Tuesday, September 30, 2008
Gazprom and PDVSA sign Memorandum of Understanding
Sep 30, 2008 - Scan Oil&Gas - As part of the working visit of Russian Federation President Dmitry Medvedev to Orenburg, Gazprom's Management Committee Chairman Alexey Miller took part in a meeting with Venezuelan President Hugo Chavez. In the presence of Dmitry Medvedev and Hugo Chavez, Alexey Miller and Rafael Ramirez, Venezuelan Energy & Mines Minister, President of Petroleos de Venezuela SA (PDVSA) signed a Memorandum of Understanding. The document contemplates potential large-scale interaction between the companies, particularly in field development, infrastructure construction, oil and gas extraction and processing, including joint low pressure gas production projects. The area of mutual interests covers hydrocarbon transportation, geological exploration, reserve estimation and certification, LNG production, services including drilling operations, oil & gas well and equipment repair. To implement the accords set forth in the Memorandum, the parties will establish the relevant working groups. “Gazprom has been working successfully in Venezuela for several years already. The Memorandum signed today identifies the mechanisms of choosing new projects for joint implementation and will contribute to deepening the bilateral strategic cooperation in a wide spectrum of aspects not only in Venezuela but also in other countries of South America. In particular, I am referring to joint operations in Bolivia,” said Alexey Miller.
Gazprom board sets date for major pipeline construction
RBC, 30.09.2008, Moscow 17:51:08. – Gazprom's Board of Directors has urged the Management Committee to insure that the construction of the Sakhalin-Khabarovsk-Vladivostok gas transportation system is completed in the third quarter of 2011, the gas monopoly's press office reported today. The board discussed the development of the Russian Far East's energy sector during today's meeting. According to another request by the Board of Directors, the Management Committee is also to make sure that gas supplies to Petropavlovsk-Kamchatsky, the administrative center of the Kamchatka region, start by the end of 2010. The move would be the first stage of the energy giant's program for gas supplies in Kamchatka.
Gazprom assesses Eastern Gas Program
RBC, 30.09.2008, Khabarovsk 16:48:45. – The total macroeconomic effect from the implementation of projects stipulated by Gazprom's Eastern Gas Program will amount to RUB 27.8 trillion (approx. USD 1.1 trillion), Deputy Chairman of the Russian gas monopoly's Management Committee, Alexander Ananenkov, told the 3rd Far Eastern International Economic Forum in Khabarovsk today. He noted that the implementation of Gazprom's program in the region from 2015 until 2030 would ensure an additional rise of 3.5 percent to 13.4 percent per year in the area's gross regional product (GRP). Tax payments to the federal and regional budgets are expected to amount to nearly RUB 3.8 trillion (approx. USD 150bn), Ananenkov said, and investment to be made in the projects has been estimated at more than RUB 2.4 trillion (approx. USD 95bn).
Gazprom, Eni say no 3rd partner in South Stream project
NOVY URENGOI, September 30 (RIA Novosti) - Gazprom and Italy's Eni have no plans to involve a third partner in their project to build a pipeline across the Black Sea to pump natural gas to Europe, the Eni CEO said Tuesday. Gazprom and Eni are implementing the South Stream project as equal partners. "For everything concerning South Stream AG [the project operator], we remain 50-50," Paolo Scaroni said. The South Stream pipeline is expected to annually pump 30 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, with the first deliveries scheduled to start in 2013. Bulgaria, Serbia, Hungary, Italy and Greece are also involved in the project. Scaroni said local partners could be involved in the project in the countries serving as the transit route for the pipeline but they would not participate in the equity of the project's operator. Scaroni said the project's total price was around $20 billion, with the cost of the sea section estimated at $10 billion. The cost of the overland section will be an additional $10 billion or more, Scaroni said.
Gazprom may get Libya Elephant field stake in Oct. - Eni
SALEKHARD, September 30 (RIA Novosti) - Gazprom's entry into Libya's Elephant oilfield under an asset swap with Eni could be clinched in October, the Italian company's chief executive officer said on Tuesday. Under the deal, Gazprom is to take half of Eni's stake in the Elephant oilfield (or a total of 33%) in exchange for Eni taking part in Russia's Arctic Gas. "I believe Gazprom's entry into the project should be finalized by the end of October," Paolo Scaroni said. Scaroni said the Libyan government had already approved the project. Eni and Gazprom formed a strategic partnership in 2006 to focus on both upstream and downstream in the oil and gas sectors. The Elephant field, located onshore in Libya's Murzuq Basin, was discovered in 1997 and produced 124,000 barrels a day (b/d) in 2006.
Monday, September 29, 2008
TNK-BP and Gazprom Neft Fined
29 September 2008 - Moscow Times - The Federal Anti-Monopoly Service said Friday that it would impose fines on TNK-BP Holding and Gazprom Neft for fixing prices of refined products on the local market. The size of the fines will be determined after further investigation, a spokesman for the anti-monopoly service said. The law under which the action was taken allows for a fine of 1 percent to 15 percent of revenues from sales of the products in question but no more than 2 percent of the company's total revenues. The investigation into TNK-BP focused on prices for gasoline and jet fuel. The Gazprom Neft probe looked into the cost of these two products as well as diesel and fuel oil, the regulator said in a statement. The two firms were charged with abusing their dominant position on the market, for setting "monopolistically high" prices and for setting market conditions that were unfair to competitors, the statement said.
Eni CEO, Gazprom Chairman Meet for Arctic Gas Pow-Wow
September 29, 2008 - Rigzone News - Eni CEO Paolo Scaroni and Chairman of Gazprom Alexei Miller met today in Moscow and made further progress in the implementation of the strategic partnership agreement. In particular, Scaroni and Miller agreed to sign by the end of October a new binding document relating to the development of the Artic Gas assets that Eni acquired in 2007. Specifically, the agreement will relate to the developement plan as well as the offtake and transportation of the gas from Artic Gas. The agreement to be signed will enable Gazprom to enter the Libian upstream. Eni and Gazprom also reviewed the progress made on South Stream.
Gazprom sets up offshore subsidiary
RBC, 29.09.2008, Moscow 11:58:24. – Gazprom has obtained a 100-percent stake in its new subsidiary, the Russian energy giant said in a statement today. The details of the deal have not yet been announced. Earlier, head of Shtokman Development Yury Komarov said, however, that Gazprom intended to establish a special purpose entity (SPE) for implementing its offshore projects, including geological surveys of offshore fields and their development. The SPE is expected to ultimately become the holder of the licenses of Sevmorneftegaz, the Gazprom-Rosneft joint venture created to develop and operate offshore fields.
Alexei Miller on Gazprom's Investment in Venezuela
29.09.2008 - [Neftegaz.RU] - Cooperation between Venezuela and Russian giant Gazprom is widening in years. Besides joint heavy crude and gas extraction, Gazprom has also set up in Venezuela a service company for repair and drilling operations. According to the information Miller has, Venezuela’s proven gas reserves amount to 4.5 trillion cu meters. “But the specific feature is that the basic reserves, roughly 90 percent, they are in the oil fields. Essentially, it is the production of oil and it is the particularity of this region and the particularity of gas production,” Miller emphasized. Asked how much gas Gazprom counts on producing in Venezuela, Miller said: “Everything depends on commercial discovery of the fields, but as to the blocks, where Gazprom is operating now, we speak of reserves of somewhat between 80 billion cu meters of gas to 100 billion cu meters of gas".
Former IEA head looks for flexibility in Gazprom’s energy relations with Europe
29 Septermber 2008 - Russia Today - Gazprom's current foreign expansion policy is facing resistance from the European Community. But Claude Mandil, Former Director of International Energy Agency, doesn't see any tension between the Russian gas monopoly and the EU, although he says, Gazprom should abandon plans to buy transport assets. Claude Mandil: "If Gazprom wants to sell gas directly in Europe, frankly I don’t see any problem, quite the opposite, I welcome. If Gazprom wants to buy transport assets in Europe, there is a problem, but not because it is Gazprom, it would be exactly the same for any supplier. We have regulations in Europe, which prevent any supplier from being also an owner of assets, of transport assets." RT: Russian energy companies are criticized for not investing enough into production. Do you share these concerns, and what are the consequences such a policy could have? Claude Mandil: "We don’t have all the information which is needed to be sure there is no problem. It may be more a problem of transparency than of reality." RT: What is the future of the Nabucco pipeline project? And how did recent events in the Caucasus affect the development of the project? Claude Mandil: "The more pipelines you have the more flexibility you have, so I think that Nabucco is a very good project, just as South Stream is a very good project as well, and just as North Stream is a very good project. All of them, I hope, should be implemented. What happened in the Caucasus in the past weeks, in my view, just reinforces the need for flexibility."
Friday, September 26, 2008
Gazprom Signs JV Deal, Long-term Gas Contract with Italian firms
26.09.2008 - RZD News - Russian energy giant Gazprom and Italian firms A2A and Iride on Friday signed an agreement to set up a joint venture and clinched a long-term deal for natural gas deliveries. The joint statement said the new venture would handle the sale of the agreed natural gas deliveries on the Italian market. Under the supply contract, Gazprom, represented by Gazprom Export and ZMB GmbH, is to provide 900 million cubic meters annually, and the volume can be increased in subsequent years. The contract will be effective from October 1, 2008, and run until 2022, with an option to extend for a further five years. To form the joint venture, A2A and Iride will create a corporate vehicle (70% A2A and 30% Iride), which in turn will be the 50% partner of the world's largest natural gas producer in the JV. Gazprom will appoint the chairman of the joint venture, while the managing director will be chosen by A2A, reports RIA Novosti.
Gazprom to lead Russian oil consortium, CEO says
RBC, 26.09.2008, Orenburg 16:44:05. – The Russian oil consortium to be established for further work within a joint venture between Petroleos de Venezuela S.A. (PDVSA) and Gazprom, Rosneft, TNK-BP, and Surgutneftegas will apparently be led by Gazprom, the Mayak radio station reported Russian energy holding's CEO Alexei Miller as saying after the signing of a memorandum of understanding between the Russian Energy Ministry and the Venezuelan Energy and Petroleum Ministry in Orenburg today. Miller noted that Gazprom had already operated in Venezuela for several years and had positive experience working there. The company has already developed a general plan for the development of the gas industry in Venezuela, Miller asserted, so it operates in the country "on a scientific basis." Rather than controlling the Russian-Venezuelan consortium, he stressed, Gazprom would become its operator. Miller added that the headquarters of the international consortium would be set up in the Venezuelan capital of Caracas.
Wednesday, September 24, 2008
Gazprom shrugs off credit crunch
23 September, 2008 - Upstream OnLine - Russian gas giant Gazprom, which is carrying debt of more than $50 billion, has not suffered in the global financial crisis and is confident it will be able to fund all its projects in due course, company boss Alexei Miller said today. Gazprom's capitalisation almost halved to $193 billion last week with the dive in the Russian share market. "We see no risks for the company. The interest from financial credit institutions wanting to lend to Gazprom is as big as it was before the crisis," financial daily Kommersant quoted Miller as saying. "That is why this crisis has not touched Gazprom at all. We are firmly standing on our feet, we are financially stable and will fund our investment programme which is rising from year to year," Miller added. Gazprom, which usually revises its investment programme several times a year, is expected to consider increasing it soon from the earlier approved 821.7 billion roubles ($33 billion) for this year. A source close to Gazprom's board of directors told Reuters the gas company was planning to cut its huge debt this year. The source said Gazprom, whose board is expected to discuss the debt situation at a meeting on 30 September, plans to "cut the debt to the level of the previous years", but did not elaborate. Gazprom's consolidated debt stood at 1.2 trillion roubles ($48 billion) at the end of 2007, up 52% year-on-year, after the company took control both of the Sakhalin 2 project and of Moscow utility Mosenergo . Kommersant quoted documents prepared for the meeting as showing that the company was by the end of this year going to cut its consolidated debt, comprising the debts of all its subsidiaries, to 920 billion roubles, the same amount as Gazprom's head company had at the end of last year. A part of the reduction, 360 billion roubles, is expected to be written off from Gazprom's balance sheet after the gas company cuts its stake in Gazprombank, once its main banking arm, said the paper. Kommersant also said that, according to the documents, Gazprom plans to refinance or repay from its own funds most of the debt taken on in 2007 and is also not planning any acquisitions before the end of the year.
Serbia Doesn’t Renege on Gazprom Deal
Sep. 24, 2008 - Kommersant - The Serbian government will honor all agreements reached previously on the acquisition of NIS, Serbia’s largest oil and gas company, by Gazprom. Speculation on the collapse of the deal was laid to rest during negotiations between Russian Emergencies Minister Sergey Shoigu and the Serbian leadership on Monday. Shoigu is the cochairman of the Russian-Serbian intergovernmental commission. Sources close to the negotiations say the talks were tense. Recent rumors held that the government was dissatisfied with the sale price for Naftna Industrija Srbije. Under an agreement reached in January of this year in the presence of the presidents of both countries, Gazprom Neft will buy 51 percent of the shares in NIS for €400 million and invest at least €500 billion in its modernization by 2012. The agreement also obliges Gazprom to build a branch of the South Stream gas pipeline and an underground natural gas reservoir in Serbia. Ratification of the agreement was delayed by the governmental crisis and early elections in Serbia. At the first meeting of the new Serbian parliament in July, Prime Minister Mirko Cvetkovic declared the price for the company insufficient and the deal was not ratified. Although the parliament approved the deal on September 9, Deputy Prime Minister Mladjan Dinkic stated, however, that the price for NIS would be the subject of further negotiations. An assessment of the company by Deloitte & Touche was published this month that set the value of the company at €2.2 billion. Serbian sources say that Shoigu pointed out that the NIS deal was linked to the construction of a pipeline that Serbia has a large interest in, that Russia wrote off over €12 million in Serbian debts, provided Serbia with favorable trading conditions and helped it in the battle for Kosovo. In the end, Serbian Deputy Prime Minister Ivica Dicic, who negotiated with Shoigu, stated, “Russia has repeatedly shown that it is our dependable ally. If anyone in Serbia doubts that, let him find us another one.”
Gazprom in First Foreign Project Liquefying Natural Gas
24.09.2008 - [Neftegaz.RU] - Petroleos de Venezuela S.A. has announced a new agreement with Gazprom concerning the Russian monopoly’s first foreign project to produce liquefied natural gas. Gazprom is to invest approximately $850 million over course of seven years and receive income from the sale of 700,000 tons of liquefied natural gas, that is, about $420 million at current prices, per year. It will liquefy some of the gas produced as a result of its cooperation agreement with Venezuela to develop gas on the Latin American country's shelf Alexander Medvedev, Gazprom deputy chairman, and Rafael Ramirez, Venezuelan Energy and Oil Minister and president of PDVSA, held negotiations last Friday and signed a memorandum of understanding on the Blanquilla and Tortuga project in the presence of Venezuelan President Hugo Chavez. 'Exploration and production of natural gas on the shelf will be delivered to the domestic market and will also be liquefied for export,' Gazprom said in a statement, without saying where the liquefied natural gas (LNG) would be shipped. The Blanquilla and Tortuga project includes exploration and production of natural gas on the continental shelf, its sale on the domestic market and its liquefaction and export. It is the third phase of the Delta Caribe Oriental project, in which PDVSA has invested $19.6 billion and in which it owns 60 percent of each phase. The third phase will extend from 2009 to 2016. Total investment in it will come to $5.73 billion. Besides Gazprom, Eni of Italy (10%), Petronas of Malaysia (10%) and Energias de Portugal (5%) will have shares. Gazprom, which is the largest gas producer in the world and supplier of a quarter of Europe's gas, has said it will add some 90 million tonnes of the super-cooled LNG fuel to its production by 2030, making it a global player with a quarter of the market. The company now has no LNG production of its own, but will get the first volumes next year when it launches its Sakhalin-2 project together with Royal Dutch Shell (nyse: RDSA - news - people ) and Japanese firms. Venezuela has proven reserves of 4.1 trillion cu. m. of natural gas, the second largest reserve in the Western Hemisphere after the United States. Venezuela produces about 30 billion cu. m. of natural gas per year, mainly as petroleum associated gas. The country’s proven oil reserves total 11.2 billion tons (7% of world reserves). The U.S. is the largest importer of Venezuelan oil. Gazprom did not name the amount of financing needed for the project or projections of production or reserves. The company did say however that it will look at other exploration and development projects in Venezuela.
Tuesday, September 23, 2008
Gazprom Makes a Deal in Venezuela
Sep. 23, 2008 - Kommersant - The state company Petroleos de Venezuela S.A. has announced a new agreement with Gazprom concerning the Russian monopoly’s first foreign project to produce liquefied natural gas. Gazprom will invest about $850 million in the course of seven years and receive the income from the sale of 700,000 tons of liquefied natural gas, that is, about $420 million at current prices, per year. Alexander Medvedev, Gazprom deputy chairman, and Rafael Ramirez, Venezuelan Energy and Oil Minister and president of PDVSA, held negotiations last Friday and signed a memorandum of understanding on the Blanquilla and Tortuga project in the presence of Venezuelan President Hugo Chavez. The Blanquilla and Tortuga project includes exploration and production of natural gas on the continental shelf, its sale on the domestic market and its liquefaction and export. It is the third phase of the Delta Caribe Oriental project, in which PDVSA has invested $19.6 billion and in which it owns 60 percent of each phase. The third phase will extend from 2009 to 2016. Total investment in it will come to $5.73 billion. Besides Gazprom, Eni of Italy (10%), Petronas of Malaysia (10%) and Energias de Portugal (5%) will have shares. Venezuela has proven reserves of 4.1 trillion cu. m. of natural gas, the second largest reserve in the Western Hemisphere after the United States. Venezuela produces about 30 billion cu. m. of natural gas per year, mainly as petroleum associated gas. The country’s proven oil reserves total 11.2 billion tons (7% of world reserves). The U.S. is the largest importer of Venezuelan oil.
Monday, September 22, 2008
Gazprom plans LNG for Venezuela gas
22 September, 2008 - Upstream OnLine - Russian gas export monopoly Gazprom said today it will liquefy some of the gas produced as a result of its co-operation agreement with Venezuela to develop gas on the Latin American country's shelf. "Exploration and production of natural gas on the shelf will be delivered to the domestic market and will also be liquefied for export," Reuters quoted Gazprom as saying in a statement, without saying where the liquefied natural gas would be shipped. Gazprom and Venezuela clinched an exploration and production deal last week in talks between Venezuelan state energy company PDVSA, the country's president Hugo Chavez and Gazprom chief executive Alexei Miller. Gazprom did not name the amount of financing needed for the project or projections of production or reserves. Venezuela also struck deals on Friday for natural gas projects in the Caribbean with other foreign companies, including Chevron . As well as Chevron and Gazprom, Italy's Eni, Qatar Petroleum, Japan's Mitubishi Corporation, Mitsui, Itochu and Malaysia's Petronas signed the accords to work on the offshore gas projects, the Venezuelan government said. The deals help make Chavez's case that his Opec nation can work with foreign investors despite his deteriorating relations with the Bush administration. Gazprom, which is the largest gas producer in the world and supplier of a quarter of Europe's gas, has said it will add some 90 million tonnes of the super-cooled LNG fuel to its production by 2030, making it a global player with a quarter of the market. The company now has no LNG production of its own, but will get the first volumes next year when it launches its Sakhalin-2 project together with Shell and Japanese companies. The project in the Pacific waters will ultimately produce 9.6 million tonnes, entitling Gazprom to 4.8 million tonnes of LNG per year. It also wants to launch its landmark Shtokman Barents Sea field in 2013 with first LNG production expected at a few million tonnes in 2014. Gazprom also said it will look at other exploration and development projects in Venezuela. In July, Chavez met with Russian president Dmitry Medvedev in Moscow, where a Kremlin source said Venezuela's state energy company PDVSA was planning several deals with Gazprom, Russia's second-largest oil company Lukoil and BP's Russian arm TNK-BP . Last week, Gazprom and France's Total committed to investing up to $4.5 billion in a natural gas project in Bolivia.
Gazprom Digs in South America
22.09.2008 - [Neftegaz.RU] - On Sept. 18 Gazprom has signed up to joint gas discovery and mining company together with the Bolivian Yacimientos Petroliferos Fiscales Bolivianos (YPFB) and French Total. Its going to be the first Gazprom's joint venture in South America. Bolivian government promises 49% of earnings to Gazprom and Total, while other foreign companies get only 18% from gas output sales. For such a huge amount of profit both companies have to contribute $4.5 bln. into the project. Though all the matters are still under discussion - political unstability in Bolivia makes the project very risky. Nevertheless, it's not the only Gazprom's project in this world region. The day after Bolivian agreement, Gazprom was among eight companies that signed deals to develop offshore gas fields with state-owned Petroleos de Venezuela at a ceremony presided over by President Hugo Chavez in the country's capital.
Friday, September 19, 2008
Gazprom, Total sign gas deal with Bolivian firm
MOSCOW, September 19 (RIA Novosti) - Gazprom and Total have signed a memorandum with Bolivian company YPFB on gas exploration and extraction, and the possible creation of a joint venture in Bolivia, the Russian energy giant said Friday. The signing took place during a visit by a Gazprom delegation to the Latin American country, which started Thursday. "The talks resulted in the signing ... of a trilateral memorandum which foresees the joint assessment of the Acero block and marks another step forward to the creation of a new joint venture to produce hydrocarbons in Bolivia," Gazprom said in a news release. Bolivia is second in Latin America after Venezuela in terms of natural gas reserves (1.5 trillion cubic meters) and has a high gas-bearing potential. Gazprom and YPFB signed a memorandum of understanding in February 2007 for prospecting and infrastructure projects as well as the training of staff. The blocks selected by Gazprom experts - Sunchal, Acero and Carohuaicho - are located in southeastern Bolivia within the gas-bearing Subandino Sur basin. Experts estimate they contain up to 300 billion cubic meters of gas.
Putin and Shroder discuss Nord Stream pipeline project
19.09.2008 - [Neftegaz.RU] - Putin, Shroder, who chairs the Nord Stream pipeline project and Alexei Miller, Gazprom chief executive, met on Thursday right a week past U.S. Ambassador to Sweden Michael Wood criticized both Gazprom pipeline project. Wood said in his report that EU must review its energy dependence on Russia and find other ways to get energy sources. In spite of this quite reasonable statements, Shroder defended Nord Stream pipeline project, taking into consideration that 100 million euros ($145 million) had already been invested in an environmental study of the Baltic Sea. As for Gazprom's second project - South Stream - Russian Prime Minister Putin discussed it later that day with Bulgarian Prime Minister Sergei Stanishev. So far both project are to be continued.
Thursday, September 18, 2008
No delays in gas deliveries to Europe via Nordstream
September 18, 2008 - Russia Today - The Nordstream gas project has been the key focus of a meeting between Russian Prime Minister Vladimir Putin, Gazprom chief Alexei Miller, and Nordstream Project head Gerhard Schroeder. The multi billion gas project Nordstream topped the agenda of Thursdays meeting between prime Minister Putin, Germany’s former top politician Gerhard Schroeder, and Gazprom’s Alexei Miller. Miller is keen to allay fears about any possible delays to the project. “There is no doubt that the project will be realized by the end of 2011. We’ve already signed the necessary documents on running the pipeline through the Baltic sea, and on production of the pipeline. First deliveries of the pipeline are already being made.” Alexei Miller reassured that Nordstream will meet more than a quarter of Europes gas needs. Its estimated that Europes need for imported gas will reach more than 200 Billion cubic metres. A key focus of the meeting was the projects environmental risks. Some say the construction of the pipeline along the floor of the Baltic Sea will unavoidably have some environmental impacts. Gerhard Schroeder says they have already addressed many of these issues. “In October we will present the most detailed research ever made on the ecology of the Baltic Sea. It will cost 100 Million Euro and will concern not only ecological problems but also munitions sunk during World War 2.” Meanwhile Nordstream is becoming a multinational project. So far 5 countries are on the list of those who will receive Russian gas by 2011, and this number will only grow.
Russia's Gazprom Not As Powerful As It May Seem
September 18, 2008 - RFE/RL by Bruce Pannier - Gazprom is not only the largest company on Earth -- with natural-gas prices reaching record highs and looking to rise further, it is also one of the wealthiest. And with just over 50 percent of Gazprom's shares (50.002) belonging to the Russian government, the European Union in particular is worried that political disputes between Gazprom's consumer countries and the Kremlin could result in reductions or suspensions of vitally important gas supplies. This worry became acute after Russian military action in Georgia in early August. Some countries in the EU want to punish Russia for incursions into Georgian territory, but at the same time, the bloc is conscious of the fact that so many European countries are heavily dependent on Gazprom for energy supplies -- and winter is coming soon. But some don't think Gazprom is as powerful as many people think. Gazprom has "150,000 kilometers of high-pressure pipeline, so it's a very, very large system. Much of it was installed in the 1970s and '80s, a lot of it in a big hurry with not very good Soviet technology," says Jonathan Stern, an analyst with the Oxford Institute for Energy Studies and the author of the book "The Future of Russian Gas and Gazprom." "So it's now getting old and it needs to be replaced on an accelerated basis, but the difficulty is to say how fast it needs to be replaced," he adds. "I think they now realize that they need to replace it as fast as they can and that probably means they are going to spending something on the order of $5 billion-10 billion per year on pipeline replacement for a good period of time ahead." The Russian government has made the "gasification" of Russia -- that is, supplying the whole country with natural gas -- a priority for Gazprom, even as the company must repair, upgrade, and construct export pipelines. In fact, until recently Gazprom was losing money on the domestic market, according to Stern. Supplying the domestic market "certainly was a very substantially loss-making proposition until the mid-2000s," he says. "Probably since 2006 they've started to make money, or at least not lose money, on the domestic market. And the profitability of the market should improve dramatically in the next few years as prices have been increased roughly 25 percent a year." Who Depends On Whom? - About two-thirds of Gazprom's gas currently goes to the domestic market. The rest is exported but accounts for most of Gazprom's revenue, though the company's total revenue is enough to account for some 25 percent of Russia's federal tax revenues. Gazprom exports "somewhere between 30 and 40 percent of its total production to Europe and Turkey," says Jennifer DeLay, the editor at the Edinburgh-based "FSU Oil and Gas Monitor." Within the European Union, the percentage of Gazprom gas imported by individual member states varies. Belgium, for example, receives a mere 1.6 percent of its imported gas from Gazprom, whereas Germany gets about 40 percent of its gas from the Russian company. But some of the newer, postcommunist EU members rely on Gazprom entirely for their gas imports. Gazprom, and by extension the Russian government, would seem then to have an advantage in dealing with Europe. But DeLay says the relationship is symbiotic. "Gazprom needs Europe as much as Europe needs Gazprom, more in fact," she says. "I believe that European gas sales account currently for about 60 percent of Gazprom's total revenues. Losing that would hurt the company very much." The big problem for the EU is not becoming too dependent on Gazprom, it's that Gazprom alone cannot fill all of the EU's energy needs, says Pierre Noel, an energy expert at the European Council on Foreign Relations in London and also a professor at the University of Cambridge. Running Out Of Gas? - "From what we understand, they already are unable to meet all their commitments with their own production and Gazprom is particularly reliant on two sources of non-Gazprom gas, which are imports from Central Asia -- essentially from Turkmenistan -- on the one hand and the so-called independent producers, the non-Gazprom gas producers in Russia," Noel says. These alternative sources are vital for Gazprom, says Oxford's Stern. "I think that the next five years, particularly starting about 2011, is going to be a difficult time for Gazprom. They have declining fields; the fields that brought them through the last 30 years are declining; they've got to open up new fields in more difficult areas, and I think that's going to be a problem for them and I see them being in a little bit of a tight squeeze for gas starting about the early 2010s." Noel adds that Gazprom is developing a new field and that the company's gas-supply situation will improve, but not soon. "The sort of mid- to long-term future is probably brighter for Gazprom, but they have a very difficult intermediary period to manage between essentially now and when the new generation of super giant fields come on stream from the Yamal Peninsula." So Europe is actually approaching a time when the main concern may not be avoiding a dependence on Gazprom. "I think that there is a complete misunderstanding within Europe that the real problem Europe faces is not that it will be flooded with Russian gas and become so dependent that it will not be able to resist political demands from Moscow," Stern says. "The real problem for Europe is that it's not going to get as much gas from Russia as it will need in the future and my personal view is that I don't see Gazprom signing any new long-term contracts for gas in Europe," he notes. "And while that may be a good thing for people who think Europe is already too dependent on Russia for gas, it is a problem for those who have done an analysis on the amount of gas Europe is going to need in the next 10 to 20 years, and we're concerned about where Europe's going to get that gas from." And while it's true that supplies to parts of Europe have been temporarily reduced or -- in rare and for very brief times halted due to disputes with Ukraine or Belarus -- Western experts point out that for 40 years Gazprom (during the Soviet times it was the Oil and Gas Ministry) has been a reliable partner for Europe.
Gazprom plans to enter Italy
18.09.2008 - [Neftegaz.RU] - The news was announced by Fulvio Conti, Chief Executive of Enel. Gazprom "has indicated a natural gas-fired plant along the Adriatic," said CEO Conti at a conference in Russia to inaugurate construction of a new generating facility. Conti's comments were first reported by the Italian newswire Ansa and later confirmed by a company spokeswoman. Enel's CEO didn't name the plant. In April, Conti said the minority stake offered, in a list of Italian facilities, to Gazprom was worth $200 million to $250 million. Gazprom is looking at a stake of about 20% in the Italian power plant, said a person familiar with the matter, who asked not to be named. Enel has large energy operations in Russia and estimates it will be one of the countries with the highest power-demand growth markets in Europe.
Gazprom's Leader expresses interest in Kit Finance shares
18.09.2008 - [Neftegaz.RU] - Asset management firm Leader, part of the business empire of Russian gas export monopoly Gazprom, wants to buy as much as 100 percent in Russian brokerage Kit Finance, state-controlled Gazprombank said on Wednesday. "Asset management company Leader confirms it is in talks with Kit Finance shareholders to buy out up to 100 percent of the bank's shares and is ready to provide additional support to the bank. The talks on the share buy-out are at the stage of agreeing on technical details," Gazprombank said in a statement. Kit Finance, which had failed to meet some of its financial obligations to clients, said earlier on Wednesday it was in the final stages of talks to sell "a controlling stake" to Leader with the support of state-controlled banks Gazprombank and VTB. Leader, founded in 1993, manages Gazprom's pension fund. Gazprombank is a major shareholder in Leader. "Gazprombank jointly with asset management company Leader has held talks with shareholders and management of bank Kit Finance," Gasprombank said later in the statement. "As a result of these talks, Gazprombank declares it will provide Kit Finance with a sufficient amount of refinancing resources to enable the latter to meet its financial obligations to its clients." Kit's chief, Sergei Grechishkin, told Reuters on Tuesday that several large clients had been unable to meet their obligations and that with liquidity scarce, the brokerage had failed to meet some of its own obligations. Russia halted stock and bond trading on Wednesday amid the worst falls since the country's 1998 financial collapse and the Finance Ministry pledged a total of $60 billion of funds to help local banks. It was not clear when the bourses would reopen. Traders in Moscow had speculated that a Russian state-owned bank was likely to buy Kit as the Kremlin tried to calm spooked investors, who have seen more than $600 billion wiped off stock prices this year. Market analysts hailed Kit's deal with Leader. "This is great news. It's great they managed to resolve it all in such a short time," said Alfa Bank analyst Natalya Orlova. "This ... can support the stock market." Russian markets have had their steepest fall since the 1998 crisis on concerns a brokerages and local investors may fail to meet their obligations and are being forced to sell securities into a falling market.
Putin Meets Schroeder for Pipeline Talks After U.S. Criticism
Sept. 18 Bloomberg by Lucian Kim -- Russian Prime Minister Vladimir Putin met with former German Chancellor Gerhard Schroeder a week after a U.S. diplomat criticized a planned OAO Gazprom natural-gas pipeline under the Baltic Sea. Putin received Schroeder, who chairs the Nord Stream pipeline project, and Gazprom Chief Executive Officer Alexei Miller at the Black Sea resort of Sochi today, state-run broadcaster Vesti-24 reported. Nord Stream, which Gazprom plans to build with Wintershall Holding AG, E.ON Ruhrgas AG and Nederlandse Gasunie NV, will supply consumers in Germany, France, the U.K., the Netherlands and Denmark, Putin said. Other partners in the project may still be considered, he added. Last week, U.S. Ambassador to Sweden Michael Wood published a commentary urging the European Union to review its energy dependence on Russia following the August invasion of Georgia. Wood called on the EU to reconsider Nord Stream as well as a second Gazprom project, the South Stream pipeline under the Black Sea linking Russia to Italy via the Balkans. Schroeder, who became chairman of Nord Stream less than a month after leaving office in 2005, defended the project today, saying 100 million euros ($145 million) had been invested in an environmental study of the Baltic that will be presented in October. Putin is scheduled to meet with Bulgarian Prime Minister Sergei Stanishev later today to discuss regional energy projects. Bulgaria signed on as a South Stream partner in January and is participating in a planned Russian oil pipeline bypassing the clogged Turkish straits via Greece.
Wednesday, September 17, 2008
Gazprom to Sell Shtokman’s LNG
Sep. 17, 2008 - Kommersant - Russia’s gas monopoly Gazprom is setting up a 100-percent subsidiary, Gazprom Dobycha (Production) Shelf, to operate on offshore fields, Interfax reported with reference to Yuri Komarov, who is the chief executive officer at Shtokman Development AG. A new company will hold all shelf licenses of Gazprom. The second news related to Shtokman field is Gazprom’s intention to sell a sizeable portion of LNG by the end of 2009. Gazprom Export that is the authorized vendor of product yielded by the Shtokman project will make contracts for supplies of a sizeable portion of the liquefied natural gas produced from Shtokman. Komarov said the issue of project’s funding is to be decided, but the banks accept only the binding documents for supplies when granting the money. “The situation on financial market is becoming more complicated and it provokes agitation,” Komarov said during the VNIIGAZ conference dedicated to development of oil and gas resources of Russia’s offshore fields. “Unfortunately, we see cyclic recurrence. Gas prices started to decline and it gives rise to apprehension and may affect the project,” Komarov pointed out, specifying, however, that “the market realizes that the time of cheap gas has passed.”
Monday, September 15, 2008
Germany Backs Gazprom Pipeline After U.S. Diplomat Urges Review
Sept. 12 (Bloomberg) by Lucian Kim -- The German government said it still supports a planned natural-gas pipeline from Russia, shrugging off a U.S. ambassador's call for the OAO Gazprom-led project to be reconsidered. ``We have made it clear that we support this project for political reasons,' Ulrich Wilhelm, German Chancellor Angela Merkel's chief spokesman, told reporters in Berlin today when asked about the diplomat's comments. The so-called Nord Stream pipeline beneath the Baltic Sea, chaired by former Chancellor Gerhard Schroeder, is necessary for the European Union's energy security, Wilhelm said. Michael Wood, the U.S. ambassador to Sweden, wrote a commentary in the Swedish newspaper Svenska Dagbladet Sept. 10 saying that Europe must consider alternative energy routes that reduce its dependence on Gazprom following the Russian invasion of Georgia last month. ``Nord Stream bypasses the Baltic states and Poland, potential consumers, and represents a special arrangement between Germany and Russia,' Wood said. ``The EU should be speaking with a single voice to counteract the power of Russia's energy weapon.' The EU should also ``reexamine' a second Gazprom project, called South Stream, to link southern Europe to Russia via the Black Sea, Wood said. The German Foreign Ministry protested to the U.S. embassy in Berlin that it was ``irritated' by the comments, German newspaper Handelsblatt reported yesterday on its Web site. Project Delayed - Nord Stream, designed to raise Russia's export capacity to Europe by a third, faces environmental and political opposition from countries along its route. As a result, the project has had to push back the start-date to 2011 from 2010 and raise the budget to pay for additional environmental safeguards. ``It looks like the U.S.A. is ignorant of the ancient diplomatic rule not to comment on a third country in the place of residence,' the Russian embassy in Stockholm said on its Web site. ``We have no intention to enter into any tussle with the U.S. on the territory of a third country. Unlike our partners, we do not want to sound diplomatically unethical.' The 1,200-kilometer (750-mile) Nord Stream pipeline needs permits from five countries touching the route -- Russia, Finland, Sweden, Denmark and Germany. Nord Stream plans to fix a final route by the end of this month and submit an environmental impact assessment by the end of the year. Gazprom owns 51 percent of Nord Stream, with Wintershall Holding AG and E.ON Ruhrgas AG each holding 20 percent and Nederlandse Gasunie NV 9 percent.
Yuzhno-Russkoye to Meet Target 2 Years Early
12 September 2008 - Reuters - Moscow Times - Gazprom and German energy group Wintershall will be able to reach maximum production at the Siberian Yuzhno-Russkoye gas field in 2009, two years ahead of schedule, a Wintershall executive said Thursday. "Production ... can be expanded more quickly than initially planned," Wintershall board member Rainer Seele said. "We will reach the maximum of 25 billion cubic meters in 2009 and thus two years earlier than originally expected." Gazprom owns the majority of the field, while BASF, the parent of Wintershall, has a 25 percent stake minus one share, which will feed the Nord Stream gas pipeline that will take Russian gas to Europe from late 2011. He said Nord Stream was not trying to compete with other pipelines, as all new transport channels under consideration were important. Seele specifically included in that reference the Nabucco pipeline project, which is planned for taking Caspian region gas to Europe via Georgia and Turkey, bypassing Russia. Prime Minister Vladimir Putin weighed in on the heightened energy-supply concerns Thursday, telling members of the Valdai discussion forum in Sochi, "Let's just finish building the pipe. Quit all the squabbling," Interfax reported. "Globally, it's better to be helpful than trying to trip people," Putin was quoted as saying by participants in the discussions.
Total Sees Gazprom as `Key' Partner for Russian Energy Projects
Sept. 11 - Bloomberg by Tara Patel and Ryan Chilcote -- Total SA, Europe's third-largest oil company, sees a partnership with OAO Gazprom as ``key'' to developing energy projects in Russia. ``If we consider new projects there, it will be with Gazprom,'' Total Chief Financial Officer Patrick de la Chevardiere said in an interview with Bloomberg Television yesterday in London. ``We want to maintain our relationship. Gazprom is a key partner in Russia.'' Total and Norway's StatoilHydro ASA hold stakes of 25 percent and 24 percent respectively in a unit working on the Arctic field of Shtokman, while Gazprom holds the rest. Total counts the project among 15 ``building blocks'' to provide 12 billion barrels of oil equivalent in reserves and says it will make an investment decision at the end of 2009 or early 2010. Gazprom has said the field holds enough natural gas to supply the world for one year. Total, based in Paris, also plans to make bigger purchases among exploration and production companies internationally than in the past three years to boost output. ``The acquisition market has changed dramatically this summer,'' de la Chevardiere said. ``Some small companies share prices dropped 30 percent.'' Total is ``looking at possible targets'' around the world, and hasn't yet decided to approach one in particular, he said. Canadian Assets - Total bought Synenco Energy Inc., the Calgary-based energy company developing an oil-sands project, at a cost of C$541 million ($505 million) to expand heavy oil operations. The French company bought Canada's Deer Creek Energy Ltd. for C$1.67 billion in 2005. ``We might make a bigger acquisition in the near future,'' Chief Executive Officer Christophe de Margerie said at an analyst conference in London yesterday on the company's outlook, referring to the Synenco deal. ``If we want to keep a strong upside in our portfolio we need to make acquisitions.'' Future acquisitions will be in sectors Total is missing in its exploration and production portfolio and will adhere to profitability requirements, de la Chevardiere said. Total yesterday cut its annual production growth target because higher crude prices will prompt partners to demand a greater share of output. Average output growth over the next decade will be 2 percent to 3 percent, de Margerie said. The estimate, based on crude prices of $100 a barrel, is lower than the 4 percent predicted a year ago for the five years through 2010, which was based on oil at $60. Production Growth - The producer is relying on projects in Angola and Canada's oil sands to raise output as Kazakhstan and Venezuela restrict access to reserves. Total said almost a fifth of production will come from LNG ventures by the middle of the next decade, with growth led by nine liquefaction projects already operating or under construction. A further five are being studied, it said. Total plans to triple LNG output to 30 million tons a year by 2016, surpassing Exxon Mobil Corp. and remaining behind Royal Dutch Shell Plc, it said. The company's LNG assets include stakes in projects in Yemen, Qatar and Angola, as well as Shtokman. Total, Eni SpA and their partners in Kazakhstan's Kashagan field agreed to cede a greater stake in the development to the government in January. The project is at least seven years behind schedule. ``Our estimate for first oil is 2012,'' de la Chevardiere said. ``I am confident the new contract framework will be able to achieve this.'' Kazakhstan Energy Minister Sauat Mynbayev said Sept. 5 the field is on target to meet an October 2013 deadline for starting production.
Wintershall sees rapid Siberia gas progress
COLOGNE, Germany, Sept 11 (Reuters) - German oil and gas group Wintershall and Russia's Gazprom will be able to reach maximum production at the Siberian Yuzhno Russkoye gas field in 2009, two years ahead of schedule, a Wintershall executive told Reuters in an interview on Thursday. 'Production is going well, it can be expanded more quickly than initially planned,' Wintershall board member Rainer Seele said on the sidelines of an energy conference. 'We will reach the maximum of 25 billion cubic metres (bcm) in 2009 and thus two years earlier than originally expected.' Gazprom owns the majority of the field, while BASF (nyse: BF - news - people ) has a 25 percent stake minus one share, which will be jointly developed to feed the Nord Stream gas pipeline that will take Russian gas to Europe from late 2011. Seele, who is chairman of the BASF Wingas unit in Germany, a 50/50 trading joint venture with Gazprom, also reiterated its 2008 Wingas sales target for 30 bcm, up from 25.4 bcm in 2007. He cited pricing policies and success in wooing German local utilities. 'That will be an all-time record result,' he said. Asked if oil's sharp price drop meant Continental gas prices could fall soon, he said the link between oil and gas gas prices moves with a six-month time lag. 'Gas consumers have not even seen the (record) $147 oil price in their bills,' he said. Current oil price falls to around $100 would be noticeable in gas bills in the spring of 2009 at the earliest, he added.
Wednesday, September 10, 2008
Gazprom reveals investment plans
09.08.2008 - RBC Moscow 13:13:53 - The implementation of Gazprom's Eastern Gas Program requires RUB 2.4 trillion (approx. USD 94.3bn) worth of investment until 2030, Deputy Chairman of Gazprom's Management Committee Alexander Ananenkov was cited by the Russian energy giant's press office as saying during an economic forum in Yakutia (the Sakha Republic) today. Ananenkov noted that, according to a government decree, Gazprom had obtained three licenses for the development of an oil and gas condensate field in Yakutia, a gas field in Sakhalin, and a gas condensate field in the Yamalo-Nenets Autonomous Area. He also mentioned several steps to be taken to establish a natural gas center in Yakutia in 2009.
Gazprom assures Germany of stable gas supplies in future
LEIPZIG, September 10 (RIA Novosti) - The head of Gazprom assured German consumers Wednesday that they could continue to count on the Russian energy giant for stable natural gas supplies. "Gazprom has always been a reliable partner of VNG and Germany, and I want to assure you that it will be so in the future," Alexei Miller said at an event to mark the 50th anniversary of Germany's largest gas distribution company, VNG. German Chancellor Angela Merkel was expected to address the celebration, which gathered guests from Germany and its partners, including Russia, France, Norway and Britain. Miller said safe and reliable energy supplies had always been central to Gazprom. "Energy security is a bilateral thing. This means there should be both a reliable supplier and a reliable consumer," the businessman said, referring to Germany, Russia's largest gas importer. Gazprom and VNG first started working together 35 years ago. Despite the close ties in the energy sphere, there have been tensions of late between Moscow and Berlin over Russia's decision to recognize the independence of Abkhazia and South Ossetia, with Merkel describing the move as "totally unacceptable."
Gazprom under threat after regulator fine
09-09-2008 - Financial Times by Catherine Belton - Gazprom’s hold on Russia’s gas industry appeared to be weakening on Tuesday after a Russian regulator said the state-controlled gas export monopoly would be fined for restricting access for an independent gas producer to its vast pipeline network. Gazprom’s shares fell 7.9 per cent to their lowest level since they started trading on Russia’s Micex stock exchange in January 2006. Investors appeared worried that the fine – which could be anywhere between $6m and $250m – could be only the first in a series of broadsides against the gas giant. The sell-off, part of a broader slump in the Russian market, was also triggered by falling oil prices. The Russian Federal Anti-Monopoly Service said it was pressing ahead with the fine for “violations” of antitrust rules for denying pipeline access to Transnafta, an independent producer in the Tatarstan region. A spokeswoman at the Anti-Monopoly Service said the fine could be as much as 15 per cent of Gazprom’s annual revenue in the “corresponding market”. The move signals a subtle power shift within the Kremlin and the country’s energy sector that may weaken Gazprom’s clout. It follows the appointment of Igor Sechin, Mr Putin’s former deputy chief of staff and chairman of Gazprom’s rival Rosneft, the state-controlled oil major, as the government’s deputy prime minister in charge of the energy sector. “Sechin is asking a lot of questions about the entire industry,” said one industry insider speaking on condition of anonymity. “They are deciding the future structure of the energy industry. Sechin is really asserting his authority with Putin’s backing.” Gazprom said it had received notification of the Anti-Monopoly Service’s decision and was considering an appeal. Valery Nesterov, an energy analyst at Troika Dialog in Moscow, said the fine was the “continuation of a campaign” to force Gazprom to open access to the pipeline network for independents, which would, however, stop short of forcing it to give up its monopoly export rights.
Monday, Sept 8, 2008
Gazprom talks tough over Rabaska08 September, 2008 - Upstream OnLine - Gazprom warned Canada that Russia could easily find an alternative market for its liquefied natural gas if the Canadian authorities try to hinder a deal over the Rabaska LNG project. Canadian Prime Minister Stephen Harper said last month commercial natural gas deals with Russia could be put at risk because of Russia's military action in Georgia. Gazprom deputy chief executive Alexander Medvedev told the 2008 Reuters Russia Investment Summit today that those comments had surprised the Russian gas giant. "We have been surprised by the statement of the Canadian prime minister that Canada will reconsider the Rabaska project," Medvedev said. In May, Gazprom said it was joining Enbridge, Gaz Metro and Gaz de France in developing an C$840 million (US$791 million) LNG project in Quebec. "If there is a nightmare scenario that for some reason this project will be out of reach of realisation based on a Canadian political decision, then for us it will be easy to find an alternative destination for our LNG," Medvedev told Reuters. "But it will not be good for Canada because they will face a shortage of natural gas." The project would involve Gazprom taking a unspecified stake in the Rabaska LNG terminal on the St Lawrence River at Levis, across from Quebec City. Medvedev said Rabaska's management had assured Gazprom that Harper's statement would not hinder the finalisation of the project. "We are happy Rabaska management do not think this statement is a barrier for finalising the transaction with Gazprom," Medvedev said. The plant's output of 500 million cubic feet of gas per day would supply the Quebec and Ontario markets. The project is scheduled to go ahead in 2014, coinciding with the planned start of a liquefaction plant at Russia's Shtokman gas field.
Gazprom Gets Three Gas Field Licenses
Sunday, 7 September 2008 - RedOrbit - YAKUTSK. Sept 7 (Interfax) - On September Gazprom received licenses for the Chayanda, Kirinskoye, Semakovskkoye gas fields and is expected to get seven more licenses later in September, said Alexander Ananenkov, company's deputy chairman of board. "We received the licenses to carry out operations in the Chayanda, Kirinskoye, Semakovskkoye gas fields after their state registration," Ananenkov told journalists at an economic forum in Yakutsk on Sunday. "The remaining seven licenses have already been signed by the agency and will be signed by Gazprom in the near future. They will also be registered in September," he said. The Chayanda field has 1.2 trillion cubic meters of gas, of which 379 billion cubic meters are C1 Category reserves and 861 billion cubic meters are C2 Category reserves, Ananenkov said. "They will be laid in the geological survey project," said Ananenkov, adding that the company is planning to start exploration after it transfers the 2 reserves into the 1 category. Gazprom will also carry out exploration at the oil rims of the Chayanda field, he said. It was reported earlier that in April-May the Russian government ordered the transfer of 10 federal gas fields to Gazprom: Antipayutinskoye, Zapadno-Tambeiskoye, Kruzenshternskoye, Malyginskoye, Severo-Tambeiskoye, Tasiiskoye, Semakovskkoyeskoye, Tota-Yakhinskoye, Kirinskoye and Chayanda.
Monday, September 08, 2008
Consultants value Serbian oil monopoly at 2.2 bln euros
Sep 7, 2008 – BELGRADE (AFP) — Serbia's oil monopoly NIS, set to be sold to Russian giant Gazprom, is worth 2.2 billion euros (3.1 billion dollars), a global consulting firm estimated in a report published Saturday. "Based on our research, examination and analysis we estimate that fair market value of 100 percent of capital of the Oil Industry of Serbia (NIS)... is 2.2 billion euros," consultants Deloitte said in the report published on the Serbian government Web site. The report, ordered by the government, was published few days ahead ratification in the parliament of the energy agreement with Russia that included sale of NIS to the energy giant Gazprom. Gazprom offered to pay 400 million euros for 51 percent of NIS and to invest 500 million euros in the company. Some politicians in Serbia, including Deputy Prime Minister Mladjan Dinkic, consider the offer too low and have urged new negotiations with the Russian side to be launched on the NIS price. The deal with Russia also covers a pipeline to be built by Gazprom in southern Serbia and an underground gas storage facility in northern Vojvodina province. The accord, signed in January in Moscow, was widely seen as increasing Russia's energy presence in the region and confirming two countries' political links. At the time when the deal was signed, Serbian officials estimated that Russian investment would be at least 1.5 billion euros (2.1 billion dollars) worth. Parliament is expected to vote on ratification draft next week.
Gazprom to receive 7 natural gas field licenses in September
YAKUTSK (Russia's Far East), September 7 (RIA Novosti) - Gazprom is planning to receive licenses for the development of seven strategic gas fields in Russia by the end of September, the Russian energy giant said on Sunday. On September 2, Gazprom already received licenses for the Chayanda, Kirinskoye, Semakovskoye gas fields from the list of 10 federal fields, which were earlier transferred to the company without a tender. "The remaining seven licenses have already been signed by the agency and will be signed by Gazprom in the near future. They will also be registered in September," deputy chairman of Gazprom's management committee, Alexander Ananenkov, told journalists at an economic forum in Yakutsk. The Russian government ordered in mid-April the transfer without a tender to Gazprom of the country's largest oil and gas condensate field, the Chayanda field in Yakutia. In July, it has transferred to Gazprom, also without a tender, another nine federal gas fields, following instructions from former premier Viktor Zubkov. Gazprom will pay at least $340 million for the license to develop the Chayanda field with proven reserves of 1.24 trillion cubic meters of gas and 50 million metric tons (about 370 million barrels) of oil, and will start its development already in 2008. Ananenkov also said that Gazprom had increased its projected investment for next year by 15%, from 850 billion rubles ($34 billion) in 2008 to 1 trillion rubles ($40 billion) in 2009. Half of the investment in 2008 will be allocated for capital expenditures, he added.
Gazprom expects state registration of 7 strategic gas deposits in Sept
YAKUTSK, September 7 (Itar-Tass) -- Russia’s gas monopoly Gazprom expects state registration of seven strategic gas deposits as part of the company balance already in September, Gazprom Deputy CEO Alexander Ananenkov said during the Yakutsk Economic Forum on Sunday. He confirmed that on September 2 Gazprom received licences for the following deposits of hydrocarbons – Chayanda in Yakutia, Kirinskoye in the offshore zone of the Sea of Okhotsk and Semakovskoye in the Yamal-Nenets Autonomous Area. The rest of seven licences have already been signed by the Russian Federal Agency for Natural Resources, and the company hopes to receive state registration this September, after which Gazprom can start its work at the deposits, Prime Tass economic news agency cited Ananenkov as saying. According to him, among the first steps will be resurvey of deposits in order to convert reserves from C2 category to C1. Currently, the Chayanda deposit’s reserves consists of 379 billion cubic metres of C1-category gas and 861 billion cubic meters of C2-category gas (the total reserve of the deposit – 1.2 trillion cubic metres), as well as 68 million tonnes of oil and gas condensate. In April 2008, the government decided to hand over the largest Chayanda oil and gas condensate field to Gazprom without a tender. In May, the holding received from the government another nine federal gas fields.
Gazprom Neft and KazMunaiGaz to sign cooperation agreement
06 September 2008 - Turkish Weekly - Prime Minister of Kazakhstan Karim Masimov met with Management Board Chairman and CEO of “Gazprom Neft” JSC Alexander Dyukov. They discussed a number of subjects on developing cooperation between KazMunaiGaz and Gazprom Neft Companies in the energy field, REGNUM correspondent was informed at the Prime Minister's press office. Karim Masimov and Alexander Dyukov discussed possible projects of exploration and field development, both in the Kazakhstan's and Russian territories. They also talked over issues of joint oil refinement and oil products sales. Discussing prospects of further cooperation, Masimov and Dyukov agreed to sign a general cooperation agreement between the Kazakhstani and Russian companies. It is to be signed shortly. Concrete joint-development projects are to be described in the document.
Emerging Market Stocks Fall for Biggest Weekly Loss Since 2002
Sept. 5, 2008 - Bloomberg - by James Attwood -- Emerging market stocks fell for a sixth day, capping their largest weekly loss in six years, as commodities dropped on global growth concerns and Morgan Stanley said profit estimates were overly optimistic for this year. OAO Gazprom, Russia's largest company, tumbled for a fourth day. China Mobile Ltd., the world's biggest phone company by market value, dropped 2.4 percent, helping to send Hong Kong's benchmark stock index below 20,000 for the first time since April 2007. ``Emerging markets are seen as a leveraged play on the global economy,' Jing Ulrich, JPMorgan Chase & Co.'s chairwoman of China equities, said in an interview. ``If the global economy slows, then that will have a profound effect on emerging markets. It proves there's been no decoupling.' The MSCI Emerging Markets Index's five-day decline of 8.6 percent is the largest since July 2002. The index has declined 30 percent this year to the lowest since March 2007, trimming multiples to 11 times earnings from 19 in late October. The U.S. economy is ``stagnant,' Europe is falling into a recession, and central banks won't have much room to cut borrowing costs amid elevated prices, the Conference Board said. In emerging markets, earnings may rise an average 5 percent this year compared with the consensus forecast of 13 percent, Morgan Stanley strategists including Jonathan Garner wrote in a note. Morgan Stanley's forecast for next year is 7 percent compared with the 18 percent consensus estimate, they wrote. ``Valuations now suggest an earnings recession in emerging markets at least as bad as the 2001/02 cycle when emerging market earnings fell 18 percent peak to trough,' they wrote. Commodity Stocks Drop Russian stocks plunged and the cost to protect government bonds from default jumped to the highest in four years as the central bank shored up the ruble after investors pulled out a net $4.6 billion since the invasion of Georgia last month. Gazprom slid 3.7 percent to a 52-week low of $8.67. Russia's dollar-denominated RTS Index dropped 3.8 percent to 1,469.15.
Price of fear = $3bln
09/04/2008 - Moscow News by Marina Pustilnik - The German government is considering an option to build up its natural gas reserves to protect the country's fuel supplies in case a crisis hampers gas imports. The news was reported this week by the German paper Frankfurter Allgemeine Zeitung (FAZ), which quoted a representative of the country's Economy Ministry. According to different sources, Germany imports anywhere from 33 to 44 percent of its total gas consumption from Russia, and there is no doubt that the announcement about planned natural gas reserves follows a recent spat between Russia and Germany over the situation in Georgia. Even though the Russian authorities had declared that Russia will continue to be a reliable partner and gas supplier for European countries, Germany's decision shows that it may not be convinced. LATEST NEWS - Georgia rejects Russian claim on conflict deaths 21:46 15/09/2008 |The Georgian Foreign Ministry rejected on Monday a Russian report that Tbilisi had lost up to 3,000 men in the five-day war in August between the two countries over South Ossetia, calling the claim "disinformation." Aeroflot makes first payments to Urals plane crash families 21:38 15/09/2008 |Aeroflot has so far paid over 4.8 million rubles ($186,770) in compensation to the families of those people killed in Sunday's air crash in the Urals, the head of the company's insurance department said Monday. EU ministers approve international probe into Georgia conflict 21:06 15/09/2008 | A proposal to hold an international investigation into last month's conflict in Georgia has been backed by the 27 EU foreign ministers, the French foreign minister said on Monday. Russia's Baltic Fleet starts week-long exercise 20:25 15/09/2008 |Russia's Baltic Fleet has launched a week-long scheduled exercise, the navy press service said on Monday. more news Nothing has yet been decided as the German authorities say they have only just started consultations with companies at both the local and international level. Moreover, there is already some opposition to the idea. Ruhrgas, one of Gazprom's principal partners in Germany, spoke up against the creation of the reserve. The reason given by the company is that the natural gas market differs from the oil market in that it continues to be ruled by long-term contracts. If Germany were to decide to stockpile gas reserves, this would lead to further growth of natural gas prices, which are already showing no signs of slowing down. In addition to this, storing natural gas is a dangerous and expensive venture. According to the estimations made by Germany's foreign trade association for mineral oil and energy, storing gas for an additional 90 days of supplies would cost some 2 billion euros ($3 billion) a year. So the price of fear and uncertainty is $3 billion. Is it really worth it? Does Germany have anything to fear? I personally think that the German authorities are being overcautious. Yes, Gazprom is a heavy-footed leviathan, whose monopoly structure should have been broken up a long time ago. Yes, natural gas production in Russia is certainly not growing, while consumption is. And yes, Gazprom's previous actions in Ukraine and Belarus, when supplies were cut over price disagreements, could be interpreted as being politically rather than economically motivated. But it's a very long stretch to imagine that German gas supplies would in any way suffer because Angela Merkel had criticized her colleague Dmitry Medvedev for his decision to recognize the independence of South Ossetia and Abkhazia. Uninterrupted gas deliveries to Europe as a whole and to Germany in particular (Gazprom's largest and most important European partner) are a point of pride for the Russian authorities and it will take much more than political disagreements to break that flow. Not only that, but the European deliveries are a very profitable venture for Gazprom and Russian authorities and nobody is willing to voluntarily kill the goose that lays the golden eggs. If I were the German authorities, I would listen to the specialist from Ruhrgas and give up on the idea of stockpiling natural gas reserves. There are plenty of other ways to spend $3 billion a year if you are looking to secure your gas deliveries from Russia - like investing them in gas production in cooperation with independent Russian gas producers or using them to wine and dine Polish and Lithuanian officials who continue their stern opposition to the Nord Stream gas pipeline project in hopes that they will finally relent and give the construction the green light it so needs. Russia is an unpredictable partner on the political arena, but it is very predictable when it comes to earning money. Paying $3 billion a year for storage (and upping the market price of natural gas in the process) is too steep a price to discover that Germany has no reason to fear for its gas supplies.
Gazprom Neft looks to send crude to China via Kazakhstan
MONACO, September 1 (RIA Novosti) - Gazprom Neft, the oil arm of Russian energy giant Gazprom, plans to apply for permission to ship crude oil to China via Kazakhstan in the fourth quarter of this year and in 2009, the company CEO said on Monday. "We are the only company that has a direct contract with China Oil," Alexander Dyukov said. It was earlier reported that Gazprom Neft had not been included in the schedule for oil shipments to China via Kazakhstan along the Atasu-Alashankou pipeline. The company said it had applied to the Energy and Fuel Ministry for permission to pump 1.08 mln tons of crude in April-December 2008, but ran into transit problems with the Kazakh state transport monopoly KazTransOil. A transit agreement signed between Russia and Kazakhstan last November provides for the export of up to 5 mln tons of oil per year from Russia to China through Kazakhstan, along the Atasu-Alashankou pipeline.