Russ Oil-Gas

2009-05-28 - Barents Observer – Gazprom does not have the need nor financing for the development of the Shtokman field in the Barents Sea, researcher Anders Aslund argues. “Since Gazprom has been forced to reduce its output, it has neither the need nor financing for the expensive development of its new mammoth fields, Shtokman in the Barents Sea and Yamal in the far northern tip of Siberia. Even so, it is now proceeding with contracts for the development of the Shtokman filed for an initial 15 billion USD. Its partners, France's Total and Norway's StatoilHydro, should call its bluff”, Mr. Åslund, senior fellow at the Peterson Institute for International Economics, argues. In an article published in the Moscow Times, Mr. Åslund maintains that the Russian energy giant is poorly managed, inefficient and that government protection is “the company’s only true strength”. However, the crisis offers an excellent opportunity for reform. “The arguments for a profound reform of the country's gas sector have never been stronger. How long is the Kremlin prepared to tolerate Gazprom's massive waste of resources? Åslund writes The researcher also believes that the Russian company’s weakness offers a unique opportunity for the European Union to improve gas trade with Russia. “The two should come together and reform both the European and Russian gas sectors. The centerpiece should be an all-European gas reform, with unbundling of transportation and gas production”.

05-26-2009 - Upstream OnLine - A potential second candidate for TNK-BP's top job has been mooted as news emerged today that the company's Russia-connected shareholders have suggested appointing an interim chief executive for three to six months before a final choice is made. A source close to the Russian shareholders told Reuters shareholders would consider a second candidate, Maxim Barsky, as a possible permanent chief executive. The source added that the shareholders want a new interim chief executive named for a period of three to six months before an independent company head is chosen. Barsky is a board member at oil producer West Siberian Resources. BP , which owns 50% of TNK-BP, said on Monday it had nominated Pavel Skitovich, a former employee of billionaire Vladimir Potanin, as its candidate for the company's top job. The UK supermajor and the quartet of Russia-connected billionaires who share control of TNK-BP fell out publicly last year in a dispute that spooked foreign investors and led to the departure of many expatriate staff, including then-chief executive Robert Dudley. Though both sides say they have resolved their differences, a permanent chief executive has yet to be appointed. Tim Summers, the former chief operating officer now serving as chief executive, has said his contract expires at the end of next month. BP retains the right to nominate a chief executive for TNK-BP, but the Russia-connected shareholders have insisted that the candidate be a Russian speaker with experience in the country.

05-26-2009 - Upstream OnLine - The chief of Russia's Gazprom said that he is concerned Ukraine will not pay in full for this month's gas supplies. "We see the payment situation regarding gas supplies in May as very, very grave," Alexei Miller said. "If there is any disruption in payments for May supplies, Gazprom will have to move over to 100% advance payments." Gas export monopoly Gazprom says it wants to store extra gas in Ukraine during winter to be able to respond more quickly to the needs of its customers in Europe. How these storage facilities will be filled, and who will pay to fill them, have become the main sticking point in the most recent gas talks between the former Soviet allies. A new spat over Ukraine's proposal to defer payment of up to $5 billion in gas storage payments has also prevented agreements which could ensure smooth gas supply to Europe. Russia, which supplies a quarter of Europe's gas, much of it via Ukraine, has twice cut supplies in recent years due to pricing disputes between Moscow and Kiev, leaving parts of Europe with no gas in the dead of winter. Russia has called on the EU to help Ukraine pay its gas bills and help avert a new gas crisis, reported Reuters.

26 May 2009 - Daily News – Fairplay.co.uk - GAZPROM sources have told Russian reporters that it has asked Japanese buyers of LNG to reduce delivery prices. Long-term delivery contracts for the LNG to be shipped to Japan obliged Gazprom, and the project company Sakhalin Energy, to start deliveries last September, the sources added. But Sakhalin Energy’s spokeswoman Yevgeniya Oleinikova told Fairplay that the February start-up had been planned for more than a year and that her company is meeting its contract obligations. She did not deny the reports on contract obligations but said this was confidential commercial information. Gazprom's official spokesman Denis Ignatiev would not confirm the Russian news reports. The 18 February launch of Gazprom’s – and Russia's – first LNG shipments from Aniva Bay, on the Sea of Japan, took place too late to save the company from having to make spot-market deliveries since last year, the news reports explained. When the first tanker loading was postponed until February, Gazprom had to pay $850M for deliveries to cover its contracts to the end of 2008, plus another $390M this year, until the first tanker load arrived. Gazprom is reportedly insisting that the losses from the difference between the spot price and the contract price should be reflected on Sakhalin Energy's balance sheet. The issue is reported to have grown out of a dispute with Sakhalin Energy’s managers over Gazprom’s view that LNG prices for contracts signed up to five years ago had been excessively low. Gazprom is seeking to renegotiate the pricing.

May 26, 2009 - Associated Press by Nataliya Vasilyeva - MOSCOW, London-listed Sibir Energy said Tuesday it had agreed to a takeover bid from Gazprom Neft, the oil arm of Russian gas monopoly Gazprom, in a deal which values the company at $3 billion. Gazprom Neft, Russia's fifth-largest oil producer, proposed a cash offer for the company's shares, except for the 40 percent owned by Bennfield Limited, the Central fuel company and the Bank of Moscow. Gazprom Neft, which increased its stake in Sibir to 27.5 percent last month, plans to pay 500 pence for every ordinary share, Sibir said in a statement. That is nearly three times what Sibir's shares last traded at in February, when trading was suspended after a steep selloff. The acquisition could potentially pave the way for state-controlled Gazprom Neft to obtain a controlling stake in Sibir. Under British law, any shareholder with a stake of more than 30 percent is obliged to launch a formal takeover bid. Gazprom Neft earlier drove its stake in the company up to 27.5 percent after trumping a bid from rival TNK-BP with its offer of 500 pence per share. The mid-sized Siberian oil producer was previously controlled by two Russian businessmen, Igor Kesayev and Shalva Chigirinsky, with a stake of around 47 percent split evenly between them. According to Russian media reports, Kesayev has already agreed to sell his 23.3 percent to Gazprom Neft. Sibir Energy, which runs the Moscow Refinery with Gazprom Neft and has an oil production venture with Royal Dutch Shell in Siberia, is mired in a legal dispute with Chigirinsky and former CEO Henry Cameron. Sibir is suing Chigirinsky to return funds he received as part of a failed and controversial deal to sell his Russian real estate portfolio to the company. The real estate deals and alleged share manipulation left the company in debt. Trading in Sibir's shares was suspended in February, when the price was down to 175 pence from a high of 814 pence last summer. Analysts said Gazprom Neft is tightening its grip on Sibir, which boasts attractive upstream assets in Russia. "It's almost certain that they will buy Chigirinsky and Kesayev's stake to drive their share to 80 percent," said Alexey Kokin, gas analyst with Metropol brokerage. "A large stake in Sibir will turn Gazprom Neft into a company of a higher standing. The Salym field is one of the most attractive oil assets in Western Siberia." Considering this, Sibir would be the right buy for Gazprom Neft, which is desperate to boost production, he said. Gazprom Neft would move closer to the country's fourth-largest oil company Surgutneftegaz if the deal comes through. Surgutneftegaz produced 62 million tons of oil last year while Gazpromneft pumped more than 40 million tons and is expected to pump some 45 billion tons this year. Sibir Energy is expected to produce 6 million tons this year. A larger stake in the Moscow refinery, which Gazprom Neft runs together with Sibir, will enable Gazprom's oil subsidiary expand its refining facilities considerably, observers said. Although shares in Sibir last summer cost 62 percent more than Gazprom Neft is offering now, the proposal will still look lucrative for many shareholders after the recent corporate scandals threatened to cripple the company. "A few months ago the situaiton was hopeless," Kokin said. "In this case most investors would want to sell (their stakes)."

05-25-2009 - BarentsObserver - Norwegian energy major StatoilHydro is in “intense discussions” with Gazprom over joint projects in Russia, Norwegian newspaper Dagens Næringsliv reports. According to StatoilHydro spokeswoman Mari Dotterud, company CEO Helge Lund last Wednesday took part in a board meeting in the Shtokman Development AG. He also met with Gazprom leader Aleksey Miller and leader of Total Christophe de Margerie. The StatoilHydro-Gazprom talks came the same week as Norway’s Prime Minister Jens Stoltenberg met with President Dmitry Medvedev and PM Vladimir Putin. Accoring to Dagens Næringsliv, StatoilHydro was instrumental in preparations for that meeting. -We are pleased with the results from the meeting, Ms. Dotterud says. She does not want to speculate on the company’s plans in Russia. As BarentsObserver reported last week, Aleksey Miller and de Margerie that same Wednesday had a meeting Moscow, where progress in the Shtokman project was discussed.

LJUBLJANA, May 22 (RIA Novosti) - Gazprom and Slovenia have agreed on a deal extending Russian natural gas supplies for another 15 years, the Russian communications and media minister said on Friday. The current agreement expires next year. Igor Shchyogolev said the agreement was signed between a Gazprom subsidiary and Slovenia's state-controlled Geoplin. The Slovenian economy minister said Slovenia and Russia would sign a deal on the South Stream gas pipeline project in June. South Stream is a rival to the Western-backed Nabucco pipeline, designed to bring gas from Central Asia and the Caspian to Europe bypassing Russia. The EU, nervous about growing energy dependence on Russia, is backing the project despite the current economic crisis.

05-22-2009 - The Moscow News - Gazprom has given a pessimistic forecast for the production of natural gas in 2009, stating volumes may fall up to 18 percent. In 2008, Russian state-owned gas giant OAO Gazprom produced 549.7 billion cubic meters of gas, Gazprom’s spokesman Alexander Ananenkov told Interfax Friday. The planned production of gas for 2009 was reported at 492 billion cubic meters (a 10.5 percent decrease compared with 2008). But according to Ananenkov, taking into consideration the market conditions, production volumes may range from 450 to 510 billion cubic meters. Sources close to Gazprom earlier suggested a fall in production, but the level voiced by Ananenkov is by far the lowest estimate. It has been reported that due to the shrinking gas exports and the lowering gas prices, Gazprom’s profits in 2009 are expected to shrink, while its customers choose to work with other suppliers. Gazprom’s main rival StatoilHydro has on the other hand reported growth of production. Its net profits have doubled due to attractive prices, the company says. Gazprom shares fell more than twice from 364 to 165 rubles year on year (and the Russian Ruble lost almost 30 percent of its value over the same period of time). In the past four months, Gazprom showed a 20.8 percent decline in production of gas and exports cut in half.

05-22-2009 - Upstream OnLine - Russia and Ukraine failed to reach a decision on the issue of Ukraine's gas storage, Ukrainian Prime Minister Yulia Tymoshenko said after talks today with her Russian counterpart Vladimir Putin. "There has been no decision worked out on this yet," Tymoshenko said. "But I believe that we will find a compromise." "I'm sure we will find mutual understanding on how to pump gas into storage, because it's very important for the European Union, for Ukraine and for all who consume Russian gas," Reuters quoted Tymoshenko as saying earlier in the day. "I'm sure that we can resolve this issue," she said.

05-22-2009 - Upstream OnLine - Russian gas giant Gazprom faces a drop in natural gas output of up to 18% this year, a senior company executive said. Aleksandr Ananenkov, the deputy head of the gas export monopoly, told Interfax news agency: "The volume of gas production, considering real consumption on the market, could be 450 billion to 510 billion cubic metres of gas." In 2008 Gazprom produced 550 Bcm, so a decline to 450 Bcm would mean a decline of 18.2%. Gas production at the state-controlled company fell 28% last month to the lowest level in a decade in response to plummeting demand in Europe. Analysts expected a recovery only in the second half of 2009 when gas prices were expected to fall in line with the lower oil price, which they follow after a lag of six to nine months. Cash-strapped consumers delayed purchases until gas was cheaper, and switched to alternative fuels. Around 80% of Russian gas output comes from Gazprom, which supplies a quarter of Europe's gas and is the world's largest producer of the fuel.

May 22, 2009 - (Reuters by Melissa Akin) - MOSCOW, Gazprom Neft, Russia's No.5 oil producer, wants to raise its stake in Sibir Energy to as much as 30 percent, Gazprom's broker said, prompting renewed speculation of a takeover approach. Russian investment bank Renaissance Capital, which is buying the shares on behalf of Gazprom Neft, the oil arm of gas giant Gazprom, said it would not go above 30 percent stake threshold, which would trigger a buyout. Russian news agency Interfax, citing unnamed sources, said the state-controlled oil company would like to raise its stake to between 45 percent and 75 percent. A London-based analyst, who declined to be named, said the 30 percent stake plan could be an attempt by Gazprom Neft to block rival takeover efforts. "It sounds like someone is taking a position to put their moniker on it ... You don't buy 30 percent without looking for some form of control," the analyst said. Analysts have said previously that Gazprom Neft may be preparing to acquire control of Sibir, although the firm itself says it is interested only in acquiring a large minority stake. Renaissance Capital said in a statement that it would immediately begin purchasing shares in London-listed Sibir on behalf of Gazprom Neft. Gazprom Neft acquired over 16 percent of Sibir in April after trumping rival TNK-BP with a bid valuing the company at about $2.8 billion. Renaissance Capital also organised that offer. If successful in acquiring a 30 percent stake in Sibir, Gazprom Neft would become its biggest single shareholder, according to Sibir's official ownership data. Sibir's Web site, www.sibirenergy.com, said two Russian tycoons, Igor Kesayev and Shalva Chigirinsky, owned a combined 47 percent, which is split evenly between them. Kesayev has already agreed to sell a 23.3 percent stake to Gazprom Neft, the Interfax report said. Sibir said Chigirinsky, who has fled Russia, handed over 2.7 percent of the company to be sold to Gazprom Neft to cover a $400 million debt to the company, along with his Cote d'Azur villa and a London mansion. Russian media had reported he sold his stake. Sibir is suing Chigirinsky to return the funds he received as part of a failed deal to sell his Russian real estate portfolio to the company. The Moscow city government owns a further 18 percent. PRICE CONFUSION Renaissance did not announce a price for the share purchase. "The price at which shares will be purchased will reflect the level of interest shown by Sibir shareholders," Renaissance Capital said. "All purchases need not be at the same price." Sibir, whose shares are currently suspended, issued a statement noting that the previous tender on behalf of Gazprom Neft was conducted at 500p per share and encouraged shareholders to seek that price. Gazprom Neft, like its Russian peers, is pursuing new assets to expand its influence at home and abroad. Already this year the company has bought Italian assets from U.S. oil major Chevron, as well as Serbian oil refiner NIS. VTB Capital said a potential takeover attempt would be a "good use of cash" to invest at low values. "Consolidating Sibir will allow Gazprom Neft to maximise the value from Sibir's potential production growth and robust downstream exposure," VTB Capital said in a note to clients. Sibir's main assets include a joint venture with Royal Dutch Shell to operate the Salym fields in western Siberia. It also owns the Koltogorsky exploration blocks and the Yuzhnoye and Orekhovskoye fields in the same region. Downstream, it already shares ownership of the Moscow refinery with Gazprom Neft and Tatneft.

May 21, 2009 - Oil & Gas Journal by Uchenna Izundu – LONDON, Eni SPA and Enel SPA will assign to OAO Gazprom a 51% stake in SeverEnergia, a Russian holding company with exploration and production licenses. The deal is expected to close in June. Enel and Eni have given Gazprom until 2010 to pay the $1.5 billion for the stake in two tranches. "As a result of the transaction, Eni and Enel's equity will cash in $900 million and $600 million dollars, respectively," said Eni. The new shareholding in SeverEnergia will be Gazprom holding 51%, the Italian partners, 49% (via a joint venture between Eni and Enel holding 60% and 40%, respectively). This agreement builds upon a deal that was signed in April giving Gazprom until May 30 to implement its option to buy the stake (OGJ Online, Apr. 11, 2009). SeverEnergia was formerly known as EniNeftegaz and was two production companies belonging to the defunct OAO Yukos. By 2013, SeverEnergia hopes to produce at least 150,000 boe/d focusing on west Siberian fields. SeverEnergia has the Arcticgaz, Urengoil, and Neftegaztechnologia E&P licenses, which hold an estimated 5 billion boe. "The parties also agreed to produce first gas by June 2011 from the Samburskoye field. The parties have 90 days to define the plan and obtain all the necessary authorizations, including the extensions of the licenses by Rosnedra, the Russian authority regulating the exploitation of the country's mineral and oil resources," said Gazprom. Enel Chief Executive Officer and General Manager Fulvio Conti said that this partnership would enable Enel to grow in the Russian market throughout the entire value chain, from gas fields to generation and sale of electricity. "From this perspective, the entry of Gazprom provides us with a guarantee of being able to continue contributing a reliable supply of gas to our Russian power plants at advantageous conditions through our SeverEnergia gas quota."

05-21-2009 - Act Media News - Moscow held talks between members of the Romanian delegation and the Russian authorities were positive, and a joint commission was set up, which is going to present in two months to the energy ministries in the two countries solutions for Romgaz-Gazprom direct cooperation links, announced on Wednesday Romanian Economy Minister Adriean Videanu on a TV channel. He pointed out that Romgaz will eventually import natural gas directly from the Russian Federation and a joint company might be set up in charge with the gas storage, creating the premises for an eventual gas tariffs reduction.At present, Romania imports gas from the Russian Federation through Russian-German Wintershall Co. Economy Minister declined to provide an estimation linked to an eventual cut in gas price starting July 1, saying that this is an exclusive prerogative of the National Regulatory Authority in Energy Field. The Minister of Economy is paying a visit to Moscow on Wednesday and Thursday aimed at the preparation of the future session of the Romanian-Russian Inter-governmental Joint Commission for Economic Cooperation. On this occasion the two sides will examine the stage of the cooperation projects in energy field, as well as the needed approaches for the implementation of the respective projects. According to Agerpres, the delegation accompanying Minister Adriean Videanu to the Russian Federation includes representatives of the Ministry of Economy, Ministry of Small and Medium-Sized Enterprises, Trade and Business Environment, as well as of companies in energy field - Romgaz, Transgaz and Transelectrica.

05-21-2009 - Eurasianet - Russian officials have sought recently to portray a gas transit dispute between Russia and Turkmenistan as close to resolution. But officials in Ashgabat apparently beg to differ. A commentary distributed by the Turkmen state news agency on May 21 suggests that if Moscow doesn’t address Turkmen concerns soon, Ashgabat will scrap its present energy export arrangement and embrace a US-backed alternative. The Turkmen commentary, appearing under the byline of Serdar Durdiev, head of the International Information Department at the Turkmen Foreign Ministry, could be seen as an effort by Ashgabat to pressure Moscow to resume importing Turkmen energy according to terms agreeable to President Gurbanguly Berdymukhamedov’s administration. Turkmen natural gas has not been flowing to Russia since early April, when an explosion put a pipeline out of action. [For background see the Eurasia Insight archive]. In an ominous reference to Turkmenistan’s 25-year export agreement with the Russian state-controlled conglomerate Gazprom, Durdiev’s commentary suggested that Ashgabat is souring on the idea of tying up its energy exports in bilateral deals. Durdiev complained that a "lack of reliable international guarantees of implementation makes them [bilateral agreements] extremely vulnerable and dependent on a variety of subjective factors. . . . This is particularly evident during complicated political periods." Unless Gazprom quickly modifies its current stance, Ashgabat indicated that it will make a firm commitment to participating in the long-planned Trans-Caspian Pipeline, a route that would circumvent Russia while transporting energy from the Caspian Basin to the European Union. "It is in this context," Durdiev continued, "[that] Turkmenistan’s commitment to the principle of diversifying energy flows, particularly the construction of export pipelines should be assessed," the commentary said.

* Deputy CEO disputes analysts' forecasts of Q4 loss
* Financial investments may be cut by around 30 pct in 2009
* Main capex plans are not under review
05-20-2009 - Reuters by Denis Pinchuk - ST PETERSBURG, Russian gas export monopoly Gazprom (GAZP.MM) does not expect to see a net loss in the fourth quarter of 2009, the company's deputy chief executive said on Wednesday. Gas prices follow oil prices, typically with a lag of 6-9 months, and are expected to catch up with sharply lower oil prices by the fourth quarter of this year, prompting some analysts to predict a net loss for Gazprom. "No such loss is expected," Valery Golubev told reporters. "(That forecast) is not correct," he said, adding that Russia's economy ministry was forecasting an average global natural gas price of $250 per thousand cubic metres in 2009. "This is a very good price, even if in the fourth quarter it will be lower," Golubev said. Gazprom shares were up 2.55 percent 180.5 roubles at 1322 GMT, underperforming the broader market . Gazprom said last month it was expecting the slump in global oil prices and an ongoing decrease in demand for fuel in export and domestic markets to hurt its financial results in 2009. In adjusting to the lower demand and the difficult macroeconomic environment, Gazprom may cut financial investments by around 30 percent this year but will leave capital expenditure intact, Golubev said. "We are talking about lowering the financing plan by about 30 percent. We are not looking to amend our investment programme in terms of the planned capital construction of capacity," he said. Gazprom has voiced particular concern over lower demand from the domestic electricity sector, a major consumer of gas, causing it to cut production. But Golubev said the domestic demand situation had stabilised last month. "In Russia for April demand went along the planned levels."

BERLIN, May 19 (RIA Novosti) - Without new supply routes from Russia, Europe will struggle to receive the additional 80-100 billion cubic meters of gas it will need by 2020, a top official at Russian energy giant Gazprom said on Tuesday. "Those European politicians, who are trying to block Russia's construction projects for new gas pipelines, bear great responsibility," the Gazprom Deputy CEO Alexander Medvedev told an annual gas cooperation conference between Russia and the European Union, which began in Berlin on Tuesday. "Without the diversification of gas supply routes to Europe, it will not receive the additional 80-100 billion cubic meters of gas from Russia that it will need by 2020," he said. "It isn't Gazprom, but Russophobe politicians are a real threat to Europe's energy security," Medvedev said. He added that a link between Europe's energy security and Russian gas supplies was "fictitious and politicized." Russia is Europe's largest gas supplier, providing Europe with about a quarter of its overall gas demand. It is closely followed by Norway (18%) and Algeria (10%).

May 19, 2009 -(Dow Jones by Jan Hromadko) - BERLIN - Russian natural gas monopoly OAO Gazprom (GAZP.RS) Deputy Chairman Alexander Medvedev said he Tuesday he doesn't expect the recession will result in a considerable decline in gas demand in Europe. "We must not forget that the first quarter of 2009 was a peak price quarter and we expect demand will stabilize once prices come down further," Medvedev told reporters at a press conference on the sidelines of a conference hosted by the Russian Gas Society. Medvedev said he expects Gazprom's customers will mostly stick to the contractually agreed quantities of gas supply. Russian gas demand is expected to fall around 10% in 2009, he said.

05–19–2009 – BERLIN – (Dow Jones) - GDF Suez SA's (GSZ.FR) planned entry into the Nord Stream pipeline project, which will transport natural gas from Russia to western Europe through the Baltic Sea, is being supported by all consortium members, said Alexander Medvedev, deputy chairman of OAO Gazprom's (GAZP.RS) executive board, Tuesday. Medvedev told reporters at a conference hosted by the Russian Gas Society in Berlin that GDF Suez will acquire a stake from the two German partners, E.ON AG (EOAN.XE) and BASF SE's unit Wintershall, in the pipeline project. Medvedev didn't elaborate on the size of the stake GDF Suez is seeking, but said that the French company has access to the Nord Stream project's data room.

05-18-2009 - MosNews - Following an order of the Russian government, state-owned gas giant Gazprom is slashing its dividends to a seventh of the 2007 sum. The government has told Gazprom to cut the dividends for 2008, Interfax reports. The board of directors decided to set the dividend payments at 0.37 rubles ($0.011) per share, which is a seventh of what it was in 2007, when the shareholders received 2.66 rubles ($0.082) per share. According to RIA Novosti, the dividend payments will take up five percent of the net profit, which in 2008 amounted to 173 billion rubles ($5.4 billion). Altogether, the amount of dividends will be around 8.65 billion rubles ($0.26 billion). Last month, Gazprom announced it would cut the dividends in half, to 1.28 rubles per share. In that case, the overall amount of dividends would reach the traditional 17.5 percent of the company’s net annual profit. In the first quarter of 2009 Gazprom’s earnings reached 33.043 billion rubles ($1 billion). Due to the shrinking gas exports and the lowering gas prices, the company’s profits in 2009 are expected to shrink. Gazprom’s capital stock amounts to approximately 118.7 billion rubles ($3.7 billion). It is split into 23.7 billion shares worth 5 rubles each. The company’s major shareholder is the state, which owns the controlling interest. OAO Gazprom's shares on the Russian electronic exchange RTS fell to less than a third in one year from 15.450 points in May 2008 to 5.050 points last week.

5/18/2009 - Daily News Bulletin by ProQuest LLC - MOSCOW: Gazprom (RTS: GAZP) believes new offshore gas pipelines need to be built to develop the European gas transportation system, a source at the company told journalists on Friday. In the run-up to the signing of an agreement between Gazprom and Italian, Greek, Serbian and Bulgarian energy companies on the South Stream gas pipeline, the source said that, given the new realities, energy security systems should be based on the construction of offshore gas pipeline systems free from transit risks. When "the weak political regimes and economies of transit countries start using the transit through their territory as a method of foreign economic competition and pressure, energy supplies via a system of land-based gas pipelines become insufficient," the source said. "Sea-based pipelines are an optimal way of building new gas pipelines to Europe both in terms of security and in terms of technical, economical and environmental factors," the source said. The source also described as unfounded "the popular view that Russia is making the EU dependent on its energy supplies by building these gas pipelines." European countries depend on Russia for 30% of their gas supplies on average, he said.

05-15-2009 - (Dow Jones)- ROME -Italy's two biggest energy companies, Enel SpA (ENEL.MI) and Eni SpA (E), said Friday they have agreed to sell a 51% stake in Russian company SeverEnegia to OAO Gazprom (GAZP.RS) for about $1.5 billion, in a move widely expected by the market. In a statement, the two companies said Enel will receive about $600 million and Eni $900 million. The amounts will be transferred in two tranches between this year and 2010. Enel and Eni formed SeverEnergia in 2007 by teaming up to purchase some of the assets that Moscow seized after breaking up oil giant Yukos. The two Italian companies gave Gazprom an option to buy a 51% stake in SeverEnergia. SeverEnergia targets daily natural gas output of at least 150,000 barrels of oil equivalent from 2013, Eni and Enel said.

May 15, 2009 - (Bloomberg by Torrey Clark and Stephen Bierman) - OAO Gazprom, the world’s largest natural gas producer, is ready to buy all the gas from the second stage of an offshore Azeri development slated as a resource base for the Europe-backed Nabucco pipeline project. “We’re ready to buy the whole volume of Shah Deniz II,” Gazprom Deputy Chief Executive Officer Alexander Medvedev said in a Moscow interview with Bloomberg Television today. Gazprom’s network is the “optimal” route for gas from Azerbaijan to reach Europe, Medvedev said. Russia’s gas exporter is due to sign accords today on building the South Stream pipeline under the Black Sea to the European Union with Greece, Bulgaria and Serbia at an event attended by Prime Minister Vladimir Putin. Azerbaijan lacks a direct gas link to Europe and has been unable to agree with Turkey on terms for the transit of larger planned volumes. State-run Gazprom’s purchases of Azeri fuel could undermine the supply base for European-supported pipeline projects, such as Nabucco, designed to diversify supply routes away from Russia. Shah Deniz is the only deposit mature enough currently to be considered as a base for forming contracts for Nabucco, Olav Skalmeraas, a StatoilHydro ASA vice president for natural gas, said in Baku last month. The Norwegian company oversees the marketing of fuel from Shah Deniz II.
Eni Agreement: Gazprom’s agreement with its main South Stream partner, Eni SpA, won’t limit where the Italian company will be able to sell gas, Medvedev said. If the link carries volumes of 47 billion cubic meters of gas a year, Eni will be able to sell 12 billion cubic meters, he said. “We are entering a new stage of the project realization and on the corporate level we will accelerate the preparation of the feasibility study then the comprehensive feasibility and then the fifth stage begins,” Medvedev said, adding that Gazprom has enough gas for South Stream without Azeri fuel. The second phase of Shah Deniz could add 12 billion to 14 billion cubic meters of annual gas output in three to five years once a market is found and transit for the fuel ensured, Azeri President Ilham Aliyev said on April 18. In 2007, Azerbaijan produced 10.3 billion cubic meters, according to BP Plc’s Statistical Review of World Energy. The State Oil Co. of Azerbaijan, or Socar, plans to meet Gazprom this month to negotiate a deal to begin selling gas to Russia beginning next year, Vagif Aliyev, general manager of Socar’s investment division, said in April. Socar’s partners in the Shah Deniz, including StatoilHydro ASA, BP and OAO Lukoil among, are not participating in these negotiations, he said. Gazprom’s production and exports will probably fall 10 percent this year to 495 billion cubic meters and 150 billion cubic meters respectively, Medvedev said. Average prices during the year will be less than $300 per 1,000 cubic meters, he said.

15 May 2009 - The Moscow Times by Anatoly Medetsky - The Gazprom-led international company set up to develop Shtokman, a huge offshore Arctic gas field, has opened up bidding for contracts in a step that will better define the project's costs by the end of the year. Shtokman Development AG will invite more bids over the next few weeks in addition to the offers it has already posted on its web site since the end of April, Andrei Plis, the company's head of supplier surveys, said Thursday. It's now estimated that the field would cost Gazprom, France's Total and Norway's StatoilHydro, which are partners in Shtokman Development AG, $15 billion to develop. Prime Minister Vladimir Putin and his Norwegian counterpart Jens Stoltenberg may discuss the project when they meet in Moscow on Tuesday. In one of the higher-profile offers so far, Shtokman Development has announced a bidding for a 600-megawatt power plant near the Teriberka village on the Barents Sea, where the underwater gas pipeline will come to shore. There were a total of eight bidding invitations posted as of April 28, Plis said. The offers include offshore and onshore geological surveys for the project. There are no restrictions for foreign contractors in the field's development, just a recommendation that they hire Russian companies to do some of the work where possible, Plis said. "Every potential bidder must realize this and seek to broaden the Russian involvement," he said. Shtokman Development has been expanding its contacts with potential Russian bidders recently, informing them of opportunities and looking at their potential, Plis said. The company is holding a meeting with the members of the Association of Oil and Gas Equipment Producers on Friday. The association, its director Alexander Romanikhin said, is seeking a government decision to put a cap on the proportion of contracts that Shtokman Development will award to foreign competition. The global economic crisis is unlikely to lead to steep discounts by any association members because their costs keep rising, fueled by the government's decision to raise the regulated gas and electricity prices, he said. Shtokman Development chief Yury Komarov sounded upbeat Wednesday on keeping costs at bay. "Today, the situation is favorable," he said, adding that the budget will shape up more clearly after the bidding, Interfax reported. Bidding for the project is scheduled to finish by the end of the year, allowing Shtokman Development to make the final investment decision in the first quarter of next year. First Deputy Prime Minister Viktor Zubkov reiterated at a meeting with Stoltenberg in Oslo on Thursday that the government expected the decision at the start of next year. Initially, Shtokman Development planned to decide on investment at the end of 2009, but Gazprom deputy chief Alexander Medvedev announced in February that the date had been moved back to early 2010. The deadline for producing the first gas remained unchanged -- 2013, Komarov said later.

13 May 2009 - (Platts) - London - German energy giant E.ON hopes to sign a deal with Russia's Gazprom over a stake in the West Siberian Yuzhno-Russkoye gas field in June, E.ON said Wednesday. In its Q1 results report, E.ON said that "our discussions with Gazprom regarding our acquisition of a roughly 25% stake in Yuzhno-Russkoye... are in the final stages. The detailed contracts for the transaction have, for the most part, been worked out. We expect them to be signed in June." The company had indicated earlier this year it was hoping for a deal sometime during the course of this year. E.ON CEO Wulf Bernotat said in an interview with Russian business daily Vedomosti in April that he hoped to close the deal for the field as early as this summer. "We hope the deal will be closed in the second half of the year, maybe in the summer," he said. Gazprom and E.ON signed a long-awaited asset swap agreement in October 2008, after more than two years of discussions on the assets to be included in the deal. It is expected that in return for providing E.ON access into Yuzhno-Russkoye, Gazprom will receive E.ON Ruhrgas' 49% stake in Gerosgaz--the joint venture between Gazprom and E.ON--in which the Russian gas giant currently holds 51%. Gerosgaz holds under 3% of Gazprom shares, which will thus be transferred to the ownership of Gazprom. After the transaction, E.ON Ruhrgas will still hold a 3.5% direct stake in Gazprom.

May 14, 2009 - Datamonitor News - Gazprom Global LNG, an affiliate of Gazprom Marketing & Trading, has delivered the first cargo of liquefied natural gas from Sakhalin, Russia to India. The cargo was bought by Total Gas & Power and was discharged at the Hazira regasification terminal in Gujarat. The cargo was shipped on board the Grand Mereya liquefied natural gas (LNG) carrier, which is on long-term charter to Sakhalin Energy. The Hazira regasification terminal is co-owned by Shell and Total, and is located near the city of Surat. Vitaly Vasiliev, CEO of Gazprom Marketing & Trading (GM&T), said: "This shipment demonstrates GM&T's commitment to the important Indian market and will further enhance the good relationships built with Indian partners through our commodity trading activities and in particular our carbon business."

May 13, 2009 - Reuters by Sachi Izumi - TOKYO - Japanese trading house Mitsui & Co is in talks with Gazprom to expand their alliance on the Russian gas export monopoly's projects in Russia, it said on Thursday. Mitsui, fellow Japanese trading firm Mitsubishi Corp and Royal Dutch Shell are Gazprom's partners at the Sakhalin-2 project, which recently shipped Russia's first liquefied natural gas to Japan. The Nikkei business daily said earlier they are considering an alliance on the Chayanda gas field in eastern Siberia, which has estimated gas reserves of 1.2 trillion cubic metres, and the Shtokman gas field in the Barents Sea, which has estimated gas reserves of more than 3 trillion cubic metres. "We are considering whether we can form alliances in Gazprom's other projects in Russia, based on our partnership we developed through the Sakhalin-2 project, and we are discussing such a possibility with Gazprom," Mitsui said in a statement. A spokesman said they are not yet discussing details. Gazprom signed a memorandum of understanding with Japan on Tuesday to explore gas projects in eastern Russia, seeking ways to process gas near the Pacific city of Vladivostok for supply to consumers in Russia and the Asia-Pacific region including Japan. The Agency of Natural Resources and Energy, part of Japan's Ministry of Economy, Trade and Industry, as well as Itochu Corp and Japan Petroleum Exploration Co (Japex) signed the memorandum. Mitsui shares fell 4.4 percent to 1,127 yen by midmorning against a 2.3 percent slide in the benchmark Nikkei average.

ATHENS, May 12, 2009 (RIA Novosti) - Gazprom and a Greek gas company have agreed on setting up a consortium to build the South Stream gas pipeline section across Greece, a source close to the negotiations said on Tuesday. "The accords have been agreed upon and their signing is expected in coming days," the source said. The South Stream pipeline is designed to annually pump 31 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, but its capacity could be increased by a further 16 billion cu m. The project involves Bulgaria, Serbia, Hungary, Italy and Greece. Russia and Greece signed in April 2008 an intergovernmental agreement on cooperation in the construction and operation of the Greek section of the South Stream gas pipeline. In the fall of 2008, Gazprom and Greece's DESFA started talks on a consortium to implement the project.

May 12, 2009 – Associated Press – WARSAW, Poland — Poland's gas monopoly PGNiG said Tuesday it had reached a deal with Gazprom to receive 1.024 billion cubic meters (1.34 billion cubic yards) of natural gas from the Russian company through the end of September. PGNiG, or Polskie Gornictwo Naftowe i Gazownictwo, estimated the value of the agreement at around $300 million, but said the final value would depend on the world market price of crude oil products. The company said the deal would allow it to replenish strategic reserves that it was forced to tap into this year after a pricing dispute between Russia and Ukraine in which Moscow cut gas deliveries to much of Eastern Europe. Poland continued to have a shortfall in gas deliveries even after Ukraine and Russia resolved their dispute because the Swiss-based energy trader RosUkrEnergo — which is half-owned by Gazprom — did not resume gas deliveries for reasons that remain unclear. PGNiG said its governing board and the Polish Treasury Ministry still have to approve the deal. Also Tuesday, PGNiG reported a 399 million zloty ($125 million) net loss in the first quarter, largely due to the high cost of imported gas. The company also said the Polish zloty's slide against the U.S. dollar kicked up the cost of imported gas and contributed to the losses. PGNiG imports the bulk of the gas it sells in Poland from Russia.

05-12-2009 (Dow Jones) -- ROME, Eni SpA (E) Chief Executive Paolo Scaroni said Tuesday he will meet with Russian officials Wednesday to seek a deal on the South Stream natural gas pipeline project it has with OAO Gazprom (GAZP.RS), as the two energy companies appear to be far from agreement. Scaroni, on the sidelines of a conference in the Egyptian Red Sea resort of Sharm el Sheik, told reporters he was going to Moscow Wednesday to see if an accord on South Stream could be reached. Scaroni said a deal wasn't close. Italian Prime Minister Silvio Berlusconi is scheduled to meet his Russian counterpart, Vladimir Putin, Friday in Crimea and may sign an agreement on South Stream. A dispute has erupted between Eni and Russian state-controlled Gazprom over the role the Italian oil company will play in the South Stream gas pipeline, Reuters said last week, citing an unidentified person within the Italian government. The person said Eni wants to be able to market gas from the pipeline in the countries the pipeline will pass through but that Gazprom was only offering the right to bring gas into Italy and a role in managing the pipeline, Reuters wrote. South Stream is a project that aims to carry Russian and Caspian gas to Western Europe via a pipeline under the Black Sea and landing in Bulgaria, so bypassing Ukraine.

May 7, 2009 - Reuters by Alberto Sisto - ROME, A dispute has erupted between Italian oil major Eni SpA and Russian state-controlled Gazprom over the role Eni will play in the South Stream gas pipeline, an Italian government source said on Thursday. The Gazprom-led project aims to bring Russian, Caspian and Central Asian gas to Europe and is a rival to the European Union-backed Nabucco pipeline, which aims to reduce European reliance on Russia for its energy supplies. Eni and Gazprom are 50 percent partners in the company which is conducting feasibility studies for the pipeline, but the Italian oil and gas producer's final role in the pipeline has not been defined. The government source said Eni wants to be able to market gas from the pipeline in the countries the pipeline will pass through but that Gazprom was only offering the right to bring gas into Italy and a role in managing the pipeline. "The Italian group wants to enter into the second phase of the project, that of selling the gas in the countries the pipeline will pass through... the Russians are putting up opposition, the talks are, however, still fluid," the source said. Eni did not want to comment. A Gazprom spokesman declined immediate comment. The Italian Prime Minister Silvio Berlusconi and his Russian counterpart Vladimir Putin are slated to meet at Sochi in Russia on May 15. A previous meeting in April, when a statement on South Stream was expected, had been cancelled because of the Italian earthquake in Abruzzo. The disagreement is the latest setback for the project, which had appeared to be speeding ahead of Nabucco, following Nabucco's difficulties in securing gas supplies. On Wednesday, a source familiar with the situation said plans for Russia and the transit countries to sign an agreement on South Stream next week in Sochi were in doubt after the parties failed to agree on terms. However, Serbian state gas company Srbijagas will sign a deal with Russia's Gazprom on May 15 on Serbia's participation in the South Stream gas pipeline, a spokesperson with Serbia's Energy Ministry said on Thursday. No one from the Slovenian Ministry of Economy, which is in charge of the South Stream pipeline in Slovakia, will attend a signing ceremony in Sochi next week, an official said. Eni and Gazprom have signed a series of Memoranda of Understanding on the development of the South Stream project since 2007. South Stream will pass under the Black Sea and through Bulgaria, Serbia and Slovenia to Austria.

May 5, 2009 - Eurasia Daily Monitor by Roman Kupchinsky - Gazprom may be preparing to take over a large part of the Hungarian domestic gas distribution network. A new, highly opaque deal is in the works as a result of which Hungary's energy security could be threatened. On April 28 Emfesz KFT, a major Hungarian gas distribution company owned by Ukrainian businessman Dmytro Firtash, announced that it will stop importing gas from RosUkrEnergo (RUE), a company based in Zug, Switzerland and will instead buy gas from an unknown company, RosGas AG, also located in Zug. An Emfesz press release claimed that: "RosGas is a company in Gazprom's network of business interests." Furthermore, the press release stated that: "The new gas acquisition system of Emfesz is independent of Ukraine. Gazprom, whose interest is to keep Emfesz consumers supplied with gas, has played a role in shaping the system. The supply of all Emfesz's gas consumers is continuously guaranteed and the fact that RosGas will be the gas provider of Emfesz involves no perceptible change for the latter's customers" (www.emfesz.hu, April 28). Emfesz, the second largest Hungarian gas distributor which imports 3 billion cubic meters annually, was forced to turn to another middleman for its gas supplies after RUE was removed from the Ukrainian - Central Asian gas trade in January 2009 (www.emfesz.hu, January 9). However, the owner of Emfesz Dmytro Firtash, has several commercial interests. He is also the 45 percent owner of RUE - 50 percent of which is owned by Gazprom and 5 percent by Firtash's business partner, Ivan Fursyn. Gazprom's spokesman Sergey Kuprianov, sharply contradicted the allegation that the company was linked to Rosgas: "It is well known that the only export channel for Russian gas is the company Gazprom Export. The company RosGas which was named today in the Hungarian media has no relation to Gazprom and is not part of the Gazprom Group" (Interfax Ukraine, 29 April). According to company records located by Jamestown, RosGas AG was first registered in Zurich, under the name IKRON AG on December 10, 2008 and changed its name eight days later to RosGas AG while relocating to Zug -only a few weeks before the Ukrainian-Russian gas conflict began in January 2009. The two principle shareholders of RosGas are Andras Laki, and Tamas Grazda, a Hungarian national who also happens to be the acquisitions and mergers director for Emfesz and a member of the management board of Emfesz, Poland (www.moneyhouse.ch, April 3). The immediate suspicion is that RosGas AG is yet another in a long line of shadowy intermediary companies created by Firtash and Gazprom. However, in the case of RosGas this may mask a possible attempt by Gazprom to cut gas supplies to Firtash's Emfesz, as a precursor to a company takeover -vastly increasing its share of the Hungarian domestic gas distribution network. Hungary has been a key target for the Russian state-owned Gazprom since the collapse of communism within Central Europe. Viewed as a potential major European gas hub, Hungary first became a target of the Kremlin in 2002 when the mysterious gas trading company, Eural Trans Gas (ETG) was registered in Budapest. That year ETG took over the contract from a Russian company, Itera, acting as the intermediary for supplying gas from Turkmenistan to Ukraine. ETG was a totally opaque structure which was later exposed as belonging to Ukrainian gas trader Dmytro Firtash and his partner, Ivan Fursyn, a banker from Odessa with close ties to the administration of then-Ukrainian president Leonid Kuchma. ETG was paid for its services with 13 billion cubic meters of gas by the Ukrainian side which it then sold on the European market for a considerable profit. Soon after it began trading, the company's owners were suspected of having connections to the Russian mafia. This was denied by the then-unknown owners of ETG, who instituted a number of libel suits against anyone alleging the company had mafia links. The Kremlin became nervous and closed down ETG in July 2004, replacing it with a new intermediary company, RosUkrEnergo (RUE). The 50 percent owners of RUE were the same individuals that had established ETG, Dmytro Firtash and Ivan Fursin, while the remainder of RUE was owned by Gazprombank -which at the time a fully owned subsidiary of Gazprom. The Kremlin, for undisclosed reasons, claimed that it did not know the identity of Gazprombank's Ukrainian partners in RUE. According to the company website, one year before the dissolution of ETG, Firtash created a new Hungarian company: "Emfesz, the First Hungarian Natural Gas and Energy Trading and Service Provider Ltd., was founded in 2003 to develop a major gas and energy business in Hungary following the liberalization of the country's energy market with the passing of the Hungarian Gas Act in that year." Firtash presumably had the go-ahead to do this from Gazprom and a guarantee that he would be able to buy gas for Emfesz from RUE where he controlled 50 percent of the company. Firtash's website stated: "The company (Emfesz) has a long-term, 10 year contract with RosUkrEnergo, a Swiss gas distribution company, for the supply of gas from Central Asia to Hungary." As the Firtash-Gazprom relationship began souring in 2008, Gazprom made a number of offers to buy a substantial share of Emfesz, however Firtash refused to sell. In April 2009 the Russian audit chamber announced that Firtash owed Gazprom $514 million, exerting more pressure on him to turn over his Hungarian operation to Moscow (www.ukranews.com, April 21). If RosGas begins supplying Emfesz with the large quantities of gas it is contracted to sell in Hungary, it will raise questions over the source of that gas. Is it possible that RosGas is another Gazprom scheme to possibly siphon off funds for the Kremlin and reward Firtash for his long-standing loyalty to the Kremlin.

May 5, 2009 – (Reuters by Simon Shuster) - MOSCOW, The Sakhalin-1 consortium has agreed to sell 20 percent of the natural gas extracted from the large oil and gas project to Russian gas export monopoly Gazprom, Nikkei reported on Tuesday citing unnamed sources. The price of the gas, which has been the main sticking point in talks over the sale, is still being negotiated, the Japanese business daily said in its issue due for publication Wednesday. U.S. energy major Exxon Mobil (XOM.N) operates Sakhalin-1, on the Russian Pacific coast island of the same name, in cooperation with Russian state oil firm Rosneft, Japan's Itochu, Marubeni and India's ONGC. Gazprom spokesman Sergei Kupriyanov said he could not immediately comment on the report, as did a spokesman for state-controlled Rosneft. A spokeswoman for Exxon Mobil also declined to comment. Gazprom has long said it needs the gas produced at Sakahlin-1 to cover domestic needs, while Exxon has long-stated it is looking for the best price, though has eyed major importer China for some time. The project has been producing oil for several years and reached peak production of 11.2 million tonnes in 2007. It has been producing gas since 2005 and shipping small volumes to continental Russia. It has signed a deal to supply China with 8 billion cubic metres (bcm) of gas a year and hopes to start the supplies next decade.

May 1, 2009 – (RIA Novosti) - NEW YORK, Gazprom's deputy CEO Alexander Medvedev has been named in Time magazine's top 100 most influential people on the planet for 2009. Medvedev, described as Russian energy giant Gazprom's "link to the outside world," is listed among the Builders and Titans category, which also includes U.S. Treasury Secretary Timothy Geithner and designer Stella McCartney. "One-third of the gas consumed in Europe passes through Medvedev's hands, and 60% of Gazprom's total revenues come from exports," said the magazine, whose list last year included Prime Minister Vladimir Putin. At 53, Medvedev, the magazine said, "Believes in a bright future for natural gas and looks beyond the present crisis to the day when Gazprom's capitalization will shoot to a trillion dollars. Last summer it stood at a mere third of that amount." Medvedev was a central figure in the gas transit row earlier this year between Gazprom and Ukraine which resulted in gas being cut off to Europe. The list also includes German Chancellor Angela Merkel, U.S. President Barack Obama and British Prime Minister Gordon Brown along with actors Kate Winslet, Penelope Cruz, Brad Pitt and George Clooney.