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Friday, June 27, 2008

More tax cuts in pipeline to help oil prices stabilise

More tax cuts in pipeline to help oil prices stabiliseJune 25, 2008 - Russia Today - Russia's oil industry is likely to benefit from more tax cuts in the near future, according to Finance Minister Alexey Kudrin. However, he doesn’t support the ministry’s plan to reduce Value Added Tax (VAT) as he thinks it will impair the country’s budget. The recent $US 4 billion of cuts in oil taxes announced by the Russian government was only the first step said Kudrin. The Finance Minister also said there might be an advance in the development of energy saving technology that could further stabilise oil prices. But he declined to say what additional measures could be taken. The Finance Ministry is considering the reducing the VAT rate to 12% by 2010 - the rate currently stands at 18%. Though some ministry officials consider the tax remission will pay for itself during the following four years, Kudrin has called the prospect “absolutely destructive”. The minister is inclined to think the pay off demands a minimum of eight years.

Trans-Balkan oil pipeline cost rises to 1.5 bln euros

MOSCOW, June 25 (RIA Novosti) - The cost of the trans-Balkan oil pipeline being built by Russia, Bulgaria, and Greece has increased to 1.5 billion euros ($2.3 billion) from 1 billion euros ($1.55 billion), the project operator said on Wednesday. Russia, Bulgaria, and Greece signed a memorandum on the Burgas-Alexandroupolis oil pipeline in April 2005. Once completed, the pipeline 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). Nikolai Seryogin, a member of the supervisory board of the Trans-Balkan Oil Pipeline project company, said the price increase was due to growth in the prices of metal and pipe products, adding that a final costing would be made after an adjusted feasibility study for the project has been conducted. Seryogin said construction of the pipeline, expected to take from eight to twelve months, would begin in 2009. Under an inter-governmental agreement signed in 2007, Russia holds 51% in the project company, while Greece and Bulgaria hold 24.5% each.

Italian firm signs deal to lay Nord Stream gas pipeline

Saipem logoMOSCOW, June 24 (RIA Novosti) - An Italian engineering company said Tuesday it had signed a contract to lay the first section of the Nord Stream gas pipeline. Saipem, 43% of whose shares are owned by the Italian energy giant Eni SpA, agreed the deal - worth more than $1 billion - with Nord Stream AG, the operator of the pipeline construction project. The first part of the 1,200 km (746-mile) pipeline, which will run from Russia to Germany under the Baltic Sea, is scheduled to start pumping gas in 2010. Russian energy giant Gazprom holds a 51% stake in operator Nord Stream AG, with Germany's BASF and E.ON each holding 24.5%.

Monday, June 23, 2008

Dutch join Gazpromā€™s pipeline project

Dutch join Gazprom’s pipeline projectJune 20, 2008 - Russia Today - The Dutch national gas company Gasunie has joint the Nord Stream gas pipeline project. The announcement came from Russian gas giant Gazprom. The Dutch company gets 9% in the joint enterprise, reducing the shares of E.On Ruhrgas and Wintershall Holding to 20% each. Gazprom keeps its 51% stake. The Nord Stream pipeline is to transport Russian gas to European customers, bypassing transit countries. It will run over the seabed of the Baltic Sea. Gasunie is the operator of one of the biggest European gas networks with a total length of over 12,000 kilometres.

Friday, June 20, 2008

Transneft and Chevron sign cooperation accord

BRIEFLY RBC, 16.06.2008, Moscow 13:56:55.American energy company Chevron and Russian pipeline giant Transneft have signed a memorandum of intent providing for a possibility to carry out joint pipeline projects, a representative of Chevron's office in Russia told RBC today. The document was signed by the corporation's General Director David O'Reilly and Transneft's President Nikolai Tokarev during an economic forum in St. Petersburg on June 7-8. No further details of the document have been revealed. Chevron and Transneft are currently cooperating as shareholders of the Caspian Pipeline Consortium.

Monday, June 16, 2008

EU natural gas pipeline project gets first order

June 11, 2008 - By Judy Dempsey - BERLIN: After months of delays and setbacks, Nabucco, the European Union's ambitious natural gas pipeline project, received its first supply order, the EU said Wednesday. The order is to ship gas from Azerbaijan for sale to Bulgaria. The pipeline, planned to open in 2013, was designed to reduce European dependence on Russian natural gas. Under the agreement, Bulgaria has agreed to buy more than one billion cubic meters, or 35 billion cubic feet, of natural gas a year from Azerbaijan, which is rich in energy resources and crucial for supplying Nabucco. That amount represents about 12 percent of Nabucco's capacity in its first phase and 18 percent of Bulgaria's needs. "This is good news," said a European Commission official who asked not to be identified because he was not authorized to speak on the record. "Until now, Nabucco had not been going so well." The planned 3,300 kilometer, or 2,050 mile, pipeline has been beset with difficulties and is two years behind schedule. The consortium building it announced last week that Nabucco's development cost would increase by nearly 60 percent, to €7.9 billion, or $12.3 billion, because of the rising costs of commodities, particularly steel. That has raised doubts among some consortium members - which comprise OMV of Austria, MOL of Hungary, RWE of Germany, Bulgargaz of Bulgaria, Transgaz of Romania and Botas of Turkey - over whether the project would deliver an adequate return on investment. Bulgaria's agreement with Azerbaijan coincides with renewed attempts by Russia - which supplies over a third of Europe's total gas needs - to win over more European energy companies and countries to its competing South Stream pipeline. "Russia will try to prevent Nabucco as far as they can," said Niklas Nilsson, project coordinator of the Central Asia-Caucasus Institute and Silk Road Studies Program in Sweden. "This poses a big question for the EU: Can it ever agree to a strong and unified energy policy among all the member states? If not, Russia will be able to tick off one Nabucco partner after the other." This week, OMV, which is the Nabucco's project coordinator, agreed to take on the same role for South Stream, which is being developed by Gazprom, Russia's state-controlled natural gas company. European countries, too, have supported South Stream, including Bulgaria and Hungary. South Stream, which Gazprom is developing alongside Eni, the Italian energy company, is aimed at reducing Russia's dependence on transit countries, including Ukraine and Turkey, for its gas destined for European markets. Aleksander Medvedev, a deputy chairman of Gazprom, announced last week that a Russian-Austrian intergovernmental agreement on the project would "be signed very soon." The European Commission dismisses suggestions that South Stream would be a major competitor to Nabucco, even though it would travel along the same route, running through Bulgaria then spurring north and south.

Tuesday, June 10, 2008

Gazprom decides on South Stream gas pipeline route

RBC, 10.06.2008, Moscow – Gazprom has finally determined the route of the South Stream gas pipeline, the Russian energy holding's CEO Alexei Miller said during the 11th annual meeting of the European Business Congress in Deauville today. Miller reiterated that the holding had earlier signed agreements on the construction of the pipeline with Bulgaria, Hungary, Serbia, and Greece. He added that Gazprom agreed with its partners during the St. Petersburg International Economic Forum on June 7-8 that Slovenia and Austria would also join the project. Miller stressed that the South Stream project did not compete with the Nabucco pipeline project, thanks to the rising demand for gas in Europe.

Monday, June 09, 2008

Gazprom Finds a Way to America

AlaskaJune 09, 2008 - Kommersant - Gazprom is prepared to participate in a 6000-km. Prudhoe Bay, Alaska-Alberta-Chicago natural gas pipeline, Gazprom CEO Alexey Miller stated at the St. Petersburg International economic Forum. It has sent a proposal to ConocoPhillips and BP, which are implementing the project, but there has been no reply yet. Therefore, Gazprom is covering its bases and has begun negotiations with TransCanada on a different pipeline from Alaska to Canada. ConocoPhillips and BP announced the project on April 8. The new pipeline is planned in two stages, the first stretching 3400 km. to the Canadian province of Alberta, and the second extending another 2400 km. to Chicago. The pipeline will have a capacity of 41.36 billion cu. m. of gas annually. Alaska has estimated gas reserves of 1 trillion cu. m. The project will cost about $30 billion to implement, $5 billion of which will go to build a gas processing plant in Alaska. In the first three years, costs will be low ($600 million) while the companies conciliate the project with regional authorities and the U.S. and Canadian governments. The project should be completed within ten years. Gazprom was unwilling to specify the size of the share in the project it is pursuing, or how much money it is willing to invest in it. BP declined to comment on Gazprom’s offer, and no ConocoPhillips spokesman could be reached on Sunday. Gazprom deputy chairman Alexander Medvedev said unofficially at the forum that Gazprom is negotiating with TransCanada for a $26-billion Alaska-Alberta project.

Thursday, June 05, 2008

South Stream pipeline may carry Azerbaijani oil

MOSCOW. (Political analyst Ilgar Velizade, Azerbaijan, for RIA Novosti) - Gazprom CEO Alexei Miller has made a surprise proposal during his short stay in Baku. The press release of the Russian energy giant says he has proposed buying Azerbaijani natural gas at market prices under long-term contracts. Analysts immediately concluded that Russia needs Azerbaijani gas for the South Stream pipeline, under construction to pump Central Asian gas to Europe. Baku is currently hosting the 15th International Caspian Oil and Gas Exhibition and Conference. Judging by the number of participants, which keeps growing every year, global interest in Azerbaijan's energy resources is increasing. This year, 380 companies from 33 countries are attending the forum. They are analyzing the recent statements by the Azerbaijani leaders about the country's huge energy resources, trying to determine if they will be enough for the current projects. President Ilham Aliyev has said oil production in Azerbaijan will grow to 60 million metric tons (441 million bbl) by 2009 from 50 million metric tons in 2008, and that the country has enough natural gas to satisfy domestic requirements in the next 100 years. Experts say that Azerbaijan has 1.5 trillion cu m (52.95 trillion cu f) of prospected gas reserves, including at the Shah Deniz offshore deposit in the Azerbaijani part of the Caspian Sea, with recoverable reserves of 1.3 trillion cu m (45.89 trillion cu f) of natural gas. Azerbaijan annually consumes 10-11 billion cu m (388.3 billion cu f) of gas. Foreign policy priorities today largely depend on the direction of export pipelines. Therefore, such projects as the Nabucco pipeline, designed to deliver natural gas from Central Asia to the EU via Azerbaijan and Turkey, bypassing Russia, is a political rather than an economic project. Remaining an outsider in this event means losing instruments of influencing the situation in the given region. Miller's sensational proposal is evidence of Russia seriously considering ways to regain its positions in the region as an active strategic player. Russia's former tactic of an observer who underestimates the growth potential of the region has apparently not succeeded. Russia's largest private oil producer LUKoil has left the South Caspian region and gas exporters soon followed in its footsteps, weakening the country's economic positions there. Therefore, Miller's visit to Azerbaijan can be interpreted as an attempt to change the energy transportation policy in the region to suit Russian interests. On the other hand, it may also point to the intention of the Vladimir Putin government to focus on foreign economic policy. Rovnag Abdullayev, president of Azerbaijan's State Oil Company, said: "We will use the most profitable routes to export gas," choosing between the Nabucco pipeline, the Trans-Adriatic pipeline and Gazprom's proposal. Azerbaijan has not initiated any new pipeline projects lately. At the beginning of the year, President Aliyev made a statement signifying that the country would not initiate new energy transportation routes, like other countries are doing, because it wants to stay away from political quarrels between superpowers and other centers of power. Azerbaijan will limit its international role to participation in projects supported by the international community. This position suits the West and Russia, though some people interpret Gazprom's proposal as a trick. According to them, Gazprom has proposed buying Azerbaijani oil in order to draw its attention away from the Nabucco project and therefore hinder its implementation. Others see it as a public confirmation of Azerbaijan's considerable reserves. Another argument is Iran's interest in buying oil from the Shah Deniz deposit, in which Naftiran Intertrade Co (NICO) holds a 10% stake. But probably neither interpretation is the truth: Gazprom is considering possibilities of participating in promising gas projects in the South Caspian region, notably the second stage of the Shah Deniz project, which will start operation after 2012 when production should grow to 20 billion cu m (706 billion cu f). Gas export is expected to grow at this stage and the South Stream, which should be commissioned by 2013, could be used to transport Azerbaijani gas to Europe. As for competition between Nabucco and South Stream, there will be none when both pipes carry Azerbaijani oil.

Nord Stream gas project serves Europe's energy interests - Medvedev

Nord Stream gas project serves Europe's energy interests - MedvedevBERLIN, June 5 (RIA Novosti) - The Nord Stream pipeline being built under the Baltic Sea to pump natural gas directly from Russia to Germany serves the interests of European energy security, Russian President Dmitry Medvedev said Thursday. Medvedev arrived in Germany on Thursday on his first European trip since his inauguration as Russian president. "This project serves equally the interests of reliable energy supplies and energy security for all the countries on the European continent," Medvedev said after talks with German Chancellor Angela Merkel. Russian energy giant Gazprom is building the Nord Stream pipeline together with Germany's E.ON at an estimated cost of $12 billion. The first of Nord Stream's two parallel pipelines, approximately 1,200 kilometers (750 miles) long, with a transport capacity of some 27.5 billion cubic meters per year, is to become operational in 2010. In the second phase, capacity should double to about 55 billion cubic meters per year. Medvedev said that he had also discussed the South Stream gas pipeline project with the German chancellor. The South Stream project is expected to transport 10 billion cubic meters of Russian gas annually across the Black Sea to the Balkans and onto other European countries, with the first deliveries scheduled to start in 2013. Medvedev said that the Nord and South Stream projects would be completed on schedule.

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