Tuesday, February 27, 2007
Russia's Gazprom Says Trans-Caspian Nabucco Pipeline Just a Project
21.02.2007 - MosNews - Russia’s state-controlled energy giant Gazprom said it has no interest in the gas pipeline project linking the energy-rich Caspian Sea to Europe, bypassing Russia. The pipeline project, referred to as Nabucco, is expected to run through Turkey, Bulgaria, Romania, Hungary and Austria. The construction is scheduled to begin in 2008, so that the pipeline could go on stream in 2011. The European Union expects the project to diversify its supply routes away from Russia and boost European energy security. “So far, Nabucco is only a project,” Gazprom’s spokesman Sergei Kupriyanov said, quoted by RIA Novosti. “There is no clear understanding of who will buy the gas and who will sell it.” Addressing journalists from former Soviet republics at a meeting organized by the news agency’s PEN-Club, Gazprom spokesman said the project was considering gas supplies from Iran, Kazakhstan or Turkmenistan. “There are no specific details yet for us to show interest,” Kupriyanov said. The Nabucco project has been under discussion since 2002, and might also include a southern branch from Iraq and other Gulf countries, and, possibly, Iran.
Russia 'pressing on with Pacific pipe'
26 February 2007 - Upstream - Russia has completed the first section of a 4300-kilometre pipeline linking Siberian oilfields to its Pacific seaboard. Russian Industry and Energy Minister Viktor Khristenko told Japanese Foreign Minister Taro Aso on a visit to Tokyo that the first 700 kilometres of the pipeline had been built, a Japanese foreign ministry source told the Associated Press. Khristenko reportedly said Russia would continue with the project despite the concerns of environmentalist. The pipeline had already been rerouted away from sensitive areas around Lake Baikal and environmentalists are concerned about threats to beaches and marine life on Russia's Pacific Coast. Khristenko confirmed that the pipeline would reach the coast near the town of Kosmino, near Nakhodka, the official said. However, Russian pipeline giant Transneft will also construct a southern branch to the Chinese oil city of Daqing. Japan has clashed with China over the route and construction schedule for the pipeline. Japan is concerned that Russia will prioritise the building of the Chinese segment, delaying Japan's access to Siberian oil.
Russia to delay Pacific link
23 February 2007 - Upstream onLine - Moscow will delay a decision on extending a planned oil pipeline from East Siberia to the Pacific coast until it confirms there will be enough oil to fill it, a Japanese newspaper reported. "I think the reserves can be proven by the end of 2008 and then we can make the official decision on when to start construction," the Mainichi newspaper quoted Russian Energy Minister Viktor Khristenko as saying, according to Reuters. "Confirmation of reserves and production (capacity) are creating obstacles." The Russian government decided to build the Pacific pipeline in 2004 as a key part of President Vladimir Putin's plan to find new Asian export markets for Russian oil. The first part of the $11.5 billion pipeline is expected to be finished in 2008, when oil is due to start flowing. At the first stage, oil will flow from East Siberia to China by pipeline and from Skovorodino to the Pacific by railway.
New pipeline - an alternative to unreliable oil transit
02/ 22/ 2007 - MOSCOW. (RIA Novosti economic commentator Vasily Zubkov) - Moscow has accepted a rise of oil transit tariffs by an average of 30%, but this has not put an end to the Russian-Belarusian oil-and-gas squabble - Minsk's decision is fraught with a whole package of problems. Today, the Russian government is considering a project to extend the Baltic Pipeline System. Russia may have to invest heavily but if it builds the new pipe, Belarus will lose two thirds of the Russian oil transit. In proportion, transit will go down for Poland and Ukraine, but the end user will have guaranteed supplies. The Druzhba (Friendship) Belarusian leg stretching to Poland and Ukraine is about 2,000 km. Minsk hopes it will bring in up to $50 million this year. But this is only possible if pumping stays on the same scale. Nobody knows how long Belarus will keep the current new tariffs. Transneft Vice President Sergei Grigoryev told RIA Novosti that the situation is unclear: "There is no guarantee that the tariffs will not go up any day." In the last six years, the amount of Russian oil pumped through the Friendship pipeline has gone up by 50% to reach almost 80 million metric tons - a third of Russia's entire oil exports. Belarus itself purchased another 20 million metric tons. The pipe was temporarily shut down because of the disagreement over gas prices in January, which seriously damaged Russia's reputation of a reliable supplier. The proposal to build a new pipeline with a capacity of up to 50 million metric tons a year on Russian territory to Primorsk terminals on the Baltic Sea was submitted to the Russian government in order to prevent future collisions. Higher Belarusian tariffs are no longer front-page news. Some experts explain them as Minsk's response to Moscow's recent increase in oil prices for Belarus. Minsk insists that it has changed tariffs because the servicing of the pipe has become much more expensive since the adoption of the old tariffs on January 1, 1996. Minsk has compared its rates with much higher tariffs of other neighbors: Ukraine charges $0.89 per metric ton for 100 km, and Poland -- $0.9. Another argument is that Russia's tariff for the transit of Kazakh oil is $0.73 per metric ton for 100 km. Needless to say, Minsk has conveniently forgotten that it pays Russia much less than other transit countries for the 20 million metric tons of oil and 20 billion cubic meters of gas it receives. If it were not for dumping prices on hydrocarbons, Belarus would never have been able to export oil and gas products to Europe. The Russians were prepared for new transit tariffs. Ten days ago, Minister of Trade and Economic Development German Gref emphasized that if we received a timely notice and held bilateral talks, and if the new increases were within adjustments, this would be acceptable, and a change was possible. The Belarusian arguments must have been convincing if three days ago the owner of all Russian oil mains - Transneft - signed an additional agreement on new tariffs with the operator of the Belarusian leg of the Gomeltransneft-Friendship export pipeline. Transneft Vice President Sergei Grigoryev is confident that the new tariffs will not affect the cost of oil for the European consumers. But the main point of the story is Moscow's decision to look for new ways of delivering oil to Europe. It may have to go for an expensive new pipeline because when it comes to exports, it cannot afford to depend on its neighbors (whether friendly or not). Belarus is already insisting on receiving rent for land under its Friendship section, and is trying to revise the transportation regime in the Kaliningrad Region, and the legal status of Russian military installations. In 2008, Russia may remove the majority of problems with transit countries. Somewhat later, the Baltic North Stream will do the same for gas. The government and the Duma support the idea of a new pipeline. Chairman of the Duma Energy Committee Valery Yazev thinks that this is a timely project in the interests of national energy security. Sergei Grigoryev said that the pipe may even be a bit shorter. Prospecting is already underway. About 1,000 people will be involved in its construction at the first stage. The tentative cost of the project is about $2 billion, and this sum will be borrowed. Once the new leg is built, Minsk will face a serious problem - apart from giving it transit fees, the Friendship pipe delivered 20 million metric tons of oil for its economy. Where will Belarus get oil, and how much will it pay? Clearly, Russia will no longer sell oil below world prices. President of neighboring Lithuania Valdas Adamkus said Alexander Lukashenko could transport oil from Klaipeda by rail. But who has seen oil in Klaipeda? The tentative result of the current energy clash is as follows - Belarus will lose a sizeable portion of its profits from oil transit, and will not receive Russian oil; Ukraine, Poland, and Lithuania will part with some transit profits. Russia will have to pay a lot for the new pipeline, but will make its oil exports failsafe; it will also get money for oil transit. The European consumers will receive Russian oil in a year and a half, and will never have to worry about delays again.
Thursday, February 15, 2007
Three Russian giants eyeing YUKOS assets
13 February 2007 - Upstream onLine - Russia will spend at least $11 billion to build the first leg of its oil pipeline to Asia, up from initial estimates of $6.6 billion, pipeline monopoly Transneft said. "Phase 1 of the project is scheduled for completion in late 2008 and the total cost to Transneft is expected to be about $11 billion. The cost of Phase 2 has not yet been evaluated," said Transneft in its Eurobond prospectus. The prospectus is for a seven-year benchmark Eurobond in US dollars. Phase 1 of the scheme envisages shipments of 600,000 barrels per day to China. Transneft had to revise the project last year as the route was passing too close to the ecologically sensitive Lake Baikal. Transneft has said the new route would cost more. Phase 2 foresees expansion of the link to 1.6 million bpd and the building of a second leg to the Pacific coast, where a terminal would be already built as part of Phase 1. "We estimate that the pipeline monopoly may spend as much as $20 billion on the entire project calculated at 2006 prices," Deutsche UFG said in written research. Valery Nesterov from Troika Dialog brokerage said the project could turn out to be one of the most expensive ever, with planned capital expenditures of about $3.9 million to $4 million per kilometre of pipeline. By comparison, the BP-led Baku-Ceyhan pipeline from Azerbaijan to Turkey cost $2.2 million per kilometre, while the Chevron-led CPC pipeline from Kazakhstan to Russia's Black Sea port of Novorossiisk cost $1.7 million per kilometre. "The difference is easy to explain by escalating costs and much harsher environmental and infrastructural problems associated with the Asian pipeline's construction," Nesterov said. Artyom Konchin from Aton brokerage said he expected Transneft to recover costs via a state-approved increase in transit fees, which may worsen the economics of East Siberian fields' development for Russian oil majors, Reuters reported.
Russia to boost oil supplies to EU
RBC, 14.02.2007, Moscow 12:49:11.The share of Russian oil among EU consumers will reach 20 percent by 2015, the press office of the Russian Industry and Energy Ministry reported today citing Sergei Mikhaylov, the deputy director of the ministry's fuel and energy complex department, who is participating in an international energy conference. Mikhaylov pointed out that by 2015 the US and countries in the Asia-Pacific region will consume 1 percent and 5 percent of Russian crude, respectively. These figures may be achieved thanks to carrying out such projects as the Eastern Siberia - Pacific Ocean (ESPO), Nord Stream, and Burgas-Alexandroupolis pipelines, among others. These projects are aimed at diversifying Russia's oil supplies on the global market. Mikhaylov also said that the main goal of the Burgas-Alexandroupolis pipeline project was to provide the security and environmental safety of oil transfer through the Black Sea straits.
Friday, February 09, 2007
Blue Stream study in the pipeline
02-09-2007 - Upstream onLine - Russian gas export monopoly Gazprom and Hungarian oil company MOL will complete a feasibility study by July for extending a Russian-Turkish gas pipeline to southern Europe, Gazprom said today. The companies set up a joint venture last year called SEP to oversee the project to extend the Blue Stream pipeline to supply countries such as Austria and Italy via Bulgaria and Hungary. The project also envisages building underground gas storage in Hungary with capacity of up to 10 billion cubic metres. The existing Blue Stream pipeline was built in 2001 and has capacity of about 16 Bcm a year. It has been underused, as Gazprom says Turkey had overestimated its gas needs. Hungary relies on Russian imports for about 80% of its gas needs and as domestic production declines analysts have said imports will increase steadily in coming years. Gazprom supplied 8.7 Bcm of gas to Hungary last year, Reuters reported.
Wednesday, February 07, 2007
Gazprom Nominates 2 Outsiders
February 6, 2007 - The Moscow Times - Gazprom on Monday nominated two Moscow business figures as independent members of its board of directors. The board nominated Alexander Shokhin, the head of the Russian Union of Industrialists and Entrepreneurs, or RSPP, and Yevgeny Yasin, the rector of the Higher School of Economics, Gazprom said in a statement Monday. Gazprom shareholders will choose a new board from 19 candidates on June 29, the company said. All 11 current members, including First Deputy Prime Minister Dmitry Medvedev, CEO Alexei Miller and Economic Development and Trade Minister German Gref, are on the new list. Shokhin, the head of the RSPP since 2005, is a former chairman of Renaissance Capital's supervisory board. Shokhin will head a delegation of RSPP members at a meeting with President Vladimir Putin at the Kremlin on Tuesday, ahead of the organization's 15th-anniversary celebration Wednesday. Yasin, who served as economy minister under President Boris Yeltsin, is one of the country's most respected liberal academics. The Gazprom board also decided to sell a 50.67 percent stake in its petrochemical unit, Sibur Holding. Gazprom has been in talks with potential buyers BASF, Dow Chemical and PetroChina for more than two years. The board also said that by 2011 it planned to increase daily output capacity from underground storage facilities by more than one-quarter.
Russia, Bulgaria, Greece Sign Agreement for Burgas-Alexandroupolis Pipeline
07.02.2007 - MosNews - After delaying the project for more than 14 years, Russia, Bulgaria and Greece are set to finally sign cooperation agreement on construction and operation of Burgas-Alexandroupolis oil pipeline on Wednesday, Feb. 7. Kalin Rogachev, Bulgarian Deputy Minister of Regional Development and Public Works, Andrei Dementiev, Russian Deputy Minister of Industry and Energy, and Nikos Stefanou, General Secretary of Greece’s Development Ministry will sign the trilateral agreement in the Bulgarian coastal town of Burgas. Initially developed in the mid 1990s, the strategic oil pipeline is projected to transport Russian crude oil along a land route that bypasses the traffic-congested Bosphorus and Hellespont straits. Its initial capacity is set at 35 million tons of oil per year, which could increase to 50 million tons per year. Three Russian energy companies will hold a cumulative stake of 51 percent in the operations of the Burgas-Alexandroupolis oil pipeline. The remainder will be shared by Bulgaria and Greece. The pipeline will be 280 kilometers long. The Bulgarian section is 166 kilometers and will run via seven municipalities in south-eastern Bulgaria. The cost of the project is set at $700- 900 million. Concerns over the project’s viability, ownership share, a guaranteed supply of oil, as well as the financing parts have kept the project on the drawing boards for about a decade. The three-way venture is the first stage of a broader framework project on the transiting of crude oil. After running into numerous problems with its traditional transit allies, such as Ukraine, Belarus, Poland and the Baltic States, Russia is striving to diversify its oil and gas export routes.
New Russian Oil Pipeline to Bypass Belarus
06.02.2007 - MosNews - Russian state oil pipeline operator Transneft has approved a plan for construction of a new oil export pipeline that will bypass Belarus, the company’s president Simon Vainshtok said on Monday, Feb. 5. “We have made a decision and will develop the Baltic Pipeline System from Unecha (on the border with Belarus) to the port of Primorsk” on the Baltic Sea, Vainshtok was quoted by the Itar-Tass news agency as saying. The new pipeline, which will be an expansion of the Baltic Pipeline System, will run 1,000 kilometers and be capable of handling 50 million tons of oil a year. The cost is estimated at $2.5 billion. Roughly one third of Russian oil exports is piped through Belarus. Last year, some 80 million tons of Russian crude were shipped via the country to European destinations. A pricing dispute between the two countries resulted in a brief suspension of oil flow to Belarus and Europe at the start of the year. The crisis ended on Jan. 12 with a deal in which Russia agreed to cut the duty on oil exports to Belarus, while Minsk promised to share with Moscow a substantial amount of the profits from the refined oil products it sells to Europe. However, as MosNews has reported on Monday, Minsk decided to raise oil transit duties for Russian oil by several times, making export of crude through Belarus economically unfeasible.
Progress on pipeline deal
Tuesday January 31, 2007 - Groong News - Greece, Russia and Bulgaria will finalize the text of a delayed $1 billion (-772 million) pipeline deal early next month that aims to transport Russian petrol to the Mediterranean region, the Development Ministry said yesterday. Representatives from the three countries are expected to meet on February 7 at the Black Sea port of Burgas in Bulgaria to hammer out the final detailsof the agreement. «During previous meetings the governments of the three countries agreed to hold a tripartite meeting on February 7 in Burgas, Bulgaria, with the intention of finalizing the content of the agreement,» said Development Minister Dimitris Sioufas. When completed, the 280-kilometer (175-mile) pipeline will link Burgas with the Aegean Sea port of Alexandroupolis, providing an alternative transit route for fuel around the crowded Bosporus in Turkey. Kathimerini, Greece
Thursday, February 01, 2007
Russian oil majors establish pipeline consortium
RBC, 01.02.2007, Moscow 19:00:18.Transneft, Rosneft, and Gazprom Neft have set up oil pipeline consortium Burgas-Alexandroupolis. According to Gazprom Neft's statement, the new company was registered on January 18. Gazprom Neft and Rosneft each hold 33.3-percent stakes in it, and Transneft has a 33.34-percent stake.