Pipeliners

13.12.2005 MosNews - Iran supports Russia's participation in an ambitious multi-billion-dollar plan to supply Iranian natural gas to India and Pakistan, the country's Foreign Ministry was quoted as saying by the France Press agency on Tuesday, Dec. 13. "The issue has been brought up. Russia is a powerful country with advanced technology. If the Indians and Pakistanis agree, and I don't think they would have serious opposition, these countries can cooperate and go ahead with the project," Iran's Foreign Ministry Spokesman Hamid Reza Asefi said. In June, India signed a deal worth $22 billion which foresees Tehran supplying 5 million tons of liquefied natural gas annually over a 25-year period from 2009 and also a memorandum of cooperation on the construction of a multi-billion-dollar gas pipeline from Iran through Pakistan. The 2,600-kilometer (1,600-mile) link is expected to cost more than $7 billion. As MosNews has reported on previous occasions, Russia has voiced its interest in the project and the idea was supported by both India and Pakisan. The country is already involved in an $800 million deal to build Iran's first nuclear power station at Bushehr.

12.12.2005 10:54 [Neftegaz.ru] – Russia's natural gas monopoly Gazprom began official construction of the 1,217 kilometer North european Gas Pipeline, that will deliver Russian gas to Germany and other European nations via the Baltic Sea. This is a fundamentally different project, because the Russian gas will reach Germany bypassing transit countries such as Ukraine, Poland, and the Baltic states for the first time. The pipeline will link the Russian port of Vyborg and the town of Greifswald in north-eastern Germany. The pipeline is due to become fully operational by 2010. The project will cost 4 million euro. The ceremony of welding of the first pipes' connection was attended by Russia’s Prime Minister Mikhail Fradkov, Germany’s Economy Minister Michael Glos, and Gazprom CEO Alexey Miller. The North European Gas Pipeline has already stirred a lot of controversy in transit countries, such as Poland, Ukraine, Latvia and Lithuania. The two former claim that the pipeline may disturb the burial of chemical weapons of thw World War II, trying to prevent Gazprom’s project from starting. Ukraine worries that it will eventually be cut off from Russia’s gas supplies. Poland has called the pipeline plan a “conspiracy” against its interests. Gazprom has signed a partnership for the project with Germany’s BASF and E.ON. The Russian giant holds 51 % of shares, and German firms each have 24.5 %. Gazprom has said that it may take a third partner into the project, thus reducing the stakes of BASF and E.ON. It plans to make the final decision on the candidate by April 2006.

12-12-2005 The Moscow Times - By Valeria Korchagina - BABAYEVO, Vologda Region -- Former German Chancellor Gerhard Schroder on Friday was named to a key post on the $4.75 billion North European Gas Pipeline, the project he and President Vladimir Putin signed off on shortly before he left office. The pipeline will give Gazprom direct access under the Baltic Sea to some of Europe's richest gas consumers, and has left transit countries Ukraine and Poland fearful of losing access to Russian gas. The appointment of Schroder, a close ally of Putin and an enthusiastic backer of the pipeline project, as head of the pipeline company shareholders' committee came as pipes were ceremonially welded at the official start of construction. High-ranking Russian and German officials wearing fur hats stood in temperatures of minus 15 degrees Celsius and watched the welding in a forest clearing near the Vologda region town of Babayevo, 475 kilometers north of Moscow. Further highlighting the close energy ties between Russia and Germany, Matthias Warnig, the head of Dresdner Bank's Russian operations, was appointed CEO of the pipeline project. Putin and Warnig have been friends since Putin's days in the St. Petersburg city administration in the 1990s. The Wall Street Journal reported the two men knew each other in East Germany when Putin was a KGB agent, but Warnig has denied this. Dresdner last week sealed an $800 million deal to buy one-third of Gazprombank, and in October advised Gazprom on its $13 billion purchase of Sibneft. In Moscow and Berlin, analysts welcomed the appointments as giving the project political clout in Western Europe, but some politicians in Germany questioned whether Schroder's involvement was appropriate, given his recent role in greenlighting the project. "It stinks," said Reinhard Buetikofer, co-chairman of Germany's Greens, the junior member in a coalition with Schroder's Social Democrats until September, The Associated Press reported. Rainer Bruederle, an official of Germany's right-wing Free Democratic Party, said he hoped that Schroder's post would be purely honorary because if it were not it would raise questions about whether Schroder had kept his public and private affairs separate, The Associated Press reported. It was not clear what role Schroder or the shareholder's committee would play in the pipeline's management, or under what financial terms Schroder had accepted the post, if any. Gazprom CEO Alexei Miller stood in a forest clearing next to a long line of already connected pipes and waved for the welding to begin. After the pipes were joined, warmly dressed executives from Gazpom's German partners, BASF and E.ON, together with Prime Minister Mikhail Fradkov and German Economics Minister Michael Glos, signed their names on the pipe. Officials, dignitaries and reporters were then bused to a nearby Gazprom depot where a group of heated tents had been erected. A news conference was held, and waiters from Moscow served black caviar to guests as fireworks lit up the dark December sky. Friday's groundbreaking ceremony marked the start of construction of the land section of the pipeline, which will link to an existing network at Gryazovets, 250 kilometers east of Babayevo, and eventually run to the Baltic Sea port of Vyborg. Schroder's appointment is likely to help the pipeline consortium defuse issues arising from the Baltic Sea route, which bypasses Russia's traditional transit countries Ukraine, Belarus and Poland. Gazprom is currently attempting to renegotiate higher gas prices with Ukraine. With a planned 27.5 billion cubic meters of gas being pumped through the pipeline from 2010, rising to up to 55 bcm by 2012, gas supplies to these transit countries are potentially vulnerable. Fradkov said at the pipeline ceremony that the Baltic route would bring down the cost of transporting gas to Europe. "The fewer intermediaries there are along the transportation corridor, the cheaper and better we can carry out our obligations," Fradkov said. Miller told the news conference that Gazprom would not continue to sell gas at below-market prices to Russia's immediate neighbors, and denied that the policy change was related to political changes, such as in relations between Russia and Ukraine. "Gazprom will supply gas to everyone at European prices. Politics is when we talk about subsidies. But when we talk about equal terms for all, there's no politics in it," Miller said. Miller said the land section of the pipeline would cost Gazprom $5 billion to build and would also be used to boost gas supplies to St. Petersburg and offer extra supplies to the Baltic countries. The construction of the undersea pipeline connecting Vyborg and Greifswald, Germany, is to start in 2006 and will cost another $5 billion, Miller said. Gazprom owns 51 percent in the Swiss-registered pipeline company, while German energy giants BASF and E. ON have 24.5 percent each. Gazprom's German partners said Friday that they could offer a stake of up to 9 percent from their shares to another European company yet to be selected. Chris Weafer, chief strategist at Alfa Bank, said Schroder's appointment to the shareholders' committee, the equivalent of a board of directors, should not be viewed as a surprise. "It reflects the fact that the North European Gas Pipeline is a major political and economic project between Germany and Russia," Weafer said, adding that a European political heavyweight such as Schroder could help the project because the debate over routes and complaints from countries left out of the project would likely continue for a while. Other prominent foreign political figures could also be brought in to head various Russian energy projects, including the plan to develop the huge gas reserves in the Shtokman fields in the Barents Sea, Weafer said. Schroder's appointment could also mean that the Kremlin is rewarding him for treading softly on such sensitive issues as Chechnya, Weafer said. "Schroder devoted his political career to relations with Russia and to the energy relationship with Moscow as a cornerstone of European policy, so it makes sense that he would take this position now," said Alexander Rahr, a Berlin-based Russia specialist who is a member of the German Council on Foreign Relations and the author of a biography of Putin. "Schroder realized that the key to success with the Kremlin ... is a special personal relationship with its leader," Rahr said.

08.12.2005 SKRIN - News - General Director of Syrian Gas Company Mr. Ali Abbas and President of OAO Stroytransgaz Mr. Victor Lorents signed the contract for the implementation of 36" Arab Gas Pipeline Project according to www.Stroytransgaz.Ru. The gas pipeline with the total length of 324 km will be constructed from the Jordan - Syrian border to the Al Rayan gas collecting station near the city of Homs. Under the terms of the contract Stroytransgaz will implement the project on EPC terms: engineering, procurement and construction as well as putting into operation. The project will be completed within 22 months. The contract price is about $160 mln. The project includes the linear part, including 4 scraper launchers and traps, 12 linear valve stations, gas measuring unit. The employer decided to implement the project in 2 stages. Construction of the 94 km section till the Deir Ali power plant and erection of the gas measuring station with the capacity of 3.0 mln m3 per day are planned for the first stage. Construction of the gas pipeline and all associated facilities will be completed up to the Al Rayan collecting station in the area of Homs. The scope of work includes SCADA, telecommunication, detection of gas leakage and fire protection systems, electro-chemical protection, automatic operation and instrumentation. Stroytransgaz won the tender for the implementation of 36" Arab Gas Pipeline Project in October 2005 having demonstrated the high quality level of the services offered

RBC, 09.12.2005, Vologda region 17:48:34.Gazprom's fourth partner with regard to the North European Gas Pipeline is likely to obtain 9 percent in the project, CEO of E.ON Wulf Bernotat said at a press conference in the Vologda region today. He added that no specific decisions had been made so far. As for the finance sources for the gas pipeline construction, he said that investment shares had already been agreed upon, but further details would be specified later. According to Gazprom's CEO Alexei Miller, the shareholders' meeting and committee headed by Gerhard Schroeder will be supreme governing bodies at North European Gas Pipeline Company set up for the pipeline's construction.

12-09-2005 RBC News - Gazprom, Russia's gas monopoly, has begun the construction of the North European Gas Pipeline. The official ceremony was held on Friday to mark the beginning of the construction. The ceremony was attended by Russian Prime Minister Mikhail Fradkov, Industry and Energy Minister Viktor Khristenko, Gazprom CEO Alexei Miller, German Economy Minister Michael Glos, Wulf Bernotat, chairman of E.ON, and Juergen Hambrecht, chief executive officer of BASF. Fradkov said the North European Gas Pipeline will help guarantee energy safety in Europe and in the world. "We are creating conditions for stable cooperation in the energy sphere, ensuring energy safety in Europe and the whole world," he stressed. The premier called the pipeline project "the largest cooperation project in the gas sphere between Russia and Europe." Fradkov said the implementation of this project would mean new jobs in the region, noting with satisfaction that large-diameter pipes for the North European Gas Pipeline were produced in Russia. He did not rule out that in future, Russian materials would be primarily used for the implementation of the project. He said the new pipeline would significantly simplify the transportation of Russian gas through third countries, creating conditions for more stable supplies to Europe. On the whole, he stressed, this was a very beneficial project for the Russian economy. In September 2005, Russia's gas giant Gazprom, German chemicals manufacturer BASF and E.ON Ruhrgas signed a deal to build a gas pipeline connecting Russia and Germany under the Baltic Sea. In the new venture, called North European Gas Pipeline Company, Gazprom will hold 51 percent and BASF and E.On will have 24.5 percent each. The pipeline will stretch for more than 1,200 kilometers, from the city of Vyborg in the north-west of Russia, to Germany's northeastern city of Greifswald. The new gas pipeline is expected to go on-stream in 2010, with an annual capacity of 27.5 billion cubic meters. A second planned pipeline could double capacity to around 55 billion cubic meters a year. Overall costs for two pipelines would be above EUR 4 billion, the companies said. Construction of the first pipeline will commence this autumn.

BABAYEVO (Vologda Region), December 9 (RIA Novosti) - A third foreign partner in North European Gas Pipeline Company (NEGPC) may obtain a 9% stake in the joint venture, with Russian energy giant Gazprom maintaining a controlling stake, the chairman of a German company involved in the project said Friday. E.ON. Chairman Wulf Bernotat said a consolidated decision would be made on the issue. The Russian-German joint venture NEGPC is to build a pipeline from Russia to Europe under the Baltic Sea. Bernotat said none of the firms seeking participation in the project had yet been approved. Gazprom holds a 51% stake in NEGPC, while Germany's BASF and E.ON AG own 24.5% each. The agreement to build the 4.7 billion euro 1200-km NEGP was signed September 8 by Gazprom and the two German companies. The first leg of the pipeline, connecting the Baltic seashore near the Russian city of Vyborg with Germany's Greifswald region, is set to come on-stream in 2010. Offshoots may then be built to link it with the Kaliningrad Region (Russia's exclave within the EU), Scandinavia and the UK.

TEHERAN, December 11 (RIA Novosti) - Iran agrees to Russia's participation in a transnational project to build a pipeline transporting Iranian natural gas to Pakistan and India, a spokesman for the Iranian foreign ministry said Sunday. Hamid Reza Asefi said, "Russia is a powerful state with advanced technologies. We agree to Russia's participation in the project to construct the Iran-Pakistan-India gas pipeline." He expressed his hope that India and Pakistan would not object to Russia's involvement in the project. In late November 2005, Russian Industry and Energy Minister Viktor Khristenko said that Russia was interested taking part in the pipeline construction, and that Russian energy giant Gazprom was prepared to take on a share of the project risk. The estimated cost of the 2,500 kilometer (1550 mile) pipeline is $4.5 billion.

MOSCOW. (RIA Novosti political commentator Peter Lavelle) – Russia may account for less than 1% of APEC trade, but it is the country that will fuel the economic growth of many of its Pacific Rim neighbors. Russia is literally Asia's pipeline to stability and prosperity and what the Kremlin gets in return is not only billions of petro-dollars, but also an enhanced geopolitical position in this important region. Asia is hungry for oil and Russia has petroleum to more than satisfy this appetite. China today imports approximately half its petroleum needs. Consumption rose by 15% last year and is estimated to leap by an additional 9% this year. Russian Railways exported an average of 155,000 barrels of oil each day to China over the first ten months of this year. This is an increase of 31% over the same period last year. The current plan is to raise the volume of exports to an average of 300,000 barrels of oil day in 2006, although for that to happen the railways company will have to substantially improve infrastructure. By 2025, China's imports needs are expected to reach 14.2 million barrels a day, double this year's level and the lion-share will have to be transported other than by rail. Half of Japan's needs are met through imported oil and 87.9% of its oil is from the turbulent Middle East. It is estimated that if Russia exports a million barrels of oil on a daily basis, as Japan is planning for sometime in the future, this will reduce Japan's reliance on the Middle East to 65%. Both China and Japan desperately need Russia petroleum and the only issue that had to be defined is how Russia's crude is exported – though which pipelines and going where. Russia has long been committed to build an oil pipeline to the Far East for export of crude. Two competing pipelines routes were proposed: the first from the Russian city of Taishet to Nakhodka near the Sea of Japan and the second to the Chinese city Daqing. The Taishet-Nakhodka pipeline extends roughly 2,500 miles, from Taishet, around Russia's Lake Baikal, to the port of Nakhodka where a new export facility will have to be built. Russia estimates that the project will cost between $15 and $18 billion, and the pipeline will have a capacity of 1.6 million barrels of a day. The Daqing route is longer and thus more expensive and would appear to favor China over Japan. What is now called the Eastern Pipeline is a compromise. The first phase is to transport 600,000 barrels of oil a day over 2,000 kilometers to a point within 70 kilometers of the Chinese border. Of this amount, 400,000 barrels of oil a day will then be diverted into a direct Chinese link pipe and the remaining 200,000 barrels a day will be transported by rail to the Pacific Coast for shipment to Japan. The second phase of the proposed pipeline, to be come on line in 2010, will see capacity increase to 1.6 million barrels of oil a day and the pipeline extended the remaining 2,000 kilometers to the Pacific Coast – seemingly to favor Japan over China. The compromise route is a result of economic and political considerations. Japan reportedly promised up to $14 billion in funding for the pipeline, as well as $8 billion in investment in the Sakhalin-I and Sakhalin-II oil and gas projects and the promise of major investment in developing untapped oilfields in Russia. The Kremlin's preference for the two-phrased Eastern Pipeline should not be seen as openly favoring Japan over China – what it does suggest is Russia is protecting its self-interests, first and foremost. The compromised pipeline route ensures that Russia is not dependent on a single buyer, as would have been the case with the Daqing option. The pipeline's plans have been repeatedly delayed over the past 18 months, like all of Russia major projects, due to internal government disagreements. However, with the "Yukos affair" fading into the background and the announcement that the Prime Minister Mikhail Fradkov will in future chair all meetings on the project to try to resolve differences, the first phase of the pipeline will be built by the end of 2008 as promised. A number of commentators and experts on APEC have dismissed Russia as a bit player in the one of the world fastest growing economic zones, going to as far as to say the Kremlin does not have a clearly thought-out foreign policy regarding the 21 member organization. Just the opposite is true. Russia and Japan continue to disagree – as both have since 1945 – about the territorial dispute involving four islands off Russia's far-eastern coast. Though this has not been a barrier to establishing a long-term energy relationship. Russia's trade and other economic ties with China have blossomed since the collapse of the Soviet Union. Far from being a bit player in the region, a better characterization would be to describe Russia a key player affecting the economic future of both countries and the Pacific Rim, in general.

BABAYEVO (Volgorod region), December 9 (RIA Novosti) - The head of Dresdner Bank's Moscow office will be appointed managing director of the North European Gas Pipeline Company (NEGP), an operator of the project, January 1. Speaking at a ceremony marking the start of construction work on the $4.7 billion energy project, Mattias Warnig said he would abandon his executive functions at the bank but retain his seat on the board of directors. Warnig said the relevant contract would be signed next week. Stanislav Tsygankov, a senior manager for Russian natural gas giant Gazprom, said the Russian-German NEGP joint venture had applied for registration in Switzerland November 30 and received certification December 5. The pipeline project, in which Gazprom holds 51%, and Germany's BASF and E.OG AJ 24.5% each, is designed to create a direct route for natural gas supplies from Russia to its biggest market in Europe, bypassing transit countries (Ukraine and Poland). The pipeline will connect the Baltic Sea shore near the Russian city of Vyborg with the Greifswald region on the German coast along the Baltic seabed. The project is set to pump gas from Russia's Yuzhno-Russkoye, Zapolyarnoye and Prirazlomnoye gas fields and from the 3.2 trillion cu m Shtokman gas condensate deposit on a Barents Sea shelf in northern Russia.

28.11.2005 17:29 Tsvetelia Ilieva - Reuters - The political stakes are high and the financial risks many but the spoils are huge for investors seeking a way to pipe Russian and Caspian oil around the treacherous Turkish straits to the energy-hungry West. Oil producers lost at least $700 million last winter as bad weather and heavy seas kept their tankers stuck for as long as two weeks at the Bosphorus and Dardanelles straits —- the only way for sea-bound crude to exit the Black Sea. Delayed for years by political wrangling and environmental fears, several billion-dollar pipeline projects are finally inching toward start dates, with countries and investors around the vast Black Sea vying for pole position. "An exit-Black Sea pipeline is a necessity, because the oil market requires diversified supplies," said Max Shein, chief equity strategist at Moscow-based Broker Credit Service. For Russia and other Black Sea states, the Turkish straits provide the only outlet to world markets for exports of oil and its products. Oil shipments total about 2.9 million barrels per day. Fueled by the region's booming economies, traffic has tripled since 2001 to more than 150 ships a day through the Bosphorus, a snaking channel that divides Istanbul and is just 700 meters (2,300 ft) wide at its narrowest point. Turkey has set limits on traffic to boost safety: tankers longer than 200 meters or those carrying dangerous cargo are only allowed to enter the waterways during daylight, which, combined with rough seas, creates long delays in winter months. After years of procrastination, investors are pursuing three long-delayed trans-Balkan bypasses to skirt the Turkish straits. Producers may still be reluctant to pay transit fees, but investors such as Rumen Nikolov are bullish. "One day the ships will carry the oil to us," said Nikolov, whose company, the Albanian Macedonian Bulgarian Oil Corporation (AMBO), aims to link the Bulgarian Black Sea port of Bourgas with Vlore, on Albania's Adriatic coast. SHORT IS SWEET The need is clear: already booming oil production in the Urals and the Caspian Sea regions is expected to double crude traffic through the Turkish straits through 2015. Russia has increased exports by 50 percent since 2001 to become the world's second largest oil exporter behind Saudi Arabia, and Kazakhstan expects to more than double its output of 1.3 billion tonnes of crude in the next decade. AMBO hopes to build a 912-km (567-mile) pipeline from Bourgas through Macedonia to Vlore, a deep port accessible to huge tankers. Analysts warn the pipeline's length and political risks in the region continue to hinder the plan, which originally surfaced in 1994, but Nikolov said a deal could be imminent. "I expect the final political accord on the pipeline to be endorsed next year," he said. "No pipeline will ever lose money. But a pipeline is as much economics as it is politics." One thing fuelling investors' optimism is what they describe as an improving political climate as the European Union pushes east and south, increasing hopes of political stability. Alongside the AMBO plan is a project to run a link between Romania's Black Sea port of Constanta to Italy's Trieste, although analysts say this is also dogged by political haggling among the five countries it would cross and hampered by a price tag of up to $6 billion. Perhaps the most promising of the three trans-Balkan projects is the 285-km (178-mile) link from Bourgas to Alexandroupolis on Greece's Aegean coast. After a decade of horse-trading between Greece, Russia and Bulgaria, the three countries said this May that work on the 700 million euro pipeline could begin at the start of 2006. The countries gave a year-end deadline to nine investors to propose a structure for a company that will build the pipeline, expected to have an initial capacity of 15 million tonnes. Analysts said that, with its much shorter length and smaller number of countries involved, the pipeline had a good chance of beating competitors to completion. "The shorter, simpler and les complicated routes are most likely to make it," said Ian Woolen, senior analyst with Wood Mackenzie in London. NORTH AND SOUTH The Balkans, however, do not provide the only possible route to circumvent the Bosphorus and Dardanelles. Turkey is lobbying for a 560-1,000 km (350-620 mile) conduit from its northern Black Sea town of Samsun to its oil hub Ceyhan on the Mediterranean, saying the line could effectively relieve the traffic through the straits by 50 percent. This month, Turkey and Russia decided to carry out separate feasibility studies on the plan. Previously, Russia had been lukewarm, fearing high transit tariffs and competition for buyers in Ceyhan with Middle East members of the Organization of the Petroleum Exporting Countries. "This is so important for Turkey ... Russia is a little suspicious but we're trying to convince them," said a senior Turkish energy official, who did not want to be identified. Another option to ease congestion in Turkish waters would be to extend Ukraine's Odessa-Brody pipeline to Poland's Baltic port of Gdansk. Last week, Ukraine's President Viktor Yushchenko said his country was ready to proceed with the extension and had set up joint structures with Poland and Kazakhstan to work out a plan to complete construction, launching the project in 2006. Kazakhstan has expressed interest in the $600 million plan and the European Union has invested in a feasibility study, which should be ready by the end of the year. Despite the progress, the proposed extension still faces the same drawbacks as the other projects, including the reluctance of producers to pay transit tariffs. They fear this would give competitors an advantage by reducing traffic in crowded but still free Turkish waters. Analysts say that, if oil prices remain high, at least one or two pipeline projects will go through to completion. "If the price of crude stays high and the export volumes across the region increase as expected, at some point the producers will have to commit to a pipeline to guarantee access to international markets," said Wood Mackenzie's Woolen.

01.12.2005 IntelliNews Today - According to Gazprom's deputy CEO Alexander Medvedev, the company will shortly select its third partner for North European Gas Pipeline project. The project involves building a gas pipeline from Russia to Germany and then probably to the Netherlands and UK . The pipeline will be constructed on the Baltic Sea seabed. Companies interested in partnership with Gazprom include Dutch Gasunie, French Gaz de France and UK 's BP and Transco. At present Germany 's E.ON/Ruhrgas and BASF are Gazprom’s only partners in the venture. Gazprom holds a 51% stake, while the German companies hold 24.5% stakes each. The newly selected partner will reduce the shakes of the German companies and Gazprom will retain its controlling stake.