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Friday, October 31, 2008

Gazprom, Eni, Enel agree to develop Russian assets

Enel - L'energia che ti ascoltaMOSCOW, October 30 (RIA Novosti) - Gazprom, Italian electricity company Eni, and oil and gas giant Enel have agreed to develop Italian assets in Russia, the Russian energy giant said on Thursday. Eni CEO Paolo Scaroni, Enel CEO Fulvio Conti and Gazprom chief Alexei Miller met in Rome to agree on further implementation of the partnership between the three companies. The parties signed agreements to develop the Russian assets of Arctic Gas and Urengoil. Eni and Enel acquired the northwest Siberian deposits in 2007 through liquidation auctions of the now defunct Russian oil company Yukos. For this purpose, the Italian companies invested $852 million in April 2007 in setting up a joint venture, SeverEnergia (formerly Enineftegaz), 60% owned by Eni and 40% by Enel. Moreover, Gazprom signed further agreements undertaking commitments to acquire a stake in SeverEnergia, as established by the 2006 strategic agreement. "Eni, Enel and Gazprom will immediately work towards having the asset development plans approved together with the consequent adjustment of the mineral licenses," the Italian companies said in their news releases. Italy's natural gas market is the third largest in Europe after the United Kingdom and Germany. Natural gas accounts for more than 30% of the Italian energy balance. Russia and Algeria are the main gas suppliers to the country. Italy is the second largest importer of Russian gas in Europe. The country received almost 22 billon cubic meters of gas from Gazprom in 2007. Italian Prime Minister Silvio Berlusconi and Russian President Dmitry Medvedev will meet in Moscow on November 6 during bilateral intergovernmental consultations.

Wednesday, October 29, 2008

Gazprom mulls anti-crisis program

RBC, 29.10.2008, Moscow 14:45:54 - Gazprom's board of directors is proposing anti-crisis measures to carry on with the company's operations, Deputy Chairman of Gazprom's management committee Andrei Kruglov told a UBS conference today. In December, the board is also expected to pass a three-year budget taking the new economic environment into consideration. Kruglov noted that the company could do without raising extra funds on the financial market in 2009.

Gazprom Neft to Slash Investment Program, LUKOIL to Shelve Refining Projects

Gazprom Neft Deputy General Director Vadim YakovlevOct. 29, 2008 - Kommersant - With today’s prices for crude oil, Gazprom Neft will slash 2009 investment program by 20 percent to 25 percent on year, the company’s vice president Vadim Yakovlev told reporters Wednesday. If the decline continues, the investment program of Gazprom Neft will probably amount to 70 billion ruble in 2009 vs. 85 billion ruble to 90 billion ruble in 2008, the official said. Gazprom Neft revised the 2008 forecasted crude production to 31.2 million tons from 31.7 million tons, attributing the decline to the drop in oil prices. Another oil blockbuster of Russia, LUKOIL, is raising roughly $1 billion to fund acquisition of a refinery in Sicily, LUKOIL Vice President Leonid Fedun said. “No problems, we have agreed about the payment system and are syndicating the loan,” he specified, adding that the loan size will probably cover the whole budget of the deal. It was reported earlier that the deal could cost roughly $1 billion. At the same time, LUKOIL intends to shelve the refining projects in Russia and reduce drilling, Fedun pointed out.

Gazprom revenue from sales to Europe to fall in 2009

RBC, 29.10.2008, Moscow 13:08:40 – Gazprom expects its revenue from the sale of natural gas to Europe to decline in 2009 due to a fall in global hydrocarbon prices, Andrei Kruglov, deputy chairman of the Russian gas monopoly's executive board, told a UBS conference today. He noted, however, that the decrease would be offset by higher domestic gas prices. At the same time, Gazprom's revenue and net profit are expected to reach their record highs in 2008. Kruglov added that the share of revenue from gas sales to Europe in Gazprom's total revenue would gradually decrease as Gazprom would switch to setting equal like-for-like gas prices in Russia and abroad. He also expressed the opinion that domestic prices would rise 20 percent on average in 2009.

Monday, October 27, 2008

Nord Stream project well on track

Nord StreamOct 24, 2008 - Scan Oil&Gas - The Nord Stream Shareholders’ Committee discussed the development of the pipeline through the Baltic Sea in a meeting on 20 October 2008. The Shareholders reviewed the project’s progress and confirmed that it is on schedule. The Shareholders’ Committee approved further contracts for supply of materials and construction work to be signed before end of this year. Nord Stream is the most advanced of all gas infrastructure projects designated as a “priority project” by the European Union. The Espoo report is currently being finalised. The draft will be submitted for final feedback to the relevant authorities within a month. Nord Stream and its Shareholders do not regard the financial crisis as an obstacle to financing the project. Shareholders will meet about 30 per cent of the project costs with equity contributions, with 70 per cent to be financed externally through limited recourse finance. The project remains attractive to lenders since it has strong backing from its Shareholders, a solid contractual framework and is an important infrastructure project in the energy market with long-term and stable returns. Nord Stream cooperates with renowned companies throughout Europe, which underscores the pan-European character of the project. These include Snamprogetti (Italy) for detailed design engineering; independent safety certification by Det Norske Veritas (DNV) (Norway); route surveys by Marin Mätteknik (Sweden), IfAÖ (Germany) and PeterGaz (Russia); Environmental Impact Studies by Ramboll (Denmark) and ERM (UK); pipe production by EUROPIPE (Germany) and OMK (Russia); concrete weight-coating and logistics by EUPEC (France). After N.V. Nederlandse Gasunie officially joined the Nord Stream consortium as fourth shareholder in June 2008, the Shareholders’ Committee representing OAO Gazprom, E.ON Ruhrgas AG, Wintershall Holding AG and Gasunie was expanded from eight to ten seats reflecting the shares in the project. The new members of the Committee are Marcel P. Kramer, Chairman of the Executive Board and CEO of N.V. Nederlandse Gasunie, and Nikolai Dubik, Member of the Management Committee and Head of the Legal Department of OAO Gazprom.

Nord Stream Consortium Says Project Development on Track

October 23, 2008 - Rigzone News - The Nord Stream Shareholders' Committee discussed the development of the pipeline through the Baltic Sea in a meeting on October 20, 2008. The Shareholders reviewed the project's progress and confirmed that it is on schedule. The Shareholders' Committee approved further contracts for supply of materials and construction work to be signed before end of this year. Nord Stream is the most advanced of all gas infrastructure projects designated as a "priority project" by the European Union. The Espoo report is currently being finalized. The draft will be submitted for final feedback to the relevant authorities within a month.
Nord Stream Remains An Attractive Project for Banks: Nord Stream and its Shareholders do not regard the financial crisis as an obstacle to financing the project. Shareholders will meet about 30% of the project costs with equity contributions, with 70% to be financed externally through limited recourse finance. The project remains attractive to lenders since it has strong backing from its Shareholders, a solid contractual framework and is an important infrastructure project in the energy market with long-term and stable returns. Nord Stream cooperates with renowned companies throughout Europe, which underscores the pan-European character of the project. These include Snamprogetti (Italy) for detailed design engineering; independent safety certification by Det Norske Veritas (DNV) (Norway); route surveys by Marin Matteknik (Sweden), IfAO (Germany) and PeterGaz (Russia); Environmental Impact Studies by Ramboll (Denmark) and ERM (UK); pipe production by EUROPIPE (Germany) and OMK (Russia); concrete weight-coating and logistics by EUPEC (France).
New Members in Shareholders' Committee: After N.V. Nederlandse Gasunie officially joined the Nord Stream consortium as fourth shareholder in June 2008, the Shareholders’ Committee representing OAO Gazprom, E.ON Ruhrgas AG, Wintershall Holding AG and Gasunie was expanded from eight to ten seats reflecting the shares in the project. The new members of the Committee are Marcel P. Kramer, Chairman of the Executive Board and CEO of N.V. Nederlandse Gasunie, and Nikolai Dubik, Member of the Management Committee and Head of the Legal Department of OAO Gazprom.

Thursday, October 23, 2008

WesternGeco Announces New Contract with GAZPROM Libya B.V.

WesternGeco ( Oct. 2008 - Your Oil&Gas News - WesternGeco announced today that it has been awarded a major land contract by GAZPROM Libya B.V. The contract is for the acquisition and processing of 3,400 km2 of 3D seismic data over the Ghadames Basin. GAZPROM has selected the WesternGeco Q-Land* high-channel-count, integrated point-receiver acquisition and processing system to acquire the data. Q-Land enables the WesternGeco single sensor technology resulting in effective noise attenuation and improved data quality. GAZPROM has also elected to use Maximum Displacement Sweep (MD Sweep*), a complementary methodology that enables a seismic vibrator to produce more energetic low frequencies than a traditional sweep design approach, to both increase seismic bandwidth and image deeper targets. GAZPROM will utilize the WesternGeco Desert Explorer family of land seismic vibrators. “The age of easy exploration is over and the way ahead will be more challenging as we look to increasingly complex geologies and the need for faster more accurate decision making,” said Wadii El Karkouri, Africa region manager, WesternGeco. “Advanced imaging technologies are essential to reducing uncertainty and mitigating risk. We look forward to working with GAZPROM to help the company meet its operational objectives.” The survey will commence in November, 2008. The data will be processed in the new WesternGeco processing center in Tripoli. The WesternGeco suite of advanced geophysical services includes electromagnetic services and Q-Technology, the world's only single-sensor high-fidelity seismic acquisition-to-inversion platform. For additional information please visit

Gazprom Not Crisis-Proof After All

Oct. 23, 2008 - Kommersant - A report published by Gazprom yesterday acknowledges for the first time that the company may encounter problems attracting credit and refinancing its debt. At the same time, it became known that the gas monopoly is holding a competition to receive new credit and that it does not expect to show an increase in receipts or profit this year, in spite of high indicators in the first quarter. Gazprom chief Alexey Miller predicted receipts of around $100 billion this year (compared to $97 billion in 2007) and net profit of $30 billion ($27 billion last year). The company’s first quarter financial results, also published yesterday, indicate that its net profit grew 30 percent in that period to 273.44 billion rubles using international accounting standards. Its EBITDA rose 62 percent to 422 billion rubles and receipts rose 48 percent to 909.94 billion rubles. All of those results were better than economists had forecast. The good showing comes thanks to the high export gas prices ($356.40 per 100 cu. m.) and expanding deliveries to Europe. On Monday, Gazprom chief Alexey Miller stated that “For a giant like Gazprom, a financial crisis is not a worrisome factor.” Nonetheless, the report notes that “The current situation may have negative influence on the ability of the group to receive new loans and refinance current debt at previous conditions. The general reduction in the level of liquidity may influence the ability of the group’s counteragents to ensure prompt payment of debts to Gazprom.” Gazprom has already asked the government for a loan of $1 billion for loan refinancing.

Wednesday, October 22, 2008

Gazprom to become Russia-Venezuela energy consortium operator

Gazprom to become Russia-Venezuela energy consortium operatorMOSCOW, October 22 2008 (RIA Novosti) - Gazprom is set to become the operator for a Russia-Venezuela oil and gas consortium, the head of the Russian energy giant's external economic activities department said Wednesday. "Gazprom will at least receive the operator status in the first stage. This was the request of the Venezuelan partners," Stanislav Tsygankov told journalists. Russia's energy minister, Sergei Shmatko, said earlier the consortium, to be set up next spring, will include Russian producers Gazprom, Rosneft, TNK-BP, Surgutneftegaz and LUKoil, and that investment from the Russian companies would total "tens of billions of dollars." Venezuela's state oil and natural gas company PDVSA will hold a controlling stake in the consortium. Venezuela is one of the world's largest oil producing states, with about 87 billion barrels of proven conventional oil reserves. In addition, it has huge non-conventional oil deposits (heavy oil). Most of these deposits are located in the Orinoco oil belt.

Crisis may hit Gazprom refinancing plans

October 22 2008 - Financial Times - Gazprom on Wednesday warned that the credit crisis had weakened its ability to refinance debts as it reported a sharp rise in first-quarter profits on higher gas tariffs and larger export volumes. The state-controlled Russian gas group said in a statement that the ongoing global liquidity crisis could affect its ability to obtain new borrowings and re-finance its existing borrowings at terms and conditions similar to previous transactions. It also warned that the crisis might affect the ability of some units to repay their outstanding loans which would then have an impact on management’s cash flow forecasts. EDITOR’S CHOICE Lex: Russia, the banks and the rouble - Oct-22Gazprom threatens to quit TNK-BP gas deal - Oct-16Gazprom’s expansion hopes in doubt - Oct-16Editorial Comment: Russian rescue - Oct-15Moscow dictates rescue of oligarchs - Oct-14Show of unity by partners puts TNK-BP dispute to rest - Oct-03Gazprom shares fell 7.4 per cent to Rbs109.50 on Wednesday, having dropped about 70 per cent since May. Its net debt as of the end of March 2008 was 10 per cent less than what it had at the end of 2007 due to a significant increase in cash and cash equivalent assets, the company said. But Gazprom’s net debt balance of Rbs1,103bn ($41.7bn) was still very high — the result of borrowing a record amount last year to fuel an acquisition spree in Russia, including control of Royal Dutch Shell’s Sakahlin-2 project. Earlier this month, Gazprom’s chief executive Alexei Miller told reporters that Gazprom was under no risk from the financial crisis. A spokesman, Sergei Kupriyanov, also said last week Gazprom would not have problems raising money abroad during the crisis. If credit remains tight, Gazprom can borrow against its export revenues, as it has done in the past when Russia has been in financial turmoil. It also has the comfort of the government’s promise of support. The company has already asked for $1bn in state funds as part of a rescue package being disbursed by the government to fund investment projects. However, Gazprom is facing a massive demand for investment at a time when costs across the industry have been soaring. It also cannot delay its big projects because the gas is already committed to export customers, or is needed to replace declining fields for the domestic market, analysts say. Developing the Shtokman gas field off the north coast of Russia, a technically challenging project, has been estimated at $15bn-$20bn, but will be ”much more expensive than people might think,” according to Christophe de Margerie, the chief executive of Total, one of Gazprom’s likely partners in the development. Fields and pipelines in Russia’s far east for supplying China and Korea could cost about $100bn, Gazprom has suggested, while opening up the deserted Yamal peninsula in the north of Russia, the location of vast gas reserves, could cost $200bn, according to an estimate from Shell. Falling steel prices will help curb those costs, but the demand for capital spending is still huge. Gazprom has threatened to pull out of a deal to buy a controlling stake in Kovykta, the vast gas field in Siberia. While it is likely to be a negotiating tactic, at least in part, it is also evidence of its constrained ambitions. The company on Wednesday said its first-quarter net profit rose 32 per cent from a year ago to Rbs286bn ($10.8bn) and sales increased by 40 per cent to Rbs903bn, beating expectations. Analysts polled by Reuters were expecting profit of Rbs246bn on sales of Rbs839bn.

Gazprom says Shtokman 2008-09 budget over $800 mln

 Oct 22, 2008 – Your Oil & Gas News – Shtokman Development AG, controlled by Russias gas export monopoly Gazprom, has confirmed the budget for its Arctic Shtokman project at over $800 million for 2008-2009, Gazprom said on Monday. Gazprom said Shtokman Development discussed the budget of one of the worlds biggest offshore gas projects at its board meeting in Switzerland on Monday. Gazprom controls 51 percent of Shtokman Development, while Frances Total and Norways StatoilHydro hold 25 percent and 24 percent respectively.

Gazprom oil since October, 20th reduces prices for gasoline.

AK & M10–21–2008 – AK&M News – OJSC "Gazprom oil" since October 20th reduces prices for gasoline at gasoline stations. AK&M has been informed it about in the press-service of the company. Besides, the company plans in the forthcoming winter to sell diesel winter fuel at the price of the summer. "Gazprom oil" is the fifth company in the Russian Federation on volumes of oil recovery. Its proved stocks under classification SEC for the end of 2006 made 514mln ton, under classification SPE - 601.8mln ton. Under results of 2006 the consolidated oil recovery decreased down 1.7% to 44.4mln ton. The net profit in 2006 grew up 47% to 62.829bln rbl. from 42.489bln rbl., the proceeds - up 37% to 374.776bln rbl. from 273.086bln rbl. The net profit under US GAAP grew up 31% to $3.661bln from $2.805bln in 2005. The investment program of the Company for 2007 makes 64.4bln rbl. OJSC "Gazprom oil" in 2007 extracted 32.7mln ton of oil, that practically corresponds to parameters of 2006. "Gazprom oil" borrows the 8th place in the "Leading enterprises of Russia" rating under results of 2006, presented by the rating agency AK&M in October, 2007.

Gazprom Invited to Explore Just Off Alaska

AlaskaOctober 21, 2008 - St. Petersburg Times - Bloomberg - MOSCOW — Gazprom, Russia’s largest energy producer, said it was invited to explore for resources off the coast of Alaska during talks with ConocoPhillips and state officials last week. “We received invitations for exploration work on the Alaskan continental shelf and in the near future will hold a new round of meetings and discussions,” Gazprom Chief Executive Officer Alexei Miller said, according to a transcript of an interview broadcast by Russian state television during the weekend. Miller led a delegation of senior executives to Anchorage, meeting last Monday with Alaska’s Department of Natural Resources and ConocoPhillips CEO Jim Mulva. Gazprom highlighted its experience in producing natural gas and building pipelines in similar climate conditions as Alaska. Gazprom, which already supplies a quarter of Europe’s natural gas, is seeking to increase its reach with projects around the world, including in North America. The courtship of Alaska comes less than a month before the U.S. presidential election, in which Russia’s resurgence has become a campaign issue. Future negotiations will determine which fields U.S. partners intend to open up for exploration in the Chukchi Sea, Miller said. The Chukchi Sea is located north of the Bering Strait, the narrow body of water that separates Russia from Alaska.

Romania Might Substitute Bulgaria In "South Stream"

South Stream vs. Nabucco10-20-2008 - by Olga Yoncheva - Last week the director of Gazprom Alexey Miller has conducted a series of talks in Moscow with the leaders of the Romanian companies “Transgas” and “Romgas” for supply of gas to Romania till 2030. This writes Komersant newspaper. According to the edition the possibilities for attracting Romania in the “South stream” project as well as the possibility the country to substitute Bulgaria have been discussed. A source from the Russian ministry of energy confirmed to “Komersant” that the possibility Bulgaria to be substituted by Romania in the project was being explored (in this case the route is shortened with 100 km), but refused to give details. Initially Romania was seen as an alternative to Serbia. However, in the last half year all legislative hurdles in the relations between Serbia and Romania within the “South stream” project were cleared up. The arrangements for the gas pipeline with Sofia, Budapest and Belgrade were reached in 2007. However, the Bulgarian authorities insist on the part of the pipeline which crosses Bulgarian territory to be property of the state, while “Gazprom” wants it to be Russian. Similar problems emerged in Serbia and Hungary. Apparently the main problem for the realization of the “South stream” project is not the impossibility for negotiations with the East European countries but the general mistrust of the European Union towards Russia and “Gazprom”. On the EU summit on 1 September this year the European leaders unanimously decided to distinguish the sources of energy supply. At first they will concentrate all their efforts in the implementation of the “Nabucco” project, which is a direct rival of “South stream” and should supply gas to Europe from the Caspian region by eliminating Russia. The Romanian company “Transgas” and the Bulgarian “Bulgargas” are shareholders in the “Nabucco” project. This is why the aim of the talks with Romania is to persuade Sofia or Bucharest participate in “South stream” and not “Nabucco”.

Gazprom invited for geological prospecting on Alaska shelf - A. Miller

10.19.2008 - MOSCOW, October 19 (Itar-Tass) - Gazprom received an invitation to start geological prospecting on Alaska shelf, said Gazprom board chairman Alexei Miller in an interview with the Rossiya TV networks, circulated by the Gazprom press service. Executives of the Russian company and specialists from other countries participated in a scientific seminar in Alaska on development of oil and gas deposits. According to Miller, Gazprom will hold “a new round of meetings and talks in the near future on which blocks (in Alaska) could be offered to us by our American colleagues”. “This will be also closely examined by us from the viewpoint of geological data,” Miller said, adding that he “will study proposals which were offered to Gazprom to work on the Alaska shelf, including blocks in the Chukchi Sea”. Besides, Miller hopes “to turn in the near future from discussions to the next move: formalising relations concerning research work, Gazprom’s participation in explorations and development studies in Alaska”. Gazprom head admitted “although there is much talk on plans of developing the Alaska shelf and concerning creation of new gas transport routes, there is no real progress in anything”. He claimed that “even according to the most optimistic plans, if we are to speak about gas transport projects, the ball will start rolling only in 2018”. Miller emphasised the importance of the so-called pre-project stage when research studies are very important. “Incidentally, Gazprom’s experience in implementing such large-scale projects in the north could be very handy in this case,” he added. In Miller’s opinion, “Gazprom’s arrival in Alaska is a logical outcome for the development of a gas market”, since “there is now need for developing new deposits and deliveries of new volumes of gas to markets”. He noted that the US is not only the biggest consumer, but also a big gas producer. It imports annually 130 billion cubic metres of gas. This notwithstanding, it does not develop big deposits, including the Alaska shelf. “Licenses for those deposits were given long ago, in the 1970s, but no serious moves have been made to develop those deposits over the past 40 years,” Miller specified. To Miller’s mind, the Gazprom experience looks alluring in this situation. Gazprom is a company, operating now in Russia’s North, the main country’s production potential (some 80 percent of gas output) concentrates in the Yamalo-Nenets Autonomous Area. “We have accumulated very rich experience both of production and construction of gas pipelines, creation of transport and social infrastructure over several decades of work under conditions of Russia’s North,” Miller said. He put his company in the first place in the world according to experience of work in the north. “Alaska has very similar conditions with our work in the Russian North. Those are the same latitudes and climatic conditions, to which we are accustomed. Gazprom is interested in boosting its cooperation where we can be needed with our experience and our knowledge,” said Gazprom chief. He noted that the Russian side “sees interest of American colleagues in work in cooperation with Gazprom. Gazprom carried out a presentation in Alaska of its own experience of work on Yamal Peninsula shelf and new technologies of gas transportation. “It is Gazprom in Russia that started implementing construction of gas pipelines of a new generation. This experience is unmatched anywhere in the world,” Miller underlined. He added that these technologies fully take into account the most stringent ecological demands and show “how can be implemented in a sparing regime large-scale projects under conditions of very fragile ecological systems of the north”. Miller noted that he shared the company’s experience at the seminar on resolving social questions. “In the Russian North, we implement large-scale social and humanitarian programmes of cooperation with indigenous population, programmes for professional schooling and training of indigenous ethnic groups, maintaining their every-day life and traditions. The Gazprom experience in this sphere can be applied here in Alaska,” Miller said with confidence. The Gazprom leadership also advised their American colleagues to choose one of the two future projects of building a gas trunk pipeline via Alaska and via Canada to the US domestic market. “In our opinion, implementation of two projects of trunk pipelines is redundant, unsubstantiated and economically inexpedient. Miller also said that liquefied gas could be an alternative to transportation of gas by pipelines. This alternative will meet requirements of Alaska indigenous population. Therefore, it is necessary to examine a possibility of building factories on liquefying gas in the north and transporting it to the US domestic market. Miller is convinced that “the volume of gas consumption in the US will continue to rise”. “And there is no alternative to gas in the medium-term perspective,” Miller emphasised.

Monday, October 20, 2008

Gazprom eyeing Alaska exploration projects

RBC, 20.10.2008, Moscow 10:28:41 – Gazprom has been invited to take part in exploration work on the Alaska continental shelf, the Russian gas giant's CEO Alexei Miller announced following a recent visit by a Gazprom delegation to Alaska, which involved meetings with the executives of ConocoPhillips, Arctic Slope Regional Corporation, and the state's Natural Resources Department. A round of discussions on what areas could be offered to Gazprom by their American colleagues is coming up shortly, Miller said, adding that offshore fields in the Chukchi Sea were among those to be considered.

Collapse of the Kovykta Deal between Gazprom and TNK-BP

20.10.2008 - [Neftegaz.RU] - According to Financial Times, the threat reflects the financial pressure on Gazprom, which is being forced to focus on its essential investments in relatively short-term projects. Gazprom agreed to buy TNK-BP’s 63 per cent stake in Kovykta, a field in eastern Russia, in June last year as part of a settlement to resolve a dispute over the license for the field. Kovykta is estimated to hold more gas than the entire proved reserves of Canada or Kazakhstan, and is a potentially important source of gas supply for Asian countries such as China and South Korea in the second half of the next decade. However, Gazprom believes that its value is highly uncertain, given the long-term nature of the development, and also thinks the license for the field is likely to be taken away from the TNK-BP-led consortium that runs it. One Gazprom executive told the Financial Times the company was dubious about paying hundreds of millions of dollars for a potentially worthless asset. Nevertheless, Gazprom and BP said the Kovykta deal cancelling would not necessarily end their plans for broader co-operation. The credit crunch and the fall in oil prices are forcing Gazprom to focus on the development of gas production and infrastructure in Russia with projects that will show results more quickly.

Gazprom sees 2008 profits at $30bn

20 October 2008 - Upstream OnLine - Russia's gas export monopoly Gazprom expects net profit of $30 billion this year, its chief executive said, roughly level in dollar terms with the $29.7 billion it reported for last year. Chief executive Alexei Miller said revenues were expected at $100 billion. "Our figures are just astronomical," he was quoted as saying by Reuters. Gazprom reports to International Financial Reporting Standards and can restate the year-ago figure when it issues its 2008 earnings. It has yet to issue its first quarter 2008 report. The average analyst forecast for first quarter net profit was 246.12 billion roubles, or $9.4 billion, a Reuters poll showed . The forecasts were issued in a transcript of Miller's interview with Vesti television news on Gazprom's participation in a technical conference in Alaska, which was e-mailed to reporters. They were not broadcast. In response to a question about Gazprom's fate in the global credit crisis, Miller, who predicted in June that oil prices could hit $250 per barrel in 2009, said oil prices would rise in the medium-term, citing analysts. "We are working in a price environment that is very, very favourable to Gazprom. The era of cheap oil and gas is over. Even in spite of the financial crisis, hydrocarbon prices will stay high," he said.

Thursday, October 16, 2008

Gazprom deputy chief triples stake in gas giant

Ananenkov Alexander GeorgievichRBC, 15.10.2008, Moscow 19:56:31. – Deputy Chairman of the Board of Gazprom, Alexander Ananenkov, has increased his stake in the gas giant 3.1 times, from 0.00211207 to 0.0065474 percent, the company said in a statement. Gazprom learned about the transaction on October 15, 2008. Gazprom's share capital amounts to RUB 118,367,564,500 (approx. USD 4.54bn), and is divided into 23,673,519,900 common shares with a par value of RUB 5 (approx. USD 0.19). Over 50 percent of Gazprom shares are owned by the Russian government. In 2007, Gazprom produced 548.5bn cubic meters of gas, down from 556bn cubic meters a year earlier. The company's net profit under IFRS grew 9.2 percent to RUB 694.98bn (approx. USD 26.64bn).

Wednesday, October 15, 2008

Gazprom Unfazed by Palin Spiel

15 October 2008 - Moscow Times - Gazprom said Tuesday that it offered to help Alaska increase gas supplies to the U.S. mainland, even after Governor Sarah Palin warned against Russia's resurgence while campaigning to become vice president. The company sent eight senior executives to Anchorage for talks Monday with Alaska's Department of Natural Resources and ConocoPhillips chief executive Jim Mulva, state and company officials said. The courtship of Alaska comes less than a month after Palin criticized Prime Minister Vladimir Putin for "rearing his head" over Russia's maritime border with her home state. CEO Alexei Miller was accompanied by deputies Valery Golubev and Alexander Medvedev, who oversees the country's gas exports. A working breakfast was held with Palin supporter and former Alaska Governor Walter Hickel, Gazprom said. Miller said in June that Gazprom had approached ConocoPhillips and BP on joining their Denali pipeline project, designed to deliver Alaskan gas to the continental United States. At the same time, Gazprom expressed interest in a rival pipeline project backed by Canada's TransCanada. "The working conditions in Gazprom's traditional areas of production practically coincide with those in Alaska," the company said. "Gazprom's experience will be in demand when similar projects are developed in Alaska."

Gazprom eyes Alaskan pipeline

14 October 2008 - Upstream OnLine - Russian gas export monopoly said today its top executives had visited US state Alaska, where the gas company is seeking a share in a project to pipe gas via Canada to the US market. Gazprom discussed gas production, transport and supply to Alaska - which shares a border to its east with Canada and a sea border with Russia to its west - with the region's officials and the chief executive of ConocoPhillips, Jim Mulva, Reuters quoted the company as saying in a statement. "Gazprom has accumulated great experience in exploring hydrocarbon deposits, building and using gas pipelines in the Far North environment,” it said in the statement. “Gazprom's experience will be relevant in realisation of similar projects in Alaska," It did not specify what projects were discussed. Gazprom's chief executive Alexei Miller, who headed the delegation, said in June his company wanted to join a gas pipeline project to pump the fuel from Alaska across Canada to the US market and had made a proposal to oil majors BP and ConocoPhillips. Gazprom, which already supplies a quarter of Europe's gas, has been actively eyeing a way into the north American market for several years. Earlier this week a French stakeholder in Canada's Rabaska liquefied natural gas terminal said Gazprom could get a 27% stake in the project. The terminal is due to be built by 2014, when Gazprom plans to launch its giant LNG project, Shtokman, on the Barents Sea.

Gazprom to be entitled to sell Sakhalin gas

 RBC, 15.10.2008, Moscow 10:46:39 – Gazprom has found a way to supply between 1.5bn and 2bn cubic meters of natural gas to the Primorsky region by 2011 without buying it from the Sakhalin-1 consortium, the RBC Daily newspaper reported today. To this effect, the Russian gas monopoly may use the government's share of gas produced in the Sakhalin-1 and Sakhalin-2 projects. A bill entitling Gazprom to sell the gas should have been submitted to the government before mid-September, in accordance with Russian Prime Minister Vladimir Putin's request. According to certain sources, however, the Energy Ministry is still working on the document, despite the fact that it has already been agreed upon with the Finance and Natural Resources Ministries, as well as with Gazprom. The gas holding, however, may face yet another challenge soon, as the Khabarovsk region has urged the government to ensure an increase in its gas supplies from 4.5bn to 6bn cubic meters.

Alaska Is to Use Gazprom Experience

Alaska15.10.2008 - [Neftegaz.RU] - The company sent eight senior executives to Anchorage for talks with Alaska's Department of Natural Resources and ConocoPhillips chief executive Jim Mulva. CEO Alexei Miller was accompanied by deputies Valery Golubev and Alexander Medvedev, who oversees the country's gas exports. Gazprom has already approached ConocoPhillips and BP on joining their Denali pipeline project, designed to deliver Alaskan gas to the continental United States. At the same time, Gazprom expressed interest in a rival pipeline project backed by Canada's TransCanada. The company's interest in these projects is commented as the will to impart the experience it has in this sphere: "The working conditions in Gazprom's traditional areas of production practically coincide with those in Alaska," - said Gazprom.

Gaz de France Signed a Development Strategy with Gazprom

14.10.2008 - [Neftegaz.RU] - Gaz de France Suez, (GdF Suez) formed from the merger of Gaz de France and the Franco-Belgian Suez, Europe’s largest gas concern gave Gazprom a quota of 1.5 billion cu. m. on the French market per year as part of agreement where the potential projects were devided into 2 groups - retail gas sales and production, purchases and sales of gas to industrial users and distribution companies. GdF is the world’s top seller of liquefied natural gas. It owns shares in gas liquefaction plants in Egypt, Norway and Latin America. It owns 15 liquefied natural gas tankers and is building five more. The company’s electric plants in France has a combined capacity of 6 GW, with plans to increase it of 1o GW in France and 100 GW worldwide. GdF Suez’s receipts in 2007 came to "74.3 billion with profits of "13 billion.

Gazprom May Take 27% Stake in Canada's Rabaska LNG Terminal

14.10.2008 - [Neftegaz.RU] - A 27% stake in Canada's Rabaska liquefied natural gas (LNG) terminal may be awarded to Russian gas export monopoly Gazprom. Gazprom can get the stake from the current shareholders, Canada's Enbridge Inc and Gaz Metro and GDF Suez, which will reduce their stakes in the terminal, a Gazprom spokesman quoted Jean-Francois Cirelli, GDF Suez's vice president, as saying at a Friday briefing in Paris. Gazprom confirmed that talks were going on but declined to disclose the sum or other details of the possible deal. In May, Gazprom said it was joining Enbridge Inc, Gaz Metro and Gaz de France in developing an $866 million LNG project in Quebec. The plan provided that Gazprom take an unspecified stake in the Rabaska terminal but Canadian Prime Minister Stephen Harper said in August that gas deals with Russia could be put at risk after Russia's military action in Georgia. The terminal is due to be built by 2014, when Gazprom, the world's largest natural gas producer, plans to launch its giant LNG project, Shtokman, on the Barents Sea.

Gazprom’s eyes on Alaska

//For gas production
10-14-2008 - RBC News - Gazprom’s appetite for Alaska is growing. In addition to two Alaskan pipeline projects under discussion, the Russian gas giant wants to build a LNG plant in the region, expressing confidence that its experience of working in the Far North would be useful in the United States’ most northerly state. Experts say Gazprom could take part in Alaskan projects, though they would not be very lucrative. Gazprom officials met Alaskan officials and ConocoPhillips Chief Executive Jim Mulva on Tuesday, the gas group said. The talks centered not on Alaska’s gas pipeline Denali, which had been discussed earlier, but on other broad-based business opportunities, Bloomberg reported, citing a ConocoPhillips spokesman. Instead, Gazprom executives expressed “general interest”' in Alaska, a representative of the US Department of Natural Resources was quoted as saying. Gazprom officials also held a seminar during their visit to Alaska, demonstrating Gazprom’s vast experience in hydrocarbon production, construction and maintenance of gas pipelines, environmental care and solving social problems in the Far North. The company hopes that its experience will be used for similar projects in Alaska. In addition to two pipeline projects under discussion - Denali to pump Alaskan gas to the continental US and a rival project to transport Alaskan gas to Canada – it is also necessary to consider the construction of LNG facilities in the region, Gazprom experts maintain. Gazprom CEO Alexei Miller said at the St. Petersburg Economic Forum in June that Gazprom approached ConocoPhillips and BP on joining their Denali pipeline project from Alaska to Chicago. At that time, Gazprom also expressed interest in a rival project backed by TransCanada to transport Alaskan natural gas to Alberta in Canada. Dmitry Lyutyagin, an analyst at Veles Capital, says Gazprom may produce gas in Alaska together with BP and ConocoPhillips. The region’s gas reserves, estimated at 35 trillion cubic meters, are of little use so far due to a lack of gas pipelines. The first major gas project is North Slope, and Gazprom may very well try and take part. But the Russian gas giant will not get controlling interests in North American projects; most probably, it will get some gas and try to sell it in the United States. If Gazprom does get a foothold in the new market, Lyutyagin believes, it will undoubtedly become a transnational corporation. Another factor pushing the company towards projects in Alaska involves Gazprom’s unique experience: American companies may need advice on how to build long gas pipelines in extremely low temperatures and permafrost, says Nikolai Isain, an analyst at the Institute for Natural Monopoly Problems. At the same time, he thinks that Gazprom’s participation will not go beyond technical support, not rising to full-fledged partnership. There should be no serious political obstacles for Gazprom’s bid, given the small stake it could take in North American projects, Isain noted. It is only in Eurasian and Latin American markets that Gazprom stands in the way of US companies and Washington’s political plans, he added. ­ And Mikhail Korchemkin, General Director of East European Gas Analysis, thinks that Gazprom should not go to Alaska at all. The gas monopoly does not have excess cash to share the risks of American producers. Perhaps more importantly, this region does not even offer fruitful profits.

Monday, October 13, 2008

Gaz de France Takes Gazprom to Canada

Oct. 13, 2008 - Kommersant - Gaz de France Suez, formed from the merger of Gaz de France and the Franco-Belgian Suez, Europe’s largest gas concern, has signed a development strategy with Russia through 2013, Jean-Francois Cirelli, deputy general director of the Franco-Belgian company announced on Friday. Investment details are not set yet but, after negotiations last week in Paris with Vlada Rusakova, Gazprom board member and head of the development, science and ecology department, potential projects were divided into two groups: retail gas sales (Gazprom has received a quota of 1.5 billion cu. m. on the French market per year) and production, purchases and sales of gas to industrial users and distribution companies. In May, Gazprom Marketing & Trading USA signed a contract to supply 100-percent of the liquefied natural gas for the Rabaska regasification terminal in Quebec, Canada, from the Shtockman deposit beginning in 2014. That is Gazprom’s largest investment in North America so far. Now it has become known that GdF Suez and the Canadian Gaz Metro and Enbrodge Embreg companies will offer Gazprom 27 percent in the Rabaska project. The share of GdF in Rabaska will fall from 33.3 percent to 23 percent, and the Canadian companies’ shares will fall from 33.3 percent to 25 percent. GdF is the world’s top seller of liquefied natural gas. It owns shares in gas liquefaction plants in Egypt, Norway and Latin America. It owns 15 liquefied natural gas tankers and is building five more. The company’s electric plants in France has a combined capacity of 6 GW, with plans to increase it of 1o GW in France and 100 GW worldwide. GdF Suez’s receipts in 2007 came to €74.3 billion with profits of €13 billion.

Gazprom to Open Department in Brazil

13.10.2008 - [Neftegaz.RU] - Gazprom Board of Directors had a meeting Monday. The conclusion of the meeting was to open a new company's department in Brazil's city Rio de Janeiro. The main purpose of the new office is to develop Gazprom's business in Latin America.

Gazprom to get foothold in North America

//The Russian gas giant has been offered a stake in Canada’s gas terminal Rabaska
10-13-2008 - RBC News - Gazprom could take part in the construction of Canada’s LNG terminal Rabaska. The Russian gas monopoly was offered a 27 percent stake in the project, announced Jean-Francois Cirelli, Vice Chairman of GDF Suez. According to earlier reports, Gazprom had contracted 100 percent of the new terminal’s capacity for its LNG supplies from the Shtokman field. In this sense, Gazprom is getting a foothold on the North American market, even if the launch of the Shtokman project falls behind schedule. Cirelli said Gazprom could receive 27 percent in the LNG terminal Rabaska in the Canadian province of Quebec. Currently, the project is controlled by French energy giant GDF Suez, natural gas company GazMetro and Enbridge, Canada’s largest gas distribution company. Each of the three companies has a third in Rabaska. Gazprom’s entry into the project would reduce the stakes of the three partners, and Rabaska would be owned on a parity basis, according to Cirelli. He said Gazprom could either buy a stake and supply LNG to the terminal, or alternatively act as a LNG supplier without joining the project. Cirelli refused to specify the price of the offered stake. The Rabaska construction had earlier been estimated at $840 million. LNG would be supplied from several fields, including the Shtokman field, Cirelli noted. Rabaska is to be build by 2014, coinciding with the launch of the Shtokman field. The Canadian project has received the blessing of both national and local authorities. The terminal will be able to receive, store and regasify up to 500 million cubic meters of LNG a day. In May, it was reported that Gazprom’s subsidiary, Gazprom Marketing & Trading USA (GM&T), had contracted 100 percent of Rabaska’s capacity for LNG supplies from the Shtokman field. Deputy CEO Alexander Medvedev said that exporting Shtokman gas to new North American markets was vital for the company, citing the Canadian provinces of Quebec and Ontario as especially attractive. Getting a stake in Rabaska is much more beneficial to Gazprom than simply contracting the terminal for LNG supplies, maintains Pavel Sorokin, an analyst at UniCredit Aton. For Gazprom, the Rabaska project is a guarantee of sales on the North American market, even if the Shtokman launch is delayed. “Perhaps, some European company will also get a stake in a Russian project, in return,” he added. According to Alexander Nazarov, an analyst at IFC Metropol, by acquiring a stake in a terminal which will be fully dependent on Gazprom’s LNG supplies, the Russian gas monopoly obtains a reliable and solvent consumer, with its demand for gas guaranteed to rise. Similarly, the global LNG market is growing rapidly, and the deal could also be of benefit to Canadian consumers, for whom Gazprom is a reliable and long-term gas supplier. Apparently, the Russian gas will be bound for the United States, with its natural gas consumption expected to grow by 1.5 percent annually over the next 20 years, while US domestic production is declining. This means that the United States will have to import more gas, Nazarov says, estimating its gas imports at about 42 million tonnes of LNG by 2010 and some 85 million tonnes by 2020. Once Shtokman comes online, Russian gas supplies to the US will rise significantly, and Gazprom wants to secure enough regasification capacity on the market.

Gas projects in Russia unaffected by financial crisis

MOSCOW, October 13 (RIA Novosti) - The tough economic situation in Russia and the world will not affect Russian natural gas projects, such as the Nord Stream and South Stream pipelines, the president of the Russian Gas Union said on Monday. "These projects are so advanced that the crisis will not affect them," Valery Yazev told the press. Speaking about Nord Stream, Yazev said the timeframe for launching the pipeline, the budget and the costing had already been fixed. The official also dismissed speculation that the crisis could also affect projects in the east of the country, such as the East Siberia-Pacific Ocean (ESPO) pipeline. The ESPO pipeline is slated to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and then onto China and the Asia-Pacific region. He also was confident that projects involving major Russian state-run companies, such as energy giant Gazprom, oil major Rosneft and pipeline monopoly Transneft, would not be frozen. "The government will do its utmost for projects to be implemented according to schedule," Yazev said. The Nord Stream pipeline, which will pump gas from Siberia to Europe under the Baltic Sea, is being built jointly by Gazprom and Germany's E.ON and BASF and Dutch gas transportation firm, Gasunie, at an estimated cost of $12 billion. The first deliveries along the South Stream pipeline are scheduled to start in 2013. The project, expected to annually pump 30 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, involves Bulgaria, Serbia, Hungary, Italy and Greece.

EU reaches deal on foreign energy investors

October 10 2008 - Financial Times by Joshua Chaffin - European states will have the authority to determine whether to open their energy markets to foreign investment from companies such as Gazprom, according to a compromise agreement reached by European energy ministers on Friday. The agreement scales back the European Commission’s efforts to exercise greater oversight over foreign participation in the EU energy market. It is a particular victory for Germany, which receives 40 per cent of its gas from Russia and had objected to tighter restrictions. The Commission last year proposed rules to prevent foreign companies from acquiring generation or transmission companies in the EU unless their own countries opened their own markets to EU investment. That proposal was widely seen as a way to curb the rising influence of Gazprom, which had interrupted gas shipments to Europe amid pricing disputes with Ukraine. However, ministers agreed on Friday that each of the EU’s 27 member countries would decide whether to permit foreign investments in their territory. In so doing, member governments are to consider Europe’s energy security, and also take into account suggestions from the Commission. The compromise on the so-called “Gazprom clause” came amid a broader package of reforms intended to nudge the EU towards its long-term goal of creating a single energy market with robust competition. As part of that effort, ministers agreed to an amendment that would prevent large, integrated utilities such as Germany’s Eon from taking over transmission companies in countries that have already liberalised their energy markets. That agreement was a priority for the Netherlands, which has moved to “unbundle” its energy market by separating companies that handle electricity generation, transmission and distribution, and was concerned that its network could fall prey to larger competitors. In spite of a worsening economy and mounting financial crisis, several energy ministers also reiterated their commitments to meeting ambitious targets to reduce Europe’s greenhouse gas emissions by 20 per cent by 2020. “In spite of tough times, I think there’s a determination to meet our climate commitments,” said Ed Miliband, the UK’s newly appointed energy and climate change secretary. “I think that is encouraging.”

Friday, October 10, 2008

Gazprom Inks MOU on Kyrgyzgaz Stake Sale

kyrzyzstanOctober 09, 2008 - AFX News Limited - Russia's Gazprom signed a memorandum of understanding (MOU) on Thursday with Kyrgyzstan which will help it buy a stake in Kyrgyz state-owned gas company Kyrgyzgaz, the state gas export monopoly said on Thursday. Gazprom said in a statement the memorandum was signed in Bishkek as part of Russia's President Dmitry Medvedev's visit to Kyrgyzstan and allowed the parties to work out principles of Gazprom's participation in the privatization of Kyrgyzgaz. The Kyrgyz government invited Gazprom to take part in the planned privatisation of Kyrgyzgaz and another state-owned company, Kyrgyzneftegaz, in February this year. Kyrgyzstan, more known for its metals reserves, remains a small player on the Central Asian energy market, which is dominated by oil-rich Kazakhstan and gas exporter Turkmenistan. It produces about 70,000 tonnes of oil and 30 million cubic meters of gas a year, but the government says there are sizeable unexplored hydrocarbon reserves. The country's proved reserves of natural gas are estimated at 6 billion cubic meters. By 2010, Kyrgyzstan is forecast to produce 40 million cubic meters of gas a year, Gazprom said.

Thursday, October 09, 2008

Gazprom says no plans to buy back its shares amid crisis

BISHKEK, October 9 (RIA Novosti) - Russian energy giant Gazprom [RTS: GAZP] has no plans to buy back its stock due to the ongoing global financial crisis, Gazprom CEO Alexei Miller said on Thursday. "No, we will not repurchase our shares," Miller told journalists. Miller is among a number of Russian businessmen accompanying Russian President Dmitry Medvedev on his visit to the Central Asian Republic of Kyrgyzstan, which began on Thursday. At their meeting in the Kyrgyz capital of Bishkek, Medvedev and his Kyrgyz counterpart Kurmanbek Bakiyev are expected to discuss trade and economic cooperation, including energy, as well as regional security. Miller also said that Gazprom saw no risks for itself in spite of problems on global financial markets, adding that the price of natural gas supplied by the energy giant to Europe hit a historical high of $500 per 1,000 cubic meters on October 1. Miller also said that falls in global oil prices that are currently hovering under $90 per barrel would not damage Gazprom's pricing policy. "The work of gas sector enterprises is built on different principles and even if something critical happens on oil markets, gas companies always have at least six months to analyze their financial business," Miller said. Also in Bishkek, Gazprom signed a memorandum of understanding with the Kyrgyz government to cooperate in the privatization of branches of Kyrgyzstan's national gas supply company Kyrgyzgaz. Under the document, "the parties will comprehensively study the issue and draft general principles, options and main terms of Gazprom's participation in the privatization of the Kyrgyz government's stake in Kyrgyzgaz equaling 75% plus one share in the company's equity."

Wednesday, October 08, 2008

Oil Producers Pump Their Rights

// Using the state’s financial aid
Oct. 08, 2008 - Kommersant - Russian oil and gas companies have finally admitted having problems due to the financial crisis. Gazprom, LUKoil, Rosneft and TNK-BP heads turned to Vladimir Putin for help. They need to pay for the credits they borrowed from western banks and finance their businesses to avoid a fall in oil and gas production. The prime minister has already promised market participants $50 billion. But there are other contenders for those funds – Rusal and other companies of Oleg Deripaska will soon turn to Vnesheconombank. According to unofficial information, they need $10 billion. Four Russian biggest oil and gas companies turned to the government for financial support, LUKoil head Vagit Alekperov told Reuters. Apart from his company, Gazprom, Rosneft, and TNK-BP want to get extra funds. They expect to receive state credits “to pay for foreign debts”. LUKoil proper reckons with $2-5 billion. On September 24 the companies sent a letter to Vladimir Putin, where they stated their request, a source of Kommersant said. The letter was signed by Vagit Alekperov, Gazprom Deputy Managing Committee Chairman Alexander Ananenkov, Rosneft president Sergey Bogdanchikov and TNK-BP CEO Herman Khan. The businessmen explained that the overall debt volume of the Russian fuel and energy complex totals some $80 billion. But they need money not only to pay creditors. They asked Vladimir Putin “to order that the Finance Ministry and the Central Bank should work out a mechanism of financing strategic projects”. It can be done at the expense of “state targeted credits”, the letter says. The companies do not mention concrete sums they expect to receive. They only add they are ready to work out the mechanisms of crediting together with the government. The four companies that appealed to Vladimir Putin account for 70% and 91% of Russia’s oil and gas production, respectively. The LUKoil press service refused to expand on the statement of their President. Rosneft and TNK-BP didn’t comment on the situation either. But yesterday the market speculated about the problems that accompany Rosneft’s margin call. According to unofficial information, Mitsubishi UFG organized a $2.3 billion credit for it, where $1 billion was given against the pledge of Rosneft stocks. According to sources of Kommersant, one of the terms was that in case Rosneft’s ADR reaches $3.8 per share, the margin call is activated and the loan should be paid immediately. Yesterday Rosneft’s ADR dropped to $3.6 at London’s stock exchange. But then, according to traders, Rosneft stocks were given massive support, and as a result they exceeded $4. At the same time the list of those who signed the document is surprising. Ahead of sending the letter, on September 23, Gazprom CEO Alexei Miller argued that the crisis didn’t affect Gazprom. “We see no risks to the company. Financial credit organizations have the same interest in Gazprom as they used to have before the crisis,” he said. Yesterday the monopoly’s press service stated they asked for money just to be on the safe side. “Given the imminent crisis in the world financial markets, it important to Gazprom, its shareholders and investors to have this mechanism of crediting in force majéur situations,” Gazprom’s press service stated. In fact the government has already responded to the oil producers. A week ago Vladimir Putin ordered that funds should be allocated for this, but he didn’t specify to whom exactly. “Any Russian bank or company will be able to apply to Vnesheconombank for a credit to pay their debts to foreign creditors for the credits received before September 25,” he said stressing that the funds the Central bank will give Vnesheconombank won’t exceed $50 billion. The mechanism of giving credits is yet unclear. But there is already a queue of companies willing to get them. The oil producers didn’t specify whether they appealed to Vnesheconombank. However, Rusal representative Vera Kurochkina told Kommersant that the company plans to turn to Vnesheconombank for funds to refinance its debts. Another source of Kommersant says that “up to $5 billion” can be at stake. The money is needed to refinance Rusal’s buying out the blocking interest of Norilsk Nickel (Rusal borrowed $4.5 billion for that deal). According to unofficial data, Norilsk nickel’s stocks secured the credit. In April, when the agreement was concluded, they cost $13 billion, whereas yesterday – only $3.1 billion. So, Rusal might have encountered problems of paying the debt. At the same time, according to the information of Kommersant, on October 24 Rusal is to pay another portion of money to the seller of Norilsk nickel stocks – ONEXIM Group President Mikhail Prokhorov. Rusal confirmed that the necessary calculations haven’t been completed yet, and assured there will be no default concerning the payment. However, according to the information of Kommersant, other companies of Oleg Deripaska demand money, with the total sum amounting to $10 billion. At the same time oil producers need money to maintain their currently running businesses. Yesterday Vagit Alekperov stated that if oil prices are lower than $105 per barrel, the company won’t secure a growth in oil production in 2009, which would allow it to save extra 130 billion rubles. Now the Finance Ministry and the Energy Ministry discuss the possibility of altering legislation so that companies could get another 400 billion rubles starting from 2010. But so far no concrete measures have been taken. Denis Borisov from investment company Solid points out that monetary flows in the oil market “are leveled by the capital volumes they need to invest to maintain oil production”. The expert presumes that it is possible to secure the necessary volume of funds only if oil price doesn’t drop below $10 per barrel. There is no money to refinance debts – companies planned to settle this matter at the expense of new credits. But it is now too difficult to borrow money in the market, experts believe. “The majority of external markets investors have closed their limits for Russia,” Advisor to Chairman of Expobank’s managing committee Yevgeny Retyunsky explains. There is not much money with Russian banks either. The home market of public debts is closed at least till the end of the year, according to Oleg Gordiyenko from Raiffaizenbank.

Monday, October 06, 2008

Gazprom Could Delay South Stream Startup to 2015

October 3, 2008 - MOSCOW (Dow Jones Newswires) - Gazprom could delay the launch of the South Stream gas pipeline to Europe by two years, the Vedomosti business daily reports Friday, citing an internal strategy document. Gazprom Chief Executive Alexei Miller said in January that the 900-kilometer pipeline would come online in 2013. But Vedomosti says the document pencils in 2015 for startup, although an exact date will only be determined following certain technical assessments in the third quarter of 2009 and may also depend on other market conditions. South Stream will transport gas across the Black Sea from Russia to Bulgaria before splitting into two arms, one going to Austria and the other to southern Italy via Greece.

Yuzhno Russkoye Gas Field: E.ON and Gazprom Reach Final Agreement on Asset Swap

Kovykta Production StationOctober 02, 2008 - Oil Voice - Following intensive negotiations, Gazprom and E.ON have been successful in reaching agreement: E.ON will acquire a stake of 25% minus one share in the Siberian gas field Yuzhno Russkoye. In return, Gazprom is receiving E.ON Ruhrgas’s 49% stake in the Russian company ZAO Gerosgaz, which holds just under 3% of the Gazprom shares. Via Gerosgaz, E.ON Ruhrgas is the owner of this share package which will be transferred to the ownership of Gazprom. After the transaction, E.ON Ruhrgas will still hold a 3.5% direct stake in Gazprom. During the German/Russian government consultations in St. Petersburg, Mr. Alexej Miller, CEO of OAO Gazprom, and Mr. Wulf Bernotat, CEO of E.ON, signed the participation agreement in the presence of the Russian President, Dmitry Medvedev, and the German Chancellor, Angela Merkel. "We are pleased about the final conclusion of our negotiations and the very positive result. With our participation in Yuzhno Russkoye, we will strengthen our long-standing partnership with Gazprom, contribute to a deeper level of understanding between our two countries and secure natural gas supplies to Europe," said Mr. Bernotat. "Following the acquisition of the Russian power station company OGK4, this is again a big step towards strengthening E.ON’s position on the Russian energy market." "Gazprom and E.ON have again confirmed that they are long-term, strategic partners that are able to realise joint cooperation projects along the entire added value chain. We welcome E.ON to the development of the Yuzhno Russkoye gas field. E.ON will be our third partner in this project and thus make an important contribution to gas production in Russia," said Mr. Alexej Miller. Yuzhno Russkoye has reserves of over 600 billion m³, making it one of the world’s largest gas fields. The owner of the production licence and operator is Russian OAO Severneftegazprom (SNGP). After today’s agreement, Gazprom will hold a stake of just under 51% in SNGP and E.ON Ruhrgas and BASF-Wintershall each a stake of 25% minus one share. Production started last year and will reach around 25 billion m³ annually as early as next year. This gas quantity would be sufficient to supply a metropolis of approx. 10 million households. "Participation in Yuzhno Russkoye adds another successful chapter to our long-standing cooperation with Gazprom and is a milestone on our way towards realising our upstream goal. In future, we plan to supply at least 10 billion m³ of natural gas from our own field participations," said Mr. Bernhard Reutersberg, CEO of E.ON Ruhrgas, which will manage the Yuzhno Russkoye participation.

Friday, October 03, 2008

Gazprom and E.ON strike deal on Siberian gas field

//Entry into Yuzhno-Russkoye costs E.ON approx. $5.4 billion
10-02-2008 - RBC News - Russian President Dmitry Medvedev has blessed the first major deal since he took office in May. The transaction is also the first one involving a large foreign company since the beginning of the Georgian-Ossetian conflict in August. Following four-year negotiations, Russian gas giant Gazprom and German utility E.ON clinched a deal today, under which E.ON will receive an almost 25 percent stake in the Yuzhno-Russkoye field, in return giving up 2.93 percent of its 6.5 percent stake in Gazprom. The deal costs E.ON $5.4 billion, almost three times as much as another German company, BASF, paid for its entry into the project two years ago. The Yuzhno-Russkoye oil and gas field in the Yamal-Nenets Autonomous Region is one of the world’s largest gas reserves. It contains ABC1 gas reserves of 825.2 billion cubic meters, C2 reserves of 208.9 billion cubic meters of gas, and 5.7 million tonnes of oil. The project is expected to reach its design capacity of 25 billion cubic meters of gas in 2009. A license for Yuzhno-Russkoye is held by Severneftegazprom. Gazprom CEO Alexei Miller and E.ON CEO Wulf Bernotat have signed an agreement to jointly develop the Yuzhno-Russkoye field in St. Petersburg today in the presence of Russian President Dmitry Medvedev and German Chancellor Angela Merkel. According to the agreement, the German utility will receive a 25 percent minus one share in Severneftegazprom, in exchange giving up a 49 percent in Gerosgaz CJSC, which has a 2.93 percent stake in Gazprom. E.ON’s stake in the company will drop to 3.5 percent. The swap will take effect on January 1, 2009, and the deal will be closed in the second half of next year. The agreement follows four years of negotiations. During this period, another German company, BASF, joined the project, getting a 25 percent minus one share, and plus 10 percent of non-voting shares. The Gazprom-BASF agreement was signed in the spring of 2006. In return, Gazprom received a stake in Wingas Europe, a joint venture selling natural gas to the EU; and it also increased its stake in European gas trader Wingas GmbH to 50 percent minus one share. Gazprom had hoped to get energy assets from E.ON, too. In the summer of 2006, both companies signed a framework agreement under which Gazprom would get a 50 percent minus one share in E.ON’s Hungarian companies E.ON Fоldgaz Storage and E.ON Fоldgaz Trade, and a 25 percent plus one share in Hungaria. Many swap options were discussed later, the latest including stakes in German, Hungarian or British power plants. E.ON first offered to join Yuzhno-Russkoye back in 2004, but Gazprom declined the offer. In June 2004, E.ON renewed its bid, offering $7 billion for the stake, or about 2.07 percent of Gazprom’s stock. The global financial crisis has knocked the price down: Gazprom’s capitalization is currently estimated at $184.74 billion, which means that a 2.93 percent stake is worth some $5.4 billion, calculated Ivan Andriyevsky, Managing Partner at 2К Audit-Business Consultations. Yet, this is almost three times as much as BASF had paid ($2 billion): the stake in the gas field has risen in price thanks to growing energy prices. So, E.ON did not benefit from the dragged-out negotiations. On the contrary, Gazprom will benefit from the buyback, which will effectively put the government in control of over 50 percent of the gas monopoly, says Dmitry Lyutyagin, an analyst at Veles Capital. In addition, once Gazprom’s capitalization increases, the group can sell some of its shares to buy stakes in other projects, including international ones. The deal is also important from a political viewpoint as it is the first major transaction involving a large foreign company since the outbreak of the Georgian-Ossetian conflict, which strained Russia’s relations with the West. Mikhail Korchemkin, General Director of East European Gas Analysis, is more skeptical, saying the transaction is hardly an achievement for Gazprom, which has failed to get access to E.ON’s Hungarian assets mentioned in the 2006 framework agreement. For E.ON, the deal means access to Russia’s gas resources and bigger influence and bigger gas supplies in Germany, Lyutagin concluded.

Thursday, October 02, 2008

E.ON stakes claim at Yuzhno-Russkoye

02 October 2008 - Upstream OnLine - Russian gas giant Gazprom signed a deal with E.ON giving the Germany utility a stake in the Yuzhno-Russkoye gas project. E.ON will give back to Gazprom a stake of about 1.42% in the Russian company, and the German utility will in exchange receive a quarter minus one share of the Yuzhno Russkoye gas field, the two companies said. E.ON had held a total of about 6.4% in Gazprom. The German utility is the second to join Gazprom to exploit the field - which has been producing gas since the end of last year - after Germany's BASF took a stake of 35% minus one share in April 2006. Gazprom and E.ON signed a memorandum of understanding about the field in July 2004, but several rounds of negotiations between the two companies had failed to bear fruit, leading to speculation the talks might be abandoned. The Yuzhno-Russkoye field has reserves of more than 700 billion cubic metres of gas. The field will supply gas to the Nord Stream pipeline under the Baltic Sea to Germany.

E.ON to Pay to Gazprom by Stocks

Oct. 02, 2008 – Kommersant – Russia’s Gazprom and German Е.ON AG have inked an agreement to jointly exploit Yuzhno-Russkoe oil and gas field, Interfax reported from St. Petersburg. Russia’s President Dmitry Medvedev and German Chancellor Angela Merkel attended the ceremony. The agreement that Gazprom CEO Alexei Miller and his E.ON counterpart Wulf H. Bernotat sealed today, October 2, 2008, spells out the asset swap, whereby the German company will get 25 percent less a common stock in Severneftegazprom and, therefore, will be able to join the development of Yuzhno-Russkoe field. Russia’s monopoly will receive 49 percent in Gerosgaz, which is the holder of 2.93 percent in Gazprom. As a result, Gazprom will own this stake in part and in whole. At the same time, Е.ON Ruhrgas will retain direct ownership for the remaining 3.5 percent in Gazprom. Economically, the asset swap will take effect January 1, 2009, even though the parties plan to close the deal in the second half of 2009. Yuzhno-Russkoe oil and gas field is located in Yamal-Nenets Autonomous District; its explored reserves equaled 805.3 billion cu meters of gas and 5.7 million tons of oil as of January 1, 2007.

Gazprom, E.ON sign asset swap accord

RBC, 02.10.2008, St. Petersburg 15:53:02.Gazprom CEO Alexei Miller and Chairman of E.ON's executive board Wulf Bernotat have signed an agreement on joint participation in the development of the Yuzhno-Russkoye oil and gas field, the two companies said in a joint statement today. The document was signed in St. Petersburg in the presence of Russian President Dmitry Medvedev and German Chancellor Angela Merkel. The agreement provides for an asset swap, following which E.ON is to receive 25 percent minus one common registered share in Severneftegazprom, and thus take part in the development of the Yuzhno-Russkoye field. In turn, Gazprom is to get a 49-percent stake in Gerosgaz, which holds 2.93 percent of Gazprom shares. The asset swap will take effect on January 1, 2009, with the parties planning to close the deal in the second half of that year.

Gazprom agrees on Siberian asset swap with Germany's E.ON

ST. PETERSBURG, October 2 (RIA Novosti) - Russia's Gazprom and Germany's E.ON AG signed an asset swap agreement on Thursday involving northwest Siberia's Yuzhno-Russkoye oil and gas field. Under the deal, signed in St. Petersburg in the presence of German Chancellor Angela Merkel and Russian President Dmitry Medvedev, E.ON, the world's largest utility, will receive 25% minus one share in Gazprom subsidiary Severneftegazprom, while the Russian energy giant will get a 49% stake in E.ON's ZAO Gerosgaz, which holds a 2.93% interest in Gazprom. Severneftegazprom holds a license for the Yuzhno-Russkoye oil and gas deposit, which has recoverable reserves of 600 billion cubic meters of gas. Gerosgaz, founded in 1999, is a joint stock company in which Gazprom Export holds a 51% interest, and E.ON Ruhrgas AG has 49%. The transfer would reduce E.ON's stake in Gazprom to 3.5% from 6.43%. The asset swap is to be completed in the second half of 2009. Gazprom CEO Alexei Miller said the deal shows that the companies are strategic, long-term partners. "We are pleased to welcome E.ON into the Yuzhno-Russkoye project; it will become a third partner and will be able to engage in gas production in Russia," he said.

Wednesday, October 01, 2008

UT could get record $500 million gift - or zilch

//Oil company's pledge dependent on lawsuit vs. Russian oil company
October 01, 2008 - Austin American Statesman by Claudia Grisales - The University of Texas could be in line for a $500 million windfall from a longtime donor. But first, Fort Worth-based Moncrief Oil International must hit its own jackpot: winning a complex, international legal fight over its interests in one of Russia's largest natural gas fields. If Moncrief Oil wins, UT would receive 25 percent of the net proceeds from the case, or up to $500 million. If Moncrief Oil loses, the university would get nothing. "Oh, we don't want to talk about that," UT spokesman Don Hale joked Tuesday after the university announced the pledge. "It has the potential to be a $500 million gift, but it also has the potential to be less than that." Moncrief Oil International is owned by the family of Richard Moncrief, son of W.A. "Tex" Moncrief Jr., an oilman and former UT regent who has given $27 million over the years for new facilities and programs at the university. The Moncrief Oil donation could surpass UT's largest gift, one valued at $241 million, from the late Dallas oilman John Jackson and his late wife, Katie, Hale said. It also would be one of the biggest gifts ever in higher education. It is far from a sure thing, however. The pledge is tied to the outcome of litigation over Moncrief Oil's interests in the Yuzhno-Russkoye gas field in Siberia. Moncrief Oil maintains that it owns 40 percent of the gas field, with an estimated value of $16 billion. The company alleges that Gazprom, the Russian oil giant that controls the gas field, has refused to honor Moncrief Oil's contracts with a Gazprom subsidiary, which date back to the 1990s. According to the litigation, in 2004, Gazprom sold a stake in the gas field to a German company without Moncrief Oil's knowledge. The Texas firm filed a lawsuit against Gazprom in the United States and Germany, but the U.S. court said it did not have jurisdiction. It has filed new lawsuits in Texas and a different German court and is fighting a move by Gazprom to move the case to Russia. Rob Reich, who is co-director of the Stanford Center on Philanthropy and Civil Society at Stanford University, said UT's announcement of the pledge was interesting. "Making a public announcement about a pledge that is conditional on the outcome of a trial is unusual. I don't know, however, whether it's unprecedented," Reich said. "However, $500 million is a lot of money, and especially for a public university. It's not surprising that a university would find such a donation attractive. "The main issue of ethical interest is whether Mr. Moncrief is seeking to influence either the outcome or the speed of the trial," Reich said. "It's unclear whether he's trying to do either, and one would have to produce some evidence to make the accusation that his pledge of the proceeds to UT has some ethical taint." The pledge would be given in Tex Moncrief's name to establish an alternative energy program, Richard Moncrief said in a statement released by UT. "The Moncrief family has a long tradition of giving to The University of Texas at Austin," UT President William Powers Jr. said in a statement. "This is another generous contribution that would be an enormous catalyst to the work already being done by our faculty and researchers in the energy field. We will watch the legal developments in this case with great interest in the hope the litigation will be handled expeditiously." Richard Moncrief did not return a phone call seeking comment Tuesday.

Gazprom and Kogas sign Memorandum of Understanding

Oct 01, 2008 - Oil&gas News - Today, in the presence of Dmitry Medvedev, President of the Russian Federation and Lee Myung-bak, President of the Republic of Korea, Alexey Miller, Chairman of the Gazprom Management Committee and Lee Byung-Ho, Acting President – Director General of Kogas signed in Moscow a Memorandum of Understanding on natural gas supplies from Russia to Korea. The Memorandum stipulates the possibility of laying a pipeline for natural gas supplies to the Republic of Korea across the Korean Peninsula, as well as performing joint surveys on this route. The parties agreed to proceed with the commercial negotiations and to prepare the investment rationale for the project before the end of 2010. A decision was also taken to explore the possibility of implementing projects in the area of gas processing, construction of a gas chemicals plant and an LNG plant in Russia’s Far East. Alexey Miller and Lee Byung-Ho expressed their content with the working results of the Joint Working Group (JWG) of Gazprom and KOGAS, particularly when arranging Russian natural gas deliveries to the Republic of Korea. Background: On October 17, 2006 Seoul saw the signing of the Agreement of Cooperation in the Gas Industry between the Government of the Russian Federation and the Government of the Republic of Korea, pursuant to which Gazprom and Kogas were identified as authorized companies overseeing natural gas deliveries from Russia to the Republic of Korea. At present, Gazprom and Kogas are in the relevant commercial talks. The Agreement of Cooperation between Gazprom and Kogas was signed on May 12, 2003 and extended for an additional five-year term in May 2008. The September 3, 2007 Order by the Russian Federation Industry and Energy Ministry approved the Development Program for an integrated gas production, transportation and supply system in Eastern Siberia and the Far East, taking into account potential gas exports to China and other Asia-Pacific countries (Eastern Gas Program). Gazprom was appointed by the Russian Federation Government as the Program execution coordinator. The Sakhalin – Khabarovsk – Vladivostok gas transmission system is a top priority project of the Eastern Gas Program.

Eni and Gazprom Make Further Progress Towards Strategic Partnership Agreement

September 30, 2008 - Oil Voice - Further progress made 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. Eni CEO Paolo Scaroni and Chairman of Gazprom Alexey 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. In particular 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.

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