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Monday, October 31, 2005

Approval of Siberia-Pacific pipeline possible by year's end

MOSCOW, October 31 (RIA Novosti) - Feasibility studies for the Eastern Siberia-Pacific Coast oil pipeline, which is to be built by Russian state-owned pipeline operator Transneft, could be approved before the end of the year, the head of Russia's Federal Energy Agency said Monday. Sergei Oganesyan told a Moscow press conference the final decision on the route and ending point of the $12-billion, 1.6-million-b/d-capacity pipeline would depend on the results of the study. Several alternative routes have been under consideration since Transneft's initial suggestion was rejected by the Natural Resources Ministry for violating environmental laws. The company had proposed that the 420,000-km pipeline run to the Pacific Coast through Lake Baikal, raising environmentalists' concerns over the possible negative impact on the UNESCO world heritage site and the source of 20% of the earth's fresh water. The proposed end point at Perevoznaya Bay also proved controversial, with wildlife groups arguing that the pipeline would damage the bay's unique ecosystem.

Transneft to complete Baltic Pipeline System construction

MOSCOW, October 31 (RIA Novosti) - Russian pipeline monopoly Transneft plans to complete construction of its Baltic Pipeline System (BTS) in the first half of 2006, a senior company official said Monday. Sergei Grigoryev, company vice president, told an oil and gas forum in the Russian capital that BTS' annual capacity was estimated at 60 million metric tons. He also said the company's oil exports reached 187.2 million tons in the first nine months of 2005, including 60.6 million tons piped through Belarus and 25.8 million tons piped through Ukraine.

Thursday, October 27, 2005

Russia's Baltic Gas Pipeline Sparks Row Between Germany and Lithuania

Photo from www.wilkmedia.org26.10.2005 12:40 MSK MosNews - A state visit by Lithuanian president Valdas Adamkus to Berlin has sparked an open row with German chancellor Schroeder on plans to build a direct gas pipeline between Russia and Germany, EUobserver.com reported on Wednesday, Oct. 26. Just before his visit to Berlin on Tuesday, Oct. 25, the Lithuanian leader heavily criticized plans for the 1,200 km pipeline that will link St. Petersburg in Russia via the Baltic Sea to Greifswald in Germany. Adamkus accused Schroeder of "complete ignorance" of neighborly relations by sidelining his country in the bilateral deal with the Russians, German media reported. The German chancellor reacted by saying that Adamkus' remark was "in no way justified, neither in its form, nor in its content". As MosNews reported, the pipeline was officially announced in September in the presence of Schroeder and Russian president Vladimir Putin, who was in Germany for a visit. It has huge strategic importance as the direct connection will bypass EU states which have difficult relations with Moscow, such as Lithuania, Poland and EU hopeful Ukraine. Adamkus said after talks with Schroeder that positions had not converged. "We have confirmed the status quo," he stated, adding that "we feel that we were excluded from the discussions". He also pointed out that the building of the gas pipeline poses a substantial environmental risk, as the Baltic Sea contains large amounts of chemicals and explosives that were dumped by the Nazis during WWII. "Nobody can guarantee that it will not come to an accident," he said, adding that this would "bring the whole Baltic Sea out of balance." But Schroeder reiterated "the sovereign right of Germany to secure its energy supply in the long term and free from disruptions", the government's press service said after the meeting. The Lithuanian leader announced that he would raise the issue again with Schroeder's successor, German conservative leader Angela Merkel, who is set to take office on Nov. 22. Lithuania's opposition to the pipeline is shared by Poland, whose freshly elected president told German tabloid Bild that "this pipeline gives Russia the possibility — at least in theory — to suspend gas supplies to Poland, without affecting supplies to the rest of Europe." "For us Poles and also for our neighbors in Lithuania this is not a very secure situation. We want good relations and relations based on partnership with the Russians," Lech Kaczynski said. Poland and the Baltic states have instead proposed the so-called Amber Pipeline project that would run through their countries, which they claim is cheaper and environmentally friendlier, while at the same time providing them with steady supplies. Approximately one quarter of Europe's gas is provided by Russia. Poland gets almost all of its oil, and 40 percent of its gas, from Moscow through overland pipelines. Construction of the St. Petersburg-Greifswald line has already begun and it is expected to start operations in 2010.

Wednesday, October 26, 2005

Kazakhstan invites Russia to use its pipeline to transport oil to China

MOSCOW, October 26 (RIA Novosti) - Kazakh Prime Minister Danial Akhmetov has offered Russian oil companies the use of a Kazakh pipeline to transport oil to China. "The Atasu-Alashankou pipeline could be used not only by Kazakh, but also by Russian oil companies," Akhmetov said at a Shanghai Cooperation Organization session Wednesday. This kind of cooperation could set a good precedent for SCO partnership, the prime minister said. Russian state-owned oil company Rosneft has applied for permission to transport 1.2 million metric tons of oil via the Kazakhstan-China pipeline in 2006. Currently, Rosneft transports its oil to China by rail. In 2005, Rosneft plans to deliver 4 million tons of oil to China. Lukoil, another Russian oil giant, has also showed an interest in the pipeline. The Atasu-Alashankou pipeline is to begin operations on January 1, 2006. It will eventually have a capacity around 20 million tons a year, but initially carry 10 million

Tuesday, October 25, 2005

Transneft to attract western creditors for pipeline - minister

WASHINGTON, October 25 (RIA Novosti, Alexei Berezin) - Russia's Industry and Energy Minister said Tuesday that domestic pipeline monopoly Transneft would attract western investors to build the Far Eastern oil pipeline to the Pacific Ocean. Minister Viktor Khristenko said the most effective and acceptable proposals from all sources would be chosen. "I am convinced these will not only be Russian banks, but western creditors as well," he said. The minister said the first construction stage, to be completed by 2008, would put the pipeline capacity at 30 million metric tons, to be increased to 80 million metric tons in the future. The first stage of the project is currently being tested for environmental safety.

Monday, October 24, 2005

TNK-BP to dispatch 6mn tons of oil through Odessa-Brody pipeline in 2005

20.10.2005 IntelliNews Today - According to oil major TNK-BP’s press release, the company plans to send 6mn tons of oil through Odessa-Brody pipeline in 2005. Earlier projections indicated only 5mn tons to be dispatched through the pipeline this year. TNK-BP sees increasing the transit as economically justified to both itself and to the Ukrainian side.

Thursday, October 13, 2005

Georgian section of Baku-Tbilisi-Ceyhan pipeline set to open

TBILISI, October 12 (RIA Novosti, Marina Kvaratskhelia) - The opening ceremony of the Georgian section of the Baku-Tbilisi-Ceyhan (BTC) pipeline will be held Wednesday. The Georgian, Azerbaijani, and Turkish presidents Mikhail Saakashvili, Ilham Aliyev, and Ahmet Necdet Sezer, as well as U.S. Ambassador to Georgia John Tefft, senators from California, and BTC Co. president Michael Townshend, will attend the ceremony, the Georgian presidential news service said. Oil will be transported from Azerbaijan's Sangachal field in the Caspian Sea through Georgia at the first pumping station in the Gardaban district on the Georgian-Azerbaijani border. In late October, oil supplies will reach the Georgian-Turkish border. The BTC pipeline consortium comprises operator British Petroleum with a 30.1% stake; Azerbaijan's State Oil Company with 25%; American companies Unocal (8.9%), Conoco-Phillips (2.5%), and Amerada Hess (2.35%); Norway's Statoil (8.7%); Turkey's TPAO (6.5%); Italy's ENI (5%); French-Belgian TotalFinaElf (5%); and Japanese-based Itochu and Inpex with 3.4% and 2.5%, respectively. The $3-billion pipeline runs from the Sangachal terminal in Azerbaijan to Ceyhan in southern Turkey, a total distance of 1,743 kilometers (about 1,100 miles), including 235km (150 miles) in Georgia. The pipeline will have an annual capacity of 50 million metric tons of oil.

U.S. energy establishment expresses interest in Iran-Armenia pipeline

YEREVAN, October 12 (RIA Novosti, Gamlet Matevosyan) - U.S. Energy Secretary Samuel W. Bodman said Wednesday that the United States would be interested in contributing to the Iran-Armenia natural gas pipeline project. Bodman met with his counterpart Armen Movsisyan in Armenia's capital to discuss the pipelnine, as well as to consider the possibility of holding a U.S.-Armenian energy forum for private companies and financial institutions in order to boost Armenia's energy sector, the Armenian Foreign Ministry reported. Movsisyan said Armenia's only nuclear power plant could be shut down only if there were other energy-generating facilities available to replace it. He said Armenia expected the U.S. to help it in ensuring the plant's safety and developing alternative energy sources.

Friday, October 07, 2005

Putin and Schroeder to discuss Russia-EU, pipeline in St. Petersburg

On a Side

Construction continued on Thursday
of a pipeline that one day will link
the Sakhalin-2 project to a liquefied
natural gas plant in Prigorodny.

Oct 7, 2005 The Moscow Times By Carl Schreck Staff Writer - With little of the hype that characterized the run-up to his 50th birthday, President Vladimir Putin was set to celebrate turning 53 on Friday with German Chancellor Gerhard Schroder in St. Petersburg. The visit, a private one, could well be Schroder's final foreign trip as his country's leader.

Schroder to St. Pete for Putin's Birthday

ST. PETERSBURG, October 7 (RIA Novosti) - Russian President Vladimir Putin will hold talks with German Chancellor Gerhard Schroeder in St. Petersburg Friday, a Kremlin spokesman said. The German and Russian leaders will discuss the results of the Russia-EU summit that was held in London on Tuesday, and will focus on economic and energy cooperation, particularly the construction of the North European Gas Pipeline. The $10-billion pipeline will pump natural gas from Russia to Germany, passing under the Baltic Sea. Putin and Schroeder will also exchange opinions on how agreements reached at previous meetings are being implemented, the spokesman said.
Spokesmen for the Kremlin and the German Embassy in Moscow said Thursday that they did not know what celebratory events were planned, but Friday is the second and final day of a Central Asian Cooperation Organization summit, which has brought leaders from Tajikistan, Kyrgyzstan, Kazakhstan and Uzbekistan to the city. German Embassy spokesman Wolfgang Bindseil said that while Schroder's visit was private, the two leaders might address Russian-German relations at a news conference on Friday evening. Putin was the guest of honor at Schroder's 60th birthday in April 2004. Negotiations between Schr?der and opposition leader Angela Merkel, who are competing to lead Germany's next government after elections last month which saw Schroder's government narrowly defeated, appeared set to last through the weekend, The Associated Press reported Thursday. Schroder will return to Germany early Saturday morning, Bindseil said. There has been markedly less pomp ahead of Putin's birthday compared with the political frenzy to congratulate him that marked his 50th birthday three years ago, which Putin spent at a CIS summit in Chisinau, Moldova. In September 2002, the Argumenty i Fakty newspaper asked what the country's biggest political problem was. "Not the 2003 budget, not Chechnya and not the fires in the Moscow region," the newspaper wrote, but "what to give V. Putin for his 50th birthday." Putin is reportedly not a big fan of ostentatious gifts, though he did accept a diamond-encrusted Super Bowl ring from New England Patriots owner Robert Kraft after a meeting in St. Petersburg in June. Kraft later said it was a present, though it was speculated initially that Putin pocketed the ring when Kraft merely meant to show it to him. Bindseil said he did not know what Schr?der planned to give Putin as a present, and a Kremlin spokesman said he could not comment on other gifts Putin was to receive. The press service for Kazakh President Nursultan Nazarbayev said he planned to give Putin something nice, "but also useful," Moskovsky Komsomolets reported Thursday. Meanwhile, opposition groups are planning to hold a small protest Friday evening near Pushkin Square to mark Putin's birthday. Members of the Garry Kasparov-led United Civil Front and the youth group My, or We, plan to don Putin masks and prisoners' caps and carry birthday cakes, while giving people a chance to write postcards to Putin, Natalya Alexandrovskaya, head of UCF's Moscow branch, said Thursday. "The prisoners' caps are a symbol of what is increasingly becoming a police state," Alexandrovskaya said. "These days anybody can land up in prison."

Thursday, October 06, 2005

Lukoil-ConocoPhillips joint venture to build worth oil pipeline USD 320mn.

BRIEFLY 06.10.2005 IntelliNews Today - Naryanmarneftegaz, a joint venture of Lukoil and US ConocoPhillips plans to build a new oil pipeline in Yamal-Nenets Autonomous District. The investment cost is estimated at around RUR 9.13bn (USD 320mn). Currently, Naryanmarneftegaz is developing the Khyluchuyusskoye field in the Yamal-Nenets district. Lukoil holds a 70% stake in the joint venture, while ConocoPhillips possesses 30%. No date of the beginning the construction was disclosed. Naryanmarneftegaz expects over 3.7mn tons to be pumped through the 162-kilometer pipeline starting from 2007.

Gazprom to start European pipeline construction this year

MOSCOW, October 6 (RIA Novosti) - Russia's natural gas giant, Gazprom, intends to start the construction of the first sections of the North European Gas Pipeline by the end of the year, a senior official said Thursday. Valery Golubev, the head of Gazprom's Investment and Construction Department, said the company wanted to start construction on November 1. He said Gazprom was planning to announce four tenders on pipe supplies for the project and would give Russian companies the opportunities to bid in them. The list of prospective firms will include Severstal's new Izhora pipe plant, which is set to start operation next year, he said. This year Gazprom intends to buy pipes from Vyksunsk Metal Works, the biggest subsidiary of the United Metallurgical Company, but has said foreign companies can bid in the future tenders. Golubev said the company has yet to decide on tenders for the undersea segment of the pipeline. The 1,200km-long pipeline will mean natural gas can be exported from Russia without passing through third countries, thereby reducing transportation costs and making it more reliable for export. The pipeline, which could cost up to $10 billion, will pass through Russia's Vyborg region, go under the Baltic Sea and emerge in Germany. Construction on the pipeline is scheduled to end in 2010, with the first section's annual pumping capacity of 27.5 billion cu m and the second section extending it to the designed capacity of 55 billion cu m per year. The pipeline will help expand natural gas supplies to Scandinavia and provide reliable gas supplies to western Europe, as gas consumption continues to grow there.

Tuesday, October 04, 2005

Russia's Putin Urges Wider Participation in Baltic Gas Pipeline

04.10.2005 11:15 MSK MosNews - Russian President Vladimir Putin called on Monday for wider European participation in a Baltic gas pipeline project which Poland and others fear leaves them vulnerable to the whims of the Kremlin, the Reuters news agency reported. "The participants of the project do not need additional resources," Putin told a news conference, referring to an ambitious plan to build a gas pipeline under the Baltic Sea. "But we are interested in widening the number of participants because this makes the project more balanced, reliable and stable," he added during a joint news conference with Belgian Prime Minister Guy Verhofstadt. "It is obvious that this project will enhance Europe's energy security because it diversifies energy sources and makes the final product cheaper." Russia and Germany last month signed a deal to build the Baltic pipeline, which would give Europe an additional source of Russian natural gas and help Moscow to bypass current routes through Poland and Ukraine. Warsaw has vigorously protested against the construction of the pipeline saying Moscow could use gas supplies to exert political pressure on Europe and Poland in particular, straining relations between the former Soviet allies. Putin insisted there was no political motivation behind plans to construct the new pipeline. "We are not doing anything to harm anyone," he said clearly referring to Polish objections. "We only assume Europe's acute need to create favorable conditions for economic development." Given the political uncertainty in Germany after last month's inconclusive election, Moscow is interested in getting wider European support for the project. "Not only Germany, but other European countries as well have shown interest in developing this project," Putin said. He said Russia's gas monopoly Gazprom was negotiating the construction of a storage facility for Russian gas with Belgium. "If the project is implemented, it will become a major element in the big North European gas pipeline project, because the gas will arrive to the facility through that very pipeline," he said. "It can be used for consumers in Belgium and for supplies to other European countries including the possibility of constructing new sub-Baltic pipelines from other western European countries," he added. Verhofstadt said Belgium was keen to develop a role as a center for gas distribution in Western Europe. Asked by a Belgian reporter, whether Europe was safe from Russian blackmail over gas supplies, Putin referred to Russian gas cooperation with Finland. "Over 90 percent of Finland's needs in gas are satisfied with Russian supplies," he said. "Everyone is happy."

Monday, October 03, 2005

Baltic pipeline is interesting to all

MOSCOW (Sergey Kolchin for RIA Novosti) - Recently an agreement was signed between Russia and Germany on building a North European gas pipeline (NEGP). The offended Ukraine, Poland and the Baltic countries immediately dubbed it "the Putin-Shroeder pact." Discontent in the former "transit" counties is understandable, but this project is obviously more economically than politically oriented. Gazprom, BASF AG and E.ON AG signed a basic agreement on building the North-European Gas Pipeline, with its route running under the waters of the Baltic Sea. The parties intend to set up a Russian-German joint venture in which a 51% stake will belong to Gazprom, while BASF and E.ON will hold 24.5% stakes each. Total investments, necessary to complete the project, are over 4 billion Euros. The NEGP will connect the Baltic seashore near the city of Vyborg with the Greifswald region on the German coast. The 1,200 km pipeline will be put into operation in 2010. The plan is to build two parallel gas pipeline legs. The first stage envisages the construction of one 27.5 bcm capacity leg, with the second one to be commissioned later and double the NEGP capacity to 55 billion cubic meters of natural gas per year. The project is designed to create a direct route for gas deliveries from Russia to its biggest market in Western Europe, bypassing transit countries. It will benefit not just Germany alone, but other countries as well, since the resources of alternative gas producers in the region (Norway, the Netherlands, Britain) are close to depletion. Both Russia and Germany stand to gain from the project. Today, Germany is Gazprom's main export market. The NEGP will be the company's additional route providing gas to this steadily growing market. Also it will bolster the gas giant's position and reputation as a reliable gas supplier to Germany and other consumers in Western Europe. Through the NEGP Germany will be directly connected to Russia's gigantic natural gas fields. It should help quench Germany's and other countries' growing gas thirst and ensure reliable gas supplies. European officials, experts and mass media say that stable energy supplies are fully dependent on Europe's relations with Russia for years to come. Besides, due to the NEGP's integration into the existing German pipeline systems of Wingas and E.ON Ruhrgas, German companies will receive additional gas volumes. Experts predict that during the first year of the NEGP operation Gazprom will earn about $4 billion. Russia's transit expenses will also decrease. Currently they add up to 20% of the receipts for gas transit via Ukraine alone (13% for transit costs, and 7% for keeping up pressure in the pipes). Besides, the possibility of new countries - Great Britain, the Netherlands and Denmark - joining Gazprom's gas grid gives Russia a great chance to expand its energy presence in Europe. Today's favorable market conditions and high oil and gas prices helped bring the project to fruition. Earlier other Russian gas-transportation projects were discussed with equal enthusiasm - laying an additional leg of the West Siberia-Western Europe pipeline through Belarus and the Blue Stream route to Turkey. To put it mildly, both projects failed to meet expectations. In the first case, Russia was unable to provide ample amounts of gas without investing heavily in the gas production, while the western partners would willingly loan money to Gazprom, but didn't want to make direct investments. In addition, transit dependence on Minsk turned out to be no better than transit dependence on Kiev. As regards the second project, the Turks suddenly refused to buy all the gas offered to them at fixed world prices. Later the situation was rectified, but the existence of problems was an undeniable fact. However, radical changes have taken place since then. Fuel prices have risen steadily and obviously to stay for long. World gas giants are ready to directly invest into both the Russian gas industry and the construction of infrastructure and gas processing facilities. There is even a rivalry among the investors for the right to participate in Gazprom projects. More to it, they are willing to share profits and property with Gazprom in the field of gas supplies to European consumers. Consequently, the long-known projects to develop huge gas deposits in the North of Russia (Zapolyarnoye, Prirazlomnoye, Shtokmanovskoye, Yuzhno-Russkoe, etc.) are becoming quite promising and profitable. The primary source of raw materials for the NEGP will obviously be the Shtokmanovskoye gas condensate field. Gazprom has recently published a preliminary list of five companies to form this gas field's development consortium. It includes Norwegian companies Hydro and Statoil, the French Total and American Chevron and ConocoPhilips. Sergey Kolchin is Doctor of Economics and senior researcher at the Institute for International Economic and Political Studies, Russian Academy of Sciences.

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