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Monday, November 24, 2008

Russia's Gazprom denies using gas as political tool

BERLIN, November 24 (RIA Novosti) - The head of Russian natural gas monopoly Gazprom has hit back at Ukrainian politicians' claims that Moscow uses gas exports as a political weapon, saying the company meets all its commitments in full. Alexei Miller said in an interview with Germany's Handelsblatt newspaper published on Monday that Gazprom has been negotiating gas deliveries with Ukraine throughout the year. "Gazprom has not only agreed to supply to Ukraine 7.5 billion cubic meters of gas per year," but has also decided to postpone raising the gas price to international levels until 2011, he said. Miller had earlier said the price of gas for Ukraine could rise to over $400 per 1,000 cubic meters from the start of 2009, from the current level of $179.5. Last week he said Ukraine's gas debt stood at $2.4 billion, and that talks with Kiev were showing little progress. Miller told the paper that several EU countries have a tendency to "demonize" energy supplier countries, particularly gas producers, but that Gazprom has always fulfilled its commitments on supplies. Alexander Medvedev, a deputy chairman of Gazprom's management board, said Monday that Gazprom has drawn up documents to take legal action through an international court to force Ukraine to pay its debt for gas supplies. "We have developed an unpleasant tradition of seeing in the New Year at the negotiation table with colleagues from Ukraine," Medvedev said, in reference to previous gas disputes. "This year, however, we are hoping for better things." Alexei Miller also told the German paper that Europe has no cause to fear gas supply interruptions should Ukraine fail to pay its debt, saying: "these fears are exaggerated, I want to emphasize this." The worst gas pricing row between Russia and Ukraine occurred at the start of 2006, when Russia briefly cut in supplies to its western neighbor, which transits about 80% of Russia's Europe-bound gas. Some consumers in Europe reported a supply shortfall.

LNG Supplies to Japan to Start in Early 2009

24.11.2008 - [Neftegaz.RU] - "An official ceremony of filling the first tanker with liquefied natural gas is scheduled for February 19," said Alexander Medvedev, deputy chairman of the Gazprom management committee and head of Gazprom Export. The second stage of the liquefied natural gas plant in Sakhalin is planned to be launched in 2010. The $20 billion Sakhalin II project includes the Piltun-Astokhskoye and Lunskoye oil and gas fields on Sakhalin Island's northeastern shelf, with recoverable reserves estimated at 150 million tons (1.1 billion bbl) of oil and 500 billion cubic meters of natural gas. The minority partners in the project, Royal Dutch Shell, Mitsui and Mitsubishi, currently hold 27.5%, 12.5% and 10% stakes in the project respectively. Gazprom acquired a controlling stake (50% plus one share) in the project in December 2006.

Gazprom's oil arm to keep refining at 207 mln bbls in 2009

MOSCOW, November 24 (RIA Novosti) - Gazprom Neft, the oil arm of Russian energy giant Gazprom, said on Monday it planned to keep oil refining at 28.3 million metric tons (207 mln bbls) in 2009 to match this year's level. "Under the downstream business plan, oil refining by Gazprom Neft will total 28.3 million tons in 2008. As for 2009, no significant increase in refining volumes is planned," said Anatoly Cherner, Gazprom Neft deputy general director. The company increased oil refining 7.3% year-on-year in 2007 to 26.15 million metric tons (192 mln bbls). Compared with 2007, Gazprom Neft's oil refining will grow 8.2% in 2008. Commenting on Gazprom Neft's earlier-announced strategic plans to boost oil refining to 60-70 million metric tons (440-513 mln bbls) by 2020, Cherner said the company was currently capable of reaching refining volumes of 30 million metric tons (220 mln bbls). He said Gazprom Neft was planning to acquire a 51% stake in the Serbian NIS oil company, which also has considerable refining capacity. Gazprom Neft, known as Sibneft before it was taken over by Gazprom in September 2005, produced 32.7 million metric tons (240 million barrels) of crude and posted a US GAAP net income of $4.14 billion in 2007. Cherner also said Gazprom Neft planned to supply 1.2 million metric tons (8.8 mln bbls) of crude to China in 2009. "As for crude supplies to China, we have an agreement with China Oil [a subsidiary of China National Petroleum Corporation] for 2009 on the supply of 1.2 million tons via Kazakhstan," Cherner said. The Gazprom Neft official said the company planned to increase crude supplies to China in the future, both via Kazakhstan and through the East Siberia - Pacific Ocean (ESPO) pipeline.

Friday, November 21, 2008

Gazprom Export extends gas contract with Slovakia until 2028

slovakiaMOSCOW, November 21 (RIA Novosti) - Gazprom Export, the export arm of Russian energy giant Gazprom, has extended a contract to supply natural gas to Slovakia until 2028, Gazprom and Slovensky plynarensky priemysel a.s. (SPP) said in a joint press release. Gazprom Export also signed a deal with Eustream (SPP's subsidiary transiting gas via Slovakia) to transport gas for the same period - until 2028. Under the agreements, which kick in as of January 1, 2009, by 2028, SPP will buy about 130 billion cubic meters of gas while Eustream will transport approximately 1 trillion cubic meters. In April 1997, Gazprom and SPP signed an array of agreements under which the Slovak gas company received a discount of $5 per 1,000 cubic meters of Russian natural gas. In return, a Gazprom-Slovak joint venture was formed to transit Russian gas via Slovakia to the European Union. In July 2002, the European Commission approved the purchase of a 49% stake in SPP by Gazprom, Ruhrgas and Gaz de France.

Lukoil targets 30 pct of Repsol-radio

MADRID, Nov 19 (Reuters) - Russian state oil company Lukoil (LKOH.MM: Quote, Profile, Research, Stock Buzz) is targeting 30 percent of Spanish oil major Repsol including 20 percent of the company held by Sacyr Vallehermoso, Spanish radio reported on Wednesday without citing sources. A spokesman from Repsol denied that the company is in talks with Lukoil, while a Sacyr spokeswoman reiterated that the company continues to study the possible sale of its stake in Repsol and has been in talks with potential buyers. Repsol's second largest shareholder, Spanish savings bank La Caixa with 14 percent of the oil group, was not available for comment. Last week, Russian news agencies quoted deputy Prime Minister Alexander Zhukov as saying that Gazprom was considering buying a 20 percent stake in Spanish oil major Repsol. Gazprom denied it was looking at Repsol last Friday, after Spanish Prime Minister Jose Luis Rodriguez Zapatero also dismissed the matter in a radio interview. Spanish builder Sacyr Vallehermoso said in September it could sell its 20 percent stake in Repsol as it struggled with a falling property market and rising payments on debt. Some analysts said the stake might find a buyer among Russia's energy companies and its sale could lead to a full-scale takeover or break-up of Repsol, which has lagged rivals in profitability and in growing production and reserves in recent years. A 30 percent stake in Repsol would not necessarily lead to control of the company as its bylaws state that voting rights of any individual shareholders are restricted to 10 percent of the company's share capital, regardless of the stake held. In order to change these bylaws, a shareholder would need support of holders of 75 percent of Repsol's share capital present at an extraordinary general meeting of shareholders. Spanish officials have said they would prefer a Spanish buyer for the stock but would consider any bids seriously. (Reporting by Jonathan Gleave, editing by Carol Bishopric)

Gazprom Export to Up Gas Exports Nearly 5% in 2008

Nov 18, 2008 - (Interfax) - Gazprom Export will increase gas exports to Western and Central Europe almost 5% this year. Alexander Medvedev, deputy chief executive of Gazprom (RTS: GAZP), said at the sixth international Russian Gas forum that Gazprom Export would export 161 billion cubic meters of gas this year. It exported 153.7 bcm in 2007, he said.

Gazprom Considers U.S. Help

19 November 2008 - Reuters-Bloomberg-Moscow Times - Gazprom is considering U.S. majors ExxonMobil and ConocoPhillips for its liquefied natural gas projects in the Arctic Yamal Peninsula, Alexander Medvedev, the firm's deputy chairman, said Tuesday. "The list [of possible participants] is currently being made, but we're not ruling out majors such as ExxonMobil and Conoco from joining the project," Medvedev told reporters on the sidelines of a gas conference. CEO Alexei Miller met with ConocoPhillips CEO Jim Mulva on Monday to discuss exploring Alaska and other projects on LNG. Conoco could gain access to the Yuzhno-Tambeisky gas deposits in Yamal, said Medvedev, who oversees the company's exports. Royal Dutch Shell and Gazprom signed a preliminary accord in June to study LNG projects in Yamal, which means the "end of the world" in the local indigenous language. "Bringing global majors on board increases the chances of implementing such a complex project as Yamal, but doesn't guarantee it will be completed soon," said Artyom Konchin, an analyst with UniCredit. Ice-breaking LNG tankers, which do not yet exist, will have to be designed and built, he said. Gazprom, supplier of one-quarter of Europe's gas, holds around one-fifth of global gas reserves, of which more than 10 trillion cubic meters, or one-third, is on Yamal. The firm needs tens of billions of dollars to bring gas to its trunk pipelines. "The problem is these fields are so remote, the technology doesn't really exist to develop them yet," Konchin said. Medvedev's statements marked a major turning point in agreements between Gazprom and Alaska. "Recently, we had a meeting with top managers of Conoco and outlined potential areas of cooperation. One of these areas [involves] the Arctic, both in the United States and Russia. … They are very similar." Also at the conference Tuesday, Nord Stream's financial director said the Baltic Sea gas pipeline is on track to deliver its first gas in the fourth quarter of 2011 as promised. "We're absolutely on track to deliver the project on time, and we are in budget," financial director Paul Corcoran said. His comments came as a relief to those supporting the 7.4 billion euro ($9.34 billion) project, which Medvedev said Tuesday could be scrapped if Europe continues to delay the project. Russia could opt for tanker exports of liquefied gas if Europe drags its feet on pipeline projects, he said. The European Union has identified the plan to pump 55 billion cubic meters of Russian gas annually to Europe via Germany as a key project to ensure secure gas supplies for Europe. But EU lawmakers have called for a new investigation into the Nord Stream's environmental impact. Corcoran dismissed fears that the global financial crisis could dent the project's feasibility. "It is true that liquidity isn't there as it was two years ago," he said, adding that 30 percent of Nord Stream's financing will come from shareholders' equity and the remainder of 70 percent from the project finance market.

Wednesday, November 19, 2008

Gazprom makes Yamal LNG partner list

18 November 2008 - Upstream OnLine - Russia's Gazprom is considering US giants ExxonMobil and ConocoPhillips for its liquefied natural gas project in Russia's Arctic Yamal region, its deputy chairman said today. "The list (of possible participants) is currently being made, but we do not exclude majors such as ExxonMobil and Conoco from joining the project," Retuters quoted Alexander Medvedev as telling journalists on the sidelines of a gas conference. He also said Gazprom could work in gas projects in Alaska with Conoco in exchange for the US major gaining access to the Yuzhno Tambeisky deposits in Arctic Yamal. "But nothing concrete has been decided yet."

Gazprom transport subsidiaries liquidated

11–20–2008 – Steel Guru – Gazprom announced that Gazpromtrans Yamburg, Gazpromtrans Urengoy, Gazpromtrans Tyumen, Gazpromtrans Surgut and Gazpromtrans Nadym had been liquidated. The above companies united railway assets of the Gazprom’s subsidiaries in the regions. Their main task was to provide operation of rolling stock and operate rail infrastructure, as well as to provide the cargo transportation by rail. It is said that all five companies have been liquidated as they were included in newly established Gazpromtrans under the board’s decision taken in April 2008.

Gazprom to suspend some projects

RBC, 18.11.2008, Moscow 13:07:54 – Gazprom is likely to suspend its fourth- and fifth priority level projects because of the financial crisis, while the projects of the first three levels will be fully implemented within the approved terms, deputy chairman of Gazprom's board Alexander Medvedev told journalists today. He pointed out that among the projects to be implemented were production, transportation and sales projects.

Gazprom adjusts downwards gas export forecast for 2008

MOSCOW, November 18 (RIA Novosti) - Russia's Gazprom has revised its 2008 gas export forecast to 161 billion cu m from over 163 billion cu m, Alexander Medvedev, deputy chairman of the company's management committee, said on Tuesday. In 2007, the state-run energy giant exported 153.7 billion cubic meters of natural gas. Additional transportation capacities of over 80 billion cubic meters will be required to meet Europe's demand for natural gas by 2020, Medvedev told a Moscow forum on Russian natural gas production and supplies. According to data from the International Energy Agency, Russian natural gas exports are expected to rise by 65-110 billion cubic meters by this date, while Gazprom predicts these volumes will expand by 65-70 billion cubic meters, Medvedev said. According to Gazprom's estimates, natural gas exports will rise to 219-227 billion cubic meters by 2020. Gazprom will hold talks in January on the price of natural gas supplies to China, Medvedev said. The Gazprom official also said the implementation of the Altai gas pipeline project depended on an agreement between the Russian and Chinese parties on the price of natural gas supplies. The $11 billion Altai gas pipeline, in Russia's south Siberian Republic of Altai, is considered the principal route to connect natural gas deposits in West Siberia with provinces in western China. The construction of the Altai pipeline was scheduled to begin in 2008. Supplies along the route are expected to start in 2011. The pipeline is designed to supply 30-40 billion cubic meters of natural gas to China annually.

Gazprom's deal with Eni for stake in Libyan oilfield delayed

MOSCOW, November 18 (RIA Novosti) - Gazprom's deal to gain a 16.5% stake in Libya's Elephant oilfield under an asset swap with Italy's Eni S.p.A. has been postponed until later this year, the deputy head of the Russian energy giant said on Tuesday. Under the deal, which was to be finalized in late October, Gazprom is to take half of Eni's 33% stake in the deposit with reserves estimated at 68 million metric tons (499.8 million bbl) in exchange for Eni taking part in projects to develop northwest Siberian assets owned by the Arctic Gas company. "We will finalize it before the end of the year," Alexander Medvedev said, explaining that the delay was due to the global financial crisis and declining oil prices, which could lead to reviewing the terms of the deal. Medvedev earlier said a cash settlement could also be used in the deal with Eni. Gazprom has two prospecting licenses in Libya and minority stakes in two projects run by Germany's Wintershall. Gazprom's foray into Africa has provoked concerns in European countries, which have become increasingly dependent on the Russian company. Gazprom supplies over a quarter of the EU's natural gas. Libya's position as an oil and gas exporter has been strengthened with the lifting of international sanctions. The country is ranked first in Africa and fifth in OPEC in terms of proven reserves of light oil, which stand at 5.1 billion metric tons (37.48 billion bbl). Eni, which formed EniNeftegaz consortium with Enel in Russia, bought Arctic Gas and other assets at a tender for Yukos assets in 2007. The Arctic Gas assets' reserves exceed 900 billion cubic meters of gas, 300 million tons of condensate, and 860 million tons of oil. Gazprom has an option to buy 51% of the Russian assets held by EniNeftegaz within two years. Eni's other projects in Russia include a 50% stake in the Blue Stream gas pipeline under the Black Sea, the other stake belonging to Gazprom, and the company is also involved in the South Stream pipeline to supply Russian gas to Europe.

Gazprom slams users who claim they can't pay as credit crisis pressures payments

Gazprom slams users who claim they can't pay as credit crisis pressures payments18 November 2008 - Russia Today - Russian gas giant Gazprom has slammed countries which claim they won't be able to pay for next year's gas deliveries due to the global financial crisis. Nations including Belarus, Serbia and Hungary, which rely heavily on Gazprom supplies, have sought IMF bailouts to cover gaps in their budget, and Ukraine is hiking consumer gas prices 35% from December to plug its debts to Gazprom. But in an interview with Business RT at the International Gas Forum in Moscow, Deputy CEO Aleksandr Medvedev said if states can't pay, they should use less gas. “Every commodity that's delivered should be paid, we're not a charity organization. It's a little bit of a strange statement that in advance they'll not be able to pay. Obviously it's difficult economic situations in different companies and countries. But then they should look at their consumption models, to take as much gas as they could pay.” Also Speaking to Business RT, Joseph Stanislaw, Deloitte's Independent senior advisor on Energy & Resources, said Gazprom is right to demand payment in full for its gas supplies, but noted the problems being faced are not just limited to a few countries and reflect a worldwide shortage of credit. “It’s a complicated issue. He’s absolutely right. If they cant afford to pay they shouldn’t buy. And the reality is the price will be too high for them because of exchange rate changes and other things. The demand will go down – no question of that. But in the short term they cant change their behaviour very very quickly. In the very short term this crisis means people can not pay debts and have access to credit lines. Its an issue of access to credit lines more than anything else. In the United States for example, there are major power companies who cant get access to credit to continue producing electricity. That was the state of affairs for about a month in the United States. It’s complicated all over the world, its not isolated to the countries he mentioned. So it’s a matter of how do you make concessions, understanding that at the time theres a severe need, and a severe crisis. This is a serious world economic problem."

Monday, November 17, 2008

Gazprom increases gas exports by 9% to 182 bln cu m in 9M08

MOSCOW, November 14 (RIA Novosti) - Gazprom increased gas exports in January-September 2008 by 6% year on year to 182 billion cu m, the Russian energy giant said Friday. In the third quarter, the average price for gas sold to Europe was $473 per 1,000 cu m, an almost 13% growth on the second quarter, and a 70% growth on last year's third quarter. Gazprom gas supplies to Western Europe grew 15% to 90.6 billion cubic meters, and 25% to 32.3 billion cu m to Central and Eastern Europe. Gas supplies to the Russian market grew 4% to 239 billion cu m. Gas supplies to former Soviet Union countries decreased by 4% to 59.2 billion cu m.

Gazprom not interested in Repsol

14 November 2008 - Upstream OnLine - Russian energy giant Gazprom said it is not interested in buying 20% of Spanish energy company Repsol. “Gazprom had and has no plans to buy 20% of Repsol,” Sergei Kupriyanov, the Moscow-based company's spokesman, said in an e-mailed statement today. “All discussions about this arose from a desire to sell the stake, not to buy it. And that's not the same thing,” he added. Russian Deputy Prime Minister Alexander Zhukov said 12 November that Gazprom was considering buying builder Sacyr Vallehermosa’s 20% stake in Repsol, said a Bloomberg report. Gazprom supplies about a quarter of Europe's gas and has said it wants to expand into marketing and distribution, as well as liquefied natural gas. Gazprom is not interested in buying a stake in Repsol, Prime Minister Jose Luis Rodriguez Zapatero also said in comments broadcast by Cadena Ser radio today. “This has not been, is not and will not be on Gazprom's horizon nor on Repsol's, of course,” Zapatero said. “There is nothing real in this,” he added.

Thursday, November 13, 2008

Gazprom, Egypt Discuss Middle Eastern LNG Plans

egypt11–13–2008 – Moscow Times-Bloomberg by Emad Mekay - CAIRO, Egypt -- Egypt and Gazprom are in talks to liquefy Russian gas in Egypt for shipment to Europe, a spokesman for the Egyptian Oil Ministry said Wednesday. Egypt is offering "excellent liquefying facilities" as part of a plan to turn the North African nation into a major LNG hub, Hamdi Abdelaziz said in a phone interview from Cairo. "We are discussing the possibility that Russian gas be pumped into the Arab Gas Pipeline in reverse," Abdelaziz said. "It will originate in Russia and be liquefied in Egypt since we have excellent liquefying facilities." The Arab Gas Pipeline currently runs from Egypt through Jordan to Lebanon and Syria and has a capacity of 10 billion cubic meters per year. The proposal involves linking the Arab Gas Pipeline to pipelines that already exist in Turkey. The plan is one of several ideas Egyptian Prime Minister Ahmed Nazif and officials from the Egyptian Oil Ministry are discussing with Gazprom executives in Moscow, Abdelaziz said. Two Russian companies, Novatek and LUKoil, are already working in Egypt, the Russian Embassy in Cairo said. Abdelaziz said talks also include inviting Gazprom to make exploration bids in Egypt. Egypt will benefit from liquefying and selling Russian gas by providing labor, storage facilities and manufacturing equipment, Hamdi El-Banbi, former Egyptian oil minister said in an interview by phone from Cairo. "We are right on the Mediterranean, and we have exceptional liquefying facilities and have experience with being a transit point for fuels to Europe and the U.S.," he said. Egypt runs the Sumed pipeline, a major route for crude from Gulf oil exporters to Europe and the United States.

Gazprom Sends Germans to Siberia

Gazprom head Alexey Miller and BASF chief executive Juergen Hambrecht at the opening ceremony of a new unit at the Achimgaz project in Nov. 13, 2008 - Kommersant - Wintershall, the hydrocarbons division of BASF, is discussing joint development projects in Eastern Siberia and the Russian Far East with Gazprom. The Russian monopoly is most interested in technical and financial support from its German partner in order to create a gas and chemical complex that will include the Kovykta gas condensate field. Gazprom chief Alexey Miller called talks with Wintershall “serious,” Interfax reports. He said that Gazprom has presented a “program to create a unified production system in Eastern Siberia and the Russian Far East” and the Germans were interested. Neither Gazprom nor BASF is commenting on the nature of their potential partnership. “We are looking for an opportunity for synergy,” Gazprom spokesman Sergey Kupriyanov commented. Gazprom and Wintershall own equal shares in Achimgaz, which is worth a total of €700 million. The Eastern Siberia gas program, which was approved by the government in September 2007, foresees the formation of new natural gas production centers in Sakhalin, Yakutsk, Irkutsk (the Kovykta field) and Krasnoyarsk. Gazprom was appointed coordinator of that project. There are a number of chemicals found in the gas filed along with the natural gas and development requires a complex approach. That requires considerable capital investment and the most modern technology. Fourteen percent is the level of foreign participation planned in the future development of the Russian gas industry, but it would be expedient and efficient to make exceptions fro individual projects.

Gazprom Caught in Eyeing Repsol

Photo: ReutersNov. 13, 2008 - Kommersant - Russia gas monopoly Gazprom, which presence in Spain could have hardly been noticed so far, is willing to acquire 20 percent in Repsol from Sacyr Vallehermoso. The experts are optimistic about the deal prospects, specifying, however, that the monopoly will probably have to pay above the market price of €3.2 billion. For its part, Russia may admit Repsol to the project for Yuzhno-Tambey field development. It was Russia’s Vice Premier Alexander Zhukov that gave the first official confirmation to Gazprom’s intention to acquire 20 percent in Repsol. Zhukov made the respective statement at the news conference held by results of the meeting of Russia-Spain’s intergovernmental commission. Spanish Sacyr Vallehermoso put up the stake for sale September 12. Gazprom that had refuted the buying intention in October declined to comment on Zhukov’s words Wednesday. In addition to Gazprom, Spanish media named Shell, Total and LUKOIL as potential buyers. Repsol YPF is one of ten biggest private oil companies in the world and Latin America’s biggest energy company in terms of the asset size. It controls 57 percent of oil and gas processing facilities in Spain, selling 55 million tons of oil and 32 billion cu meters of gas each year. 2007 net profit reached €3.2 billion, the revenues stood at €55.9 billion. The major holders are Sacyr Vallehermoso S.A. (20.01 percent), Criteria Caixa Corp. (14.29 percent), Petroleos Mexicanos (4.90 percent), Chase Nominees Ltd (9.83 percent), Axa S.A. (4.21 percent). Sacyr Vallehermoso paid €6.5 billion for the stake in Repsol a few years ago but it cost no more than €3.2 billion on Madrid Exchange yesterday. Nevertheless, the price could be roughly €5 billion given the consolidation margin, forecasted Maxim Shein from BrokerCreditService. What’s more, according to Zhukov, Repsol proceeds with negotiations to set up a venture with Tambeineftegaz to implement the LNG projects. The firms of Metalloinvest owner Alisher Usmanov control 75 percent in the company and Gazprombank has the remaining 25 percent.

Gazprom and BASF join forces to turn on Urengoy gas

Gazprom and BASF join forces to turn on Urengoy gasNovember 13, 2008 - Russia Today - Russian gas giant Gazprom, together with partner BASF, has tapped new supplies in the Urengoy gas field - the world’s second largest. Despite falling gas prices and a forecast drop in demand next year, the longer term outlook underlines the need more production and greater investment, with this joint venture being a sign of more to come. The first gas is now flowing from the remote Achimov formation. Achimov is part of Urengoy in Western Siberia- the largest gas field in Russia, with its gas in isolated pockets at a depth of 4 thousand meters. Achimgaz is a 50/50 joint venture between Germany's BASF and Russia’s Gazprom. BASF is investing $700 million in the first stage of the field's development, with Board Chairman Jurgen Hambrecht saying its an investment in future energy security. “We are not only producing gas together, and participating in its sale, but also extracting it together with Gazprom. For Europe and Germany it means more secure gas supplies.” This field is important not only for its output of 7 Billion cubic meters a year, but is also significant for its use of pioneering technology and international cooperation. According to Gazprom Chairman, Alexey Miller further large scale projects are being considered. “If we are talking about future projects - that means we will be working in increasingly remote areas. It would be a large scale project for West Siberia, involving a unified production and transportation system. This is still under discussion.” With new reserves of gas increasingly hard to find, and Europe increasingly reliant on Russia as a supplier, such cooperation is a sign of things to come. Achimgas is an example of successful international cooperation in Russia’s upstream sector - with BASF’s participation in Russian gas production resulting in Gazprom getting access to downstream markets in Germany. As getting more gas to European markets becomes increasingly crucial over the longer term, this project is blazing a trail which other projects are sure to follow.

Wednesday, November 12, 2008

Gazprom, BASF Eye Gas Refining JV

November 12, 2008 - AFX News Limited - Russia's Gazprom and German chemical group BASF are in talks on joint projects in East Siberia that will focus on gas refining, Gazprom's chief executive said on Wednesday. Alexei Miller told reporters that Gazprom, Russia's gas export monopoly, had extensive plans to create a single system of production and transportation of gas in East Siberia. "We have presented this programme to BASF specialists and started serious dialogue on joint work on the plan," Miller said. "We have extensive plans on gas refining and petrochemical projects in East Siberia and I think this will become the main direction of our cooperation," he said.

BASF and Gazprom Boost Natural Gas Production in Siberia with Achimgaz Joint Venture

November 12, 2008 - Oil Voice -
• Joint project officially comes on stream
• Section 1A of the Achimov deposit has reserves of up to 200 billion cubic meters of natural gas
• Second joint project Yuzhno Russkoye already supplying more than 50 million cubic meters of natural gas daily
BASF and Russia’s OAO Gazprom have officially launched natural gas production at the joint venture ZAO Achimgaz in Siberia. The German-Russian joint venture produces natural gas and condensate from the Achimov Formation, from which it also gets its name, in the Urengoy deposit. Together with the natural gas field Yuzhno Russkoye, which was commissioned in 2007, Achimgaz is now the second joint natural gas production project by Gazprom and BASF in Siberia. Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE, and Alexei B. Miller, CEO of OAO Gazprom, opened a valve together to launch production at the deposit, which lies about 3,500 kilometers north-east of Moscow. The joint venture plans to recover up to 200 billion cubic meters of natural gas and 40 million tonnes of condensate from the Achimov Formation over a period of more than 40 years. The annual natural gas production target during the plateau phase is up to 7.5 billion cubic meters. “Today, are we not only procuring natural gas from Russia and marketing it with Gazprom – we are now producing gas together in Russia, too. That means more supply security for Germany and all of Europe”, Dr. Jürgen Hambrecht declared at the official opening celebrations near the town of Novy Urengoy. The gas fields Achimgaz and Yuzhno Russkoye are also important symbolically, the BASF Chairman continued. “With these projects, for the first time a European company, namely BASF, is playing a central role in natural gas production in Siberia.” “More than 15 years of successful cooperation, participation in major infrastructure projects and shared efforts in the delivery of gas to Europe bind Gazprom and BASF together. And today we are beginning a new chapter in the history of our partnership. Together with our German partners we are commencing gas production from the Achimov strata of the Urengoy deposit, which are far more complex to develop than the traditional Senoman and Valendis strata,” Alexei Miller said in his welcome address. “In our view “Achimgaz” represents a model for the successful organization of shared business activities between Gazprom and its international partners for the production of hydrocarbons in Russia.” ZAO Achimgaz was founded in July 2003 as a joint venture by Gazprom subsidiary OOO Gazprom dobytscha Urengoi and wholly owned BASF subsidiary Wintershall Holding AG with both partners holding equal shares. The aim of the joint venture was to develop the first section of the Achimov horizon of the Urengoy deposit – one of the largest natural gas fields in Russia. The Achimov reserves lie at a depth of 3,600 to 3,800 meters and have a much more complex structure than the overlying rock formations which have been producing so far. A gas treatment facility as well as three gas and condensate wells are currently in operation at section 1A of the Achimov Formation providing 1.5 million cubic meters of gas daily. In 2009 the field is set to produce almost a billion cubic meters of gas and about 300,000 tons of condensate. The second joint natural gas production project, the natural gas field Yuzhno Russkoye, commissioned in 2007, has recoverable natural gas reserves of more than 600 billion cubic meters and is thus three times as big as Achimgaz. The field already supplies more than 50 million cubic meters of natural gas a day. “The development of the Yuzhno Russkoye field is going extremely well”, reported the Chairman of the Board of Executive Directors of BASF, Jürgen Hambrecht. “We will reach maximum production there of 25 billion cubic meters of gas per year by the middle of 2009 – two years earlier than originally planned." Over 100 production wells have already been drilled to develop Yuzhno Russkoye, and in the final phase of development this figure will be 142.
Gazprom and BASF/Wintershall: partners since 1990
At the moment Gazprom delivers around 40 billion cubic meters of natural gas a year to Germany. Based on this figure, the Yuzhno Russkoye and Achimgaz deposits alone could supply all Russian gas exports to Germany for another 20 years. Aside from these two major Russian production projects, BASF and Gazprom are also directly involved in the European natural gas supply. For instance, the two partners are planning to make additional investments worth several billion euros in the European natural gas infrastructure in the coming years. Most of the planned investments are earmarked for the construction of the Nord Stream Baltic Sea pipeline as well as the expansion of the German transport system and the construction of new natural gas storage facilities in Europe. Two natural gas pipelines on the German mainland are also planned for the onward transport the Russian gas arriving via the planned Nord Stream Baltic Sea pipeline: the OPAL (Ostsee-Pipeline-Anbindungs-Leitung – Baltic Sea pipeline link), which is to transport gas from the Baltic Sea coast south to the German-Czech border, and the NEL (Norddeutsche Erdgas-Leitung – Northern German gas link), which will transport gas to the West. Following commissioning in 2011, once the pipeline has been completed, up to 55 billion cubic meters of natural gas are set to flow from Russia to Germany via the Nord Stream pipeline. Gazprom and BASF subsidiary Wintershall have already been active in natural gas sales and trading in Germany and other European countries via joint ventures (WINGAS, WIEH and WIEE) since 1990 and have invested around three billion euros to date in the construction and expansion of a pipeline infrastructure and the construction of natural gas storage facilities. Furthermore, a declaration of intent was recently signed to extend the existing primary supply agreement to 2043 ahead of schedule. This guarantees the natural gas trading companies WINGAS, WIEH and WIEE more than 800 billion cubic meters of natural gas for Europe over the next 35 years. To put this into context, this volume is enough to provide all German households with the “blue fuel” for 25 years. Russian natural gas is becoming increasingly important for Central and Western Europe because of falling production from the North Sea and increasing demand.

Gazprom may engage BASF in Eastern Siberian projects

RBC, 12.11.2008, Moscow 10:43:39.Gazprom may have the German-based BASF take part in gas processing and chemical projects in Eastern Siberia, Gazprom's CEO Alexei Miller told journalists in Novy Urengoy, Yamalo-Nenets Autonomous Area today. He explained that the gas giant had already made a presentation of its eastern program to BASF, suggesting it had serious intentions to cooperate. However, Miller did not name any specific projects.

Gazprom looks at buying 20% in Spain's Repsol

MADRID, November 12 (RIA Novosti) - Russian energy giant Gazprom is considering buying a 20% share in Repsol, Spain's largest private oil and gas company, Deputy Prime Minister Alexander Zhukov said on Wednesday. "Gazprom is studying the issue of buying a 20% stake in Repsol put up for sale by the Spanish construction company Sacir Vallehermoso," Zhukov said after a meeting of the Russian-Spanish inter-governmental commission for economic and industrial cooperation. At the same time, Zhukov said the prospective deal was a private matter of the two companies. Repsol is among the world's top 10 private oil and gas companies, selling about 55 million metric tons (403 million barrels) of oil and 32 billion cubic meters of gas annually. Zhukov also said that Spanish energy companies were interested in developing gas deposits in Russia and implementing liquefied natural gas production projects. Zhukov said the list of Spanish companies interested in energy cooperation with Russia included Repsol and the electric utility Iberdrola. The materials prepared for Zhukov's visit to Spain say that Repsol is continuing negotiations on a possible joint venture with Russian company Tambeineftegaz to develop the Tambeisky field on the Yamal Peninsula in Russia's Arctic, and with U.S. Anadarco to implement a project for liquefied natural gas production and transportation. Zhukov said Russia and Spain also had good prospects for cooperation in alternative energy projects, adding that Iberdrola had already signed a contract to build a wind turbine farm in southern Russia's Krasnodar Territory. Zhukov also said Spanish company Tecnicas Reunidas had started the modernization of the Khabarovsk refinery in Russia's Far East under an $800-million contract.

Spanish energy companies want to develop gas fields in Russia

MADRID, November 12 (RIA Novosti) - Spanish energy companies are interested in developing gas deposits in Russia and implementing liquefied natural gas production projects, Russian Deputy Prime Minister Alexander Zhukov said on Wednesday. Zhukov spoke Wednesday at a meeting with the leaders of the Spanish Confederation of Entrepreneurs. Zhukov said the list of Spanish companies interested in energy cooperation with Russia included Repsol, Spain's largest private oil and gas producing and refining corporation, and Iberdrola electric power operator. The materials prepared for Zhukov's visit to Spain say that Repsol is continuing negotiations on a possible joint venture with Russian company Tambeineftegaz to develop the Tambeisky field on Yamal in Russia's Arctic, and with U.S. Anadarco to implement a project for liquefied natural gas production and transportation. Zhukov said Russia and Spain also had good prospects for cooperation in alternative energy projects, adding that Iberdrola had already signed a contract to create a wind-turbine farm in the Krasnodar Territory in southern Russia. Zhukov also said Spanish company Tecnicas Reunidas had started the modernization of the Khabarovsk refinery in Russia's Far East under a $800-million contract.

Russia, Iran, Qatar consider gas production, liquefying JV

MOSCOW, November 12, 2008 (RIA Novosti) - Russia, Iran and Qatar, leading natural gas producers that are set to meet on Wednesday for cooperation talks, plan to set up a joint venture to produce, liquefy and sell gas, a Russian business daily said on Tuesday. Kommersant cited a Russian government official as saying the "gas troika" would build a pipeline to pump gas from Iran's South Pars deposit, the world's largest with reserves estimated at 14 trillion cubic meters, to an LNG plant in Qatar. Analysts expect the project to be worth at least $4 billion. Each country could have 30% in the project, and the other 10% could go to China or South Korea, the paper said, citing analysts. Analysts say Qatar's participation could reduce the political risks of selling Iranian gas, the paper reported. "The infrastructure to produce gas at South Pars, a pipeline on the Persian Gulf floor linking to Qatar's Ras Laffan province [100-150 km from the deposit] and an LNG plant there are planned to be built as part of the project," an unidentified Russian government official told the daily. A source in the Russian natural gas monopoly Gazprom confirmed the plans to the paper, adding that "the fourth participant in the project will be picked depending on the sales market." Analysts quoted by the paper said China, with which Qatar has signed a deal to supply 7 million metric tons of LNG a year, and South Korea, which has increased consumption of liquefied gas recently, are the most likely candidates. Kommersant said its sources had not given specific figures, but Valery Nesterov of Troika Dialog investment company told the paper the project would be worth at least $4 billion. Gazprom, which has already been engaged in the development of South Pars's second and third stages, could now receive revenue from exporting the gas, which Iran had not previously allowed, the paper said. Energy cooperation with Iran could be risky due to U.S. sanctions, while sales from Qatar would allow a change in Iranian gas's "citizenship," East European Gas Analysis Director Mikhail Korchemkin was quoted by the paper as saying. Russian Prime Minister Vladimir Putin moved on Tuesday to ease fears over the planned talks in Doha, saying the three countries do not plan to create a gas cartel. "We are aware of the concerns and fears expressed by some energy consumers. There are absolutely no grounds for such fears. We are not establishing a cartel, nor are we striking any cartel deals," Putin said. Russia, Iran, and Qatar - ranked first, second and third respectively in terms of global gas reserves - formed the "gas troika", agreeing to boost coordination in the sphere, at their meeting in Tehran in October. The decision sparked fears among consumers that the countries plan to create an OPEC-style gas cartel and will control prices. Europe feared Russia would expand its influence on energy markets via the cartel.

Gazprom says natural gas prices for Europe to drop in 2009

NOVY URENGOI, November 12 (RIA Novosti) - Export prices for sales of Russian natural gas to European consumers will start to go down at the start of 2009, Gazprom CEO Alexei Miller said on Wednesday. "It is absolutely true that gas prices for European consumers will start to go down from the start of 2009," Miller said, adding that the price of natural gas for Europe in the fourth quarter had been above $500 per 1,000 cubic meters, an all-time high. Miller said natural gas prices were not as volatile as oil prices as the gas pricing system made them more predictable, adding that the price of gas was based on the cost of crude oil and petroleum products. He also reiterated however that he believed the era of low hydrocarbon prices was over. Gazprom has offered Germany's BASF chemicals group the opportunity to join gas and petrochemical projects in East Siberia, Miller also said. The Gazprom top executive said the Russian energy giant had developed a program of natural gas production, processing, and transportation in East Siberia and the Far East, adding that Gazprom personnel had recently made a presentation of the program for Wintershall, a wholly-owned subsidiary of BASF. "BASF is a leader in gas chemistry and we are saying that projects in the field of gas chemistry and petrochemistry could become another area for our further cooperation," Miller said. Gazprom intends to channel about 30% of its investment program in 2009 into the development of natural gas projects on the Yamal Peninsula in Russia's Arctic, Miller said. Gazprom views Yamal as a key source of its future natural gas output amid declining gas production in West Siberia. Natural gas deposit development on Yamal Peninsula will enable Gazprom to bring up gas output in the region to 250 billion cubic meters annually. As of today, 11 gas and 15 gas condensate fields have been explored on Yamal, with proven natural gas reserves amounting to 10.4 trillion cubic meters of gas, 228.3 million metric tons of condensate, and 291.8 million metric tons (2.1 billion barrels) of oil.

Russia to supply 55 bln cu m of gas to Ukraine in 2009 - Gazprom

MOSCOW, November 11, 2008 (RIA Novosti) - Russia will supply at least 55 billion cubic meters of natural gas to Ukraine in 2009, energy giant Gazprom said on Tuesday. Oleh Dubina, head of the Ukrainian national oil and gas company Naftogaz, and Gazprom CEO Alexei Miller held talks on Tuesday in Moscow on natural gas supplies to Ukraine and the conclusion of a long-term gas supply contract until 2019. "Agreements were reached that at least 55 billion cubic meters of natural gas will be supplied to Ukraine in 2009," Gazprom said in a statement. Ukraine has imported around 55 billion cubic meters of gas annually in the past few years. Talks between Gazprom and Naftogaz on a long-term natural gas deal could be completed in the near future after "considerable progress" was made on Tuesday, the Russian energy giant's press service said. "The parties made considerable progress on a long-term contract for gas deliveries to Ukraine and a deal for gas transit through the country. There is mutual understanding on pricing for 2009 and talks on the issue are expected to be completed in the near future," Gazprom said. The price of natural gas for Ukraine in 2009 and subsequent years has not yet been agreed. Kiev hopes that the price will be around $250 per 1,000 cubic meters next year. This year, Ukraine has been paying $179.5 per 1,000 cu m. Dubina said on Monday that he hoped a pricing formula based on the price of natural gas in Europe, earlier mentioned by Ukrainian Prime Minister Yulia Tymoshenko, would not be used in the next three-year period of transition to market prices.

Monday, November 10, 2008

Gazprom Elects Oleg Aksyutin to Management Committee

Oleg AksyutinNovember 07, 2008 - Rigzone News - Meeting in absentia, the Gazprom Board of Directors recently decided to elect Oleg Aksyutin to the Management Committee of OAO Gazprom for a five-year term. Aksyutin replaces Bogdan Budzulyak in the position. By a Gazprom order, Bogdan Budzulyak was relieved of his post as Head of Gas Transportation, Underground Storage and Utilization Department in October 2008 due to his retirement. Oleg Aksyutin was appointed to replace him. Aksyutin was born in 1967 in the city of Kuybyshev. In 1990 he graduated with honors from the Kuybyshev Aviation Institute named after Academician S.P. Korolyov, majoring in Aircraft and Engines Operation and qualified as a Mechanical Engineer. Aksyutin has a PhD in Geological and Mineralogical Sciences and is a Corresponding Member of the International Academy of Technological Sciences and the Russian Academy of Natural Sciences. He began his career at the Stavropol Gas Production Unit of the Kavkaztransgaz Production Association. He worked as a compressor operator, gas facilities operation engineer, Deputy Head of Booster Compressor Station #2 and Head of the Rozhdestvenskaya Gas Compressor Service. In May 1998, he was appointed Head of the Stavropol Gas Production Unit. From October 2002 to June 2007, he served as Chief Engineer and First Deputy Director General of Kavkaztransgaz. From June 2007 to October 2008, he served as Director General of Gazprom Dobycha Nadym.

Friday, November 07, 2008

OMV and Gazprom to develop a central European gas hub

OMV 07.11.2008 - [Neftegaz.RU] - OMV said in a statement that Gazprom would take a 30-percent stake in its wholly-owned unit, Central European Gas. Two other partners - the Vienna Stock Exchange and Austrian gas group Centrex Europe Energy & Gas - would also take stakes of 20 percent apiece and help transform it into a "leading hub platform in continental Europe" and establish a central European gas exchange, Petroleum reports. Financial details were not disclosed. The exchange would allow the trading of gas products on a spot and futures market. The deal first has to be approved by the regulatory authorities, including the EU Commission in Brussels, but OMV said it is expected to be completed next year. CEGH is currently a wholly-owned subsidiary of OMV Gas & Power GmbH and, according to OMV, is "one of the most important gas hubs in Europe" with trading volumes of 17.7 billion cubic metres last year. In January, Gazprom and OMV had signed an agreement to give the Russian giant a 50-percent stake in CEGH and expand it. There is already a spot and futures market for gas products at the European Energy Exchange in Leipzig, Germany.

Tuesday, November 04, 2008

Gazprom net profit more than doubles

RBC, 01.11.2008, Moscow 10:21:09 – Gazprom's net profit under RAS more than doubled from RUB 194.146bn (approx. USD 7.16bn) in the first nine months of 2007 to RUB 432.9bn (approx. USD 16bn) in January-September 2008, the gas monopoly said in a statement today. In the third quarter of 2008, the holding's net profit stood at roughly RUB 147.2bn (approx. USD 5.43bn), up 12.2 percent against RUB 131.24bn (approx. USD 4.84bn) in Q3 2007.

Gazprom and E.On Ruhrgas to form joint venture

RBC, 31.10.2008, Moscow 18:40:04 – Gazprom and Germany's E.On Ruhrgas AG are planning to form a joint venture to operate in the energy efficiency and conservation sphere, the press office of the Russian energy holding reported today. Gazprom's Deputy Chairman Alexander Medvedev and E.On Ruhrgas AG CEO Bernhard Reutersberg signed a memorandum to this effect on Thursday. The parties are expected to start forming the new company in 2009.The joint venture is to be responsible for the implementation of energy conservation projects, including those using renewable sources of energy, as well as holding consultations for major European clients on energy efficiency.

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