve everyone. I don't think the Russian Iranian joint venture will be appreciated by the west. But at the same time there's no basis for blocking Gazprom's or Russia's actions. Because the joint venture will improve the situation in the gas sector for the whole world, especially for countries where there's no gas like India or China. Iranian gas will serve everybody. Gazprom`s interests range from exploring new fields and improving pipeline networks to modernizing existing facilities in partner` countries.Experts say this strategy of extending the company’s geographical reach is only the beginning.

Iran, Russia's Gazprom sign energy cooperation deal

Iranian President Mahmoud Ahmadinejad (left) shakes hands with Gazprom chief Alexei Miller in Tehran. Gazprom's chief hass assured Iran that the Russian energy giant was ready to participate in major Iranian oil and gas projects, days after Total dropped out of a multi-billion dollar gas deal.(AFP/Atta Kenare) Sun Jul 13,2008 - AFP by Stuart Williams - TEHRAN (AFP) - Iran and Gazprom Sunday signed an agreement for the Russian energy giant to help Tehran develop its oil and gas fields, days after Total dropped out of a multi-billion-dollar gas deal. "The Iranian National Oil Company and Gazprom signed an agreement in which the two sides will cooperate in the development of Iran's oil and gas fields," the oil ministry's Shana news agency said. No financial details were given but the agreement signals Iran's determination to secure Russian help for exploiting its energy resources as Western countries pull out due to political pressure. The head of French energy giant Total last week said it was dropping out of a multi-billion-dollar gas investment to develop phase 11 of the South Pars gas field, saying it was currently too risky politically to invest in Iran. Western governments have pressured firms to cut their ties with Iran over the country's controversial nuclear programme, which world powers fear could be aimed at seeking atomic weapons -- a charge vehemently denied by Tehran. The United States, Iran's arch enemy, has also been urging global energy giants to cut their ties with Tehran, saying that doing business sends the wrong message at a time of growing tensions in the nuclear crisis. "Gazprom will be a cooperative partner for the Islamic Republic of Iran," Iranian state television quoted Alexei Miller, CEO of the Russian state-controlled firm, as telling President Mahmoud Ahmadinejad in a meeting. Other issues covered in the cooperation agreement include possible participation of Gazprom in the planned peace pipeline that would deliver Iranian gas to India and Pakistan, Shana said. Improving recovery rates in Iran's ageing oil fields and Russian help in transferring Caspian Sea crude oil to the Gulf of Oman are also mentioned. Cooperation in the development of Iran's North Azadegan oil field, part of the vast Azadegan filed in southwestern Iran, was also mooted in the agreement, Shana said. It said that working groups would be formed to implement the cooperation and a joint company would be set up between the two countries for cooperation in oil and gas. State television said Miller expressed willingness for Gazprom to participate "in big oil and gas projects; in South and North Pars, Azadegan and the Caspian Sea fields." Ahmadinejad, for his part, said that Iran was "interested in expanding ties with Russia in oil and gas as far as possible," state television said. The South Pars field in the Gulf has around 500 trillion cubic feet (14 trillion cubic metres) of gas, which represents about eight percent of world reserves. But the lack of foreign investment has so far delayed the development of the giant offshore field and dented Iran's hopes of becoming a major gas exporter. Azadegan is Iran's biggest onshore oil field with an estimated 42 billion barrels of crude oil in place and production started in February using only Iranian firms after the Japanese partner Inpex quit the project. Iran sits on the world's second largest proven oil reserves worldwide and is the number four crude producer worldwide and the second in the oil cartel OPEC. It also has the second biggest proven global gas reserves after Russia but so far has played only a minor role on the gas export market. Russia, while approving three sets of UN sanctions against Tehran, has repeatedly argued the nuclear standoff should be solved through diplomacy and still has significant economic interests in Iran.

Monday, July 14, 2008

Gazprom to snap up all Libya’s oil and gas

Gazprom to snap up all Libya’s oil and gasJuly 9, 2008 - Russia Today - Energy-rich Libya has approved an offer by Russia's gas monopoly, Gazprom, to buy all its hydrocarbon exports. It follows a meeting in Tripoli between Libyan leader Moammar Gaddafi and Gazprom chairman Aleksey Miller. Gazprom will also set up a joint venture with Libya's national oil corporation to modernise Libya's oil refining facilities and create new capacity. The two sides agreed to set up another joint venture for exploration and development in the north African country’s oil and gas fields. Miller had previously said Gazprom was interested in a project to expand an undersea pipeline from Libya to Sicily.

Monday, July 07, 2008

Gazprom, Azerbaijan agree to start talks on Azeri gas sales

BAKU, July 3 (RIA Novosti) - Gazprom and Azerbaijan have agreed to start talks on Azerbaijani natural gas sales to the Russian energy giant, the company's chief executive said Thursday. "Azerbaijan could become one of the countries selling natural gas to Gazprom, even though the country bought gas until recently," Gazprom CEO Alexei Miller said, adding that the company was seeking to buy the largest possible volumes of gas at market prices. Gazprom proposed buying gas from the ex-Soviet state in June. The company has forecasted that the average European price for gas could hit $400 per 1,000 cubic meters by the end of 2008. Miller said Thursday the forecast had been raised. "By the end of 2008, gas in Europe will cost $500 per 1,000 cu m," he said. He added that should oil prices go past $250 per barrel, the natural gas price would exceed $1,000 per 1,000 cu m. He said such high prices would not be an unnatural phenomenon for the market, as some individual Gazprom contracts had at certain times already exceeded the figure. Rovnag Abdullayev, president of the State Oil Company of Azerbaijan, said earlier that the South Caucasus republic was studying Gazprom's offer to buy Azerbaijani gas at market prices along with proposals to supply natural gas for the Nabucco and Trans-Adriatic gas pipeline projects. Azerbaijan is considered as a potential natural gas supplier for the Western-backed Nabucco project designed to bypass Russia and pump up to 30 billion cubic meters of natural gas annually from Central Asia to Europe via Azerbaijan, Turkey, Bulgaria, Romania, Hungary and Austria. The Trans-Adriatic project is for a natural gas pipeline from the Caspian Sea to Italy through Greece and Albania and under the Adriatic Sea. The Swiss firm EGL-AXPO, the project's operator, plans to involve Azerbaijan as a natural gas supplier for the pipeline. Azerbaijan's natural gas reserves are estimated at 1.5 trillion cubic meters. Azerbaijan is developing its giant Shah Deniz field, with gas reserves of over 1 trillion cubic meters, under a production-sharing agreement signed in 1996. Seven companies, including BP, Norway's Statoil, France's Total and the State Oil Company of Azerbaijan are involved in the project. The Shah Deniz field is expected to yield 8 billion cubic meters of natural gas this year. In March, the gas companies of Kazakhstan, Uzbekistan and Turkmenistan said they will sell gas at European prices from 2009.

Wednesday, July 02, 2008

Gazprom: endless price growth strategy

MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - Gazprom, the world's biggest gas company, believes that there will be no alternative to hydrocarbon-based fuel in the foreseeable future and therefore gas prices will continue to soar. On that basis the Russian state-controlled gas monopoly hopes to become an influential world energy company. This is borne out by the materials prepared for the annual meeting of Gazprom shareholders held on June 27. The meeting was routine, if not dull. And indeed, what can one expect since the price of hydrocarbon resources have skyrocketed for several years, with the current average price in Europe at $400 per 1000 cubic meters. Even the first change of Gazprom's Chairman in many years was something of a formality: First Vice Premier Viktor Zubkov became the Chairman of the company's Board of Directors replacing Dmitry Medvedev who moved from the seat of Vice Premier to that of President in May. However, for eight years the day-to-day affairs of Gazprom have been run by the company's CEO Alexei Miller. He implied that the company's strategy would still be based on the price for "the blue fuel". The gas company's investment program hinges entirely on this. In 2008, with luck, the investment program may increase from the planned 710 billion rubles ($30.33 billion) to 910 billion rubles ($38.9 billion). The main investment projects will be the Bovanenkovo and Kharasavei fields on Yamal Peninsula, which the Russian giant is finally starting to develop, and the building of the gas pipeline between Bovanenkovo and Ukhta which will link the fields on the peninsula with the existing network of gas pipelines. It is heartening that the gas monopoly is planning to increase gas production in 2008, if only by 2.6% to 563 billion cubic meters. The extra gas will go to the domestic market. It will be recalled that Gazprom's fuel production dropped by 1.3% in 2007. The meeting discussion could not ignore the delicate issue of Russia's middleman role in selling Central Asian gas to Ukraine through which 80% of the sales of Russian gas go to Western Europe. Last spring Uzbekistan, Kazakhstan and Turkmenistan declared that they would themselves supply gas to Gazprom at average European prices (this year Ukraine has been buying Central Asian gas from Gazprom at a much cheaper price, $179.5 per 1000 cubic meters). Miller told the Gazprom meeting that if agreements with the Central Asian countries are based on the average European price this year, the cost of gas for Ukraine would be more than $400 per 1000 cubic meters. It should be noted that Russian Prime Minister Vladimir Putin, in his talks with Ukrainian Prime Minister Yulia Tymoshenko on June 28, was much more diplomatic. Both agreed European prices for Ukraine should be introduced gradually. As for other aspects of international cooperation, Miller told the Gazprom meeting that an agreement with Slovenia on building the Southern Stream pipeline (from the Russian Black Sea coast via the Balkans with branches to southern and northern Italy) would be signed shortly. A similar agreement is planned with Austria. (Such agreements have already been signed with other transit countries. A recent Financial Times list of the biggest companies has Gazprom, with a capitalization of $300 billion, in 4th place after ExxonMobil (U.S.), PetroChina (China) and General Electric (U.S). However, after the meeting Miller said that the Russian gas monopoly was set to gain even greater weight as an energy company in the world. He thinks Gazprom will need 7-10 years to become the world's "number one". Miller can well afford to make such forecasts as his own contract with the company expires in 2011. A promise to double the group's capitalization within two years would make more sense. But to do that the issue of the group's efficiency must be addressed and the returns on investments must be increased. Today investments are spent much like in Soviet times, on the basis of using up the money. But this is not how Gazprom management thinks. It believes that the price of hydrocarbons will go up and up. In an interview with the British Financial Times on the eve of the shareholder meeting, Miller said the price of oil next year would hit $250 per barrel (OPEC, for example, does not rule out that oil prices will jump to $150-170 per barrel this summer, but it is aware that the market is a typical "bubble" which may burst at any moment). Miller told the FT that his company viewed North America as a sphere of its strategic interests and was planning to start supplying liquefied natural gas from the Shtokman field in the Barents Sea to the US and Canada beginning in 2014 (having said that, the West-European market may consume all the fuel from Shtokman). Miller also claims that Gazprom is interested in taking part in the construction of a pipeline in Alaska. Moreover, Miller says Gazprom is about to strike a major gas deal with Nigeria for the construction of a 4300 km trans-Saharan pipeline that would bring gas to Europe via North Africa. If one looks at the world through rose-colored glasses, one can make bold plans indeed.

Contact me:  

eXTReMe Tracker This page is powered
by Blogger. Isn't yours?