Russ Oil-Gas

07/06/2009 - PennEnergy - YUZHNO-SAKHALINSK -- Exploration drilling is under way on the Gazprom-operated Kirinskoye gas-condensate field offshore Sakhalin Island. Gazprom views this campaign as a key step towards creating a new gas production area offshore Sakhalin, serving Russia’s Eastern Gas program. It will also be the first project in the Sakhalin region performed solely by Russian companies. Gazprom plans to maximize resources of Russian shipbuilding and machine-building companies for the development. From 2014, Kirinskoye will provide gas for the Sakhalin – Khabarovsk – Vladivostok gas transmission trunkline system, under construction to supply consumers in the Khabarovsk and Primorsky Krais and Sakhalin Oblast regions. In 2007, Gazprom was designated program execution coordinator by the Russian government. Kirinskoye, discovered in 1992, is in the Kirinsky Block of the Sakhalin III license area in the Sea of Okhotsk. Gazprom was granted the subsurface license in May 2008. Reserves are currently estimated at 75.4 bcm of gas and 8.6 million tons (7.8 million metric tons) of gas condensate. The company holds 45 licenses for subsurface resources in eastern Russia, including parts of the Bering Sea. Its latest four awards were issued last month, including Kirinsky and two other Sakhalin III blocks, Vostochno-Odoptinksy and Ayashky.

MOSCOW, July 6, 2009 - (UPI) - Excessive spending on reserves and acquisitions in a poor economic climate could overextend Russian energy giant Gazprom beyond profitability, trends suggest. Despite modest energy prices and a lingering economic recession, Gazprom last week moved on a deal with Azerbaijan to tap the massive Shah Deniz field that has more immediate political ramifications than energy benefits. Europe eyes Shah Deniz as a major source for its Nabucco gas pipeline, which sidelines Russia. The Gazprom deal could undermine Nabucco and European efforts to diversify the regional energy sector, though Baku said it has a diverse client portfolio. At a rate of roughly three acquisitions per month, Gazprom has spent close to $70 billion on mergers, ranging from Russian newspapers to rival energy targets. Gazprom through its various operations and global ventures holds more gas than its customer base supports. The company in 2008, meanwhile, requested $1 billion in government loans to refinance its debts while expressing concerns over the ability to attract new loans. Its bullish behavior in a bear market has prompted minority shareholders, for their part, to express concerns over any decisions that could result in minimal payoffs, The Wall Street Journal reports.

July 3, 2009 -- MOSCOW. July 3 (Interfax) - Gazprom (RTS: GAZP) produced 998.3 million cubic meters of gas on July 1, up 48 million cu m or 5% from the end of the second quarter of this year but still 23% lower than average daily production in July last year, the Fuel and Energy Central Dispatch Center said. Daily output fell below 1 billion cubic meters for the first time this year on May 10. Daily output had averaged at less than 900 mcm since the beginning of June. The lowest volume so far this year was 891.7 mcm on June 21. But the Russian gas giant recorded 952.2 mcm a day on June 25- 26, 955.2 mcm on June 27 and 950 mcm on June 30 after production had dipped to 940.6 mcm on June 30.

MOSCOW, June 26 (RIA Novosti) - The South Stream gas pipeline will account for 35% of Russian gas supplies to Europe by 2015, Gazprom CEO Alexei Miller said on Friday. "We have taken the decision to increase the pipeline's capacity to 63 billion cubic meters. This means it will account for 35% of all Russian gas supplies to Europe in 2015," Miller said at an annual meeting of Gazprom shareholders. 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 European Union, nervous about growing energy dependence on Russia, is backing the project despite the current economic crisis. Miller described Gazprom's pipeline as "balanced and economically efficient," and said the South Stream and Nord Stream projects were the company's "strategic investment" in improving European energy security. Intergovernmental agreements have been signed with Bulgaria, Serbia, Hungary and Greece to lay the surface pipeline. Similar agreements are currently being negotiated with Slovenia and Austria. Investment in the South Stream project has been estimated at 25 billion euros ($35 billion).

MOSCOW, June 29 (UPI) -- Gazprom announced major plans to expand into the British energy market over the course of the next few years, corporate officials told shareholders. Gazprom chief Alexei Miller told officials at the annual shareholder meeting the energy monopoly could ship more than 266 billion cubic feet of natural gas to British markets each year. "Gazprom plans to account for 10 percent of the British market by 2011," he said. Gazprom opened its first offices in England in 1999, while expanding its retail and wholesale market footprint in the rest of Europe. Miller told shareholders the liberalization of European gas markets created an opportunity to move into broader markets through the use of underground storage facilities, RIA Novosti reports. Gazprom appears to be losing ground in its Asian markets, meanwhile, as China inks a 30-year gas deal with Turkmenistan. The deal means Turkmenistan increases its gas sales to Beijing by 30 percent to 1.4 trillion cubic feet each year while work begins on a 4,000-mile pipeline between the two countries. "This agreement is very important for ensuring a stable, long-term and adequate supply of gas for this pipeline," said China's vice-premier, Li Keqiang.

06-29-2009 - Upstream OnLine - Russian gas giant Gazprom signed a gas supply deal with Azerbaijan today, though the terms of the agreement remain unclear, according to reports. The news of the deal came as Gazprom chief executive Alexei Miller said the company would import a modest 500 million cubic metres of Azeri gas from 2010, a Reuters report said. The news agency quoted Miller as saying that import volumes would, however, increase. Miller also told reporters that Azerbaijan has promised to give Gazprom priority as buyer when gas from the second phase of the Shah Deniz development comes on stream. Russia wants to secure Azeri gas supplies to fill the planned South Stream gas pipeline to Europe. The European Union has also been courting the government in Baku as it bids to line up feedstock for the Nabucco pipeline, which circumvents Russia.

June 26, 2009 - Business Week-AP - Gazprom, the world's largest natural gas producer, said Friday it hoped to sign key deals in Azerbaijan next week, raising the possibility that Russia will secure Azeri gas to feed pipelines to Europe. "We enjoy good relations with Azerbaijan," chief executive Alexei Miller said at a shareholders' meeting at the company's Moscow headquarters. "And we hope that during next week's trip to Baku we will reach important agreements." State-run Gazprom has sought in recent years to corner the Central Asian gas supply, and reached preliminary agreement in March to buy Azeri gas from 2010. Russia requires more gas to feed two planned gas export pipelines -- North Stream and South Stream -- that would enable it to boost supplies substantially to Europe over the next decade. The European Union is backing a rival Europe-bound pipeline project called Nabucco that would hook up Central Asian or Middle Eastern gas with a pipeline in Turkey. The project has progressed slowly, however, because its investors have not yet secured supplies to fill it.

JUNE 26, 2009 - Dow Jones - MOSCOW. Russian gas firm OAO Gazprom (GAZP.RS) plans to control 10% of the U.K. natural gas market by 2011, the company's chief executive, Alexei Miller, said Friday. Volumes of Russian gas sold on the U.K. market has tripled in the last few years, Miller told an annual shareholder meeting. Gazprom currently supplies 7.5 billion cubic meters of gas a year to U.K. consumers. In 2006, Gazprom dropped its ambition to take control of U.K gas firm Centrica PLC (CNA.LN)after UK politicians voiced concerns about giving the state-controlled Russian firm a large influence over the country's energy supply.

MOSCOW, June 25, 2009 (Itar-Tass) - Gazprom intends to reconsider and to approve an adjusted budget of the holding in August-September this year. Andrei Kruglov, Deputy Chairman of the Board and head of the Gazprom financial and economic department, told a news conference here on Thursday, "This is normal practice for Gazprom to reconsider the parameters of the company’s budget on the strength of half-year results". Kruglov pointed out that the results of the first quarter -- during which a decline in gas prices, the complex situation concerning Ukraine, and a continuation of the economic downturn played a substantial role -- are no indicators that determine a trend for the entire year. Therefore, the holding will orient itself to the results of the second quarter and the first six-month period as a whole. "Taking into consideration the decline in demand for gas on the world markets, Gazprom intends to cut investments," Kruglov emphasized. He said, "The overall scope of investment programme adjustment may amount to about 30 percent downward". Gazprom's investment programme, which is calculated on the strength of the forecast for average annual oil price of $42 per barrel, amounts to 920,000 million roubles this year. Speakng of adjustment plans, Kruglov pointed out, "One of key tasks among the anti-crisis measures is to determine priorities more efficiently". "We do not plan seriously to cut down capital expenses on priority projects and on the construction of key processing and transportation facilities," he assured. Kruglov also stressed that Gazprom affords enough monetary resources and open credit lines to ensure a sufficient level of liquidity".

25 June 2009 - The Moscow Times by Anatoly Medetsky - Gazprom deputy chief Alexander Medvedev defended the company's sales policy on Wednesday, responding to reports that the gas producer has lost part of the lucrative European market. Customers were buying less gas only temporarily because they built up large reserves last summer in anticipation of higher prices at the start of this year, said Medvedev, the company's exports chief. Gazprom at the time posted better sales growth than one of its rival's, Norway's StatoilHydro, he said. "Actually, this can be characterized as a shift in demand for an earlier period," Medvedev said at a news conference. "That's why we, in Gazprom, don't see any reason for panic and pessimism." Data from the International Energy Agency showed last week that Gazprom's market share in Europe and Turkey plunged to 16 percent in the first quarter of this year, compared with 30 percent last summer. European customers preferred buying cheaper LNG in spot trading from Gazprom's competitors because contracts with the Russian company fix prices for pipeline gas to those of oil six to nine months ago, when it hovered at record-high levels. Russia's reputation as a gas exporter also took a hit in January, when a dispute over supplies and transit in Ukraine led to widespread shortages throughout much of Europe. Gazprom exported to Europe just 74 percent of what it planned to in the first half of this year, or 59.5 billion cubic meters, Medvedev said. Demand in Europe has been rising again since April as Gazprom's prices decline, Medvedev reiterated. There was no commercial sense in offering discounts to increase the volume of sales in the first quarter, Medvedev said. Deputy Energy Minister Sergei Kudryashov criticized Gazprom's loss of sales volumes to Europe at an energy conference in Moscow on Tuesday, according to a copy of his speech on the ministry's web site. The ministry retracted the comments later that evening, saying the wrong document was posted because of a technical error. It was replaced with a different, shorter address that did not contain the criticism. Gazprom anticipates an average price of $280 per thousand cubic meters for its gas this year, which would be on par with the 2007 level, Medvedev said. He described the price as "quite satisfactory" and insisted that it would allow the company to develop. Gazprom is planning to export 142.1 billion cubic meters of gas to Europe and Turkey this year, a decrease from last year's 158.8 bcm. The gas will come from its own production, independent producers and Central Asian imports, he said.

June 24, 2009 (Reuters by Simon Shuster) - MOSCOW, Russia's Gazprom (GAZP.MM) expects its sales to Europe to drop 40 percent this year, its export chief said on Wednesday, but sees European demand picking up from April as the average price in 2009 falls by a third. At a news briefing, Alexander Medvedev rebuffed accusations that a rigid pricing policy was to blame for the plummetting sales, and insisted that Gazprom would not offer cheaper gas to stimulate demand. Exports to Europe from the world's largest gas company will stand at only 142 billion cubic metres this year, down from 158.8 last year, with export revenues falling to $40 billion from $65 billion, Medvedev said. "When there is a global storm there is no safe haven anywhere," he said. Medvedev added that a sharp drop in exports in the first half of 2009 was not the result of the financial crisis, but of gas prices on the spot market that were half those in Gazprom's long-term contacts. "Our consumers, being rational in their approach, have opted for the less expensive choice," he said. But the average price of gas is falling, and will soon help bring consumers back around to Russian imports, Medvedev said. He forecast that the average cost of Russian gas will be more than $280 per thousand cubic metres on export markets in 2009, down from $400 in 2008 but at the upper range of previous guidance. NO NEED FOR PANIC: Some analysts agreed that discounts could be counterproductive for Gazprom. "If they now, as prices are falling, break their pricing policy by giving discounts, their customers in Europe would also ask for discounts when the prices start rising," said Maria Radina, an oil and gas analyst at UBS in Moscow. "That could result in a complete spot situation, which would mean a loss of predictability in future sales and volumes." European consumers, which buy a quarter of their gas from Gazprom, have also been buying more alternative fuels and cutting imports as they wait for gas prices to catch up with the sharply lower oil prices. Medvedev said Algeria and Nigeria suffered from the same problem in the fourth quarter of 2008 and the first quarter of 2009 and only Norway had increased supplies. "But we don't see any reason to panic or for pessimism," said Medvedev, adding he believed Gazprom will boost its European market share in the future. "Norway has no special flexibility. The structure of their price formula is such that the spot segment is prevailing," he said, countering remarks by an energy ministry official this week that Gazprom should have been more flexible in its pricing. "The advantage of our contracts is in price predictability," he said. "It doesn't make any sense to halve prices to see offtake picking up by, let's say, 3 percent". "And starting from April we are seeing gas imports are beginning to exceed our expectations," he added.

June 23, 2009 - Eurasianet - Russian media outlets are reporting that the Kremlin-controlled conglomerate Gazprom is pushing for an almost 50 percent cut in the price it pays to the Turkmen government for natural gas. A Gazprom delegation headed by Alexander Medvedev, the company’s deputy board chairman, was in Ashgabat on June 23. Medvedev was expected to seek a downward revision in the gas pricing structure. Gazprom paid $300 per thousand cubic meters of gas (tcm) during the January-March period of this year, according to Kommersant. Medvedev will reportedly offer to pay $220/tcm for Turkmen gas during the third quarter of 2009, and $160/tcm for the fourth quarter of this year.

June 23, 2009 - (Reuters by Randy Fabi) - ABUJA, Gazprom (GAZP.MM) is expected to sign a joint venture agreement with Nigeria's state-run oil firm NNPC as part of the Russian president's visit to Africa's biggest oil producer on Wednesday, a senior Kremlin source said. Details of the deal were not available, but Gazprom in February said it was close to sealing a $2.5 billion oil and gas exploration deal that would create a 50/50 joint venture with the Nigerian National Petroleum Corp. [ID:nLP386561] Russian President Dmitry Medvedev travels to Nigeria's capital Abuja on Wednesday to meet with President Umaru Yar'Adua and promote Moscow's economic interests in Africa's most populous country. "A number of intergovernmental agreements are expected to be signed after the talks in Abuja, including a document on the founding of a joint venture between Gazprom and Nigeria's NNPC," said a senior Kremlin official, who asked not to be named. An NNPC official also confirmed the planned signing, but declined to provide details. A senior Gazprom source told Reuters in February that 90 percent of the $2.5 billion investment would be in developing Nigeria's domestic gas production, processing and transportation. Nigeria has the world's seventh-largest proven gas reserves, but has been unable to develop its gas industry to anywhere near full potential because of a lack of funds and regulation. Some industry experts in Europe see Russia's deals with African OPEC members like Nigeria as an attempt to increase control on Europe's natural gas supplies. Gazprom already provides a quarter of Europe's gas.

06–23–2009 Associated Press — MOSCOW. Coming soon to the stunning snowcapped peaks of southern Siberia — probably the world's highest billboard. Leaders in the remote Russian region of Altai want to name one of the region's tallest mountains in honor of Gazprom, the state-run natural gas monopoly and corporate behemoth. It was unclear whether the mountain currently has a name. The Altai government's Web site says an official expedition is expected to climb the 11,200-foot (3,410-meter) peak this summer to erect a giant Gazprom logo on top. Local lawmakers hope the logo will be seen for miles around. For western consumers, Gazprom is more associated with acrimonious disputes that turned off gas supplies to Europe and symbolizes Russia's blunt-edged energy clout. But for many Russians the corporation that was once one of the world's largest is emblematic of Russia's resurgence. Gazprom did not respond to request for comment.

06-22-2009 - Upstream OnLine - Gazprom Neft, the oil arm of Russian gas giant Gazprom, may issue up to $1 billion in bonds and raise a club loan as it weighs up buying a number of assets in Russia, Kazakhstan and Slovenia, as news emerged that the company had backed down over its choice of chief executive at Sibir Energy. Gazprom Neft boss Alexander Dyukov told Reuters the company was considering buying mid-sized Russian producer Russneft, Kazakhstan's Pavlodar refinery and Slovenia's top fuel retailer Petrol. Gazprom Neft has already spent over $1 billion in the past month to amass a 34 % stake in London-listed Sibir in a move widely perceived as a Kremlin strategy to use the financial crisis to further strengthen its grip over key industries at home and expand its influence abroad. "Petrol could be interesting. We bought (Serbia's) NIS and this is 4 million tonnes of annual oil refining with an option to increase it to between 5 million and 6 million. And we are interested in increasing our (retail) network," Dyukov said. He said talks were still going on about Russneft - the first public revelation that Gazprom Neft could become the ultimate owner of the indebted player, whose shares are now held as collateral with Russia's top lender, state-run Sberbank . "Russneft is a question of price," said Dyukov. He also said the company had no plans to increase its stake in Sibir from 34% after buying out virtually all of the company's free float. He said Gazprom Neft was holding talks with the remaining shareholders, who include several Russian businessmen and the government of Moscow, to manage the asset. Today, Sibir re-appointed Stuard Detmer its chief executive at Gazprom Neft's request, reversing last week's management reshuffle, which saw Detmer replaced by Gazprom Neft's top legal expert Igor Tsibelman. Tsibelman will now become the first deputy chief executive to Detmer, "to ensure the seamless transition of the management of the company", Sibir said in a statement. "Igor Tsibelman's appointment was a (Sibir) board decision ... It was premature to do it. There is a (standard) procedure of handover and it should not take place suddenly," said Dyukov, adding that Sibir was likely to get a new chief executive -- Tsibelman or somebody else - within two to three weeks.

June 19, 2009 (Bloomberg by Maria Kolesnikova) -- OAO Gazprom Chief Executive Officer Alexei Miller may earn $5.3 million for 2008, Vedomosti said. Miller may get about $2.8 million for being chairman of the gas producer’s oil unit, OAO Gazprom Neft, more than $500,000 for being deputy chairman of Gazprom and at least $2 million for being CEO, the newspaper said, citing company data and its own calculations.

BISHKEK, Kyrgyzstan, June 19, 2009 (UPI) -- In an attempt to revive its aging natural gas industry, Kyrgyzstan is turning to Russia's state-owned natural gas giant Gazprom. Kyrgyzstan's Belyi Parus newspaper reported Friday that according to the Kyrgyz government's latest official reports, Gazprom has agreed to purchase 75 percent of shares plus one share of the state gas enterprise Kyrgyzgaz. In addition, Gazprom has agreed to close out all the old debts of Kyrgyz gas transport enterprises, estimated at $13 million. The deal culminates discussions begun between Gazprom and Kyrgyzgaz in 2003, when an agreement was initialed between the two companies establishing cooperation in the oil and gas sector for 25 years. For years the Kyrgyz government has attempted to procure foreign investment in its energy sector but has been largely unsuccessful. Among potential investors Russia has shown the greatest interest. In February Kyrgyz President Kurmanbek Bakiyev during a visit to Moscow managed to procure a $2 billion loan, which included money to help Kyrgyzstan build the 1,900-MW Karambata 1 hydroelectric project.