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Tuesday, October 31, 2006

EU's Energy Commissioner Urges Broader Access to Russia's Gas Pipelines

Andris Piebalgs / Photo from www.merkur.de30.10.2006 MosNews – The European Union’s energy commissioner on Monday reaffirmed the call for Russia to open up access to its natural gas pipeline transport system, and called for greater transparency in energy relations between Russia and its European neighbors, the Associated Press news agency reports. Andris Piebalgs told a Russia-EU energy conference that the EU expected Moscow to respond to longtime European calls to allow independent companies access to Russia’s export pipelines, which now only carry gas sold by Russia’s state-controlled monopoly OAO Gazprom. That effectively gives the gas giant the power of veto over independent gas projects. “There is a recognition that there is a need for secure and predictable investment conditions to both the European and Russian companies,” Piebalgs said at a Russia-EU energy conference that opened in Moscow on Monday. “There is also a need for a level playing field in terms of market access and access to infrastructure, including third-party access to pipelines in both Russia and the EU.” With Russia providing a quarter of EU’s oil and gas, EU leaders want Putin to guarantee reliable access to his country’s vast resources. The EU has been seeking to persuade Russia to ratify an international energy charter that it signed in 1994 regulating transit and investment in the energy sector, and which would allow for market competition between foreign and independent companies. But Russian President Vladimir Putin said Moscow would not ratify the charter in its current form, saying that the EU nations pushing for access to Russia’s energy deposits and long-distance gas pipelines must offer assets comparable in value. Russian regulators’ recent close scrutiny of deals with Western energy firms and Gazprom’s decision earlier this month to develop the huge Shtokman gas field without foreign partners suggest the Kremlin is seeking to increase state control of the energy sector.
“The regular flow of information with respect to policy will increase our understanding,” Piebalgs said Monday, adding that it would contribute to what he called a “more healthy spirit of confidence.” Apparently responding to Russian concerns that EU competition rules could jeopardize long-term gas supply contracts to Europe, Piebalgs said that, if such contracts enabled investments in infrastructure, they would be regarded favorably under EU rules.
“Russia also needs to ensure a secure investment climate, which will reduce as far as possible the level of commercial and noncommercial risk,” Piebalgs said. Russia is under pressure to develop its vast oil and gas reserves more speedily, and Piebalgs reaffirmed Monday that the EU needed “transparency and certainty” that investments would be made to keep production growing. The EU currently imports just over half its energy needs, but a report drawn up for European defense ministers this month predicted Europe would be externally dependent for 90 percent of its oil and 80 percent of its gas by 2025, when competition for diminishing hydrocarbons will be intense from the expanding economies of China and India.

U.S. Official Criticizes Russia-Germany Gas Pipeline

Matthew Bryza / Photo from www.panarmenian.net30.10.2006 MosNews - Germany’s big gas pipeline deal with Russia has been criticized by a U.S. official, in a sign of Washington’s mounting unease about Berlin’s ties with Moscow. Matthew Bryza, the U.S. deputy assistant secretary of state for the Caucasus and southern Europe, indicated that the Baltic Sea pipeline would deepen Europe’s dependence on Russian gas. In an interview with Financial Times Deutschlan, which was published on Monday, Oct. 30, Bryza said: “That project simply raises the question what diversification means when it comes to gas supply. If you live in Germany you do not want to go through what happened last winter with Ukraine [when Russia shut off the supply of gas] . . . I wonder as a U.S. official how much diversification anybody can develop by having more pipelines into the same supplier.” Relations between Russia and the United States are at one of their lowest ebbs since the Cold War, partly because of the U.S. support for the “color revolutions” in the former Soviet states of Ukraine and Georgia. Washington is worried that Angela Merkel, German chancellor, is slipping from her intention to distance the German government more from Moscow than was the case under her predecessor, Gerhard Schr?der. U.S. diplomats add that European states failed to give sufficient backing for Georgia when tensions between Tbilisi and Moscow recently rose because of a spy scandal. In the interview, Bryza cautioned Russia not to cut off gas to Ukraine again or to do the same to Georgia, which was denied gas for about two weeks last winter after explosions damaged a pipeline. Bryza echoed concerns voiced by some EU officials that the Baltic pipeline weakened European solidarity in negotiating with Moscow, particularly since it bypasses Poland. German politicians maintain that the pipeline boosts the country’s energy security by increasing the number of supply routes. In comments seemingly aimed at Russia’s natural gas monopoly Gazprom, Bryza said: “Very often the monopolist will work to cut a specific deal with an individual country . . . If that happens it’s much harder for Europe to stand together.” He said Europe needed to work more with the Caspian area, and in particular Azerbaijan, if its dependency on Russian gas were not to soar. He added that the United States predicted that Russia would increase its share of Europe’s gas market from 25 percent today to 33 percent within a decade, but that Azerbaijan could increase its exports to about a quarter of the Russian level.

Iran-Armenia gas pipeline to be put into operation ahead of schedule

10–26–2006 Regnum News – Iranian gas will be supplied to Armenia via Iran-Armenia gas pipeline ahead of schedule, the High-voltage Electric Lines Company director Saak Abramyan, whose company ordered construction of the pipeline’s Armenian section, stated to a REGNUM correspondent. According to him, it is supposed that the pipeline’s operation will start on December 20, 2006 instead of January 1, 2007. Also, Saak Abramyan informed that construction works at 38-km section of 40-km Megri-Kajaran section had already been finished. Construction of the 40-km section is assessed to cost $35mln; 80% of the sum will be loaned to Armenian side by Iranian development bank; the rest will be grated from own resources. It is worth reminding; according to Armenian-Iranian agreement, the section’s construction, which will guarantee penetration of Iranian gas deep into the Armenian territory, should be finished till 1 January 2007. It will enable connection of Armenian and Iranian gas distributing systems and to arrange coordinated functioning. The system’s preliminary carrying capacity will slightly be inferior to amounts, recorded in main Armenian-Iranian agreement. According to the latter (signed in May 2004), amount of Iranian gas, supplied into Armenia will total 1.1bln of cubic meters at initial stage; since 2019 it will total 2.3bln of cubic meters. The agreement was concluded for 20 years. In order to reach the planned figures, the Armenian side will additionally lay 197 km of pipe, which will pass through Kajaran, Sisian, Jermuk, and Ararat settlements. Also, it is worth stressing; later in June, the Gazprom Company Deputy CEO Alexander Ryazanov stated that the company was going to purchase the Iran-Armenian gas pipeline. According to him, the gas pipeline’s putting into operation will enable guaranteeing Armenian gas supply’s reliability. “There are problems concerning gas transit into Armenia via Georgia because Georgia permits itself unsanctioned gas extraction,” Ryazanov said.  

Transneft sees net profit rise

RBC, 31.10.2006, Moscow 10:32:20. The net profit of Transneft under Russian accounting standards increased 42.9 percent to RUR1.419bn (approx. USD53.05m) in Q3 against Q2 2006, the company said in a press release. Transneft puts the rise in the net profit down to a decline in expenses that was 0.3 percent faster than the decline in revenue in Q3 compared with Q2. Also, the completion of the Baltic Pipeline System's facilities and the related changes in deferred taxes also had a positive effect. Earlier, Transneft's President Yevgeny Astafyev said the company expected its consolidated net profit to rise 6.2 percent to RUR60bn (approx. USD2.24bn), and revenue to climb by 5.6 percent to RUR172.9bn (approx. USD6.46bn).

Tuesday, October 10, 2006

Iran-Armenia gas pipeline to be in operation in 2007

05 October 2006 [01:42] - Tehran Times - The gas pipeline from Iran to Armenia will be commisioned in the beginning of 2007, Reza Kasaiizadeh, the managing director of the National Iranian Gas Company (NIGC) said on Wednesday.
"First, Iran will export 3 million cu. m. of gas per day to Armenia. The figure will gradually reach 10 million cu. m. of gas per day, according to the schedule," he told Iranian Students News Agency (ISNA). Shifting to Iran-Turkey gas pipeline, he said that Iran's gas export to Turkey was resumed on October 2, after parts of the pipeline which were damaged by last Thursday’s explosion were repaired. "The explosion was the first of a kind occurred at Iran's border. NIGC is pursuing plans to increase security in border regions in order to prevent such events in future," he added. He also said that Iran presently exports 20 million cu. m. of gas to Turkey per day.

Thursday, October 05, 2006

Pipe Producer TMK Expects $1Bln IPO Within a Month

October 5, 2006 - The Moscow Times - Pipe producer TMK will list as much as 30 percent of its shares in London and Moscow in the "very beginning" of November, the company's chief financial officer said Wednesday. Depending on interest generated by TMK's road show for investors, the company will sell up to 21 percent of its shares on the London Stock Exchange and up to 9 percent in Moscow, CFO Vladimir Shmatovich said. Aton metals analyst Vladimir Katunin values TMK, the world's second-largest producer of seamless pipes, at just under $4 billion based on its 2006 earnings. UralSib bank values TMK at between $3.1 billion and $5.6 billion, depending on whether the company is compared to Russian pipe-producing companies or with international pipe makers such as Tenaris. The company declined to provide an estimated market value. "I'm pretty sure there will be demand for TMK since there is no Russian pipeline company trading internationally," Katunin said. "It should be quite interesting to investors." The demand for TMK's shares will depend on investors' view of the Russian stock market in general, as well as their assessment of the steel industry and the energy sector, which is TMK's primary customer. Most of the proceeds of the IPO will be used to repay a $780 million loan that the company's chief shareholder, Dmitry Pumpyansky, used to buy out other top shareholders. The remainder will be invested back into the company. Shmatovich said the IPO would not be constrained by Russian market conditions, because TMK is a "global" pipe producer, with 27 percent of its production sold overseas in 2005. "In the medium and long term, we want to increase it to 40 percent," he said.

Russian PM Visits Greece to Discuss Burgas-Alexandroupolis Oil Pipeline

Mikhail Fradkov05.10.2006 MosNews - Russian Prime Minister Mikhail Fradkov arrived in Greece on Thursday, Oct. 5, for talks with political leaders. In Athens, Fradkov will meet Greece’s President Karolos Papoulias and Prime Minister Costas Karamanlis. The talks are expected to concentrate on Moscow’s expanding energy presence in southeast Europe and the signing of intergovernmental agreement for construction of Burgas-Alexandroupolis oil pipeline. Fradkov’s one-day trip follows a Sept. 4 visit to Athens by President Vladimir Putin during which he vowed to overcome delays in a stalled pipeline project to carry Russian oil from Bulgaria to Greece. The 280-kilometer (175-mile) Burgas-Alexandroupolis pipeline would transport oil directly to southeastern Europe, bypassing Turkey’s busy Bosporus Strait. Following negotiations with his Greek colleague, Russian Prime Minister said that the intergovernmental agreement on construction of the much-delayed oil pipeline will be signed by Russia, Greece and Bulgaria before the end of this year. “Before the end of this year we have to prepare together a draft of the intergovernmental agreement and agree on details on the corporate level, based on the agreements that were reached at a meeting on Sept. 4,” Fradkov said, quoted by RIA Novosti.

Natural gas pipe from Russia to China to cost $4-5bln - Gazprom

IRKUTSK, September 21 (RIA Novosti) - Gazprom [RTS: GAZP] expects the construction of a natural gas pipeline connecting Siberia and China to cost $4-5 billion, a member of the Russian energy giant's management committee Thursday. The Altai gas pipeline is considered the principal route to connect natural gas deposits in West Siberia with provinces in western China through the Republic of Altai, which is three time zones east of Moscow. The Russian concern will also supply gas via a route from Russia's Far East. Supplies along both routes will total 68 billion cubic meters a year and are expected to start in 2011. "According to preliminary estimates, the cost of the Altai gas pipeline construction will be $4-5 billion," Bogdan Budzulyak told journalists. He said the cost largely depended on the pipeline route. "If there is a mountain or a river on the gas pipeline route, it significantly affects its cost," he said. Budzulyak, the head of the department of gas transportation, underground storage and utilization, said Gazprom had looked into various possibilities, including building the pipe via neighboring Kazakhstan. But he said the route to energy-hungry China through Altai was the "most realistic." The official said the energy giant, the world's third largest company by capitalization, was trying to avoid routing export pipelines through transit zones because this would incur payments to other countries and create additional risks. "We are trying to minimize risks to ensure reliable supplies unaffected by politics," Budzulyak said. During a price spat with Ukraine in January, Russia briefly cut off gas supplies to its neighbor, and later Gazprom accused Ukraine of siphoning off Europe-bound gas during the halt in supplies. The situation aroused concerns in Europe about Russia's reliability as a gas supplier. Russia is already a major supplier of crude to the world's second largest consumer, but gas supply routes from Siberia to the Chinese cities of Daqin and Shanshan remain on the drawing board, as does another route from the offshore Sakhalin energy project to the northeastern city of Harbin. China is seeking to double the share of natural gas in its total primary energy balance to 6% by 2010.

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