Pipeliners

MOSCOW, November 28 (RIA Novosti) - Transneft [RTS: TRNF] has received permission to build the first leg of an oil pipeline under its Extension of East Siberia-Pacific Ocean project, the Russian state-owned oil pipeline monopoly said Tuesday. The company said its feasibility study was given a positive evaluation from a state expert appraisal agency. Earlier in the year, environmentalists condemned the East Siberia-Pacific Ocean (ESPO) pipeline, an ambitious project Russia is developing to pump oil from Siberia to Russia's Far East for exports to the Asia-Pacific region, particularly to energy-hungry China. President Vladimir Putin issued an order in April to reroute the oil pipeline from its original path, which would have brought it to within 800 meters of Lake Baikal, the world's largest body of fresh water. In late May, Transneft head Semyon Vainshtok said the new route will be 10 times farther away than the absolute minimum (40 kilometers, or 25 miles) that Putin had suggested. The construction of the 540-km (336 miles) first leg, which will connect Ust-Kut in the Irkutsk region and Talakan oilfield in East Siberia along the left bank of the River Lena, is expected to begin in January 2007 and include two pump stations, with contactors to be chosen in a tender in the near future. The new route will go to the village of Tynda, where it will join the preliminary projected ESPO system. Construction on the ESPO, estimated at $11.5 billion, began in April 2006. Since then, more than 100 kilometers (62 miles) have been laid, and 330 kilometers (205 miles) have been prepared for pipe installation. The pipeline is expected to pump 80 million metric tons (588 million bbl) of oil per year, including 30 million metric tons (220.5 million bbl) to China via an offshoot, whose construction is about to begin.

27 November 2006 - Today.Az - As Vice President of the "Strategy 1" foundation, former Deputy Chairman of the UkrTransNafta Mykhailo Honchar said, a new gas pipeline from Azerbaijan to Ukraine will run on the Black Sea floor. The project is being elaborated by the GUEU consortium (Georgia - Ukraine - EU), which consists of consulting and engineering companies.The pipeline is supposed to run along the Shahdeniz - Baku - Supsa route relying on the infrastructure of the existing Baku - Tbilisi - Erzurum pipeline. In the vicinity of Supsa the branch will turn toward the Black Sea and will run to Feodosiya on the sea floor and then to Ukrainian mainline gas pipelines via Crimea. The minimal cost of the first stage (700 km on the sea floor) is 2 bn. USD

23 November 2006 - Upstream onLine - Russia will limit its stake in the $1 billion oil Trans-Balkan pipeline from Bulgaria to Greece to 51%, leaving room for oil companies working in Kazakhstan to join the project, Deputy Energy Minister Andrei Dementyev said. ExxonMobil and Chevron, as well as Shell and TNK-BP, may negotiate for a stake in the pipeline, the official said. The holders of the 49% stake currently allotted to Greece and Bulgaria have yet to be decided, Dementyev said.

Friday, November 24, 2006 Moscow Times - Rosneft said Thursday that China would get only half of its Russian crude oil from a new pipeline to Asia, marking a victory by the railway monopoly over its pipeline counterpart in their battle to transport oil. Dmitry Bogdanov, export chief at state oil company Rosneft, the main supplier of Russian oil to China, said the rest of the crude from the initial stage of the Asian pipeline would go on to the Pacific by rail. That would mean China would only get half of its expected 600,000 barrels per day from the pipeline that, in the first stage, will run to Skovorodino, near the Chinese border. The news is a boost for railway monopoly Russian Railways, or RZD, headed by a close ally of President Vladimir Putin, Vladimir Yakunin, who has long sought to preserve current rail shipments to Asia even after Russia builds the pipeline in 2008. The development is also positive for Japan. Tokyo had appeared to have lost a battle with Beijing over Russian oil and was only likely to see oil from the pipeline after the pipeline link was expanded to 1.6 million bpd and extended to the Pacific, sometime in the next decade. The project is being built by state pipeline monopoly Transneft, and Rosneft is set to become the key shipper on the route. Transneft declined to make an immediate comment.

RBC, 17.11.2006, Moscow 15:12:28 – Bankruptcy of the Caspian Pipeline Consortium (CPC) is not likely, the head of the Federal Agency for Evergy (Rosenergo) Sergei Oganesian told journalists today. However, he finds it possible that the Consortium may face claims of violation of antitrust legislation. In answering a question about a possible expansion of the CPC's capacities, Oganesyan announced that the system could not be expanded before a decision on the Consortium's commercial block is made. He explained that the tariffs of oil transportation along the CPC pipeline should be raised to the highest possible mark of $38 per barrel, which would allow the Consortium to pay off its debts. The tariffs could be lowered later on. However, shareholders of the CPC, such as Chevron and ExxonMobil, object to the tariff increase. Oganesyan also said that the transfer of a 24-percent stake in the company to Transneft was being discussed. He considers it beneficial for both companies.

07 November 2006 - Today.Az - The process for the construction of the Russian-supported Burgas-Alexandroupolis oil pipeline, an alternative to Baku-Tbilisi-Ceyhan pipeline, has been intensified. Bulgarian Energy Minister Ovcharov left for Sofia to discuss the issue with Greek Development Minister Sioufas, APA reports. The sides are very close to signing an intergovernmental agreement on the construction of the Burgas-Alexandroupolis oil pipeline. Negotiations between the three countries-Russia, Greece and Bulgaria- over the 280-kilometer Burgas-Alexandroupolis pipeline to the Aegean Sea have been ongoing for 14 years. Meant as a way to avoid shipping through the busy Bosporus Strait, the project will transport Russian oil by tanker from the port of Novorossiysk on the Caspian Sea to the Bulgarian Black Sea port of Burgas. It will then be carried by an overland pipeline to Alexandroupolis in northeastern Greece. The three countries will hold equal shares of the consortium, APA reports.

03.11.2006 - MosNews - On Thursday, Nov. 2, the Russian Foreign Ministry angrily criticized a U.S. diplomat’s warning to the European Union that a prospective gas pipeline under the Baltic Sea could further increase its energy dependence on Russia. The Foreign Ministry was referring to the interview given by U.S. Deputy Assistant Secretary of State Matthew Bryza to the Financial Times newspaper. MosNews has reported on the interview, which was published on Sunday, Oct. 29. In the interview Bryza said: “If you live in Germany you do not want to go through what happened last winter with Ukraine. I wonder as a U.S. official how much diversification anybody can develop by having more pipelines into the same supplier.” Bryza was referring to the new North European Gas Pipeline, which Russia’s natural gas monopoly Gazprom is currently building in cooperation with Germany’s BASF and E.ON. The pipeline will bypass Poland and the Baltic states, going directly from Russia to the Baltic Sea coast of Germany. The Russian Foreign Ministry fired back on Thursday, saying that the EU’s energy security hinged on Russian gas supplies. “Let’s refrain from discussing whether it was a proper thing for a U.S. official to do to take responsibility to tell Germany how it should develop cooperation with Russia,” it said in a statement that was quoted by Association Press. The ministry said that the United States had previously criticized the Blue Stream gas pipeline under the Baltic Sea delivering Russian gas to Turkey. “Unfortunately, one could get an impression that the U.S. opposition to the Blue Stream project and now to the North European gas pipeline is driven not by its concern about Europe’s energy security, but by some U.S. officials’ belief that good gas pipelines are those which bypass Russia,” the Russian Foreign Ministry said. The statement reflected a growing chill in Russian-U.S. ties, already strained because of differences over Iran and other global crises and U.S. criticism of the Kremlin’s democracy record and strong-arming of ex-Soviet neighbors. MosNews has reported on Thursday that the former German Chancellor Gerhard Schroeder, who now serves as chairman of the consortium building the Baltic pipeline, defended Russia’s record as an energy supplier and insisted that a planned German-Russian pipeline will not compete with existing supply routes.

03.11.2006 - Moscow News - Russian technical standards agency Rostekhnadzor warned on Thursday, Nov. 2, that almost all the country’s oil and gas pipelines were in a critical condition, a possible sign of more shutdowns after the closure of Druzhba link to Lithuania. “Russia’s pipeline transport is in an unsatisfactory state. Environmental damage caused by oil and gas pipelines is inexcusable,” Rostekhnadzor chief Konstantin Pulikovsky said in a statement, quoted by Reuters. He said pipeline safety measures conducted by pipeline owners were insufficient and Rostekhnadzor planned to strengthen its control over the pipeline system. Rostekhnadzor is an independent federal agency for ecological, technical and nuclear monitoring. It is in charge of industrial safety issues and reports directly to prime minister. Russia’s crude oil pipeline monopoly Transneft, the world’s largest pipeline operator, controls the vast majority of oil pipelines, while gas monopoly Gazprom owns all the gas routes. Rostekhnadzor said most pipelines in Russia were built in the 1960s and 1970s and more than 40 percent of the trunk pipelines are over 30 years old, making them prone to corrosion. More than 30 accidents have already happened this year, mainly due to exposure and corrosion, the statement said. In July, Transneft shut down a part of the Druzhba “Frendship” pipeline to Lithuania, disrupting crude exports to the Baltic country and forcing the region’s only refinery, Mazeikiu Nafta, to use more expensive sea supplies. Transneft blamed the shutdown on a leak but analysts said the move was likely a Kremlin attempt to punish Vilnius after it allowed Poland’s PKN Orlen to buy the refinery, a takeover target of several Russian oil firms. In October, Transneft cut pressure in part of the Druzhba export pipeline to Europe, reducing oil supplies to Belarus, again following a leak

11.01.2006 MosNews - India’s Minister for Petroleum and Natural Gas Murli Deora, who was in Moscow for talks with Russian Industry and Energy Minister Viktor Khristenko, welcomed the Russian proposal to participate in the India-Pakistan-Iran gas pipeline. After his talks with Khristenko, Deora said that India has welcomed the Russian participation in the 2,700 kilometer project in the form of technological, financial and investment assistance. ’’From India, I welcomed the proposal by Khristenko during the talks. It is a very important that we from India welcome the participation by Russian companies in the India-Pakistan-Iran gas pipeline,“ Deora was quoted by PakTribune as saying. He stressed:’’We will take up this issue with Iran and Pakistan.’’ Deora is on a two-day visit to participate in the ’’Moscow Energy Week,’’ an international gathering for representatives of oil industry. He also invited the Russian minister to attend the ceremony that will be held in the first week of December at Mangalore. The ceremony, which will be attended by Prime Minister Manmohan Singh, will be held to receive the first shipment of crude oil from Sakhalin-1 project in Russia’s Far East. The first shipment of about 90,000 tons crude oil by the ONGC’s overseas arm, the OVL, from Sakalin-1 project would be processed at ONGC’s subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL). Deora said during the talks with Khristenko, the sides exchanged views on the issue of increased cooperation between Indian and Russian oil companies. ’’The issue of obtaining participating interest in upstream projects of Russia came up for discussion,’’ he said adding the OVL would make large investments in the E&P projects likely to come up in Sakhalin region.