Pipeliners

09.20.2007 - Regnum News - State Oil Company of Azerbaijan Republic (SOCAR) plans to further decrease its oil exports via the Baku-Novorossiysk pipeline, SOCAR Vice President Elshad Nasirov told reporters today in Baku. According to him, in 2008, 1mn tons of Azerbaijani oil is expected to be transferred through Novorossiysk. The Baku-Novorossiysk pipeline has been involved in exporting the Azerbaijani oil since 1998 having contracted amount of annual transfer equal to 5mn tons. Within eight months of the year, 1.51mn tons of Azerbaijani oil have been exported, 817,000 tons of them are exported by the SOCAR, 69,000 tons by the Azerbaijani International Operator Company, which stopped using the pipeline on April 1 this year.

21 September 2007 - Upstream Online - Polish Economy Minister Piotr Wozniak said today he had an initial declaration from Azeri officials that oil from Azerbaijan would flow to Poland via the Odessa-Brody-Plock pipeline. The Odessa-Brody-Plock project envisages reversing the flow of a Ukrainian pipeline that brings Russian crude to the Black Sea port of Odessa. It would instead bring Caspian oil through Ukraine to Poland and the Baltic Sea. "We have tentative declarations on the political level and on the level of the (new) company," Economy Minister Piotr Wozniak told reporters. He said that Azerbaijan, Georgia, Poland, Ukraine and Lithuania, would create a joint venture on 26 September to build the pipeline, Reuters reported. Poland and Ukraine rely almost entirely on Russia for their energy needs and want to get access to alternative sources. They have stepped up efforts to diversify away from their eastern neighbour ever since pricing disputes interrupted deliveries. The Odessa-Brody extension project has been plagued for years by lack of funding, supplies and political bickering between Russia and the EU over control of new oil routes.

RBC, 19.09.2007, Moscow 19:13:06.Shareholders of the Caspian Pipeline Consortium (CPC) have decided to hike the tariff to pump a tonne of oil from $30.24 to $38 from October 1, 2007, as well as lower the interest rate on borrowed funds from 12.66 to 6 percent. This was reported by CPC's press office following an extraordinary general meeting held in Almaty on September 18-19.

17 September 2007 - Upstream OnLine - The Nord Stream consortium has signed a letter of intent with Italian oilfield services company Saipem for work on the planned natural gas pipeline which will send Russian gas to the European Union via the Baltic Sea, the joint venture said today. Nord Stream said in a statement on its website it had selected Saipem from a shortlist of three. The job includes laying two parallel 48-inch pipes linking Vyborg in Germany to Griefswald in Germany. The 1200 kilometre pipeline will be laid between 2009 and 2012, the statement said. A detailed contract is expected to be in place by February next year, Nord Stream said. No details of financial terms were provided. Industry sources told Upstream in August that a deal with Saipem worth at least $2 billion was in the works. The company said it would award two further tenders for logistics support and pipe supply in the coming weeks. Nord Stream includes Russian gas export monopoly Gazprom, and German energy groups Wintershall and E.ON Ruhrgas.

13 September 2007 - Upstream OnLine - Yuri Lisin, a vice-president of Russian oil pipeline monopoly Transneft, has been named the company's acting head, Sergei Grigoryev, also a vice president of the company said today. Russian President Vladimir Putin on Tuesday named Transneft chief Semyon Vainshtok to head a state corporation preparing for Russia's 2014 Winter Olympics in Sochi. "Lisin is an interim company head. Vainshtok's contract would have expired on 13 September, and so he had to leave someone to replace him," Grigoryev told Reuters. "Lisin is a professional engineer." "As we understand, the process of agreeing on a candidacy of the new company head is under way right now," he said. "It is being negotiated with the economy ministry and property ministry. We do not know who this person will be."

Upstream OnLine – 07 September 2007 - Russia's natural gas exports to China and South Korea will reach 25-50 billion cubic metres a year from 2020, the Russian Energy Ministry said today. The ministry said it has confirmed a long-discussed programme of gas production development in East Siberia and Far East with the potential to export the fuel to the Asia-Pacific region. The programme also says Russia's exports of liquefied natural gas to the region are expected to reach 21 Bcm a year from 2020 and further grow to 28 Bcm by 2030. To reach the goal Russia will double its LNG production capacity in the region from 9.6 million tonnes per year to be produced at the Sakhalin-2 LNG plant, which the project's operator Gazprom plans to launch in the end of 2008. The ministry said it expected natural gas production in the region to grow over 18-fold to 2020 and 20-fold by 2030 compared with last year's output to 150 and 162 bcm, respectively. To fulfill the programme, Russia will invest over 2.4 trillion roubles in the region's gas production through 2030, the ministry said. Russian gas monopoly Gazprom, which supplies Europe with a quarter of its gas, promised last year to build two pipelines to China, from West and East Siberia, and to begin pumping gas through the west link in 2011 and by the east link in 2016. But the plan has been on hold as the parties can not agree on the price, which Gazprom insists should give comparable netbacks with its sales to Europe. The ministry also said it did not expect the development of the Kovykta gas field in East Siberia to start until 2017 while the Chayanda deposit in Yakutia in the country's Far East was not to be launched earlier than 2016. Gazprom operates both Sakhalin 2 and Kovykta after it bought control over the first project from Anglo-Dutch supermajor Shell last year and took over the second project from BP's Russian venture TNK-BP earlier this year. Gazprom earlier this year asked the government to grant it the licence for Chayanda, which has yet to be awarded, without a competition. The energy ministry official said the ministry did not discuss the issue while working out the programme. --------------------------------------------------------------------------------

04 September 2007 - Upstream OnLine - Russian oil pipeline monopoly Transneft denied today that chief executive Semyon Vainshtok had tendered his resignation amid market rumours the long-serving Russian oil export tsar would retire in October. "I can firmly deny he has offered to resign. Those rumours have persisted throughout his eight years as Transneft's president," Transneft Vice-President Sergei Grigoriyev told Reuters. Vainshtok turns 60, the normal retirement age for state officials in Russia, on 5 October. Two sources familiar with the matter told Reuters today that Vainshtok had held a farewell party and told employees of Transneft, the world's largest pipeline firm, he expected to step down soon. "The feeling is very strong that it is definitive now, but with Vainshtok you never know as people have buried him so many times in the past years," one source said. Grigoriyev denied Vainshtok had such a party. He also said Vainshtok's current contract would expire on 13 September. "We will see what happens on 13 September," he said. Vainshtok is seen as one of the most professional Russian state managers because he doubled the country's oil export pipeline capacity in eight years, firmly establishing Russia as the world's second largest oil exporter after Saudi Arabia. But oil traders have questioned Transneft's export allocation policies under Vainshtok’s leadership. Transneft trans-ships all of Russian crude production of 9.9 million barrels per day via trunk pipelines and exports around 5 million bpd to world markets. It is also building a 1.6 million-bpd pipeline to China and the Pacific coast which will allow it to diversify away from European markets. "Business goes as usual, we are pumping oil and building new pipelines," said Grigoriyev.

04 September 2007 - Upstream OnLine - Russian gas giant Gazprom said today it needs gas from ExxonMobil's Sakhalin 1 project for domestic use, adding to pressure on the US supermajor to drop its plans to export the development's gas to China. "Given that nearly all the gas from the Sakhalin 2 project has already been sold under long-term contracts, and other Sakhalin projects are not expected to start production in the middle term, the gas from Sakhalin 1 can be the only source for domestic supplies until at least 2015," Vladimir Kozlov, head of Gazprom's Sakhalin office, told Reuters. Speaking at the annual oil and gas conference in the island's capital of Yuzhno-Sakhalinsk, Kozlov said the growing domestic demand for gas in Russia's four Far Eastern regions will reach 13.1 billion cubic metres by 2010 and grow to 16 Bcm by 2015, hitting 19.2 Bcm by 2020. He added that Sakhalin 1 alone could supply the regions with 3.2 Bcm of gas by 2010, and 11.4 Bcm from 2015 to 2020. "We are in discussions with Gazprom and have regular meetings with them to explore various options and find ways of mutual co-operation," an ExxonMobil spokesman told the news agency. Sakhalin 1 is being developed via a production sharing agreement, which excludes the project from Gazprom's legal monopoly on gas exports. It gives ExxonMobil the right to sell the gas to a consumer of its choice, such as China, with which the US supermajor reached a preliminary agreement in 2004 on annual supplies of 8 Bcm of gas. "Our main principle is economic profitability. So far, we consider the Chinese direction to be the most attractive from the economic point of view," Margarita Tsoy, ExxonMobil's government and public affairs manager, told Reuters.

03 September 2007 - Upstream OnLine - Kazakh and Russian oil exports via the Caspian Pipeline Consortium (CPC) to the Black Sea rose by 5% in August to 715,000 barrels per day from 681,000 bpd in July, the consortium said today. The pipeline group is led by US supermajor Chevron and includes Russian pipeline company Transneft, ExxonMobil, Shell, Lukoil and BP. The group exports oil from a terminal near the Russian port of Novorossiisk. Russian companies including Rosneft, Surgutneftegaz and TNK-BP also ship crude via CPC.

30 August 2007 - Upstream OnLine - Construction has begun on a 7000 kilometre- (4350 mile-) pipeline that will take Turkmenistan's gas to China by 2009, bypassing the country's traditional export market of Russia, Turkmen media reported today. The pipeline, with an annual capacity of 30 billion cubic metres, will start in the east of the country on the right bank of the Amu Darya river and pass through Uzbekistan and Kazakhstan. "This is a culminating moment, the president of Turkmenistan Kurbanguly Berdymukhamedov blesses the beginning of the Turkmen-China gas pipeline," Reuters reported Turkmenistan's state news agency as saying. Turkmenistan and China agreed a 30-year production-sharing deal in July when Berdymukhamedov visited Beijing. However it is still unclear whether transit countries Uzbekistan and Kazakhstan - which will have 530 kilometres and 1300 kilometres of the pipeline respectively - have agreed to the plan. Earlier this month Kyrgyzstan asked Beijing if it could route the pipeline via its territory but nothing was agreed. But Chinese officials attending the event in the Turkmen capital of Ashgabad seemed sure of the project. "This is the first transnational project to go to China and the transit countries' governments gave us huge backing for its construction," Chen Demin, China's National Development and Reform Commission's vice director, told Turkmen television. Since coming to power in February, Berdymukhamedov has tried to implement alternative routes for Turkmenistan's gas, putting pressure on Russia, which buys virtually all its exported gas. Turkmenistan is the largest seller of gas in central Asia, and exports 50 Bcm a year to other central Asian countries through Russia using Soviet era pipelines. A small amount of gas also goes to neighbouring Iran. Turkmenistan is due to soon have talks with Russia over new gas prices, making the new export market of China even more attractive. Turkmenistan's Bagtyyarlyk area has gas reserves of 1.3 trillion cubic metres, Turkmen press reported. Only 188 kilometres of the pipeline will be built on Turkmen territory and 4500 kilometres in China. "With the participation of our Chinese partners, we have now started full-scale work on the... gas pipeline, which is the most important economical asset for the two countries and their people," Berdymukhamedov was quoted as saying in the state newspaper "Neutral Turkmenistan".

MOSCOW, August 27 (RIA Novosti) - Russian pipeline-building company Stroytransgaz said Monday it had finished constructing a short natural gas pipe section in Greece, which extends an existing route from Alexandroupolis to Turkey. The new 53.7-kilometer (33-mile) section runs northwest from the city to Komotini. The new addition is a continuation of a pipeline built by Stroytransgaz in 1996-2000, and provides a link between the gas supply networks of Greece and Turkey, the company said. The contract to build the new section was signed in December 2005. The project was implemented jointly with Greece's Prometheus Gas S.A., on an order from the Public Gas Corporation of Greece (DEPA). In line with the contract, Stroytransgaz built the pipeline with a diameter of 36 inches, and constructed other necessary facilities. Both projects implemented by Stroytransgaz were the result of Russian-Greek cooperation fixed in a 1994 intergovernmental agreement on natural gas supplies. Stroytransgaz was founded in 1990. It specializes in designing and building pipeline systems, oil and gas production facilities, and underground gas storage facilities. Stroytransgaz is currently involved in large projects in 15 countries. Russian energy giant Gazprom sold its blocking stake in the company last year.

BEIJING, August 27 (RIA Novosti) - The China National Petroleum Corporation (CNPC) will finance the construction of a pipeline across the country, to supply Central Asian gas to China's south and east, the company said Monday. The state-owned giant, China's largest oil and gas producer, said the Second West-East Pipeline Project had been approved by the Chinese government, and that CNPC would be the sole investor. The 7,000 km (4,349 mile) pipeline with design capacity of 30 billion cubic meters per year is expected to go on-stream in 2010. Construction will start in 2008, the company said. The pipeline will start in the province of Xinjiang in China's northwest, on the border with Central Asian states Kazakhstan, Kyrgyzstan and Tajikistan, and end at Guangzhou in the south, and Shanghai in the east, CNPC said. The pipeline will pump natural gas from Central Asia, mainly from gas-rich Turkmenistan. In July, during Turkmen President Gurbanguly Berdymukhammedov's visit to China, CNPC and Turkmenistan's national gas company Turkmengaz signed a purchase and sale agreement on natural gas supplies. Under the deal, the ex-Soviet country will supply 30 billion cubic meters of gas to China annually. In its statement, CNPC said the pipeline could raise gas consumption in China by 2%, and highlighted the importance of reducing the heavily-polluted country's dependence on coal. "In total, 76.8 million [metric] tons of coal combusted per year can be replaced by natural gas, meaning that the sulfur dioxide and carbon dioxide emissions can be reduced by 1.66 million tons and 150 million tons respectively," the company said. CNPC has businesses ranging from oil and gas upstream and downstream operations to oilfield services, engineering and construction, petroleum equipment manufacture and supply.

27 August 2007 - Upstream OnLine - PetroChina said today it had settled on the route for a second massive gas pipeline linking its remote north-western region to the coast, as the country firms up plans to bring in gas from Turkmenistan. The pipeline will stretch from the far western border of the Xinjiang region to Guangzhou, capital of southern China's Guangdong province and eastward to end at the financial hub of Shanghai, PetroChina's parent company China National Petroleum Corporation (CNPC) said in a statement published on its website. A feasibility study for the project will be completed by October, with the piped pencilled in to carry about 30 billion cubic metres of gas per year from Turkmenistan, CNPC said. It did not give a value for the investment, but the country's first cross-country gas pipeline, the 4000 kilometre West-to-East project, cost $5 billion. CNPC said PetroChina would be the sole investor. The pipeline will span 4859 kilometres long, and including the branch lines, will cover more than 7000 kilometres, CNPC said. First gas is targeted for as early as 2009.

MOSCOW, August 24 (RIA Novosti) - LUKoil Overseas, the international projects operator of Russia's largest independent crude producer LUKoil [RTS: LKOH] said Friday it has completed the construction of a section of a trunk gas pipeline in Uzbekistan. The Khauzak section, built by subsidiary LUKoil Uzbekistan, has a length of 45 km. It is designed to transport high-sulfur natural gas from Khauzak to the Dengizkul-Mubarek trunk pipeline. The trunk gas pipeline is expected to be commissioned late this year. A production sharing agreement on the gas production project was signed in June 2004 and entered into force in November 2004. The project is being implemented by a consortium of investors - LUKoil Overseas (90%) and Uzbekneftegaz (10%), and the consortium's profit share is 50%. The PSA is valid for 35 years. The volume of the approved geological reserves of natural gas on the contract area is 329 billion cubic meters. Industrial production will be started in the fourth quarter of 2007. The maximum level of annual gas production will be over 10 billion cu m, and the aggregate accumulated production volume could reach 207 billion cu m, with investment estimated at $1 billion.

BAKU, August 16 (RIA Novosti) - The United States and Azerbaijan Thursday signed an agreement on a $1.7 million grant for a feasibility study of Trans-Caspian oil and gas pipelines. The agreement was signed by General Counsel for the U.S. Trade and Development Agency James Wilderotter and President of Azerbaijan's State Oil Company Rovnag Abdullayev in the presence of Azerbaijan's Foreign Minister Elmar Mamedyarov and U.S. Assistant Secretary of State for Economic and Business Affairs Daniel Sullivan. Wilderotter said during the signing ceremony that the grant has been allocated for a feasibility study of the project to connect Kazakh oil to the Baku-Tbilisi-Ceyhan oil pipeline across the bottom of the Caspian Sea, and the project on the gas pipeline to deliver natural gas to Europe from Kazakhstan and Central Asian countries. Abdullayev said, in turn, that "The signing of the agreement is part of the dialogue between Azerbaijan and the United States within the framework of the energy security provision." The 1,700-kilometer (1,000-mile) Baku-Tbilisi-Ceyhan oil pipeline, expected to start operating at full export capacity from 2008, pumps crude from Azerbaijan's fields off the Caspian coast via Georgia to Turkey, and onto Western markets. The pipeline's capacity is 50 million metric tons (367 million barrels) of oil a year.

ATHENS, August 6 (RIA Novosti) - Russian gas supplies to Greece have been brought to a halt following a blast on a section of gas pipeline in Bulgaria, the Greek media reported Monday. The blast occurred Monday morning due to a gas leak, the Greek media said. No casualties have so far been reported. Bulgarian authorities have confirmed the pipeline blast and that Russian gas supplies to Greece have been suspended, the Bulgarian news agency BTA said. According to BTA, the pipe was ruptured by an explosion at 7:20 a.m. local time (4:20 a.m. GMT) near the city of Blagoevgrad in southwestern Bulgaria. "The incident poses no threat to people. The gas is not hazardous and natural gas deliveries to Greece will remain suspended until repairs have been carried out," BTA quoted the country's fire service as saying. Natural gas supplied by Russia to Greece via Bulgaria accounts for up to 80% of Greece's gas consumption, which amounts to around 2.7 billion cubic meters a year. Meanwhile, the Greek authorities and Russian energy giant Gazprom have made no comment on the incident. The latest reports quoted Dimitar Gogov, executive director at Bulgargaz, as saying on the phone that it would take no more than three days to repair the gas pipeline. "Nothing awful has happened, and there is no threat of poisoning of the area around the blast," Gogov said. "This is a remote sector, and there are no residential areas nearby. I can say for sure that there is no environmental threat."