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Wednesday, March 14, 2007

Transneft plans tariff shake-up

13 March 2007 - Upstream OnLine - Russia's crude oil pipeline monopoly Transneft wants to change its tariff regime, company boss Semyon Vainshtok said today, adding the shake-up would subsidise a pipeline route to China favoured by state-run oil producer Rosneft. In an interview published this morning in Moscow-based newspaper Kommersant, Vainshtok said he wanted a single network-wide tariff regime to replace the range of fees payable for pumping oil through Russia's many pipelines now. "It will mimic the tariff system used by the railways: the further you send the cargo, the cheaper its transit will be," he said. The scheme would be based around the main oil area of Western Siberia and would aim to make exporting oil from Russia viable regardless of which outlet the cargo was sent to. "In the final analysis it will make no difference to an oil man whether he exports oil through Novorossiisk, Skovorodino or Kozmino," Vainshtok said, referring to Russia's main Black Sea hub, its China export route and a planned Pacific terminal. Vainshtok said the plan was still being worked on and Transneft had not yet formally submitted it. Transneft is building an $11 billion pipeline to Skovorodino, a town just north of the Chinese border, and may extend it all the way to the Pacific Ocean if enough oil is found in Eastern Siberia, a relatively unexplored region. Analysts at Alfa-Bank said Vainshtok's plan would subsidise the eastern route at the expense of other routes, effectively forcing Russian oil producers to fund exports to China along a route which would otherwise be prohibitively expensive. The route is championed by Rosneft, which has said it wants to be the main exporter through the new pipeline and plans to build a refinery at the terminus of the Pacific stretch. Alfa-Bank said the proposed tariff shake-up would be negative for the Russian oil sector as a whole. "We believe that, if adopted, the new principles for establishing tariffs for pipeline crude transportation outlined by Vainshtok could significantly change how oil companies deliver crude," the bank's oil analysts said in a research note.

Putin visit seals trans-Balkan pipe deal

12 March 2007 - Upstream OnLine - Russian President Vladimir Putin will visit Athens to sign the long-delayed trans-Balkan oil pipeline deal with Greece and Bulgaria on Thursday, ensuring the flow of cheaper Russian crude to the Mediterranean. Ending almost 15 years of negotiations that often saw the ambitious deal on the brink of collapse, the three nations have set aside differences to allow work on the 280 kilometre pipeline to begin. The €700 million ($918.5 million) oil pipeline between the Bulgarian Black Sea port of Burgas and the Greek Aegean Sea port of Alexandroupolis will bypass the congested Turkish Bosphorus Straits where tanker delays are costing oil companies nearly $1 billion a year. It will also further strengthen Russia's influence in the European energy market. The deal will be signed by Putin, Bulgarian Prime Minister Sergei Stanishev and Greek Prime Minister Costas Karamanlis. It will the Russian leader's second visit to Athens in six months. "This is a historic agreement with considerable benefits to all of us," Greek Development Minister Dimitris Sioufas said. "For all the countries involved, but also for the energy markets in the Mediterranean and Europe." For years, the three countries wrangled over issues such as who would build the pipeline, ownership of the terminals and transit fees. Agreement was reached when Russia weighed in, saying three of its state-controlled companies would share a controlling stake. Oil producers Rosneft and Gazprom Neft and crude oil pipeline monopoly Transneft will now share 51% of the pipeline, ensuring Russia is in command. Greece and Bulgaria will share the remaining 49%. Sofia's stake will be handled by state players Bulgargaz and Transexportstroy, but it could sell part or all of its share. Greek comapnies Hellenic Petroleum, Latsis group and the Greek unit of Gazprom, Petroleum Gas, will also take stakes in the pipeline. The link will rival the new $4 billion Baku-Ceyhan pipeline from Azerbaijan to the Mediterranean that bypasses Russian soil and will pump 300,000-400,000 barrels per day of Azeri crude to world markets by the year-end, rising to 1 million bpd in 2008. The pipeline will initially carry 10 million tonnes of crude, reducing environmental risks from oil spills. It is designed to eventually reach 35 million tonnes about three years after its expected launch in 2009. Greece hopes the project will turn it into a regional energy hub, especially after a Turkish-Greek-Italian pipeline pumping natural gas from the Caspian Sea and the Middle East to energy-hungry Europe will start operating by early next year. The agreement to build the pipeline could also have a positive knock-on effect for another project, the Chevron-led Caspian Pipeline Consortium, which pumps oil from the Caspian Sea to the Black Sea, a Reuters report said.

Tuesday, March 13, 2007

Russia, Greece and Bulgaria to Construct Oil Pipeline

12.03.2007 [Neftegaz.ru] - Russian President Vladimir Putin is due to arrive in Athens on Thursday for the signing of the final inter-state agreement between Greece, Russia and Bulgaria for the construction of the Burgas-Alexandroupolis oil pipeline, Athens News Agency reported on Sunday. The target set since last September, when the three countries committed themselves through the Athens Memorandum for the signing of the inter-state agreement, was for the project to start within 2008 and to be concluded early 2011. On Thursday, Greek Development Minister Dimitris Sioufas, Russian Energy Minister Viktor Khristenko and Bulgarian Regional Development and Public Works Minister Valentin Cerovski will sign the inter-state agreement which gives the "green light" to the companies which will participate in the project to proceed in setting up an international construction and management company. The pipeline, connecting the Bulgarian Black Sea port of Burgas with the Greek port of Alexandroupolis in the northeastern Aegean, is expected to transport 35 million tons of crude oil per year with the possibility of increasing output to 50 million tons. It will be 280 kilometers long, of which 155 kilometers will be on Bulgarian territory.

Eastern Siberia-Pacific oil pipeline 15% ready - Transneft

NERYUNGRI (Yakutia), March 13 (RIA Novosti) - Russia's state pipeline operator Transneft said Tuesday it has built 730 kilometers (453 miles) of the 4,700-kilometer (2,920-mile) Eastern Siberia-Pacific Ocean oil pipeline. Transneft First Vice President Vladimir Kalinin spoke at a meeting held by Prime Minister Mikhail Fradkov on the development of the Eastern Siberia-Pacific Ocean (ESPO) pipeline. The ESPO pipeline is slated to pump up to 1.6 million barrels per day of crude from Siberia to Russia's Far East, which will then be sent on to China and the Asia-Pacific region. Kalinin said the ESPO project was launched in April 2006 and the first leg of the pipeline, 2,700 km (1,677mile) long and estimated at $1 billion, will be commissioned in December 2008. It will link Taishet, in the Eastern Siberian region of Irkutsk, to Skovorodino, in the Amur region, in Russia's Far East. At the same time, Fradkov said he was unhappy with the pace of the development of oil deposits in Eastern Siberia for the needs of the ESPO project. Fradkov said the Ministry for Natural Resources will submit calculations to the government before July 1, 2007 on oil volumes required to fill the ESPO pipeline, adding that extra efforts were needed for the purpose. Deputy Natural Resources Minister Alexei Varlamov told the meeting that the oil reserves explored in Eastern Siberia would suffice to supply crude for the pipeline's first leg in the amount of 30 million metric tons (219.9 million barrels) a year. "The mineral resource base in that region needs to be built up to fill the oil pipeline's second leg with up to 80 million metric tons (586.4 million barrels) a year," Varlamov said, adding that mineral deposit users failed to be up to the hopes placed upon them. In turn, Fradkov urged relevant ministries and department to investigate deposit users more frequently. "There must be no unprincipled deposit users, because [earlier] all wanted [to develop deposits in Eastern Siberia] and displayed an interest, but are now failing to comply with their obligations," Fradkov said. At the same time, Sergei Kudryashov, first vice president of the state-controlled crude producer Rosneft, said his company was prepared to supply 20 million metric tons of oil (146.6 million barrels) a year for the ESPO pipeline by 2012. Kudryashov said Rosneft intended to begin oil supplies from the Vankor deposit in Eastern Siberia as early as 2008. In turn, Vladimir Bogdanov, president of oil producer Surgutneftegaz, said his company intended to produce more than 3.5 million metric tons (25.7 million barrels) at the Talakan oil field in Eastern Siberia in 2008, and to bring up oil deliveries for the ESPO pipeline to 7 million metric tons (51.3 million barrels) a year by 2010. Andrei Dementyev, deputy industry and energy minister, said Russia will be able to claim 6-6.5% of the Asian crude market once the Eastern Siberia-Pacific Ocean pipeline is launched.

Russia may begin Europe pipe project bypassing Belarus in April

MOSCOW, March 13 (RIA Novosti) - Russia may begin building a direct oil pipeline to Europe bypassing Belarus in April to reduce its dependence on the transit country, the head of the state pipeline monopoly told a government daily. Energy pricing rows with transit countries, Belarus and Ukraine, in 2006 and 2007 have led to the suspension in Russian energy supplies to Europe and undermined Russia's reputation as a reliable oil and gas exporter. Semyon Vainshtok, head of Transneft [RTS: TRNF], told Rossiiskaya Gazeta Tuesday that a decision on the construction timeframe might be made within a few weeks, and added that his company was technically prepared to begin the construction in April. The pipeline, which will have an annual capacity of 50 million metric tons (366.5 million bbl), will run from the Russian town of Unecha, near the Belarusian border, to the Primorsk terminal bordering on Finland as a second leg of the Baltic Pipeline System, which will pump Siberian oil from Russia to Germany across the Baltic seabed and on to the rest of Europe and the United States. The Unecha-Primorsk pipeline leg is designed to increase the Baltic pipeline's annual capacity, which was raised to 74 million tons (542.42 million bbl) last year, and to "provide stable oil supplies to our partners in western Europe," Vainshtok said, adding that the new pipeline would help diversify Russian energy exports. "We expect to reorient half of the 100 million metric tons (733 million bbl), exported through Belarus, to Primorsk," he said.

Tuesday, March 06, 2007

ConocoPhillips eyeing Shtokman project

RBC, 06.03.2007, Moscow 18:59:50. – American company ConocoPhillips has confirmed today its willingness to continue talks with Gazprom on participation in the Shtokman project in light of the new cooperation conditions. The Russian company's press office made this announcement today following a meeting of Gazprom's Chairman Alexei Miller and ConocoPhillip's Jim Malva. The American company plans to make a proposal to Gazprom on the project. According to the company's statement, the meeting was part of a new round of talks with the companies, which could potentially work on the first stage of the Shtokman project construction.

Russia to complete Burgas-Alexandroupolis talks

RBC, 05.03.2007, Moscow 12:34:58.All internal talks on the intergovernmental agreement on the construction of the oil pipeline Burgas-Alexandroupolis are scheduled to be reached this week, the Russian Industry and Energy Ministry's press office told RBC today. After this the document will be redirected to the Russian cabinet.

Balkans oil pipeline deal to be signed soon

MOSCOW, March 5 (RIA Novosti) - The signing of an intergovernmental agreement on the construction of a $1 billion oil pipeline in the Balkans has been postponed, an informed source said Monday. "The signing has been postponed for editorial reasons," the source told RIA Novosti, adding that the agreement will be signed early next week. In early February, delegations from Russia, Bulgaria and Greece signed an accord confirming that the agreement to build the Burgas-Alexandroupolis oil pipeline had been finalized, coordinated and was ready for signing. The Greek Ministry of Development confirmed Monday that the agreement would not be signed March 6 as planned earlier. The ministry said Russia, Bulgaria, and Greece are currently discussing the date for the signing, adding that the agreement is likely to be endorsed during the next month. The 280-kilometer (175-mile) pipeline will pump Russian oil to Europe, the U.S. and the Asia-Pacific region via the Bulgarian Black Sea port of Burgas and Greece's Alexandroupolis, on the Aegean, enhancing the countries' roles as key energy transit hubs. The Russian Industry and Energy Ministry told RIA Novosti earlier that the agreement will be submitted to the government by the end of the week. Russia, Bulgaria, and Greece signed a memorandum on the pipeline in April 2005, which will pump 35 million metric tons of oil a year (257.25 million bbl), a volume that could eventually be increased to 50 million metric tons (367.5 million bbl). The project, designed to bypass the crowded Bosporus Strait in Turkey, received a further boost during President Vladimir Putin's visit to Greece in September 2006, when he met with the Greek prime minister and Bulgaria's president to discuss the pipeline. The project has been on the table for more than 10 years, but progress has been slow, reportedly due to Russian producers' reluctance to contribute oil to the pipeline. Russia's state-controlled oil producer Rosneft [RTS: ROSN], state pipeline operator Transneft, and energy giant Gazprom [RTS: GAZP] will hold a total of 51% in the project, while Greece and Bulgaria will control 24.5% each.

Friday, March 02, 2007

Japan to Share Costs of Russian Oil Pipeline Construction

28.02.2007 - MosNews - Japan has offered to share the costs with Russia for extending a Siberian oil and gas pipeline to the Pacific coast, apparently to help more output to be routed to Japan rather than China, the Wall Street Journal reported on Tuesday, Feb. 27, citing Japanese Finance Minister Koji Omi. MosNews has reported numerous times since 2004 on the project for Japan and China bound oil pipeline. After much consideration Russia has decided to run the proposed 4,300-kilometer oil pipeline close to its border with China, with a branch to the Pacific Ocean port at Perevoznaya Bay to be built later. This has raised fears in Japan that the branch to the Pacific will not be built as quickly as planned. To prevent this from happening, Japan is now ready to pitch in the construction. Japan currently gets over 80 percent of its oil supplies from the Middle East, but would like to diversify its supplies and decrease dependence on the Arabic countries. In turning to Russia for its oil and gas deliveries it is doing the opposite of what the European leaders call for. As MosNews also reported, Europe, which currently depends on Russia for about 1/3 of its gas and oil, wants to decrease its dependence on the bit eastern neighbor for fear that Russia may use energy resources to meet its political goals. Japanese minister also urged a visiting Russian delegation that included Prime Minister Mikhail Fradkov to supply energy from a major project in the Far Eastern island of Sakhalin that was recently taken over by Russia’s state-controlled natural-gas monopoly Gazprom.

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