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Tuesday, September 30, 2008

South Stream gas pipeline feasibility study is to begin

30.09.2008 - [Neftegaz.RU] - Bulgargaz Holding EAD Chief Executive Director Lyubomir Denchev welcomed OAO Gazprom delegation in order to discuss the arrangement of activities within the preparation of a feasibility study for the construction of the South Stream gas pipeline section in the country. Part of the negotiations included various routes of natural gas transports across Bulgaria within the frameworks of the South Stream project. The parties also agreed to hold the next meeting in Moscow.

Gazprom, Eni say no 3rd partner in South Stream project

NOVY URENGOI, September 30 (RIA Novosti) - Gazprom and Italy's Eni have no plans to involve a third partner in their project to build a pipeline across the Black Sea to pump natural gas to Europe, the Eni CEO said Tuesday. Gazprom and Eni are implementing the South Stream project as equal partners. "For everything concerning South Stream AG [the project operator], we remain 50-50," Paolo Scaroni said. The South Stream pipeline is expected to annually pump 30 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, with the first deliveries scheduled to start in 2013. Bulgaria, Serbia, Hungary, Italy and Greece are also involved in the project. Scaroni said local partners could be involved in the project in the countries serving as the transit route for the pipeline but they would not participate in the equity of the project's operator. Scaroni said the project's total price was around $20 billion, with the cost of the sea section estimated at $10 billion. The cost of the overland section will be an additional $10 billion or more, Scaroni said.

Far East pipeline for Sakhalin gas could come online in 2011

KHABAROVSK, September 30 (RIA Novosti) - A pipeline to pump natural gas from Sakhalin Island off Russia's Pacific Coast to the country's mainland and the Asia-Pacific region could come online in 2011, Gazprom said Tuesday. "In accordance with an instruction from the Russian government, this gas pipeline is scheduled to become operational in the third quarter of 2011," said Alexander Ananenkov, deputy chairman of the Gazprom management committee. Addressing a Far Eastern economic forum, Ananenkov said the Sakhalin-Khabarovsk-Vladivostok pipeline would be developed stage by stage, taking into account the available capacities in the Khabarovsk Territory. Initially, gas from the operational Sakhalin-I and Sakhalin-II oil and gas projects could be supplied to the gas pipeline, the official said. The Sakhalin I project is operated by Exxon Neftegas Limited, a subsidiary of U.S. oil major Exxon, and has recoverable reserves estimated at 315 million metric tons (2.3 billion barrels) of oil and 485 billion cubic meters of natural gas. The Sakhalin II project, in which Russian gas monopoly Gazprom holds a controlling stake, has estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas. Sakhalin is some 10,000 km (6,200 miles) east of Moscow. "The gas pipeline will operate at full capacity with the start of gas production under the Sakhalin-III project expected in 2015-2016 and the system's further development will also be linked with the gas supplies from the Chayanda gas field in Yakutia," Ananenkov said. The Sakhalin-III oil and gas project's estimated reserves in the Sea of Okhotsk total over 800 million metric tons (5.86 billion barrels) of oil and more than 900 billion cubic meters of gas. The project includes the East-Odoptinsky, Ayashsky, Venin and South-Kirinsky blocks. The Chayanda field in Yakutia in northeast Russia is intended to supply natural gas to Asia-Pacific countries, in particular China.

Thursday, September 25, 2008

$4b gas pipeline planned from Iran to Europe

25.09.2008 - [Neftegaz.RU] - Iran is planning to construct a $4 billion natural-gas pipeline to the European Union that rivaling projects backed by the EU and Russia. Deputy Oil Minister Akbar Torkan said in an interview in Tehran today that Iran was in talks with a “renowned European company'' that may operate the so-called Pars Pipeline. “Surely, European countries are thinking about creating a lifeline in addition to Russia,'' Torkan said. “Countries that believe buying gas from Iran is important enough and that don't want to be manipulated by others will collaborate.'' Iran have been prevented by international sanctions from drawing the technology and financing necessary to liquefy gas and export it via tankers as LNG, or liquefied natural gas. Iran, which holds the world's second-largest gas reserves after Russia, doesn't export the fuel any farther west than neighboring Turkey. The Pars Pipeline is Iran's answer to the EU-backed Nabucco link and OAO Gazprom's South Stream project, Torkan said. Those projects are competing to supply western Europe with Caspian gas. He declined to provide a timeline. Iran hopes to pipe as much as 37 billion cubic meters of gas to Europe annually, about 20 percent more than either Nabucco or South Stream. Russia, which supplies about a quarter of Europe's gas needs, is planning to increase that share by building South Stream under the Black Sea and the Nord Stream link under the Baltic. U.S.-imposed restrictions on foreign investment in Iran, designed to punish the government for pursuing a nuclear program, won't scare off European partners in the pipeline, Torkan said. “No one says that Iran's customers can't invest outside the country,'' he said. “We will bring the gas up to the border, they will build the pipeline up to there.'' Torkan declined to name the European company holding talks on the pipeline, saying only that it isn't Austria's OMV AG, which heads Nabucco. The EU-backed project from Turkey and the Balkans to western Europe still has no supply base and hasn't ruled out taking Iranian gas. “We have no contract and no engagement with Nabucco,'' Torkan said. ``We have come up with a new route and will have new customers.'' From Iran, the Pars Pipeline will cross Turkey, passing on to Greece, Italy and onward to Switzerland, Austria and Germany, Torkan said. Eastern Europe will be completely avoided, he said, and all countries along the route will also buy Iranian gas. Iran will tap its South Pars field, the world's single largest gas deposit, to supply the Pars Pipeline. European companies such as Royal Dutch Shell Plc, France's Total SA and Spain's Repsol YPF have curbed LNG projects at South Pars because of the increased political risk of investing in Iran. South Pars gas exports would be more cost-effective through a pipeline rather than as LNG, Torkan said. The lack of a unified pipeline system within Iran means that the northern part of the country relies on gas imports from neighboring Turkmenistan. Northern Iran, where Tehran is located, experienced a gas shortage during unseasonably cold weather earlier this year.

Wednesday, September 24, 2008

No Nabucco without Russia

Former director of the International Energy Agency Claude Mandil// A French expert speaks on energy relations between the EU and Russia
Sep. 24, 2008 - Kommersant interview by Alexander Gabuev - Former director of the International Energy Agency Claude Mandil completed his visit to Moscow yesterday. Mandil is preparing proposals on energy strategy for the French chairmanship of the European Union. After negotiations with key Russian industry figures, Mandil met with Kommersant correspondent Alexander Gabuev and told him how relations between the EU and Russia have change in regard to energy since the war in Georgia.
• What did you do in Moscow? French Prime Minister Francois Fillon asked me in March to develop proposals for energy security for the French chairmanship if the EU. And now I presented the results of my work in Moscow. I met with chairman of Gazprom Alexey Miller, with several officials in the government and with representatives of the EU countries, the G7 and European business. They gave my work high marks. But the report was written before the war in Georgia, which has somewhat clouded relations between Russia and the EU.
• Has Europe changed its assessment of energy partnership with Russia a lot since the war in the Caucasus? In the final declaration of the September 1 EU summit, it talks about the need to reduce energy dependence on Russia. In Europe, they sometimes suspect that Gazprom’s actions are also dictated by political interests. The close ties between the management of the company and the team in the Kremlin is obvious. The vents of the summer again emphasized the need for greater flexibility. Completely unexpected things can place Europe’s energy security under threat. This time it was barely averted. Nonetheless, we in the EU should look for additional options for energy supply.
• Is Nabucco one of those options? The war in Georgia showed the vulnerability of that route. It seems to me that Nabucco can only be implemented with Russia, and not against it. What happened in Georgia did not change my point of view – on the contrary. It is time to stop opposing gas transit routes. Europe has an enormous demand for energy resources, so Nord Stream, and South Stream and Nabucco are all needed. Building a pipeline against someone’s will is not safe. I think most of the natural gas in all of those projects will be Russian any way. There is much oil and gas in Central Asia, but still less than in Russia or Iran.
• How do you see the prospects for energy relations between the EU and Iran? At the present time, contacts are impossible, because Iran is having political difficulties not only with the EU, but with all the world. But the day will come when that will change. It would be good if an infrastructure existed by then to transport Iranian gas to the West, and not just to the East. Europe is very interested in obtaining it. Nabucco is one way to do that. Liquefied gas is another.
• But Nabucco is also a commercial project that should interest investors. It doesn’t now. The project really isn’t especially attractive yet for two reasons. First, there isn’t enough gas to fill the pipeline yet, especially if Iranian and Russian gas is excluded. Second, the pipeline crosses several countries and there should be completely transparent transit regimes in them. There are many issues about that, especially concerning Turkey.
• There is the impression that the United States is almost as interested in Nabucco as the Europeans are. Since the war, Washington has been insisting that Europe should shed its dependence on Russian energy. I can put myself in Mr. Miller’s place. If someone is always saying that they have to build Nabucco to save themselves from Gazprom gas, you will have a single goal – to do anything necessary to foil the project. So Washington’s steps in that direction may prove to be counterproductive. The EU alone should decide issue of European energy security. The U.S. itself is highly dependent on oil imports from Venezuela, but no EU members tell Washington that it’s time to attend to that problem.
• Should the EU raise the issue of whether or not Russia has enough natural gas to meet its export obligations? That is a problem of transparency. We do not have exact information about what is happening in the Russian gas sector, the condition of its fields, for example. We don’t think that situation is good for the suppliers either. Markets become volatile, buyers get nervous and begin to look for other solutions. It would be better for Russia itself if that data were made public, to avoid the fear of an energy shortage in Europe.

Tuesday, September 23, 2008

BTC pipline shut for maintenance

23 September, 2008 - Upstream OnLine - The BP-led Baku-Tbilisi-Ceyhan (BTC) oil pipeline has shut down for a short period of planned maintenance that will not affect exports, BP said today. BP said the work was unrelated to a gas leak at a field in the Caspian Sea that as of yesterday had cut volumes through the line, which can carry an amount equal to 1% of world supply, to about 40% of normal. "BTC has shut down for a short maintenance period. It won't affect exports because it was planned," said BP spokesman Toby Odone to Reuters. Trade sources, however, said the stoppage was expected to last about 10 hours. BP said last week that output at the Azeri-Chirag Gunashli fields in the Caspian was cut to around 40% of its rate before the 17 September gas leak in the area of the Central Azeri platform, which prompted its shutdown and that of another installation. The company sent a diver support vessel to investigate the cause of the gas leak and that work is continuing, BP said. "Hopefully, that will get back soon, download all the data and find out the cause," Odone said. BP has not given a date to restore output to normal at the ACG fields, which had been pumping about 850,000 barrels per day before the shutdown. The company is the largest shareholder in both the ACG fields and the BTC pipeline, with stakes of 34.1% and 30.1% respectively.

Monday, September 22, 2008

Kazakhstan seeks to export oil via Russia

AKTYUBINSK (Kazakhstan), September 22 (RIA Novosti) - Kazakhstan will increase oil production by 12 million metric tons in 2009 and is interested in pumping it via Russia, the Kazakh president said Monday. "It is very important that Kazakh oil should pass through Russia. We expect oil production to increase next year. It will grow by 12 million tons during the year," Nursultan Nazarbayev said at the end of a Russian-Kazakh border region forum. The Kazakh leader said that oil production would be increased at the Kashagan deposit, where the Russian company LUKoil operates, in 2012-2013. At the same time, he said, Kazakhstan was ready to increase oil deliveries via other pipelines than the Caspian. "This is beneficial for all of us," Nazarbayev said. The Caspian Pipeline Consortium (CPC), designed to carry Kazakh and Russian crude to a terminal on the Black Sea, was commissioned in October 2001. Its capacity currently stands at around 30 million metric tons of oil per year and is expected to double by 2012. Earlier the Kazakh energy and mineral resources minister said Kazakhstan planned to produce 70 million tons of oil and gas condensate in 2008, or 1.8% of world oil production, against 67 million tons in 2007 - a 4.5% rise. By 2015, the country intends to produce about 100 million tons of oil, most of it for export. Kazakhstan possesses proven extractable oil reserves of 4.8 billion tons (about 3% of the world's total oil reserves). Russia is the Central Asian country's major trade partner, with trade volume totaling $16.6 billion in 2007, and rising 27% year-on-year to $9.6 in the first half of 2008. Both countries are members of several regional alliances, including the Commonwealth of Independent States, Eurasec, the Collective Security Treaty Organization (CSTO), and the Shanghai Cooperation Organization (SCO). Russian President Dmitry Medvedev is currently on a visit to Kazakhstan to attend the forum and discuss bilateral relations. The visit is Medvedev's second trip to the oil-rich ex-Soviet state since he was sworn in as president on May 7. Medvedev said Monday that Moscow and Astana would continue producing and exporting hydrocarbons, building new pipelines, and attracting huge investment into the fuel and energy sector. "We will keep building up the production and the export of hydrocarbon raw materials, build new pipelines when it is beneficial and necessary, and attract large-scale investment into the fuel and energy sector," Medvedev said. Nazarbayev suggested border regions create joint scientific and research centers to implement large hi-tech projects in the fields of nuclear, biological and agricultural technology.

Transneft to pump to west on Asia pipeline

Transneft22 September, 2008 - Upstream OnLine - Russian pipeline monopoly Transneft will start pumping East Siberian oil westwards along the completed section of its unfinished Asian oil pipeline between 3 October and 5 October. Transneft, which is building the 2700 kilometre, 600,000 barrels-per-day oil pipeline to China, will let oil companies use the 1100 kilometre section to ship their output to the West until the completed line is ready to take crude to China at the end of next year. "The completed part of the pipeline has been filled with 800,000 tonnes of crude. It is now completely ready to start oil deliveries in a reverse mode to the West on 3 October to 5 Ocotber," Transneft vice-president Mikhail Barkov told Reuters by phone. Transneft has said Surgutneftegas, Russia's fourth-largest oil producer, is ready to start supplying the link with 180,000 tonnes per month from its Talakan deposit. Transneft's president Nikolai Tokarev told Reuters earlier this month that his company will set an exclusive tarriff for Surgut's deliveries along the link for this year. Transneft has said that BP's Russian venture, TNK-BP, will also use the link and is supposed to supply it with 40,000 tonnes of crude per month from its Verkhnechonks deposit, starting early next year. Russia's top oil producer, Rosneft, which has delayed the launch of its huge East Siberian Vankor deposit and was meant to be the main supplier of crude for the Asian pipeline, is now expected to start deliveries in the middle of next year. Russia hopes that the $14 billion Asian pipeline, its first to China, will help it to diversify oil exports away from European markets. The pipeline is also expected to encourage oil production in the oil-rich but undeveloped East Siberia, which is meant gradually to replace the mature oil resources of the established oil producing region of West Siberia.

Friday, September 19, 2008

BP may sell CPC stake

19 September, 2008 - Upstream OnLine - BP may sell its share in the Caspian Pipeline Consortium (CPC), which pumps crude from Kazakhstan to the Black Sea, if it fails to agree with Russia on terms for expanding the line, BP said in Russia today. The move would trigger a further shareholding reshuffle at the consortium after another member, Gulf Arab state Oman, said it was also looking to sell its stake. Most of the shareholders of the Chevron-led pipeline, which runs to the major Russian Black Sea port of Novorossiisk, have agreed on the expansion terms demanded by Russia, which owns 24% in the consortium as a host state. BP, the only shareholder that still opposes the terms, said it was considering selling the stake if no compromise was found. "This is one of the options to settle the current situation," Vladimir Buyanov, a BP spokesman in Moscow, told Reuters. He said BP may sell its stakes in Lukarco and Kazakhstan Pipeline Ventures, which are members of the consortium. BP's stakes in the ventures bring its share in CPC to 6.6%, Buyanov said. Russian pipeline monopoly Transneft, which holds the country's stake in CPC, had long opposed the plan to double the pipeline's capacity from the current 700,000 barrels per day, but it has now dropped its objections. Transneft previously argued that the pipeline yielded low returns and that expansion would add pressure on the already congested Turkish Straits shipping route. In summer, most of the partners agreed to raise the shipping tariff to $38 per tonne from $30.24 last year and private investors agreed to halve interest rates on a $5 billion loan to CPC to 6%, easing worries over funding. Transneft, which owns all pipelines on the Russian territory except CPC, has said BP was insisting on borrowing more to fund the expansion. A London-based source close to BP told Reuters yesterday that BP wanted to borrow more as its percentage interest in the pipeline was bigger than its percentage interest in the Kazakh fields, which feed the route. This means BP has more incentive for the pipeline project to be commercially attractive, the source said. Russia and Kazakhstan, which is also a state shareholder of CPC, have both expressed interest in buying Oman's 7% stake. Besides BP and Chevron, which holds 15%, its private shareholders include Shell, ExxonMobil and Russia's two largest oil producers, Rosneft and Lukoil. CPC has been shipping oil since 2001 and pumps up to 750,000 barrels per day to Novorossiisk for re-export to the Mediterranean.

Wednesday, September 17, 2008

Multi-purpose pipeline project

Sep 17, 2008 - Oil & Gas News - India has expressed keen interest in the over USD 11 billion Med Stream project, a multi-purpose offshore pipeline venture which can transport crude oil at cheaper rates to the country from Turkey. Officials from India, Turkey and Israel met for the first time on Saturday in the Turkish capital Ankara discussing technical issues of the Med Stream pipeline project. Indian state oil company IOCs Director B M Bansal, Undersecretary of Turkish Energy Ministry Selahattin Cimen and Director General of the Israeli Ministry of National Infrastructure Hezi Kugler had attended the meeting, Kuwaits news agency KUNA reported. The project to connect Turkey and Israel via the Mediterranean Sea is planned to transport oil, natural gas, water, electricity and fiber optic cables. Kugler, speaking to reporters after the meeting, said the project aimed at building a multi-purpose undersea pipeline linking, in its first phase, Turkey with Israel to transfer oil, natural gas, fresh water, electricity cables and fibre optics cables. The Indian side, he said, showed interest in this project specially with regards to the imports of crude oil instead of shipping it by tankers. Initial studies estimated the cost at eight billion euros, said Kugler. Technical studies should begin by end of this year and establishment of the pipeline might begin by the end of next year or in 2010.

EU looks for independence from Russian energy sources

17.09.2008 - [Neftegaz.RU] - Several steps have already been done in this direction. First of all, Greek agreement on direct deliveries of Azerbaijan gas to Europe. Secondly, Baku and Ashgabat supported the gas pipeline Nabucco omitting the Russian Federation. Finally, Hungary announced of forum on final signing of this project. In previous weekend presidents of Poland, Czech republic, Slovakia and Hungary visited a summit Slovakian city Piestany to discuss the main problem of the EU - dependency on Russian energy sources and necessity to diversify sources of deliveries. The major European alternative to pipelines, lying through Russian territory, as well as lobbied by Moscow projects Nord Stream and South Stream, is Nabucco project.

Monday, September 15, 2008

Azerbaijan is ready to direct gas output to EU

15.09.2008 - [Neftegaz.RU] - Christos Folias, Greek Minister of Development, said that Athens and Baku cooperation can become a first step to Azerbaijan and EU partnership. In the near future a quadripartite contract about Caspian gas transportation between Azerbaijan, Turkey, Greece and Italy will be signed. Azerbaijan possesses a 1,2 bln. cubic metre gas deposit in Shakhdeniz. Gas will be transported to Greece through Turkey by South Caucasian pipe-line (Baku-Tbilisi-Erzurum) and then by Karajabei-Komotini pipeline (it connects Turkish and Greek gas transportation systems). By 2011, when the Poseidon gas pipeline starts to function, azebaijanian gaz will be transported to Italy. As for now the main gas exporter to Greece and Italy is Gazprom (its market share is 80 and 25 per cent respectively). However, Azerbaijan is confident that it will become a worthy rival to the Russians. But the experts say that Rome got used to Russian gas and probably won’t change its supplier, besides Azerbaijan is not ready yet for big gas output, that’s why it won’t be a great competitor for Gazprom. Though the Russian company loses its status of monopoly.

Germany Backs Gazprom Pipeline After U.S. Diplomat Urges Review

Sept. 12 (Bloomberg) by Lucian Kim -- The German government said it still supports a planned natural-gas pipeline from Russia, shrugging off a U.S. ambassador's call for the OAO Gazprom-led project to be reconsidered. ``We have made it clear that we support this project for political reasons,'' Ulrich Wilhelm, German Chancellor Angela Merkel's chief spokesman, told reporters in Berlin today when asked about the diplomat's comments. The so-called Nord Stream pipeline beneath the Baltic Sea, chaired by former Chancellor Gerhard Schroeder, is necessary for the European Union's energy security, Wilhelm said. Michael Wood, the U.S. ambassador to Sweden, wrote a commentary in the Swedish newspaper Svenska Dagbladet Sept. 10 saying that Europe must consider alternative energy routes that reduce its dependence on Gazprom following the Russian invasion of Georgia last month. ``Nord Stream bypasses the Baltic states and Poland, potential consumers, and represents a special arrangement between Germany and Russia,'' Wood said. ``The EU should be speaking with a single voice to counteract the power of Russia's energy weapon.'' The EU should also ``reexamine'' a second Gazprom project, called South Stream, to link southern Europe to Russia via the Black Sea, Wood said. The German Foreign Ministry protested to the U.S. embassy in Berlin that it was ``irritated'' by the comments, German newspaper Handelsblatt reported yesterday on its Web site. Project Delayed Nord Stream, designed to raise Russia's export capacity to Europe by a third, faces environmental and political opposition from countries along its route. As a result, the project has had to push back the start-date to 2011 from 2010 and raise the budget to pay for additional environmental safeguards. ``It looks like the U.S.A. is ignorant of the ancient diplomatic rule not to comment on a third country in the place of residence,'' the Russian embassy in Stockholm said on its Web site. ``We have no intention to enter into any tussle with the U.S. on the territory of a third country. Unlike our partners, we do not want to sound diplomatically unethical.'' The 1,200-kilometer (750-mile) Nord Stream pipeline needs permits from five countries touching the route -- Russia, Finland, Sweden, Denmark and Germany. Nord Stream plans to fix a final route by the end of this month and submit an environmental impact assessment by the end of the year. Gazprom owns 51 percent of Nord Stream, with Wintershall Holding AG and E.ON Ruhrgas AG each holding 20 percent and Nederlandse Gasunie NV 9 percent.

Wednesday, September 10, 2008


Nabucco Gets A Boost In Baku

September 10, 2008 RFE RL by Bruce Pannier - Western hopes for Caspian gas that doesn't arrive via Russia are alive and well. The future of the Nabucco natural-gas pipeline project have appeared to be in serious jeopardy since war broke out between Russia and Georgia. Some export routes leading to the planned pipeline would run through Georgia, where Russian forces remain entrenched in unilaterally declared buffer zones nearly a month after an EU-brokered cease-fire. Of course, Nabucco's viability also hinges to some extent on gas supplies from Caspian countries Azerbaijan, Turkmenistan, and Kazakhstan, all of whom have been courted by Russia's Gazprom, which recently offered to purchase all of the three countries' gas. But at a "strategic-cooperation conference" in Baku this week, there was broad support for participation in the Nabucco project. "Azerbaijan is not giving up on the Nabucco project," Azerbaijani Industry and Energy Minister Natiq Aliyev vowed. "This is a project that has a future." Turkish Energy Minister Hilmi Guler also seized on the opportunity to pledge his country's support for Nabucco. "Nabucco will work. We will implement it," he said. "The Nabucco project will strengthen not only Turkey's energy security, but Europe's too. No one should doubt it." The Nabucco plan calls for a 3,300-kilometer pipeline that will transport 31 billion cubic meters of gas to Europe every year once it is fully operational. Crucially for Western backers like the European Union and the United States, Nabucco's route avoids both Russian and Iranian territory entirely. Importance Of Diversity - "The cooperation between these two countries [Azerbaijan and Turkmenistan] and others such as Kazakhstan to create a diversity of export possibilities helps ensure each country's independence and economic strength," said U.S. special representative to the EU Boyden Gray, who was at the Baku conference. "In addition, there is strength in numbers and in cooperation. These countries in this region are stronger and more influential acting in concert than individually," he added. "This is especially the case given the closed nature of the Caspian. If they are united on energy issues, these countries can better promote diversification and competition for their exports and, also, over the long haul promote the diversification of their economies through expanded regional and world trade." Gray noted that the United States will not benefit directly from Nabucco but that Washington hoped "that the [Caspian] region and Europe both benefit and that we, as a trading nation, will also indirectly benefit and we very much want for [Europe] to have a strong independent existence to promote your own economies to their fullest potential." Despite having no "direct" interest in the Nabucco project, the United States has been engaged in substantial lobbying for the project in the Caspian region. U.S. Vice President Dick Cheney was in Azerbaijan last week to promote diversification of energy export routes. The Nabucco pipeline itself would start from the Georgian-Turkish and/or Turkish-Iranian borders and run to Austria. Nabucco project head Reinhard Mitschek told RFE/RL earlier this year that Nabucco does not contract for gas supplies, it is only an energy import route for Europe. It is up to shareholders in the project and other companies to arrange the purchase of gas and feed it into the Nabucco pipeline. But without gas from Caspian countries such as Azerbaijan, Kazakhstan, and Turkmenistan it could be difficult to fill the pipeline, so the participation of those countries in Nabucco is vital. Enough Gas? - The progress in Baku does not yet mean that Nabucco's problems are all settled. Charles Esser, an energy analyst with the Brussels-based International Crisis Group, points out that Azerbaijan's participation alone does not remove all the obstacles to Nabucco. "The Azeri minister was tentative in his support because he said certainly Nabucco is still on track, he said, though, that 'we in Azerbaijan don't have enough gas to, by ourselves, supply [Nabucco] so it will require other sources.' [Without other sources] he was doubtful that [Nabucco] would happen," Esser says. Turkmen officials at the Baku conference have not yet said what level of participation, if any, Turkmenistan would have in Nabucco. Furthermore, Turkmenistan has committed itself to pumping more gas to Russia and China in recent weeks. And Esser notes that the Russia-Georgia conflict is still fresh in the minds of many and will play a role in how Nabucco fares in the coming weeks. "I think there's a renewed political push for Nabucco; however, at the same time I think commercial risk has increased," Esser says. "There is no way around it and because of that risk investors will want guarantees. I think we'll have to see whether the increased political will for Nabucco translates into guarantees and perhaps subsidies." Nabucco is planning to hold a meeting of shareholders, potential investors, and potential suppliers in Budapest next month to discuss the pipeline project's future.

CNPC presses for gas supply talks with Russia

IRKUTSK, September 9 (RIA Novosti) - CNPC has proposed speeding up talks with Russia on natural gas supplies, a senior official at China's national oil and gas company said at an East Siberian economic forum on Tuesday. "We propose speeding up Chinese-Russian commercial talks on natural gas cooperation," CNPC international relations director Zhang Xin told the Baikal forum. Gazprom and CNPC signed a protocol on Russian natural gas supplies to China in 2006. According to the Russian energy giant, feasibility studies for possible supply routes are currently being conducted, and a decision has been made to start discussing investment. Commercial talks have also started. Zhang said CNPC had also proposed signing an intergovernmental agreement to boost the construction of a 67-km (41 miles) leg to China of the East Siberia-Pacific Ocean (ESPO) oil pipeline. Under an agreement signed between CNPC and Russia's Transneft, the oil pipeline operator, the construction of the branch will be funded by China. The Chinese official said China had taken an active part in the construction of the first leg of the ESPO pipeline in Russia, and carried out engineering operations along a 150-km (93 miles) stretch of it. The ESPO pipeline is slated to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and then onto China and the Asia-Pacific region. The pipeline's first leg, estimated at $11 billion, was expected to be commissioned in December 2008. However, Transneft said in February that the commissioning of the project would be delayed from late 2008 to late 2009.

Cheney Thwarted in Quest for Support Over Nabucco

09-09-2008 - The St.Petersburg Times - Bloomberg - MOSCOW — U.S. Vice President Dick Cheney has failed to win Azerbaijan’s support for the construction of a new gas pipeline from the Caspian that would bypass Russia. Azeri President Ilham Aliyev indicated to Cheney during talks in Baku on Wednesday that he did not want to anger Russia in the wake of its invasion of neighboring Georgia, Kommersant reported, citing an official in Aliyev’s administration. Cheney was so disappointed that he did not attend an official dinner in his honor, the report said. Azerbaijan has also increased flows of oil through a pipeline to the Black Sea port of Novorossiisk, the newspaper reported, citing a Russian energy official. Azerbaijan is the starting point for the flow of Caspian oil and gas westward to Europe, bypassing Russia. The planned Nabucco pipeline, backed by the European Union, will bring gas from the Caspian region via Turkey to Austria and Western Europe by 2013. BP’s Baku-Tbilisi-Ceyhan pipeline can carry as much as 1 million barrels of Azeri crude a day through Georgia to Turkey’s Mediterranean coast. Another BP-led pipeline, the Baku-Supsa, moves crude from Azerbaijan to Georgia’s Black Sea coast. Kazakhstan, the holder of 3.2 percent of the world’s oil, is currently in talks with Azerbaijan and Georgia about the possible construction of a pipeline to send its oil across the Caspian Sea to the Black Sea port of Batumi, Timur Kulibayev, head of Kazenergy Association, said Friday. The new pipeline from Baku to Batumi, an oil terminal in which KazMunaiGaz has bought a stake, may carry 10 million tons of crude per year, said Kulibayev, who the Astana-based private association, which includes Chevron and BG Group as members. If Kazakhstan does not get access to Baku-Supsa, a new pipeline can be built “quite fast,” he said.

Baltic pipeline to spare Europe gas shortfall

nord stream mapSept 8, 2008 - Scan Oil&Gas - The Nord Stream pipeline running from the Russian Baltic Sea Coast to Germany will need to advance quickly if shortages of gas supply to Europe are to be averted in the coming 10 years, according to a report in _Scandinavian Oil-Gas Magazine. “Gas imports to the European Union, 336 billion cubic metres in 2005, are projected to grow by 200 Bcm per year by 2015,” the Nord Stream Co.’s permitting director, Dirk von Ameln, said in an interview with the magazine this month. “Nord Stream will only be able to meet 25 percent of that additional requirement,” von Ameln added. The Director is tasked with showing Baltic Sea states the economic lifeline to Europe is the safest anywhere. Parts of the pipeline will be 41 millimetres thick and coated with 150 mm more of hardened product. “Virtually impenetrable”, he said, adding, that based on based on his department’s analysis, construction can start in 2010 with two pipe-laying vessels to ensure first gas deliveries by 2011. Another tender for pipe-supply will then be held for a planned second pipeline. The delay from a building start in 2009 allows for ample time “for environmental safety” without compromising project timetables. The pipelines owners — BASF/Wintershall, E.ON Ruhrgas, Gasunie and Gazprom — are among the most experienced pipeline-builders in the world and have hired Saipem for pipelay and EUPEC PipeCoatings for weight coating. Among other pipelines planned for Europe are a link from Norway’s Norwegian Sea gas fields to Sweden and on to Denmark and perhaps Poland. In the south of the Continent, a Russia-Greece line is foreseen, as is a Mediterranean link to Italy for partners in Caspian Sea and Iranian gas.

Energy: Brussels told to pursue Azerbaijan pipe dream

// Commissioner pushes for route through Georgia
// Line would reduce energy dependency on Russia

09-05-2008 - The Guardian by David Gow - The EU must redouble its efforts to build the $12bn Nabucco gas pipeline and reduce its dependence on imports from Russia in the wake of the Georgian crisis, its energy commissioner said yesterday. The conflict in the Caucasus has led many experts to dismiss Nabucco, the planned 3,300km pipeline from Azerbaijan to Europe via Georgia and Turkey. But Andris Piebalgs said the aim of diversifying energy sources and routes was even more important now. "We need more political engagement to remove all the political obstacles to Nabucco to bring gas from the Caspian basin to the EU," he said in the face of evidence that the ambitious project to bypass Russia is foundering. Gazprom, the Russian gas monopoly, has already offered to buy Azeri gas at world prices and has put its weight behind two alternative pipelines, Nord Stream and South Stream, to Europe. Piebalgs won backing from Nabuo Tanaka, executive director of the International Energy Agency, who said alternative import routes would enhance the EU's energy security and reduce its dependence on Russia. Russia provides 42% of the EU's overall gas imports and 30% of its oil but accounts for up to 80% of energy imports in some countries. Moscow and Gazprom have succeeded in dividing the EU by signing bilateral supply deals, notably with Germany, Italy and Austria, and by persuading member states to take part in its own sponsored transnational pipelines even when they are already involved with Nabucco. But Tanaka, presenting the IEA's first review of EU energy policies, said Russia's dependence on Europe was much higher, with the EU taking 70% of its oil and gas exports. "It's more and more important to have a single European energy market and a single EU voice," he said. "In the long run countries conducting relations on a bilateral basis will lose out." The 220-page IEA report adds: "Speaking with one voice and acting in a consistent and unified manner will be crucial to moving towards closer relationships between the EU and the external suppliers on which it will increasingly depend in the future." The ultimate aim of the six partners in the Nabucco project and the EC is to import gas from the Middle East, including Iraq, via the pipeline. The IEA also urges the EU to step up its efforts to promote renewable sources of energy if it is to reach its 20% target of consumption by 2020 and combat climate change. Tanaka said that an extra $45tn (?25tn) of investment in renewables and other green technologies would be required globally by 2050 if the world were to cut carbon emissions by a half - the EU's own long-term goal. This would be on top of the $22tn required globally to reach interim targets.

Russia agrees to buy Oman's 7% in Caspian pipeline project

MOSCOW, September 5, 2008 – (RIA Novosti) - Russia has agreed to buy Oman's 7% stake in the Caspian Pipeline Consortium, a deputy energy minister said on Friday. "We have accepted the proposal to buy all the 7% [held by Oman]. We have sent our confirmation to Oman," Stanislav Svetlitsky said. The Caspian Pipeline Consortium (CPC), designed to carry Kazakh and Russian crude to a terminal on the Black Sea, was commissioned in October 2001. Its capacity currently stands at around 30 million metric tons of oil per year and is expected to double by 2012. Oman decided to quit the CPC back in March, sending an offer to sell its shares to the consortium's two other state shareholders - Russia (which holds 24%) and Kazakhstan (19%). Kazakhstan had earlier also sought to acquire Oman's stake in the project. The consortium also includes private companies Chevron Caspian Pipeline Consortium Company (15.0%), LUKARCO B.V. (12.5%), Rosneft-Shell Caspian Ventures Limited (7.5%), Mobil Caspian Pipeline Company (7.5%), BG Overseas Holding Limited (2.0%), Agip International (N.A.) N.V. (2.0%), Kazakhstan Pipeline Ventures LLC (1.75%), and Oryx Caspian Pipeline LLC (1.75%).

Uzbek President proposes new gas pipeline

Uzbek President proposes new gas pipelineSeptember 3, 2008 – Russia Today - Uzbekistan's president Islam Karimov has suggested building a new gas pipeline in Central Asia with a capacity of up to 30 billion cubic meters. The planned pipeline could be built parallel to the existing ones to pump Turkmen and Uzbek gas into Russia's pipeline system, which Russia will re-export to Europe. Speaking during a visit by Russian Prime Minister Vladimir Putin to Tashkent, Karimov said the new pipelines would be needed if Turkmenistan started increasing output of gas. The two countries have also reached an agreement on a formula for the price of gas exported to Russia. This will be the European gas price formula based on market principles. Experts say, Russia's offer to buy Uzbek gas at European prices will double the cost paid by its customers. They say gas prices to Europe will exceed $400 next year.

Russia, Uzbekistan to build gas pipe, update price formula

russiauzbekistanTASHKENT, September 2 (RIA Novosti) - Russia and Uzbekistan agreed on Tuesday to build a new pipeline through Uzbekistan to export Turkmen and Uzbek natural gas, and to switch to a European gas pricing formula, the Russian prime minister said on Tuesday. Analysts say the planned pipeline to be linked to Russia will allow Moscow to maintain its monopoly on Central Asian gas exports to Europe and help bolster its influence in the region. "We have reached an agreement to start joint practical work to build a new gas pipeline system in Uzbekistan to meet the growing export potential of Turkmenistan and Uzbekistan," Vladimir Putin told reporters after talks with President Islam Karimov. The new pipeline and the modernization of the 1974 Central Asia-Center pipeline network will raise combined Uzbek-Turkmen exports from the current 45 billion cubic meters to 80-90 billion cu m a year. Russia, Uzbekistan and Turkmenistan agreed on the projects in May, delivering a blow to a rival Western-backed project to build a trans-Caspian pipeline bypassing Russia, currently the sole re-exporter of Turkmen gas. The new pipeline will run along the Caspian Sea's eastern coast to Europe via Russia's pipeline network. Putin also said Russia and Uzbekistan have agreed to switch to a European pricing formula for the purchases of Uzbek gas. The price issue had earlier prevented the countries from finalizing the pipeline deal. Uzbekistan, Turkmenistan and Kazakhstan said in March they would sell gas to Russia at European-level prices in 2009. The head of Russian gas monopoly Gazprom, Alexei Miller, said in July he expected Central Asian producers to double their prices in 2009. Russia currently pays $160 per 1,000 cu m of Uzbek gas and $150 for gas from Turkmenistan. The formula to be agreed on will set the prices until 2028. Putin's visit to Uzbekistan came soon after Russian President Dmitry Medvedev's attempt to secure Central Asian support for Moscow's recognition of Georgia's rebel regions. Russia's four ex-Soviet partners in the Shanghai Cooperation Organization - Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan - voiced support for Russia's actions in Georgia at Thursday's summit in Dushanbe, but stopped short of backing recognition of Abkhazia and South Ossetia as independent states. Uzbekistan has moved to improve ties with the West, which it severed in 2005 over strong Western criticism of its brutal crackdown on the Andijan protests. Last Thursday, Uzbekistan's defense minister received a senior U.S. military official, raising suspicions in Moscow that Tashkent is considering reinstating a U.S. airbase in the country.

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