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Monday, November 24, 2008

Turkish, Israeli and Indian Energy Ministers to Discuss Oil Pipeline Project

24.11.2008 - [Neftegaz.RU] - Turkey's Energy Minister Hilmi Guler said he would meet his Israeli and Indian counterparts in the coming days over the Ceyhan-Red Sea oil pipeline project. "The highest amount of cargo allowed to pass from the Turkish Straits is set as 130,000 tons, while ships carrying 400,000 tons of cargo can come to the Ceyhan Port in southern Turkey," Guler, who is currently accompanying Prime Minister Tayyip Erdogan in India, told reporters. "On the other hand, it takes 39 days for a ship to arrive in the Red Sea after passing from the Turkish Straits, and only 16 days from Ceyhan to India. These are significant advantages for India," Guler added. He said he would meet his Israeli and Indian counterparts in the coming days to talk about the Ceyhan-Red Sea oil pipeline project. Guler also said Indian oil company had been cooperating with the Turkish Petroleum Corporation (TPAO) in Libya, and similar cooperation should be made in other countries.

Wednesday, November 19, 2008

Pipeline Venture Files App for Alaska Gasline

November 18, 2008 - AFX News Limited - A joint pipeline venture featuring oil giants BP PLC and ConocoPhillips turned in a federal right of way application for a 2,000-mile proposed gas line project. The collaborative effort is called Denali-The Alaska Gas Pipeline LLC and it submitted the application to the Bureau of Land Management last month, but only recently announced the move. Company spokesman Dave MacDowell said the application is important because nearly one-third of the 730-mile Alaska portion of the pipeline falls under BLM's jurisdiction. "The BLM can't work on (right of way) issues unless an application is filed, and Denali has now done that," MacDowell said. The company wants to build a pipeline that is rooted in the resource-rich North Slope and continues southeast to a hub in Alberta, Canada. It announced its plan in April just weeks before the state Legislature embarked on a plan to ultimately award TransCanada Corp. an exclusive license for a similar project. Federal regulators have said both competing projects are not likely be completed. The difference is that TransCanada has up to $500 million in state funding, but Denali does not. TransCanada, however, is obligated to pursue a federal permit but Denali can shelve or delay its project. Neither project is guaranteed. Denali's plan calls for delivering 4 billion cubic feet of natural gas daily from the North Slope to markets throughout North America. Once Denali announced its plans, the company embarked on a massive public relations campaign with full-page newspaper ads and television ads, causing some lawmakers to say the plan was a ruse to dissuade them from awarding TransCanada a license. The ads, however, continued after the license was approved but at a slower pace, and MacDowell said the company has already spent between $60 million and $70 million, especially this summer with field study work. Some of the recent and upcoming work includes:
• Establishing a field office in Tok and company headquarters in Anchorage
• Preparing for an upcoming winter program that includes more environmental field testing between the Prudhoe Bay area and the Canadian border
• Seeking bids for upcoming engineering work. MacDowell's said Denali's goal still is to solicit long-term commitments to ship gas in the pipeline
These commitments underpin the projects financing.

Nord Stream: On Track for 2011

November 18, 2008 - Xinhua Financial News - The Baltic Sea gas pipeline project, Nord Stream, is on track to deliver its first gas in the fourth quarter of 2011 as promised, a senior executive told a gas conference on Tuesday. "We're absolutely on track to deliver the project on time and we are in budget," financial director Paul Corcoran said. His comments came as a relief to those supporting the 7.4 billion euros ($9.34 billion) project, which Russian Prime Minister Vladimir Putin said last week could be scrapped if Europe continues to delay the project. Putin's view was echoed on Tuesday by Gazprom's Deputy Chief Executive Alexander Medvedev, who said Russia could opt for tanker exports of liquefied gas if Europe dragged its feet on pipeline projects. The European Union has identified the plan to pump 55 billion cubic metres of Russian gas annually to Europe via Germany -- involving Russia's Gazprom, Germany's E.ON and BASF and Dutch Gasunie -- as a key project to ensure secure gas supplies for Europe. But EU lawmakers have called for a new investigation into the Nord Stream's environmental impact. BANKS STILL HAPPY TO FINANCE Corcoran dismissed fears the global financial crisis could dent the project's feasibility. "It is true that liquidity isn't there, as it was two years ago," he said, adding that 30 percent of Nord Stream's financing will come from shareholders' equity and the remainder of 70 percent from the project finance market. "What we hear is... although banks are closed for many types of business, the (global) project finance market is still open and this is exactly the type of project the bank is happy to see," he said. He explained that Nord Stream aims to receive all financing for the first phase of the pipeline by July 2009, and obtain the second and final phase's financing a year later. "We are looking at 3.5 billion euros as the first phase of financing," he said, adding that Nord Stream is in talks with commerical banks over attracting funds. When asked whether Western or Russian banks were engaged in talks with Nord Stream, Corcoran declined to specify. The environmental impact assessment is expected to be ready at the beginning of 2009. "After that, documents will be ready and we can begin the discussion in detail with the lending institution." "Project shareholders have already paid 1.3 billion euros from equity into the company to finance the project," he added. "It is energy, it's long-term infrastructure, stable returns... In that sense, we can be sure the project will make good progress also financially."

An Exercise in Leverage

November 19, 2008 - Russia Profile by Sergei Balashov - By Suggesting That Russia Could Forego the Nord Stream Project Vladimir Putin Was Merely Flexing Political Muscle Nord Stream, one of the key energy projects of the past decade, was meant to bypass the transport routes through the troubled Belarus and Ukraine to ensure uninterrupted gas exports to Europe. But in the wake of further hurdles imposed by the European Union, which could drive up the costs of the project amidst declining commodity prices, Russia is claiming that it might reconsider building the pipeline. Yet in the end, Nord Stream makes too much sense for both sides to do without. The deal to build Nord Stream was signed off by then-President and now Prime Minister Vladimir Putin in 2005 during his visit to Germany, which will be the final destination of the pipeline capable of pumping over 55 billion cubic meters per year. It will stretch over Russian territory and through the bottom of the Baltic Sea, bypassing all countries but Germany and Russia. The three Baltic States, Belarus and Poland have sharply criticized the project, citing environmental and economic concerns, but the criticism looked more like an attempt to derail the project on behalf of these transit countries. Gazprom remained resilient and determined to fully implement the project. In 2008, Nord Stream AG, the operator of the pipeline, stated that it conducted extensive environmental research, driving up the cost of the offshore part of the pipeline from €6 billion to €7.4 billion and moving the launch of the pipeline from 2010 to 2011. Due to this and to the lack of consensus among EU member countries regarding the pipeline, Putin stated that Russia could scrap the Nord Stream project and switch to building LNG plants to diversify gas exports instead. Putin certainly had this in mind during his meeting with the Finnish Prime Minister Matti Vanhanen, when he expressed his doubts concerning Nord Stream. But these threats don’t seem very credible, as Putin appears to be merely using political leverage to speed up the process of garnering all the necessary approvals to keep the costs of the project to a minimum. Other pipelines, such as Nabucco and White Stream, are proposed as alternative gas routes to deliver gas form Central Asia to Europe. While work on the White Stream, which would connect the Caspian with Poland through Georgia and Ukraine, seems to have stalled, Nabucco is supposed to be finished by 2013. The new pipeline will run from Azerbaijan, Uzbekistan and Turkmenistan through Southern Europe to Austria, Germany and the Czech Republic bypassing Russia. But its capacity of 30 billion cubic meters per year hardly matches what is currently provided by Gazprom. “Russia pumped about 120 billion cubic meters last year, so it will take four such pipelines to make up for it, while there can hardly be sources for that much natural gas apart from Russia, Iran and Qatar,” said Andrei Kochetkov, commodity analyst at RosFinCom. “It would also be incredibly difficult and costly to lay pipes from central Asia to Europe,” he added. The EU’s current natural gas consumption of 505 billion cubic meters per year has been projected to grow by some 40 percent by 2020, while the domestic supply will cover only 32 percent of the demand, down from the current 59 percent. “The demand will only keep growing and there is no way to cover that without Russia,” said Kochetkov.
Putin’s bluff: Theoretically, Russia could turn to its old Belarusian and Ukranian routes, or look for alternative markets for LNG, such as North America and Japan. But in reality, this is unfeasible, even though Russia currently has the capacity to transport around 130-150 billion cubic meters per year through Ukraine and could eventually take over the Belarusian gas pipeline operator BelTransGaz. “Technically, using these pipelines could be an option, but it would go against the very point of Nord Stream to avoid dealing with the so-called ‘overland partners’,” said Dmitry Lebedev, the managing director of the Russian Energy Company. Turning back to these pipes would do little to lessen the risks of disruptions should tensions over high gas prices arise between Russia, Ukraine and Belarus again. The Ukrainian shipments are supposed to be incremented by the Blue Stream pipeline to Turkey as well as the South Stream pipeline that will link Russia and Italy upon its planned completion in 2013 and undermine the prospects of the Central Asian pipeline projects aimed at bypassing Russia. “Basically, it’s impossible to give up on Nord Stream at this point,” said Lebedev, stating that even if an LNG plant is built on the Baltic Sea, it will face numerous technical difficulties since Russia lacks low-tonnage tankers that would have to be used to transport the LNG to customers. Potential customers would also have to have the necessary infrastructure to serve the incoming tankers bearing LNG. “Even if such a plant is built, Europe will still be the top market for this gas, but the costs will be substantially higher and the delays in project completion much longer,” Lebedev added. Despite falling oil prices, Gazprom has been shipping gas to Europe for a record high of $500, and is expected to post record profits in the last quarter of 2008. Yet gas prices, which have a time lag to those of oil, are in for a slump, projected to start in early as in 2009. Mikhail Korchemkin, the managing director of the U.S.-based consulting firm East European Gas Analysis, projects that gas could go down to $200-230 per 1,000 cubic meters by the end of 2009. “Even if it goes that far down, it will still be acceptable for the Nord Stream project,” he said. Upon its completion, Nord Stream will get the bulk of its gas from the Yuzhno-Russkoye gas field, and eventually from the fields in Yamal and Shtokman, one of the world’s largest natural gas fields, able to provide for Nord Stream for over a century. It is expected to start production by 2013-2015. “Growing gas exports will become a priority for Russia in the coming years, as domestic consumption may decline in the wake of the ruble devaluation and a fall in demand ,” said Lebedev, adding that the threats to halt Nord Stream were the latest attempt to increase exports in all directions. “It was just another attempt to scare Europe and heat up the market,” said Korchemkin

Monday, November 17, 2008

Baku energy summit mulls gas pipeline routes

Baku energy summit mulls gas pipeline routes14 November 2008 - Russia Today - An alternative energy route to Europe is the main topic at the energy summit in the Azerbaijani capital of Baku. Azerbaijan, Georgia and Ukraine - along with some eastern European countries - are discussing possible routes to carry Caspian oil and gas to Europe, bypassing Russia. This includes the realisation of the proposed Nabucco pipeline project that will carry Turkmen and Azerbaijani gas to Europe. Russia is building a rival project to Nabucco - the South Stream pipeline. US energy officials who came to Baku backed the Nabucco project, saying South Stream will be expensive and difficult to build. But Konstantin Simonov, Head of the Energy Security Fund points out Nabucco brings serious risks to security of supply. “The project from Russia directly to Europe, and the project of Nabucco is from Turkmenistan to Kazakhstan, then under the Caspian sea, then Azerbaijan, then Georgia, then Turkey. So you see – 6 countries in this pipeline. Its not only a question of money, its not only the questions of lands of this pipe, it’s a question of political risk Because if you have 5 countries in this line, of course, the risk is more serious. If you have Russia and, for example, Bulgaria or Rumania, because Bulgaria and Rumania are now the European Union.”

Kazakhstan and Azerbaijan Agreed on Oil Transportation

azerbaijankazakhstan17.11.2008 - [Neftegaz.RU] - The energy summit in Azerbaijan welcomed presidents and senior officials from nations including Turkey, Georgia, Poland, Ukraine, Lithuania, Estonia, Bulgaria and Hungary. Most of the participants signed a declaration that stressed the importance of diversifying export routes and expressed support for existing and planned Western-backed pipelines bypassing Russia. Resource-rich Caspian nations Kazakhstan and Turkmenistan did not sign, presumably wary of damaging closer ties and energy export arrangements with Russia. At the same time, Kazakhstan and Azerbaijan agreed to set up an oil transport system across the Caspian Sea. This network will rely on a fleet of tankers and barges to bring Kazakh oil to Azerbaijan, the starting point for a 1,770-kilometer pipeline that traverses the South Caucasus and ends at the Turkish port of Ceyhan. Kazakh state energy company KazMunaiGaz said the network would be able to ship 500,000 barrels of oil a day at first, eventually growing to 1.2 million barrels per day. It did not say where the ships would come from or who would build or operate them; most tankers plying the Caspian are outdated. Kazakhstan relies almost exclusively on Russian routes for oil exports, and Moscow has been reluctant to expand its pipelines.

Russian Ambassador Affirms Nord Stream Pipeline

11-14-2008 - Rigzone news - Deutsche Presse-Agentur - Russia's ambassador in Germany, Vladimir Kotenyev, affirmed Friday that the Nord Stream gas pipeline under the Baltic Sea would be built. Speaking two days after Russian Prime Minister Vladimir Putin said Moscow would be just as ready to export its natural gas by ship, the ambassador said on ARD public television that Russia remained committed to the pipe. "As far as Russia is concerned, this means a stable supply of gas to Europe," he said. "Mr Putin was not making any threat," he added. The controversy blew up as the Russians were about to meet with European Union leaders in Nice, France. The EU is demanding that Russia commit to reliable supplies, and promise not to turn off the tap to exert pressure on the West. Gernot Erler, a state secretary at the German Foreign Ministry, said early Friday on WDR 5 radio that the EU had a strong interest in Russia signing up to rules about energy sales. Such assurances should be a key part of an EU partnership accord with Russia. The Russians for their part have been annoyed at the drawn-out regulatory reviews for the pipeline project, especially by Sweden. Large piles of steel pipe have already been stockpiled on the German coast, ready to be sunk to the seabed. The pipeline, set to be commissioned in 2011, would lead from Vyborg, Russia through the Gulf of Finland and across the open Baltic to Greifswald, Germany, with a land branch to the Netherlands

Thursday, November 13, 2008

Kazakhs eyes 3% Oman CPC stake

13 November 2008 - Upstream OnLine - Kazakhstan wants to buy from Russia roughly half of the 7% stake in the Caspian Pipeline Consortium (CPC) that Moscow has acquired from Oman, a senior Kazakh energy official said today. The pipeline group is led by US major Chevron and includes Russian pipeline company Transneft, ExxonMobil, Shell,Lukoil and BP. The group exports Kazakh and Russian oil CPC-E from a terminal near the Russian port of Novorossiisk. Russia owns 31% in CPC while Kazakhstan has 19%. "We are discussing with Russia a purchase of about 3% out of the 7% (previously owned by Oman)," Reuters quoted Askar Batalov, the Executive Secretary of Kazakhstan's Energy Ministry, told reporters. He said the talks would take "a month or two." Russia's state property agency, which holds Oman's former stake, declined to comment on the issue. Russia is involved in protracted discussions with other shareholders of the group on terms by which the route's capacity could be expanded. Industry sources have said Oman was frustrated with delays in the planned expansion of the route. CPC has been shipping oil since 2001. It pumps up to 750,000 barrels per day to Russia for re-export to the Mediterranean.

Germany Defends Pipeline Project after Putin's Warning

Nord StreamNovember 13, 2008 - AFX News - Germany defended plans for a Baltic Sea gas pipeline on Thursday after Russian Prime Minister Vladimir Putin warned European partners that Moscow may scrap the project. Putin said on Wednesday that if Europe kept delaying the pipeline, Russia might build gas liquefaction plants instead. "The German government sees the Nord Stream pipeline as a central project to the future assurance of European and German gas provision," Germany Economy Ministry said. "Existing concerns about the pipeline must be solved through constructive talks between those involved," it said. The European Union says the plan to pump Russian gas under the Baltic Sea to Germany -- involving Russia's Gazprom, Germany's E.ON and BASF and Dutch company Gasunie -- is a key project to ensure gas supplies. But EU lawmakers have called for a new investigation into the pipeline's environmental impact and it has been criticised by Poland, Lithuania and Estonia, angered at being shut out of a leading gas supply route. Putin said on Wednesday Europe had to decide "whether it needs this pipeline" or not. He said that if Europe were to import the fuel from Russia in the form of liquefied natural gas (LNG) rather than by the pipeline, it would be more expensive.

Nord Stream to give Finland environmental report results in 2009

Matti VanhanenMOSCOW, November 12 (RIA Novosti) - The Nord Stream company will provide Finland with the results of an environmental assessment of its gas pipeline construction project in early 2009, the Finnish prime minister said on Wednesday. The Nord Stream pipeline, which will pump gas from Siberia to Europe under the Baltic Sea, bypassing East European transit countries, is being built jointly by Russian energy giant Gazprom, Germany's E.ON and BASF, and Dutch gas transportation firm Gasunie at an estimated cost of $12 billion. "Once we receive this documentation, we will promptly consider this issue [to permit construction in Finland's economic zone]," Matti Vanhanen said after talks with his Russian counterpart, Vladimir Putin. "Europe should decide whether it needs a gas pipeline from Russia at the proposed capacity or not. If it is not needed, then we will not build the pipeline, we will build gas liquefaction plants and send [liquefied gas] to world markets," Putin said after the bilateral talks. Vanhanen assured the Russian premier that Europe would need Russian natural gas supplies through the pipeline, but said Helsinki would consider the project based on ecological concerns and environmental legislation. Putin said Nord Stream had spent more than $100 million on environmental research for the pipeline project. "We are ready to work with environmental organizations on a broad range of issues related to the problem," the Russian premier told his Finnish counterpart.

Wednesday, November 12, 2008

First Kazakh Oil Pumped Through BTC pipeline

04.11.2008 - [Neftegaz.RU] - The first shipment of Kazakh oil has been pumped through a strategic pipeline that bypasses Russia on its way to Western markets, an Azerbaijani official said Monday. The shipment from the massive Tengiz field is a significant step toward connecting Central Asia's gas and oil resources to Western markets. Most of Kazakhstan's oil currently is shipped via a pipeline that goes through Russia, skirting the Caspian Sea's northern shores. Oil from Tengiz, a Caspian field that is one of the world's largest, entered the Baku-Tbilisi-Ceyhan pipeline last week after being shipped across the Caspian Sea by ship, said Tamam Bayatli, a spokesman for pipeline operator BP. He declined to say how much was being shipped. The BTC pipeline, which opened in May 2005, opened up Caspian Sea oil fields to export routes that bypass Russia. The Caspian Sea is estimated to hold the world's third-largest reserves. Officials with Azerbaijan's state oil company have said up to 100,000 barrels of Kazakh oil a day could ultimately be sent through the 1,100-mile pipeline.

Putin: Russia May Scrap Nord Stream

November 12, 2008 - AFX News Limited - Russia may scrap its Baltic Sea gas pipeline project, Nord Stream, and build gas liquefaction plants instead if Europe keeps delaying the pipeline, Russian Prime Minister Vladimir Putin said on Wednesday. "Europe must decide whether it needs this pipeline or not," Putin told Finland's Prime Minister, Matti Vanhanen, at a meeting in Moscow. "If you don't we will build liquefaction plants and send gas to world markets, including to European markets. But it will be simply more expensive for you. You are free to make the calculations yourself," he added. The European Union has identified the plan to pump Russian gas under the Baltic Sea by to Germany -- involving Russia's Gazprom, Germany's E.ON and BASF and Dutch Gasunie -- as a key project to ensure secure gas supplies for Europe. But EU lawmakers have called for a new investigation into the pipeline's environmental impact and it has been criticised by Poland, Lithuania and Estonia, angered at being shut out of a leading gas supply route. An expert on Russian gas said Gazprom was unlikely to build any LNG plants quickly enough to give it an export alternative to Nord Stream, which the partners hope to start laying next year. Jonathan Stern, director of gas research at the Oxford Institute of Energy Studies, added Putin may be warning the EU that it needs Nord Stream to reduce the risk associated with importing gas from Russia across the Ukraine and Belarus. "Essentially he is saying 'if you want to take the transit risk on Ukranie and Belarus then fine, but we don't want you to blame us if there's a problem because we offered you Nord Stream and you couldn't get your act together'," he said. "That's the subtext of this." Ukraine's ageing gas tranport network and its disputes with Russia over the last few years over gas pricing have heightened concerns in Western Europe over the reliability of gas flows across the country. Nord Stream would bypass Ukraine by taking gas along the seabed of the Baltic from near St Petersburg to the German coast north of Berlin.

Putin Okays Caspian Gas Pipe Accord for Ratification

November 11, 2008 - Dow Jones Newswires - MOSCOW (Dow Jones) Russian Prime Minister Vladimir Putin has signed a ruling to submit an agreement on the construction of a natural gas pipeline along the Caspian Sea coast to the parliament for ratification, the government's press service said Monday, news agency Prime-Tass reported. The governments of Russia, Kazakhstan, and Turkmenistan signed the agreement in December 2007. The pipeline will run from Turkmenistan through Kazakhstan and link up with Russia's pipeline system. It will be built parallel to an existing gas pipeline and will transport up to 20 billion cubic meters of Central Asian gas annually once completed. Russia's Energy Ministry expects construction of the pipeline to start sometime in July-December 2009, Deputy Energy Minister Anatoly Yanovsky said earlier this month.

Friday, November 07, 2008

EU Envoy Hopes for Gas Pipeline Deal to be Reached Bewteen Turkey and Europe

07.11.2008 - [Neftegaz.RU] - European Energy Commissioner Andris Piebalgs said on Thursday he hoped Europe and Turkey would reach a deal early next year on transit terms to make the planned $12 billion Nabucco gas pipeline a reality. But he also admitted that the viability of the pipeline could be threatened by the energy deals that Russia is pursuing in the Caspian region. The long-delayed project is intended to carry 30 billion cubic metres (bcm) of Central Asian gas a year to Europe via Georgia, Turkey, Bulgaria, Romania and Hungary as part of a plan to reduce Europe's dependency on Russian gas. Hurdles to building Nabucco have included securing a deal with energy-import dependent Turkey, which analysts say has been dragging its feet at the bargaining table to win rights to import a portion of Nabucco gas for its own use. "We discussed the issue of supply security for Turkey. I believe we have enough gas in the region so that everybody could be satisfied," Piebalgs said in an interview with Reuters and two Turkish media. "The only issue is to find a way to accommodate the interests of the European Union, producer countries and Turkey." Piebalgs, who held talks in Ankara with Prime Minister Tayyip Erdogan, President Abdullah Gul and Energy Minister Hilmi Guler, said there was no disagreement over transit fees, but that Turkey was concerned about its own energy supplies. "Turkey ... doesn't want to see all the gas go from producer countries to the European Union," he said. European Commission officials had expected to reach a deal by the end of the year, but Piebalgs said Nabucco countries would now meet early next year to sign an intergovernmental agreement. Piebalgs, who left Turkey for Azerbaijan late on Thursday on the second leg of his trip, said he was confident Nabucco's participants would secure sufficient gas volumes to make the project viable. The pipeline is due to be operational by 2013, but before building can begin, its participants need commitments to provide at least 15 bcm a year. Azerbaijan could provide at least half of that, but the Russian gas monopoly, Gazprom , has also offered to buy Azerbaijani gas at European prices. "It is obvious Russia is also a very serious bidder. Russia could make a proposal that is better than ours," he said, adding: "The gas is not only Azerbaijani, but in the medium term it is also Turkmen gas and Iraqi gas." August's war between Russia and Georgia, one of the transit countries, increased doubts about the security of investing in the turbulent region. But Piebalgs said the EU was still committed to Nabucco and another pipeline project called ITGI. The ITGI pipeline is one day expected to carry 12 bcm of Caspian gas a year via Turkey and Greece and Italy. Both are key to the efforts of the 27-member bloc to reduce its reliance on Russian gas.

Russia buys Oman's share in Caspian Pipeline Consortium

CARACAS, November 6, 2008 (RIA Novosti) - Russia has bought out Oman's share in the Caspian Pipeline Consortium, and the deal is expected to be closed within the next two weeks, the head of the Transneft pipeline operator said Thursday. "We have bought out Oman's share - the entire 7%. Now only the technical details remain," Nikolai Tokarev said, adding that documents from Oman should be received and the legal procedures completed. Another buyer for Oman's share was Kazakhstan, which holds 19% in the CPC. Russia's share is now 31% Russian business daily Kommersant said on Wednesday. Russian Prime Minister Vladimir Putin first hinted that a deal might go ahead at a meeting with Kazakh President Nursultan Nazarbayev last Thursday. In an interview with Kommersant, a source in Transneft, the operator of the Caspian Pipeline Consortium (CPC), confirmed that the deal had been completed, but did not disclose any details. Oman agreed to sell its stake in the project early this year, Kommersant said. The country had sent relevant offers to Russia and Kazakhstan. Hungary's MOL was also a potential bidder. Russia agreed to buy the entire 7% stake for $700 million, the price offered by the Hungarians. However, a Kommersant source close to the deal said the final price was around $350 million - half the starting price. The 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. Mikhail Barkov, Transneft's vice president, said in late September he was not ruling out the possibility that the international consortium could be forced to close down. He said the agreements on privileged tariffs for the consortium were set to expire at the end of 2008, putting into question the pipeline's future existence.

Tuesday, November 04, 2008

EU Fights for Nabucco's Future

Nabucco pipelineNovember 05, 2008 - Radio Free Europe - The fate of the Nabucco pipeline project appears to be hanging by a thread. No EU official would publicly admit this, but the signs tell their own story. First, as a senior EU official told reporters in Brussels on November 4 on condition of anonymity, transit talks with Turkey have stalled. Second, Azerbaijan is dithering between competing Russian and EU bids for its gas exports, which are crucial to bringing Nabucco on line in 2012 as planned. Third, in the long term, Azerbaijani gas alone will not be sufficient. The EU official said that "other countries in the region" must supply most of the 31 billion cubic meters (bcm) of gas Nabucco is expected to carry by 2020. But Iran, with the world's second-largest reserves, remains off-limits as long as it continues to enrich uranium. And Turkmenistan, with its enormous export potential, has yet to decide whether to invest in a trans-Caspian pipeline linking it to Azerbaijan -- and Nabucco. The common thread for all these countries, and the EU as the ultimate beneficiary of the 3,300-kilometer-long pipeline, is the question of intent and commitment. EU Makes Its Case On November 5-7, EU Energy Commissioner Andris Piebalgs will visit Turkey and Azerbaijan to demonstrate the bloc's continued commitment to Nabucco. "The first objective of this trip is to show the political commitment of the European Commission to the Nabucco project and to reaffirm once more that we are convinced that it is going to be online according to the planned timetable," says Piebalgs' spokesman, Ferran Tarradellas. The Russian-Georgian conflict sent shock waves through the region and among potential investors. But official Brussels remains steadfast in the belief that Nabucco is safe from Moscow's interference. "Russia would jeopardize its reputation as a reliable supplier" to the EU if it acted in any way to damage Nabucco, said one official. However, none of Nabucco's essential building blocks is currently in place. Turkey continues to hold out for a better transit deal while Azerbaijan has yet to formally commit its gas exports to the project. Tarradellas says that while Piebalgs' visit is a sign that the EU is upping the ante in its talks with the two countries. "We're going to discuss also the remaining differences with the Turks and the question of the transit of the gas through Turkey," he says, "and then we're going to be visiting Azerbaijan, which will be probably be the first supplier of gas for the Nabucco pipeline." The senior EU official who spoke on condition of anonymity said that, apart from charging a transit fee, Turkey wants to divert 15 percent of Nabucco's gas for cheap domestic use. As Azerbaijan is insisting on selling its gas at European market rates minus transit costs, the Nabucco consortium and its subsidiaries in Turkey, Bulgaria, Romania, Hungary, and Austria would be left to pick up the tab. Piebalgs is keen to break the deadlock before the end of the year. In Turkey this week he will meet with the country's president, prime minister, foreign minister, and economy minister. Where Will Gas Come From? Azerbaijan, meanwhile, has yet to decide to whom to sell the estimated 7-9 bcm of gas it is able to export annually in the early years of Nabucco's operations. The senior Brussels official said EU companies are pitted against Russian competitors. There are fears in the EU that Russian political pressure could clinch the deal for Russian bidders. A decision is expected sometime in 2009. EU officials say that the fact that Piebalgs has secured a meeting with Azerbaijani President Ilham Aliyev is a sign of "interest" on the part of Baku in doing business with the EU. But Azerbaijan's gas reserves, even if supplemented by the planned expansion of the Shah Deniz field, will not be sufficient to keep Nabucco in business. And this is where Nabucco currently hits a wall. Iran will remain untouchable in trade terms as long as it refuses to cease uranium enrichment. Like Azerbaijan, Turkmenistan and Kazakhstan can be swayed by Moscow's cash -- or outright pressure. And even if Turkmenistan's recently confirmed reserves of 14 trillion bcm dwarf Russia's own transit capacity, Moscow will be seeking to deny the EU a piece of the pie. Piebalgs is hoping to soon visit Turkmenistan and Kazakhstan, his aides say. This leaves Iraq and Egypt as the only other viable regional suppliers for Nabucco -- with one extremely unstable and the other rather remote. Meanwhile, EU officials reject suggestions Nabucco could eventually carry Russian gas diverted south. This, they say, would defeat the purpose of Nabucco -- which is to diversify supplies. (Competing Russian projects, such as South Stream, are not seen as a problem, however. The EU's growing demand for gas will make sure it has a market and the diversification of transport routes is a good in itself). If the degree of insecurity associated with the 8 billion-euro ($10.3 billion) project coupled with the global financial crisis is making potential investors nervous, officials in Brussels remain serene. When pressed, they do point out, however, that should private investors balk, public lenders such as the European Investment Bank and the World Bank stand ready to step in.

First Kazakh Oil Pumped Through BTC pipeline

04.11.2008 - [Neftegaz.RU] - The first shipment of Kazakh oil has been pumped through a strategic pipeline that bypasses Russia on its way to Western markets, an Azerbaijani official said Monday. The shipment from the massive Tengiz field is a significant step toward connecting Central Asia's gas and oil resources to Western markets. Most of Kazakhstan's oil currently is shipped via a pipeline that goes through Russia, skirting the Caspian Sea's northern shores. Oil from Tengiz, a Caspian field that is one of the world's largest, entered the Baku-Tbilisi-Ceyhan pipeline last week after being shipped across the Caspian Sea by ship, said Tamam Bayatli, a spokesman for pipeline operator BP. He declined to say how much was being shipped. The BTC pipeline, which opened in May 2005, opened up Caspian Sea oil fields to export routes that bypass Russia. The Caspian Sea is estimated to hold the world's third-largest reserves. Officials with Azerbaijan's state oil company have said up to 100,000 barrels of Kazakh oil a day could ultimately be sent through the 1,100-mile pipeline.

Nord Stream gets nod from Russian environmental watchdog

RBC, 01.11.2008, Moscow 13:39:51 - A positive expert review from the state environmental commission on the Russian offshore section of the Nord Stream gas pipeline has been approved, Russia's Natural Resources Minister Yury Trutnev was told by his deputy Semyon Levi, as reported by the ministry's press office. The expert commission, created by the environmental watchdog Rostekhnadzor in September 2008, approved the report at a meeting earlier this week. The Russian offshore section of the Nord Stream gas pipeline will be built in the country's inland sea waters, territorial waters and exclusive economic zone. The expert commission recognized the project's design specifications as meeting the ecological standards set out in Russian laws on the protection of the environment.

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