Pipeliners

15.06.2005 10:56 [Neftegaz.ru] - Russian Foreign Minister Sergei Lavrov said that Russia is ready to build Eastern pipeline by its own capital, and does not need to take a loan from Japan. Such a statement was made by the minister at the St. Petersburg international economic forum on Tuesday. "We have the money. We have an enormous budget surplus to build an oil pipeline network from Eastern Siberia to the Pacific," Lavrov said. However, he pointed out, that "if loans would be given on terms that they would find acceptable, they would see". Referring to Japan's concern of that after the construction of the first stage of the pipeline oil will be pumped to China, Lavrov assured that simultaneously with building of the first stage of the pipeline to Skovorodino, an oil terminal will be built in Perevoznaya Bay for oil deliveries to Asian and Pacific Rim countries.

14/06/2005 (15:23) RZD News - Gazprom is assessing the effectiveness of its participation in the construction of a pipeline linking Sakhalin to Komsomolsk-on-Amur and then to the eastern Russian city of Khabarovsk. As head of the strategic development department of Gazprom Vlada Rusakova has announced at a press briefing today, Gazprom should detect a niche for gas transported via the above-mentioned pipeline. In February 2004, Rosneft declined to participate in the construction project. The project is to be implemented within the framework of Russia's federal program aimed at enhancing economic and social development of the Far East region. The Khabarovsk and the Primorye regions are to get Russian gas produced on gas fields on Sakhalin Island, under this federal program, reports RBC.

RBC, 07.06.2005, Moscow 17:54:28.Transneft has no doubts about the possibility to load the Eastern Siberia - the Pacific Ocean pipeline, Transneft president Semyon Vainshtok has told journalists. According to Vainshtok, the construction of the eastern pipeline enables one to solve the problem of involving eastern Siberian regions in oil production projects. Initially, oil produced on Western Siberian field is supposed to be used for loading the pipeline. The pipeline's capacity is to amount to 80m tons per year. The first stage of the project stipulates the construction of a pipeline with the capacity of 30m tons of oil per year linking the Irkutsk region to the Amursk region. This stage is to be finished in the second half of 2008.

MOSCOW (RIA Novosti economic commentator Vasily Zubkov) - The ceremony of commissioning the Azerbaijani section of the new Baku-Tbilisi-Ceyhan (BTC) pipeline again drew the attention of analysts to the project. Moscow did not support the idea of the pipeline but did not interfere with it either, though it had said that it would not provide oil to it. Sergei Grigoryev, vice-president of Transneft, had said that each state had an inalienable right to build what it needs. I would add, even if the project were unprofitable. Baku cannot supply as much oil as the new, highly expensive pipe from the Caspian to the Mediterranean can pump. Nobody is talking any more about the allegedly giant underwater oilfields on Azerbaijan's shelf. The truth is that the bulk of oil is concentrated on the eastern, Kazakh, coast of the sea. The competition of oil companies for transportation routes, which is always tough, has never been so politically loaded as in the case of the BTC, described as the main geopolitical project of the U.S. in the former Soviet states. The late president of Azerbaijan Geidar Aliyev had said that the pipeline would pump oil in one direction and politics in the other. Oil has not started flowing west yet, but Georgia, a member of the project, has been shaken by a pro-American revolution. Americans spent through the nose to create the first stage of the Great Oil Road, laying pipes by a route bypassing Russia, which, as it grew stronger economically, is making public its view of developments in the former Soviet states, in particular on its southern borders, increasingly often. But will this pipe lower the transit potential of Russia? The new supermodern ports on the Baltic Sea, the upgrading of the Baltic Pipeline System to 60 million tons this year, and the nascent construction of pipelines in Russia's European north and the Far East will guarantee Russia a long geopolitical transit life in Eurasia. The rerouting of Azerbaijani oil from Novorossiisk to the new pipe was hardly noticed, because it accounted for a mere 1% of Russia's oil exports. Baku says openly that it would like Russian oil companies to become its clients; it needs them to ensure the BTC's estimated capacity of 50 million tons a year. Besides, the capacity of the Russian pipe monopolist, Transneft, has been larger than the oil output for a second year running, according to its president Semyon Vainshtok. The production of oil is lagging behind the construction and modernization of pipelines and ports, though this year Transneft plans to increase export deliveries by 16% to 255 million tons. There will be a surplus of pipe capacities in the future, and so Russia does not plan to change export routes. A spokesman of LUKoil, which works energetically on the Caspian shelf, told RIA that the current rates and the absence of "lines" for Transneft's pipe suit his company. Rosneft and other oil majors do not plan to change export routes either. Russia plans to complete the construction of an alternative route to the BTC, from Burgas in Bulgaria to Alexandroupolis in Greece, bypassing the Turkish straits. It will be more profitable than the BTC: its length is slightly more than 300km (1,767km in the case of the BTC), its throughput capacity is 35-50 million tons (50 million) and it will cost about $700 million (some $4 billion). With the completion of this pipe, tankers with Russian oil will no longer have to spend weeks in the Turkish straits. Baku thinks that the Kazakh oil can "save" the BTC, to a degree. President of Kazakhstan Nursultan Nazarbayev was the highest foreign guest at the commissioning ceremony and expressed interest in the pipe, but his republic will not hurry to sign a contract. This proceeds from the recent statement by Lyazzat Kiinov, deputy minister of energy. He said that his country had an operating project Aktau-Baku and hence the new pipe would be filled exclusively by Azerbaijani oil. Kazakhstan will ponder participation in the BTC project only when the new pipeline to the Mediterranean is completed. What effect would it have on the Transcaucasus? Though there is not enough oil for the pipe so far, the aggregate capital of companies in the BTC consortium is $1 trillion, which makes the pipe an instrument of powerful political influence in the region. This is the opinion of Eduard Agadzhanov, of the Armat Center of Democratic Development and Civil Society (Armenia). In view of the unsettled Armenia-Azerbaijan conflict over Nagorny Karabakh, the powerful U.S. assistance to Baku is radically changing the geopolitical situation in the region.

MOSCOW, June 6 (RIA Novosti) - Russian President Vladimir Putin told government members today that he would soon meet with former Japanese Prime Minister Yoshiro Mori. The two men will discuss Tokyo's interest in the Eastern Siberian oil pipeline.

03/06/2005 (10:07) RZD News - The Caspian Pipeline Consortium intends to enlarge. It has by now coordinated a majority of related issues with Russian authorities, said Ian McDonald, consortium Director General. The CPC has made spectacular progress on the project to build up its assets. It has coped with six out of the seven provisos Russia's government advanced in that connection-some have been implemented, and versions of implementation have been offered on others, said the CEO. He was addressing an international conference on capital investment in the oil-and-gas complex, underway in Paris. Organizing the conference was the UK-based Energy Exchange Co. Among the issues by now coordinated, the Director General highlighted an understanding on petroleum pumping tariffs to rise by $2.5 a ton, the use of the pump-or-pay principle, and a resolution on consortium asset enlargement to be funded from without. As for the corporate management structure, the sides agreed on the involved countries' governments to hold a half of managerial posts, with the other half for the founding companies, McDonald added. The Russian government will have everything it needs to guarantee its interests in the CPC as soon as the arrangements are settled for seconding shareholders to the consortium managerial staff, he said. Now, it is the Russian government's turn to demonstrate flexibility, remarked the CEO. The prospective consortium enlargement promises Russia multibillion revenues. Meanwhile, settlement procrastination costs the CPC $25 million a month as missed profit, and the sums are expected to double in two years or so, he warned. A draft final decision is expected to come up by next September or October, and respective works can start early in 2007 if the decision is passed. Some people doubt that Russia is actually welcoming the appearance of overseas investors in its petroleum-and-gas complex. There is no better way to dispel those doubts than coordinate the Caspian Pipeline Consortium enlargement project, McDonald said by way of conclusion. The consortium is proprietor of a petroleum mainline, 1,580 kilometers long, from Tengiz to Novorossiisk. It links oilfields in Kazakhstan's west with the Russian Black Sea coast. The CPC intends to enhance the pipeline's throughput capacity to 32 million tons even within the year, while the planned enlargement promises to make it an annual 67 million tons through construction of an additional ten pumping stations, several more reservoirs, and a seaport moorage extension to add to the two now available. Russia accounts for a 24% consortium block, Kazakhstan 19%, and Oman 7%. Prominent among private petroleum companies on the CPC are Chevron Caspian Pipeline Consortium Co., with 15%, LUKARCO B.V., 12.5%, Rosneft-Shell Caspian Ventures Ltd., 7.5%, Mobil Caspian Pipeline Co., 7.5%, Agip International (N.A.) N.V., 2%, BG Overseas Holding Ltd., 2%, Kazakhstan Pipeline Ventures LLC, 1.75%, and Oryx Caspian Pipeline LLC, 1.75%, reports RIA-Novosti.

PARIS, June 3 (RIA Novosti's Andrei Nizamutdinov) - The Caspian Pipeline Consortium intends to enlarge. It has by now coordinated a majority of related issues with Russian authorities, said Ian McDonald, consortium Director General. The CPC has made spectacular progress on the project to build up its assets. It has coped with six out of the seven provisos Russia's government advanced in that connection-some have been implemented, and versions of implementation have been offered on others, said the CEO. He was addressing an international conference on capital investment in the oil-and-gas complex, underway in Paris. Organizing the conference was the UK-based Energy Exchange Co. Among the issues by now coordinated, the Director General highlighted an understanding on petroleum pumping tariffs to rise by $2.5 a ton, the use of the pump-or-pay principle, and a resolution on consortium asset enlargement to be funded from without. As for the corporate management structure, the sides agreed on the involved countries' governments to hold a half of managerial posts, with the other half for the founding companies, McDonald added. The Russian government will have everything it needs to guarantee its interests in the CPC as soon as the arrangements are settled for seconding shareholders to the consortium managerial staff, he said. Now, it is the Russian government's turn to demonstrate flexibility, remarked the CEO. The prospective consortium enlargement promises Russia multibillion revenues. Meanwhile, settlement procrastination costs the CPC $25 million a month as missed profit, and the sums are expected to double in two years or so, he warned. A draft final decision is expected to come up by next September or October, and respective works can start early in 2007 if the decision is passed. Some people doubt that Russia is actually welcoming the appearance of overseas investors in its petroleum-and-gas complex. There is no better way to dispel those doubts than coordinate the Caspian Pipeline Consortium enlargement project, McDonald said by way of conclusion. The consortium is proprietor of a petroleum mainline, 1,580 kilometers long, from Tengiz to Novorossiisk. It links oilfields in Kazakhstan's west with the Russian Black Sea coast. The CPC intends to enhance the pipeline's throughput capacity to 32 million tons even within the year, while the planned enlargement promises to make it an annual 67 million tons through construction of an additional ten pumping stations, several more reservoirs, and a seaport moorage extension to add to the two now available. Russia accounts for a 24% consortium block, Kazakhstan 19%, and Oman 7%. Prominent among private petroleum companies on the CPC are Chevron Caspian Pipeline Consortium Co., with 15%, LUKARCO B.V., 12.5%, Rosneft-Shell Caspian Ventures Ltd., 7.5%, Mobil Caspian Pipeline Co., 7.5%, Agip International (N.A.) N.V., 2%, BG Overseas Holding Ltd., 2%, Kazakhstan Pipeline Ventures LLC, 1.75%, and Oryx Caspian Pipeline LLC, 1.75%.

MOSCOW, June 2. (RIA Novosti) - Russia is skeptical about the economic prospects of the newly built Baku-Tbilisi-Ceyhan (BTC) $3-billion oil pipeline. A popular weekly magazine, Itogi, writes that the President of Kazakhstan Nursultan Nazarbayev, who was at the forefront of the pipeline's opening ceremony, expressed interest in the project at the very last moment and is probably the only factor that can keep it afloat. The BTC is the longest U.S.-inspired pipeline and bypasses Russia and Iran. Turkey has never had any serious oil, Azerbaijan's reserves have been grossly overstated, and Georgia only has vast resources of mineral water. Azerbaijan alone can hardly produce the 50 million metric tons of oil per year to fulfill the BTC capacity. Some say Azerbaijan's exploration maps were distorted at one point, and the Americans readily fell for this in belief that the Caspian could compensate for instability in the Gulf, and that a non-Russian oil pipeline to the Mediterranean would help undermine Russia's domination in the region. In fact, Kazakhstan seems to be the only state that has really something to explore and produce in the Caspian, the magazine writes. Russia sees the project as politically motivated and therefore will not sign up. Even under pressure from Turkey, which has restricted the passage of Russian tankers through the Black Sea straits, Moscow has firmly refused a potentially lucrative offer from Azerbaijani leader Ilham Aliyev to pump its oil through the BTC, citing the future Burgas (Bulgaria) - Alexandrupolis (Greece) pipeline as the reason. Stretching for 312km (194 miles), costing $700-million pipeline, and with a capacity of 35-50 million metric tons a year, it will be a less expensive and reportedly far more efficient project. Russian and Greek companies launched it several years ago. Russia has enough oil to fill a pipeline without any external assistance, while BTC's looming under-usage threatens to turn "the project of the century" into a big politically biased waste of money, smelling of mineral water and revolutionary flowers, the magazine concludes.

01.06.2005 IntelliNews Today - According to EconMin, Yukos and Surgutneftegaz can provide oil for planned Tayshet-Nakhodka oil pipeline. Its construction terms are already settled and the first stage of construction planned to completed by 2008. Yukos wanted to build an eastern pipeline to supply China for the last 6 years. Other plans envisaged pipeline’s extension to the eastern coast making it capable of supplying oil for more than one country. Pipeline's capacity is planned to reach 80mn tons a year. Yukos and Surgutneftegaz both have the best prospects to supply oil in eastern direction, by having nearby access to oil deposits. Both companies are strongly dependent on Russian state, with Surgutneftegaz being controlled by structures close to Kremlin and Yukos still facing large court claims both from the tax authorities and Rosneft. In that way, the government will be able to control eastern export profit which is now roughly estimated to USD 27bn.

MOSCOW, June 1 (RIA Novosti) - Senior Russian and U.S. ministers have made significant progress in talks on Northern and Caspian pipeline projects, and programs in other sectors, Russia's Industry and Trade ministry said. In the energy sector, Russian Trade and Industry Minister Viktor Khristenko and U.S. Secretary of Commerce Carlos Gutierrez discussed the construction of the Northern Pipeline, the management of the Caspian Pipeline Consortium (CTC), and future exports of liquefied natural gas. Apart from energy, the ministers considered prospects for U.S. participation in Russian railway, agricultural engineering, and timber projects. The ministers recommended the U.S. Chamber of Commerce and the Russian Union of Industrialists and Entrepreneurs, a prominent national business lobby, to use the forthcoming meeting of the bilateral energy working group in Washington, scheduled for June 9-10, to analyze latest changes in Russia's legal climate and implement what had been recommended at the previous meeting in September 2003. On the CTC project, Khristenko said Russia was a minority shareholder and therefore is driven purely by its own business interests. He said the CTC had entered a phase when exclusive rights of producing companies should give way to equal rights of all stakeholders. According to him, Russia saw the Northern Pipeline as a first step in huge work aimed at bringing Russian oil to the United States. The ministry will begin designing the pipeline soon, he added and reassured that Russia would not overshadow Russia's European segments. The CPC was founded in 1992 by the governments of Kazakhstan, Russia, and Oman, to build a 1,580-km (982-mile) export oil pipeline from Kazakhstan's Tengiz oilfield to the Russian Black Sea port of Novorossiisk. In the pipeline that will pump up to 67 million tons of oil per year, Russia holds 24%, Kazakhstan 19%, and Oman 7%. The remaining 50% is distributed between U.S. Chevron (15%), Mobil Oil (7,5%) and Oryx (1.75%), Russian-U.S. joint venture LUKArco (12,5%), Russian-British joint venture Rosneft-Shell Caspian Ventures (7,5%), British Gas (2%), Agip of Italy (2%), and Kazakhstan Pipeline (1.75%).