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Thursday, April 30, 2009

Gazprom, Bulgarian Energy Holding to initiate South Stream co-operation

Apr 30, 2009 - (COMTEX) - Russian gas monopoly Gazprom and Bulgarian Energy Holding have initialed an agreement of co-operation to create a gas pipeline for natural gas transit via Bulgaria as part of the South Stream project. The agreement is expected to be signed in the near future. Russian natural gas has been exported to Bulgaria since 1974. In 2008, Gazprom supplied the country with around 3.5 billion cubic meters of gas; and also transports gas to Turkey, Greece and Macedonia via Bulgaria. Gazprom and Italian energy major Eni are partners in the South Stream project. The total length of the Black Sea section will be around 900km, with the maximum depth exceeding 2,000m and design capacity averaging 31 billion cubic meters. The section is planned for commissioning in 2013. In January 2008, Russia and Bulgaria had signed the intergovernmental agreement stipulating Bulgaria's entry in the South Stream project.

Srbijagas: Contract with Gazprom on May 14

30 April 2009 - B92 News - BELGRADE, NOVI SAD - A contract for forming a joint company between Srbijagas and Russian Gazprom will probably be signed on May 14, says Srbijagas CEO Dušan Bajatović. Bajatović told daily Dnevnik that as well as the contract and the joint company’s statute, an annex would also be signed governing relations between the partners, whereby no decision could be taken without Srbijagas or the Serbian government’s say-so. He said that the South Stream pipeline was due for completion in late 2015, with the first delivery of gas to arrive in the first few days of 2016. Russian Prime Minister Vladimir Putin has confirmed that Russia and Bulgaria have reached an agreement to build the pipeline. Bajatović said earlier that someone would have to pay for the EUR 100mn in gas losses incurred—either the citizens or the state. According to the Srbijagas CEO, the losses were not the fault of the company leadership, but the disparity between the purchasing and sale price, as gas was being sold at a loss. He said that he expected gas prices to be lower in the third quarter of this year, in line with the fall on world markets, but that the most pressing matter was to resolve the problem of losses and debts among the biggest consumers. “Work on the gas reservoir at Banatski Dvor is under way, and filling should begin in July. We’ll collect enough gas by the start of the heating season to be able to draw five million cubics a day for up to two months,“ Bajatović told daily Dnevnik.

Transneft sees steady Russian output

04-30-2009 - Upstream OnLine - Russian oil pipeline monopoly Transneft expects the country's crude production to remain stable this year, despite the economic slowdown, and will receive the first tranche of a $10 billion Chinese loan by the end of May, company president Nikolai Tokarev said today. Russia last year recorded its first annual output decline in a decade and Moscow must balance its need for oil revenues against the demand of the budget as the country heads into recession. "Volumes will stay at practically the same level," Tokarev told Reuters in comments cleared for publication. Transneft is well-placed to calculate Russian oil production due to the orders it receives from producers to fill its pipelines. Tokarev said output would increase by 2012, although perhaps at a slightly slower rate than envisaged last year. "According to the data, the orders we receive from oil producers, there should be growth of 62 million tonnes by 2012," he said, referring to data submitted last November. "Probably, growth will not be so dynamic, although there is no decline. My forecast is that the production plan will not change radically." Russia produces about 485 million tonnes of oil annually, or 9.7 million barrels per day. Production has stalled as deposits in western Siberia reach maturity, and companies are now moving into eastern Siberia and the Arctic to maintain growth. To deliver this new crude to Asian markets, Transneft is building the East Siberia-Pacific Ocean pipeline. The first stage of the project will be complete by 25 December, Tokarev said. He said the second stage of the pipeline, which will extend to Russia's Pacific coast by 2014, would prove cheaper to build than the 400 billion roubles ($12 billion) originally budgeted. "We are sure we will succeed in lowering (the cost), as construction costs and pipes are cheaper. There is an opportunity to economise," Tokarev said. China will receive 15 million tonnes of oil annually over two decades as part of the $25 billion loan deal agreed with Transneft and state-controlled oil company Rosneft . Transneft will receive $10 billion and supply 6 million of tonnes of oil annually to China. Rosneft, from which it will buy the oil, will supply the other 9 million tonnes and receive $15 billion from China. Transneft also plans "in the near future" to issue bonds worth 35 billion roubles ($1.05 billion) to finance an export pipeline to the Baltic Sea, Tokarev said. "We have already registered the issue," he said, adding that it was part of a long-term plan to issue bonds worth a total of 135 billion roubles.

Wednesday, April 29, 2009

GDF Denies It Was in Talks To Buy Stake in Nord Stream

29 April 2009 - The Moscow Times - GDF Suez chief executive Gerard Mestrallet said Monday that the French utility was not in talks to buy a minority stake in the Gazprom-led Nord Stream gas pipeline. Gazprom said last year that GDF expressed interest in taking a minority stake in the pipeline, which is due to start at the end of 2011. Reports have circulated that E.On was willing to sell part of its stake in the project. On April 14, Stanislav Tsygankov, head of Gazprom's external relations department, said the Nord Stream consortium had entered into talks with GDF. GDF's talks with Gazprom are focused on securing additional long-term gas supply contracts, Mestrallet said on the sidelines of a conference in New York. It has held no talks with E.On, he said. "We are just not interested in simply being in the pipe," Mestrellet said. "We are interested if, and only if, at some point we get long-term gas supply contracts." GDF Suez was unsuccessful in becoming the sixth partner for the Nabucco gas pipeline project, which aims to pump Caspian gas to Europe and is viewed as a Nord Stream rival. Russian gas supplies made up 14 percent of GDF's long-term supplies at the end of 2008, a percentage that Mestrallet has said could rise with little risk. "As a supplier of gas, we can say that with the only exception of January 2008, when they stopped supplying through Ukraine, in the past 25 years Gazprom and Russia have been reliable, smart suppliers," Mestrallet said. Last month, Gazprom CEO Alexei Miller met with French Ambassador Jean de Gliniasty, who "noted the importance of the successful completion of the Nord Stream project for Europe's energy security," according to a Gazprom statement.

Putin Strikes South Stream Deal With Sofia

hand shake29 April 2009 - The Moscow Times by Anatoly Medetsky – Russia and Bulgaria bridged their differences over the planned South Stream pipeline after two days of intensive high-level diplomacy, Prime Minister Vladimir Putin and his Bulgarian counterpart Sergei Stanishev said Tuesday. Putin also said Russia saw no point in continuing to be a signatory to the European Energy Charter after it failed to regulate Moscow's dispute with Ukraine over transit to Europe in January. In addition, Moscow will also consider lending Sofia several billion euros to fund construction of a 4 billion euro ($5.2 billion) nuclear power plant in Bulgaria by a Russian company, Putin said. South Stream appeared to have consumed most of the diplomatic efforts during Stanishev's visit, which saw two days of talks with Putin over the issue and a delay in meeting President Dmitry Medvedev. As a result of the deal, Russia dropped its intention to use Bulgaria's existing pipelines to transit gas to Europe as part of South Stream, instead agreeing to consider other options, Putin and Stanishev said without naming them. Putin downplayed bilateral contentions in the matter. "How did we overcome the tensions?" he said, repeating a question from a Bulgarian reporter at a news conference, before adding, "With our inherent laid-back brilliance. It was easy. ... We didn't even notice them. There were no tensions." Stanishev was more reserved in his assessments. "It may not be with brilliance, but we are coping successfully," he said at the same news conference. Under a contract running to 2030, Bulgaria now handles 17 billion cubic meters of gas from Russia every year, transporting most of it on to Greece, Turkey and Macedonia and keeping 3.5 bcm for domestic needs. South Stream, to be laid on the bottom of the Black Sea and to surface in Bulgaria, is planned to have an annual capacity of 31 bcm. Gazprom and partner Eni of Italy want to complete constructing the undersea stretch in 2013. Bulgaria insisted that Gazprom must build a new pipeline to carry South Stream's gas, saying it needed the existing network to continue handling the current transit and remain available for any alternative supplies from projects such as Nabucco. Putin said further talks were needed on transiting gas in excess of the current amount. He suggested a solution during a Monday meeting with Stanishev, and they came to a preliminary agreement, Putin said. He did not elaborate on the nature of the deal. Stanishev said only that the agreement comprised all the points that Bulgaria had pressed for. Gazprom and the Bulgarian Energy Holding company will sign the deal by mid-May, the prime ministers said. Putin used the news conference to suggest again that Russia might withdraw from the European Energy Charter, apparently to give more weight to a recent proposal by Medvedev that the international community adopt a broader alternative energy security pact. "Today, it's possible to say definitely and expressly that we don't see a point in maintaining our signature under that document," Putin said.

Tuesday, April 28, 2009

Russia, Bulgaria to sign South Stream deal in 2 weeks - Putin

MOSCOW, April 28, 2009 (RIA Novosti) - Russia and Bulgaria will endorse preliminary documents on the South Stream gas pipeline later on Tuesday and sign a final agreement in two weeks, the Russian prime minister said. The project, designed to annually pump 31 billion cubic meters of Central Asian and Russian gas to the Balkans and on to other European countries, involves Bulgaria, Serbia, Hungary, Italy and Greece. "This document will be initialed today and signed in a couple of weeks. Russia and Bulgaria have no disagreements," Vladimir Putin said at a news conference with his Bulgarian counterpart. He added that there had been some "technical" differences between Russian energy giant Gazprom and its Bulgarian partners related to the parties' contractual obligations, but said they were finally ironed out on Monday. The pipeline is to go on stream in 2013.

Bulgaria meeting highlights European need for gas as competing projects step up

Pipeline project04–27–2009 – Russia Today – Gas producers and consumers meeting in Bulgaria have highlighted Europe’s need for greater diversity in supply while the South Stream and Nabucco projects approach demand from differing viewpoints. Europe wants secure supplies from diversified sources. It is the single most frequent comment at the Energy Summit in Sofia, Bulgaria. Bulgaria itself is involved in two major projects – Russia’s South Stream and the European backed Nabucco. It wants to satisfy domestic energy needs and become a gas hub and its looking at two projects with different approaches. South Stream has enough commitments from producers to supply the pipeline. But disagreements over the route has delayed the signing of an agreement between Gazprom and the Bulgarian Energy company. The Nabucco project will start building the pipeline and then start attracting suppliers, according to Reinhard Mitschek, Managing Director of Nabucco Pipeline International.
“We count on any sources. That’s one of the USP’s of the pipeline, that’s not necessarily that we have to rely on one source. But we see gas from Azerbaijan, Turkmenistan, from Iraq, from Egypt, even from Iran, from Russia.”
Azerbaijan is one of the countries that can determine Nabucco’s fate. Its fields hold 12 billion cubic metres of gas. But developing them could cost about $18 billion. But Elshad Nassirov Vice President of SOCAR, Azerbaijan’s major energy company, says the country wants to see Nabucco participants signing transit and other agreements well before allocating its gas.
“Obviously projects should first get the legal side set up – sign inter governmental and host agreements. So far there is no legal framework for the Nabucco project in place.”
Russia’s Gazprom may consider joining Nabucco – upstream as a producer. But the company will not redirect volumes from South Stream, according to Stanislav Tsygankov, Head of the International Department at Gazprom, who notes that Russia could supply all demands itself for a number of years.
“According to calculations there is already enough gas discovered in Russia to last a minimum of 100 years. And clients in Europe and Russia have nothing to worry about.”
European consumers will need up to 200 billion cubic metres of gas annually by 2012. Russia currently provides up to one third of Europe’s needs and wants to know exactly how much Russian gas Europe will need in the future, while the EU is looking for diversified supply from central Asia. However its going to be a long time before Europe’s houses are heated by Turkmen or Azeri gas due to the lack of agreement between transit countries like Turkey.

Nabucco Project Faces Turkish Hurdles at Critical Turn

PipesApril 27, 2009 - Eurasia Daily Monitor by Vladimir Socor - Capitalizing on the European Commission's November 2008 initiative to promote the Corridor and to create a Caspian Development Corporation, the Budapest meeting set the goal of signing the Intergovernmental Agreement (IGA) and at least clear the way for signing the Project Support Agreements (PSA's) during the first half of 2009. In March the EU allocated 200 million Euros to the Nabucco project as seed capital for the first time ever, with more expected after the IGA and PSA's are signed. Drawing on that seed funding, the Nabucco project company has already begun contracting work from some engineering firms in the transit countries. Turkey's AKP government, however, continues to obstruct the project, causing it to lose momentum again as it nears the landmark signing dates. Clearly, this government does not share the EU's goal of moving forward with Nabucco by signing the IGA and clearing the way for the PSA's. Instead, the AKP government has developed a vested interest in dragging out the project, using it as leverage on the EU in the even longer-dragging EU-Turkey accession negotiations; and trying to leverage it also on extraneous issues such as the Cyprus conflict (EDM, March 4, 5, 16, April 20). Unless the EU has a serious dialogue with the AKP government, the latter can continue stalling on Nabucco and even on other issues of interest to the EU (while using similar tactics in NATO). The EU can have that serious conversation with Ankara on the Nabucco project. The United States also supports Nabucco politically, but seems currently in a poor position to weigh in with Turkey effectively on this issue. President Barack Obama avoided raising the Nabucco issue during his recent visit to Turkey. Instead, the U.S. became the party seeking Turkey's favors on a range of strategic and political issues during Obama's visit. Turkey's ambitions to become an energy "hub" constitute the wrong basis for policy planning in Ankara on energy, regional policy, and on relations with the EU. The AKP government can only achieve such ambitions at the expense of supplier countries' resources and at European consumers' expense. Meanwhile, Ankara is negotiating with Moscow about a further increase in imports of Russian gas through the Blue Stream pipeline and its proposed extension, Blue Stream Two. As part of its strategic partnership with Russia, the AKP government (mainly through the Ministry of Foreign Affairs in this case) has even been trying to include Gazprom into the Nabucco project. For any such deliveries, however, Gazprom expects to use mainly Turkmen gas (or gas swapped with Turkmenistan). Gazprom even hopes to use some Azerbaijani gas, if the AKP government continues to obstruct Azerbaijan's westward outlet. Those would be the same gas volumes that should find their way from Turkmenistan and Azerbaijan, bypassing Russia, via Georgia and Turkey to Europe, in accordance with the primary vision of Turkey as a corridor for Caspian gas to the EU. Instead of a European corridor, however, the AKP government would turn Turkey into a gate-keeper and toll-extractor; or even into a corridor for Gazprom-delivered gas from Central Asia in the guise of "Russian" gas. Meanwhile, Turkey buys Azerbaijani gas far below market prices and would only readjust it slightly, nowhere near commercial value. Ankara has just reaffirmed that position in the government's retort to Azerbaijani State Oil Company's chairman Rovnag Abdullayev on this issue (ANS TV, Baku, Anatolia News Agency, April 25; Hurriyet, April 26). Inadvertently, the EU and the United States (most recently during Obama's visit) have conveyed to the AKP government an exalted sense of its importance to the West. Apparently encouraged to feel indispensable, it is overplaying its hand with growing boldness toward the EU and within NATO. Such tactics are already boomeranging. They have recently strengthened the opposition in some major European political circles to the idea of Turkey joining the EU, or turned some former supporters and fence-sitters into opponents. When Turkish officials stall on Nabucco, or turn it into leverage on the EU to accelerate accession negotiations, the obvious response would be to turn the tables and seek Ankara's cooperation on Nabucco and other energy issues as a prerequisite to any acceleration of accession negotiations. Turkey's behavior on Nabucco will also inevitably be considered in any future decision on the transport of Iranian gas to Europe. In that case, Turkey would have to be circumvented. By stalling and posing unacceptable conditions on Nabucco, the AKP government is losing Europe's confidence in Turkey's reliability as an energy partner to the EU.

'Pipeline On Rails' Looks Promising - Alberta Official

April 24, 2009  - Dow Jones Newswires by Susan Daker - HOUSTON (Dow Jones) Canadian National Railway's (CNI) "Pipeline On Rails" initiative to transport oil-sands production is feasible, Alberta Energy Minister Mel Knight said Friday. Earlier this month, the Financial Post, a Canadian business journal that is part of the National Post, reported that CN was undertaking a project to move oil by rail as a way to compete with pipelines. More pipeline capacity is needed to transport oil-sands production, a growing source of oil supply to the U.S., but construction can be expensive and time-consuming. The newspaper reported that by the end of the year, CN will be shipping 10,000 barrels a day. In the near future, CN believes it can ramp up that rate to 300,000 to 400,000 barrels a day, Knight told reporters in Houston. The product would move from eastern Alberta to the West Coast of Canada, Knight said. The Financial Post reported that CN could eventually scale up to a million barrels a day and could send crude as far away as the U.S. Gulf Coast. CN approached the Alberta government about six months ago with the project, and the two groups have had "very good meetings," Knight said. Knight said he has seen CN's economic feasibility study. "It's more than economical on a comparison to pipelines," Knight said. Of course, though, he added, any pipeline company would say otherwise. And the Alberta government hasn't done its own feasibility study, he said.

Friday, April 24, 2009

'Nabucco nod will spur gas hunt'

Reinhard Mitschek04-24-2009 - Upstream OnLine - A final investment decision to build the Nabucco gas pipeline - expected next year - should spur a multi-national search for gas to fill it, project leader Reinhard Mitschek said today. The managing director of Nabucco said fears that repeated delays to the 3300 kilometre pipeline project to wean Europe off its dependence on Russian gas could mean Caspian gas being grabbed by countries like China were unfounded. "I am sure that once the pipeline has been decided and the final investment decision is taken that will attract additional exploration and production activities in central Asia and the Middle East," Reuters quoted him telling told journalists on the sidelines of a conference in Sofia. "We see gas from Azerbaijan, Turkmenistan, Iraq, Egypt, even from Iran and Russia. We do not exclude any source... We are confident that the pipeline will reach plateau level earlier than expected." Nabucco is expected to open in 2014, if an intergovernmental agreement on the €7.9 billion ($10.41 billion) project can be agreed as expected in June. But the president of StatoilHydro's Azeri gas business told Reuters at the conference that first gas from the second phase of Azerbaijan's Shah Deniz field in the Caspian - seen as a major source for Nabucco - would be delayed to from 2014 to around 2016 because of the lack of progress on Nabucco transit agreements. Mitschek said that Europe's long-term gas demand growth was enough to justify several gas pipelines and that Russian gas export monopoly Gazprom's and Italian player Eni's South Stream pipeline, were not seen as a rival to Nabucco. "I refuse an approach of either South Stream or Nabucco," he said. Nabucco's shareholders are Austria's OMV, Hungary's MOL, Romania's Transgaz, Bulgaria's Bulgargaz, Turkey's Botas and Germany's RWE.

'EU needs to move on Nabucco'

04-24-2009 - Upstream OnLine - Turkmenistan is keen on the European Union-backed Nabucco gas pipeline but needs Brussels to come up with concrete proposals on its implementation, a senior US official said today. In Turkmenistan to attend an energy conference, US Deputy Assistant Secretary of State George Krol said the gas-rich Caspian nation was serious about efforts to diversify gas exports and break into new markets. "The president of Turkmenistan has said that he is interested in Nabucco," Krol, who met top Turkmen officials during his visit this week, told Reuters in an interview. "It is now waiting for concrete proposals from companies and participant states," Krol added. Europe has long courted Central Asia's biggest gas producer whom it sees it as a potential big supplier for Nabucco, a project designed to reduce EU energy dependence on Russia. But analysts say the project may be headed for failure unless the EU commits to buying Caspian gas quickly. Relations between Turkmenistan, which sells most of its gas to Russia, and Moscow soured this month after a gas explosion on a key pipeline which Turkmenistan blamed on Russia, giving the West a chance to firm up its position and win Turkmen support. "This explosion is of course a technical matter but it is a good argument in favour of diversification," said Krol, who oversees South and Central Asian affairs. "There can be earthquakes and other disasters and that is why it is always good to have an alternative." Addressing officials at the conference, President Kurbanguly Berdymukhamedov said he wanted to work closer with Europe to diversify flows, a remark which could be upsetting for Russia which considers Turkmenistan as part of its sphere of interest.

Gas to Europe: new projects just to keep pace with demand

04-24-2009 - Russia Today - New pipelines intended to carry gas to Europe will not reduce the volume of Russian gas piped through Ukraine. That's the message Russia is taking to a conference of gas producers and consumers in Bulgaria. Russia – with the world’s largest gas reserves – is the biggest single gas supplier to Europe. Germany, Italy and Turkey are among 30 consumer countries. Most of the gas comes by pipeline through Ukraine – the route for almost 80% of Russia’s gas to Europe. With most of that export capacity already used, Russia's Gazprom is developing new export routes to ensure stable supplies. Chief among these is the Nord Stream pipeline that will carry gas from Russia under the Baltic sea to Germany says Valery Yazev, Chairman of the State Duma Committee on Energy. “The Nord Stream capacity is 55 billion cubic meters of gas annually from 2012. Europe's consumption will grow, and in 2012 it will reach 150-to-200 billion cubic meters. Nord Stream’s capacity is just a quarter of that. So transportation through Ukraine will not decrease when the Nord Stream comes online. It will just help Russia keep its third of the European gas market.” Another project high on the agenda is South Stream that will take gas under the Black Sea to Bulgaria. It will be discussed at the conference, Sofia Natural Gas for Europe – Security and Partnership, with 28 European countries attending. Bulgaria, Serbia and Greece have already signed up to have Russian gas cross their territory but Victor Myasnikov, Oil Analyst at Uralsib believes there is a lot more negotiating ahead. “Gazprom will be negotiating with all the countries-it's an ongoing process. we have to mind that governments that have been signing come and go and there are other people to negotiate with.” But that's not all. There's also the EU's Nabucco project which would deliver gas from Central Asia to Europe. Though Russia's involvement is limited, analysts say Russia could take part upstream – dealing with producers.

Thursday, April 23, 2009

Gazprom Pushes Brussels on Pipeline

April 23, 2009- New York Times by James Kanter - BRUSSELS — Gazprom began a campaign in Brussels on Thursday to overcome “prejudice” against its South Stream gas pipeline — just as the Russian energy giant’s project hit a roadblock at the European Union’s border with Bulgaria. Prime Minister Vladimir V. Putin of Russia canceled his appearance on Friday at an energy summit in Sofia, because of slow progress over negotiations concerning a vital part of the route for the pipeline, according to news reports. South Stream will run under the Black Sea and link Russia directly to Bulgaria, bypassing Ukraine, through which more than 80 percent of Russian gas is now sent to customers in Europe. The negotiations are important for Russia because Bulgaria could force Gazprom to build a costly new network to transport the gas rather than allow it to use Bulgaria’s existing facilities. As part of the effort to push the project along, Gazprom representatives said they had held talks with the European Commission, the executive arm of the E.U., on giving the project a form of priority status, which would make it eligible for financial aid for feasibility studies and special loans. The perception among some Bulgarians, as well as in other parts of Europe, was that Gazprom was “going to take our network, which is not true,” said Sergei Kupriyanov, the spokesman for Gazprom. South Stream “is an important project at the European level,” Mr. Kuprianov said during an interview in Brussels. Mr. Kuprianov said building South Stream would be complementary to Nabucco, a separate pipeline project that would supply gas from other countries in the Caspian Sea region, rather than from Russia. Many E.U. leaders favor Nabucco but are skeptical about South Stream. They see Russia is an unreliable trading partner that has used gas supplies as a way to bully countries like Ukraine to stay within its sphere of influence. A dispute in January between Russia and Ukraine that severely interrupted gas supplies to Europe was the second incident of its kind in three years. Bulgarians were hardest hit, with many were left to shiver in a severe winter cold snap. Mr. Kuprianov said he met Thursday with Andris Kesteris, cabinet head for the E.U. energy chief, Andris Piebalgs, to discuss making South Stream a priority project. He said Gazprom officials would seek to make a presentation to the European Parliament to promote South Stream later in the year. Ferran Tarradellas, a spokesman for Mr. Piebalgs, said Gazprom would need to prove that South Stream represented “added value” for Europe to become a priority project. Mr. Tarradellas said Nabucco had already gained that status because it would diversify supplies away from existing suppliers like Russia. Even so, Mr. Tarradellas stressed that European authorities would not discriminate against Russian pipelines. He pointed out that the E.U. had already accepted a Gazprom-backed pipeline for Northern Europe, Nord Stream, as a priority project. Mr. Kuprianov said there could be broad benefits to gaining priority status. The recognition would show that contentions that South Stream is only in Russia’s interest were “completely untrue.” Gazprom’s “aim is to make sure there’s no prejudice toward South Stream,” he said.

Bulgaria offers own version for the “South stream” network

Gazprom to bring Blue Stream to Italy23.04.2009 - Bulgarian News - “The Bulgarian energy holding” and “Gazprom” to sign a transit agreement for the “South stream” gas pipeline, which to give possibility for the Russian company to pay taxes for the transition of gas to Greece and Italy if the holding constructs part of the network. This option offers the Bulgarian energy ministry to the Russian side, informed a source close to the negotiations. The Bulgarian side insists on the Russian company to construct own network on the project, while “Gazprom” refuses with the motive that this is economically not profitable. For Bulgaria, the acceptance of the Russian suggestion – the existing network to be used, would mean blocking the transit for neighboring countries and Sofia to be deprived of the possibility for alternative gas supplies. The Russian gas monopolist offers to build diversion of the gas pipeline to Greece, the capacity of which according to energy experts is filled. “The wish of the Russian side is absolutely unacceptable, in the ratified by the parliament intergovernmental agreement for “South stream” is written that a new gas pipeline will be built by the future joint company”, said deputy minister of economy and energy Yavor Kuyumdzhiev for “Dnevnik” newspaper. He confirmed the idea for the agreement. The intergovernmental agreement stipulates for a project company to be established with equal participation of the energy holding and “Gazprom”. Bulgaria insists on a multilateral agreement to be signed, which to guarantee the realization of the project. On Tuesday the spokesman of the Russian company Sergei Kuprianov cancelled the scheduled press conference in Sofia on which he was supposed to give some details on the Russian position on the project. The reason was he missed the plane to Sofia. The vice-president of “Gazprom” Alexander Medvedev announced to the information channel “Vesti”, that this year corporative agreements with Bulgaria, Serbia and Greece would be signed. He explained that the company would suggest to the European Union the project to become a priority one. The Russian side insists also during the energy forum, organized by president Georgy Parvanov, a protocol to be signed, with which “Gazprom” is not engaged to guarantee the securing of 31 billion m3 gas annually for the gas pipeline.

Tuesday, April 21, 2009

Gazprom to sign pipeline agreements

April 21, 2009 - (UPI) - SOFIA, Bulgaria, The Russian energy giant Gazprom said it will sign agreements with Bulgaria, Serbia and Greece on its South Stream gas pipeline to Europe. Alexander Medvedev, the deputy director of Gazprom, told the Bulgarian Vesti TV channel Tuesday that all technical and economic assessments of the $13 billion South Stream project are to be completed this year when agreements with the three Balkan countries should be signed. Medvedev said Gazprom will urge the European Union to place the South Stream pipeline -- transporting Russian gas under the Black Sea and across the Balkans to Europe -- on its priority list, the Sofia News Agency SNA said. Gazprom and the Italian Eni oil and gas company plan to build the South Stream pipeline, which would bypass Ukraine –the biggest and politically troubled route for Russian gas to Europe. Russia and Serbia have reached a political agreement on the South Stream pipeline and Gazprom secured the participation of Bulgaria, Hungary and Greece in the project.

Monday, April 20, 2009

'EU needs to source Nabucco gas'

04-20-2009 - Upstream OnLine - The Nabucco pipeline project, designed to ease the European Union's dependence on Russian gas, could be headed for failure unless the EU commits to buying Caspian gas quickly, analysts have warned. Competition for resources from the energy rich central Asian region is growing with Russia, China and Iran buying up the available gas, while the EU lacks a coherent plan and diplomatic resolve to compete, analysts said. Four months after a cut-off in Russian supplies to Europe that shut down factories and left thousands of people without heating, the 27-member bloc has done little to secure supplies for the stalled Nabucco project. "The time is running out, there are many competing projects, and there are many actors competing for the same gas. I haven't seen any significant progress," Agata Loskot-Strachota of the Warsaw-based Centre for European Studies think tank, told Reuters. The January dispute between Moscow and transit country Ukraine was a wake up call for the EU, which gets a quarter of its gas from Russia and has been talking about reducing its reliance since a similar row in 2006. At a summit last month, EU leaders again voiced their support for the €7.9 billion ($10.25 billion) Nabucco project. The proposed link will carry 30 billion cubic metres of mainly Caspian gas per year through Turkey, Bulgaria, Romania and Hungary to Austria. But the EU has not given Azerbaijan, Turkmenistan and other potential suppliers any real incentive to supply the project. "Europe's problem is that there are too many cooks, that it does too much talking and too little acting," Borut Grgic, a Caspian and energy expert at the Brussels-based Institute for Strategic Studies, told Reuters. "Europeans who think that all the Caspian gas is available for them are dreaming," he said. "Smart geopolitics suggests if you are sitting in Baku or Ashgabat to sell a little bit of gas to everybody." Critics say the EU has not given as much cash or political support to projects such as Nabucco as Russia or China have to their own energy projects. Last year, state-run Russian export monopoly Gazprom offered to buy Azeri gas at European market prices. Azerbaijan agreed in March to start talks on selling Russia gas to export to Europe from 2010. Earlier this year, Iran sent a high-level official to Baku with an offer in hand. China has also signed a deal with Central Asia's top exporter Turkmenistan to buy more of its gas. By contrast, EU member countries organise summits instead of working to overcome internal divisions or engaging the Caspian suppliers, analysts said. Part of the problem lies in major powers which tend to back projects that secure their own energy supplies rather than work with the whole bloc to make Nabucco, which will benefit mainly eastern Europe, a reality, they said. All the Nabucco project leaders have secured is a promise by Baku to provide 3 Bcm of gas but nothing has been put on paper. Analysts told the news agency that the EU must take advantage of Ashgabat's strained ties with Moscow over a gas pipeline explosion and quickly come up with an offer for Turkmen gas. "Even if Turkmenistan stays reluctant to commit seriously, such an offer would be an important signal of the EU's interest, commitment and readiness to engage not only with Turkmenistan but with the whole Central Asian region," said Loskot-Strachota. Analysts have said Central Asian producers, fearful of angering Russia, may be reluctant to make any written committments to Nabucco unless Brussels makes guarantees on its timing, transit arrangements and financing. And with so many other options around, nations in the Caspian will likely spread their bets. "The supplying countries are shopping around for the best deal ... They are not going to hurry to jump into bed with anyone," said Mark Rowley of legal firm Baker Botts. To speed up work on diversification, Bulgaria - the country worst hit by the January gas cut-off - is organising a conference of central Asian, Russian and European officials from 24 April to 25 April. The summit comes three months after a similar event in Hungary and two weeks before a Caspian-EU summit in Prague. Analysts said the overlapping forums in Sofia and Prague would achieve little, like the one in Budapest, due to the expected absence of Turkey's Prime Minister Tayyip Erdogan, whose country has also become an obstacle to Nabucco. Turkey wants to exploit its geographical position and turn into a gas supplier to Europe, hoping to buy Azeri gas cheaply and re-selling it at a higher price to the EU. Brussels has so far failed to reach a deal with Turkey, which has once again delayed the signing of an intergovernmental deal needed to launch the project to June.

Latvia set to propose alternative to Nord Stream

MOSCOW, April 17,2009 - (RIA Novosti) - Latvia plans to offer Gazprom the possibility of building a gas pipeline across its territory as an alternative to Nord Stream, the Latvian president said on Friday. Construction of the 1,220 km pipeline to pump 27.5 billion cubic meters of natural gas annually under the Baltic Sea is tentatively due to begin in 2010. It expected to go on stream in 2011 and will export Russian natural gas to Germany, Britain, the Netherlands, France and Denmark. In an interview with Ekho Moskvy radio, Valdis Zatlers said Nord Stream "is a joint Russian-German project" that can give Latvia neither commercial benefit nor opportunities for cooperation. However, he said, if a gas pipeline was laid not on the seabed but on land, Latvia "could make available its gas storage facilities." The president also said Nord Stream was environmentally hazardous as, unlike the North Sea, "there is no water exchange" in the Baltic Sea. "Basically, it's a lake," he said. At the same time he said Latvia would not hinder Nord Stream's implementation if all environmental concerns were addressed. Gazprom holds a 51% stake in Nord Stream AG, the project operator. Germany's Wintershall Holding and E.ON Ruhrgas control 20% each, and the remaining 9% belongs to Dutch Gasunie.

Medvedev, Halonen to talk energy security, bilateral ties

MOSCOW, April 20, 2009 - (RIA Novosti) - Russian President Dmitry Medvedev begins a two-day visit to Finland on Monday to discuss bilateral economic ties, energy issues, including the Nord Stream project, and prospects for signing a pan-European security pact. A Kremlin aide said Medvedev is making the visit at the invitation of his Finnish counterpart Tarja Halonen. "The agenda for the visit envisages top-level talks and a meeting with the parliament's leadership," Sergei Prikhodko said. Energy cooperation is expected to feature highly on the agenda, with Russia meeting 100% of Finland's gas needs as well as exporting some 70% of the country's crude oil supplies. "When discussing issues concerning the construction of the Nord Stream gas pipeline, running under the Baltic Sea across the Finnish economic zone, the accent will focus on the observance of the strictest environmental requirements during the project's implementation," the presidential aide said. Environmental approval is required from Finland, as well as Sweden, Denmark and Germany, to build the pipeline which will cross their territorial waters. Other Baltic nations are also involved in talks to discuss potential border cooperation as part of the project. The pipeline's first leg of some 1,200 km with an annual capacity of 27.5 billion cu m of gas is planned to be commissioned in 2010. Work to launch the second line is expected to be completed by 2012. Moscow also expects the two presidents to focus on bilateral economic ties, primarily in engineering, shipbuilding, material production and optoelectronics. Bilateral trade between Russia and Finland stood at a record high $22.4 billion in 2008, up 42.1% against 2007. However, Russian-Finnish trade dropped by 38.2% year-on-year amid the financial crisis in January 2009. Prospects for signing a pan-European security pact initiated by Medvedev as well as cooperation between Russia and the European Union and plans to reform international financial system are also likely to be raised. "Medvedev will be eager to discuss with Halonen the results of the G20 summit. We also think it is important to understand how our Finnish partners view the bilateral efforts to overcome the consequences of the global economic crisis," Prikhodko said. Russian Foreign Minister Sergei Lavrov, presidential aides Arkady Dvorkovich and Sergei Prikhodko, Economic Development Minister Elvira Nabiullina and some other high-ranking officials are accompanying Medvedev in his visit. This year marks the 200th anniversary of the establishment of the Grand Duchy of Finland, which preceded modern day Finland, as part of the Russian Empire. Finland was annexed by Russia as an autonomous Grand Duchy in 1809 following defeat by Sweden at the hands of Russia's Tsar Alexander I until December 1917 when it declared its independence. The Finnish president is due to attend a number of events in St. Petersburg this year as part of the festivities.

E.ON seeks to reduce stake in Baltic gas pipeline

04-19-2009 - MOSCOW (AFP) — Germany's energy group E.ON is seeking to reduce its stake in a planned Russian-German gas pipeline under the Baltic Sea, its boss said in an interview to be published Monday. Wulf Bernotat told the weekly Wirtschaftswoche that Gaz de France (GDF) could join the Nord Stream project controlled by Russian state-run energy giant Gazprom. "Negotiations are under way, but we would be prepared to cede up to 4.5 percent of our share," he said. "As far as I know, GDF wants to acquire 9.0 percent." E.ON and Germany's BASF currently each have a 20 percent stake in Nordstream and the Dutch Gasunie nine percent, with Gazprom holding the remaining 51 percent. Bernotat rejected unconfirmed reports that potential funding banks were demanding the participation of another major group. Nord Stream would allow Russia to export gas directly to Germany without passing through transit countries like Ukraine. But Baltic states have also expressed worries about the project, including fears that its construction could disturb conventional and chemical weapons sunk to the bottom of the sea during World War II. The pipeline is due to be built between 2009 and 2011. Bernotat also hinted that E.ON was interested in joining Electricite de France in building a new generation nuclear power station at Penly in western France.

Thursday, April 16, 2009

Turkmenistan, RWE sign energy deal to develop gas export route to Europe

April 16, 2009 - (AP by Alexander Vershinin) - ASHGABAT, Turkmenistan — German energy company RWE AG signed a tentative deal Thursday with Turkmenistan that could see it exporting natural gas from the Central Asian nation to Europe. The memorandum of understanding marks a significant breakthrough in Western efforts to diversify gas deliveries away from Russia, which is currently embroiled in a diplomatic row with Turkmenistan over a pipeline explosion last week. RWE chief executive Juergen Grossmann said the long-term deal will also give his company development rights to an offshore field in the Caspian Sea. "They will work on developing oil and gas resources on the 23rd block of Turkmenistan's Caspian shelf," Turkmen President Gurbanguli Berdymukhamedov said after meeting with Grossmann in the Turkmen capital, Ashgabat. European plans to reduce dependence on Russian gas have focused on building a pipeline across the bottom of the Caspian Sea, an option that is being studied by RWE. "There are number of possibilities, and one of them is to go via the Caspian Sea, which is the option we are working on," Grossmann said. RWE is a partner in the international consortium hoping to build the EU-backed Nabucco pipeline, which is aimed at bypassing Russia by transporting from Azerbaijan, through Turkey and onward to Europe. Progress on the pipeline has faltered over doubts about its financial viability, but guarantees of Turkmen gas supplies would improve the project's chances. In 2007, the Kremlin sought to undercut Nabucco by signing a declaration on the construction of a 1,100-mile (1,700-kilometer) pipeline along the Caspian Sea shore that would run from Turkmenistan through Kazakhstan and into Russia's network of pipelines to Europe. Gazprom hopes the pipeline will supplement current gas deliveries from Turkmenistan by around 30 billion cubic meters. Relations between Turkmenistan and Russia have turned sour in recent days, however, with Turkmenistan accusing Gazprom of causing a pipeline blast on its border with Uzbekistan last week that shut off the Central Asian country's gas exports. On Monday, Berdymukhamedov charged the company with committing "technological errors" that triggered the blast and invited independent experts to investigate the incident.

Wednesday, April 15, 2009

GDF Suez in drive to secure and strengthen gas supplies could take part in Nord Stream

April 10, 2009 (Reuters by Benjamin Mallet) - PARIS, - French utility GDF Suez said on Friday it was in talks with Russia's Gazprom over taking part in the North Stream gas pipeline project. GDF Suez Chairman and Chief Executive Gerard Mestrallet told reporters that getting a stake in this pipeline was part of its drive to secure and strengthen its gas supplies. "We have started talks with Gazprom ... We are ready to take part in this project, which directly links Germany and Russia via the Baltic sea, under the condition that we secure additional gas supplies," Mestrallet said. Gazprom said at the end of 2008 the French energy group had expressed interest in taking a minority stake in the pipeline, which is due to start at the end of 2011. "We have gone from virtual interest to agreement with our partners, to making practical sense of it," Gazprom official Stanislav Tsygankov told reporters in Moscow. GDF Suez was unsuccessful in becoming the sixth partner for the Nabucco gas pipeline project, which aims to pump Caspian gas to Europe and is described as the rival project to Nord Stream. Russian gas supplies made up 14 percent of the group's long-term gas supplies at the end of 2008. "This percentage rate could grow even though we believe supply security is achieved through supply diversity," he added. At the end of 2008, 23 percent of the group's gas imports came from Norway, 15 percent from The Netherlands, 12 percent from the Middle East and Asia and 11 percent from Algeria. GDF Suez plans to buy up to 2.5 billion cubic metres of gas per year from Nord Stream, a 5 billion to 8 billion-euro gas pipeline which would run 1,200 (746 miles) from Vyborg in Russia to Greifswald in Germany under the Baltic sea. The Nord Stream, majority owned by Russian gas monopoly Gazprom , is building the pipeline with Germany's BASF and E.ON and has plans to build two parallel gas pipelines of 750 miles (1,200 km) each. Dutch state pipeline operator Gasunie has joined the project, taking a 9 percent stake from the German partners.

Putin Touts Nord Stream To Schroeder

15 April 2009 - The Moscow Times - Completing the Nord Stream pipeline will give Germany a new status as a "major transporter" of Russian gas, Prime Minister Vladimir Putin told former Chancellor Gerhard Schroeder in St. Petersburg on Tuesday. "The northern European gas pipeline is in the interests of many European countries, above all Germany and Russia," Putin told Schroeder, who chairs the Nord Stream shareholders' committee and is his longtime ally. Putin's comments appeared to refer to the pipeline consortium's desire to bring in Gaz de France as an investor. The pipeline, which would run from Russia to Germany under the Baltic Sea, is 51 percent controlled by Gazprom, with Germany's BASF/Wintershall and E.On Ruhrgas each holding 20 percent and Dutch Gasunie holding 9 percent. Stanislav Tsygankov, head of Gazprom's external relations department, said Friday that the consortium had entered into talks with GDF. Gazprom said Tuesday that CEO Alexei Miller met with French Ambassador Jean de Gliniasty for energy talks. De Gliniasty "noted the importance of the successful completion of the Nord Stream project for Europe's energy security," Gazprom said in a statement.

Tuesday, April 14, 2009

Turkey Hopes to Sign Nabucco Pipeline Deal by June 2009

April 13, 2009 - BBC Monitoring - Turkey has sent a letter to EU countries which are part of the Nabucco gas pipeline project and now expects their answers. "If they sent the answers by the end of April, we will sign deals by June," Turkey's energy minister said. "We expect the European Union to send us the text that EU countries agreed on," Hilmi Guler told reporters. "We sent them (EU countries) the intergovernmental agreement and host government agreement. They sent their responses. However, we have discussed again and again things that we already agreed on. I sent a letter to avoid that. What I said was (just sign and send us, from one point of view, something that you agreed on)," Guler said. Turkish government wants to start the project, which would carry gas to European markets from fields in the Caucasus and Central Asia, as soon as possible, Guler said. The EU currently relies heavily on Russian natural gas carried through Ukrainian pipelines. Eighty percent of gas bound for Europe travels via Ukraine. Nabucco is planned to be an alternative route to transport gas from Turkey to Austria through Bulgaria, Romania, and Hungary. It is also an alternative source to the Russian supply. The pipeline would carry gas from mainly Azerbaijan's Shah Deniz fields, as well as Turkmenistan, Kazakhstan and Iran. Construction of theE3,300-km pipeline is scheduled to start in 2011 and first deliveries are expected in 2014. The project is expected to cost around 7.9bn euros. Turkey wants 15 percent share from natural gas to be carried through the Nabucco pipeline. Guler said Turkey asks 15 percent for its own use, not to sell it.

Monday, April 13, 2009

Nord Stream partners start talks on Gaz de France invitation

MOSCOW, April 10 (RIA Novosti) - Nord Stream partners have started talks on inviting the Gaz de France company to join the gas pipeline project, a senior Gazprom official said on Friday. "On the whole, I think we have moved from verbal interest to the phase of wide-ranging talks with our partners," said Stanislav Tsygankov, the foreign economic contacts chief at Gazprom. The 1,220 km pipeline to pump 27.5 billion cubic meters of natural gas annually is due to go on stream in 2010. It is currently being laid under the Baltic Sea to export Russian natural gas to Germany, Britain, the Netherlands, France and Denmark. Gazprom earlier said Gaz de France (GDF) was seeking to enter the project as a minority shareholder. Gazprom Spokesman Sergei Kupriyanov said the issue should be considered by a Nord Stream shareholder committee. Gazprom holds a 51% stake in Nord Stream AG, the project operator. Germany's Wintershall Holding and E.ON

Financing 'not a problem' for Nabucco

April 10, 2009 - UPI - BAKU, Azerbaijan, The Nabucco gas pipeline to Europe is a top priority for the region despite a scaled-back financial package from the European Union, officials said. Christian Dolezal, a spokesman for the Nabucco pipeline consortium from Austrian member OMV, said in an interview with the Trend Capital news agency that the project was key to energy security in Europe. "Nabucco is back on the list of priority projects," he said. Europe puts great emphasis on the diversification of its energy transit network. That effort received renewed focus following a January row between Moscow and Kiev that disrupted European gas supplies for weeks. The majority of Russian gas bound for Europe travels through Soviet-era pipelines in Ukraine. The Nabucco pipeline would avoid Russian and Ukrainian territory to bring gas to European customers from Caspian and Middle Eastern suppliers. The European Union downplayed the project in March, allocating only $272 million of an original $323 million for a project expected to run $10.7 billion. Dolezal said, however, that "financing is not a problem" because of World Bank credits and lender investments. "Negotiations are on their way," he added.

Georgia signs White Stream MOU

April 6, 2009 - UPI by Daniel Graever - Georgia signed a memorandum of understanding in Tbilisi with the London company responsible for the planned White Stream pipeline under the Black Sea to Europe. White Stream would bring gas from the Caspian region along a complex route under the Black Sea, through Georgia, Romania and others and on to markets in Europe. The initial capacity is estimated at 282.5 billion cubic feet per year, though later connections could more than triple that volume. Roberto Pirani, managing director of GUEU-White Stream Pipeline Co., told the Platts news service that while negotiations were under way with potential host countries, construction for the pipeline was years away. "It will take us five years to start laying the first pipeline after we have completed all the necessary agreements," he said.

Thursday, April 09, 2009

Gazprom undermines Nabucco implementation

April 08, 2009 - PanARMENIAN.Net - Europe's energy consumers should have breathed a sigh of relief last month, when German Chancellor Angela Merkel reversed field to support EU funding for the Nabucco pipeline and the union earmarked €200 million of seed funding for the project in its coming budget. At last, the EU had banded together to provide monetary incentives for investment in the route that would bring natural gas to Europe through Turkey, providing an important alternative to Russian-controlled imports. But now it seems that hard-won unity may have been too little, too late. The long-suffering Nabucco project - always a geopolitical priority but a commercial question mark - was designed to depend in its first phase on new gas coming online from Azerbaijan's Shah-Deniz II and Azeri-Chirag-Guneshli fields in the Caspian Sea. The second phase, when the pipeline reached its full capacity of 31 billion cubic meters per year (still just a fraction of Europe's gas needs), would require gas from Turkmenistan, Iran, Iraq or the Gulf states. In the beginning, however, Azerbaijan's gas is key. Yet the Russians may have just taken it. Rovnag Abdullayev, the head of Azerbaijan's state-owned energy company, visited Moscow on March 27. There, in a quiet ceremony at the headquarters of Russia's Kremlin-controlled energy behemoth Gazprom, he signed a memorandum of understanding that pledges gas from Azerbaijan's two new fields for Russian consumption -- and possibly for further export to the EU. While still nonbinding, the agreement could undercut the viability of the Nabucco project entirely. European consumers, such as those in Bulgaria who froze this January when Moscow cut off their gas for almost three weeks, stand to lose another alternative to Russian gas. Two alternatives, in fact: Azerbaijan is also the only route through which Turkmen gas can reach Europe without going through Russia. European energy diversification could very quickly depend on a potentially hostile Iran, as gas flowing from Iraq and the Gulf alone would not be sufficient to justify Nabucco's construction. The offer from Gazprom had been on the cards since at least March of 2008. So what compelled Mr. Abdullayev to visit Moscow now? After all, Baku has been a driving force behind Nabucco's construction as a vehicle for building closer ties with Turkey and the West. Two major developments in the past few months have changed that calculus: Russia's invasion of neighboring Georgia, and Turkey's decision to tie energy projects across its soil to Ankara's gaining EU membership. The former challenged the region's Western trajectory but did not necessarily knock Baku's ambitions off course. The latter, however, left Azerbaijan and the other oil- and gas-producing states around the Caspian without a reliable bridge to Europe. There was little choice left but to turn north, to Russia. It is perhaps ironic that EU unity on Nabucco came less than two months after Turkey's Prime Minister, Recep Tayyip Erdogan, refused to attend a conference on the pipeline's construction, citing the still-closed energy chapter of Turkey's EU accession process as a barrier to cooperation. Turkey has met all of the technical requirements for opening the chapter, but continuing intra-EU disagreements over Turkey's membership stand in its way. Those disagreements, whether over divided Cyprus, immigration, culture or religion, also stand in the way of Europe's energy diversification. Perhaps their importance should not be played down, but neither should the implications of Russia's energy geopolitics. Barack Obama's new administration clearly understands the strategic importance of taking Turkey's interests seriously, having made Ankara the final stop on his just-completed European tour. Turkey-skeptic EU leaders ought to take Mr. Obama's lead and at least visit the country to listen to those interests articulated. The result of Turkish resentment is not only a lost energy-transit partner but, more important, lost energy producers. This could mean the collapse of Nabucco, a project the European Commission has labeled an EU strategic priority. Such a prospect would leave European consumers in the same position as Azerbaijan: with little choice but to turn to Russia, The Wall Street Journal reports.

Is Europe serious about energy security?

9 April 2009 - FOCUS News Agency – Sofia. Alexander Medvedev, Gazprom Deputy CEO, expressed the company’s support towards the idea that Europe needs to satisfy increasing natural gas demands trough diversifying gas transit routes and securing gas deliveries, according to The 24 Chasa Daily. He explained that this is the very intention of the Nabucco, South and North Stream projects, aiming to supply additional quantities of gas directly to EU consumers. The EU and Gazprom are both interested in the efficiency and security of Ukraine’s gas transit network, Medvedev said, but the EU missed a chance to improve its energy security by excluding Russia from talks on its modernization. Ukraine’s gas transit network is completely synchronized with Russia’s. There are fundamental technical reasons why the Ukrainian system cannot operate separately. Gazprom must participate, or else, there will be direct and unpredictable consequences on whole Europe, due to changes in gas exportation contracts with Russian and Central Asian producers, Mr. Medvedev concluded.

Wednesday, April 08, 2009


4/07/09 - EurasiaNet - Russia’s energy behemoth Gazprom is eager to strike a deal with Italian executives that, if completed, could crush the export hopes for the rival Nabucco pipeline project. Gazprom executives expressed optimism late on April 6 that Italian energy companies were moving toward signing a deal that would see the Russia-backed South Stream pipeline extended to Italy. Gazprom Chairman Alexei Miller appeared to make progress toward an agreement during talks in Moscow with Paolo Scaroni, the CEO of ENI, Italy’s top oil & gas concern, and Fulvio Conti, the head of Enel, Italy’s largest utility company. The executives "deliberated on the issue of bilateral cooperation in the energy sector, paying special attention to the current activities within the pre-investment stage of the South Stream project and to the development of interaction through joint gas and power energy projects in Italy, Russia and third countries," according to a Gazprom statement. The South Stream gas pipeline plans to pump 31 billion cubic meters (bcm) of gas per year directly from Russia across the Black Sea through Bulgaria and Greece. An Italian extension of the route would make Nabucco redundant, some experts believe. Russian Prime Minister Vladimir Putin and his Italian counterpart Silvio Berlusconi are due to hold a bilateral meeting later in April. Gazprom sold more than 22 bcm of gas to Italy in 2008.

Tuesday, April 07, 2009

Gazprom wants Bulgarian gas pipelines for “South stream”

04.07.2009 - News.bg - “Gazprom” has offered to Bulgaria to use part of the country’s gas transportation system for gas supplies under the “South stream” project, according to the daily RBK newspaper. The Russian monopolist wants to use the Bulgarian gas pipeline to Greece. According to experts, by using the existing pipelines, “Gazprom” could save a lot of money for the construction of new pipelines to Bulgaria’s southern neighbor. The “South stream” pipeline is a joint project of “Gazprom” and the Italian company Eni and is expected to pass under the Black sea directly connecting Russia with Bulgaria. The northern branch of the pipeline, which will lead to Serbia, Hungary and Austria should pass through the Bulgarian territory. RBK daily cites the Bulgarian deputy minister of economy and energy Yavor Kujumdjiev, according to whom the Bulgarian government is firmly against the suggestion Bulgaria’s gas transportation system to be used for the Russian gas. During the energy conference in Sofia on 24-25 April Bulgaria and Russian should sign an intergovernmental agreement. “Gazprom” claims that Greece doesn’t consume so much gas and the construction of a new pipeline won’t be profitable. However, formal refusal for the usage of the existing Bulgarian system has not yet been received. According to Russian analysts Bulgaria’s behavior in this situation could be defined as an attempt to “increase its value” through the help of the limiting of the possible maneuvers of “Gazprom” after signing the agreement with Hungary and Serbia.

Monday, April 06, 2009

Turkey wants extra Russian gas supplies from 2015 - Gazprom

NOVO-OGARYOVO, April 3 (RIA Novosti) - Turkey has asked for additional natural gas supplies from Russia from 2015, including via the Blue Stream-2 pipeline, the CEO of Russia's state-controlled energy giant Gazprom said on Friday. The planned Blue Stream-2 pipeline, part of the existing Blue Stream system linking Russia to Turkey via the Black Sea, would extend the system to Israel. The throughput capacity of the project, being carried out by Gazprom and Italy's ENI, is planned at 8 billion cubic meters. "From 2015, Turkey wants to receive additional volumes of Russian gas, including via the Blue Stream-2 pipeline" for its domestic market, Alexei Miller told Russian Prime Minister Vladimir Putin. Moscow and Ankara agreed in late March to set up a working group for the Blue Stream-2 project. The Russian premier also said he was counting on the support of Israel in the construction of a new oil pipeline via Turkey and Israel. "I recently spoke with the Israeli prime minister-elect, and I reminded him of the creation of a new pipeline via Turkey and Israel. I believe there will be support from the Israeli government," Putin told Miller. The mooted new pipeline would link to the Samsun-Ceyhan oil pipeline, due to be constructed across the beds of the Red and Mediterranean seas.

Friday, April 03, 2009


04-03-2009 - EurasiaNet - In a development that may spell big trouble for Russia, Turkmenistan has expressed determination to diversify energy exports. Ashgabat is indicating that it may use the so-called East-West gas spur -- which was originally envisioned as linking Turkmenistan into the Russian-controlled Prikaspiiski pipeline network - as a means to carry out its diversification plans. A statement outlining Turkmenistan’s intentions, posted April 3 on the website of the state news agency, makes for uncomfortable reading for Gazprom, which currently enjoys a stranglehold on Turkmen natural gas exports. Gazprom had originally said it would finance the East-West spur, but it backed out of the deal during Turkmen leader Gurbanguly Berdymukhamedov’s late March visit to Moscow.. Now Turkmenistan appears intent on carrying out an international tender for the East-West contract. "The era of monopolies in this segment of the world economy is a thing of the past," the official Turkmen statement said. "Rapidly growing demand for energy [...] stimulates the search for new configurations, schemes and project models of alternative energy supply routes. Which [new configuration] is chosen is the sovereign right of the parties to a particular project." The statement provided no specifics on Turkmenistan’s development plans. Ashgabat has expressed interest in participating in the US-supported trans-Caspian pipeline (TCP) project, which would become part of an export route to Europe that evades Russian control. But so far, Turkmen officials have made no firm commitments to the TCP route. The East-West spur is estimated to cost about $1.5 billion to build. The April 3 statement took repeated swipes at Russia, but gave no indication that Turkmen leaders were ready to embrace the US-backed TCP route. In not so subtle terms, the statement accused Russia of trying to bully Turkmenistan on energy-related issues. "The issue of sovereign rights of countries to choose the manufacturer of the supply routes of their energy is inextricably linked to the right to formulate prices for them," the statement said. "In this context, the only correct pattern for the formation for natural gas prices is direct agreements between the seller and buyer. In doing so, logically, that it is the country of production determines the price based on cost of gas production." If Russia wishes to remain an influential player in the development of Turkmenistan’s energy resources, Ashgabat’s statement seemed to demand that the Kremlin undergo an attitude adjustment. The statement hinted that Russia’s approach to energy issues was "anachronistic" because it attempted to "politicize the problem of energy supply, to use them as a tool to achieve political goals or to satisfy corporate interests." "The modern approach - an approach based on the interests of all participants in the energy market [is to] to protect energy supply from political and other risks," the statement added. Turkmen officials indicated that they would explore diversification options an upcoming energy conference in Ashgabat on April 23-24.

Thursday, April 02, 2009

Eni's Scaroni, Gazprom's Miller Discuss South Stream Project

APRIL 2, 2009 - (Dow Jones by Luca Di Leo)- ROME. The heads of Russian gas giant OAO Gazprom (GAZP.RS) and Italy's largest energy company, Eni SpA (ENI.MI), discussed the progress of the South Stream natural gas pipeline at a meeting in Moscow Thursday, Eni said. In a statement, Eni said Chief Executive Paolo Scaroni and Gazprom head Alexei Miller looked at "the progress in implementing the pre-investment stage of the South Stream project, given its strategic relevance to providing a significant contribution to secure direct gas supplies to Europe." The EUR10 billion pipeline - a 50-50 joint venture between the two companies - is expected to pump as much as 30 billion cubic meters of Russian gas into the European market.

Wednesday, April 01, 2009

Azerbaijan: Gazprom deal means no change for Baku’s energy policy

1 April 2009 - EurasiaNet by Shahin Abbasov - Baku. Executives for the State Oil Company of the Azerbaijani Republic and Azerbaijani energy experts are insisting that a recent memorandum of understanding signed with Gazprom in no way means that Baku will abandon the Nabucco pipeline project, or other Western-backed natural gas ventures. The memorandum, signed by the two companies on March 27, establishes that talks will begin at an unspecified date on the shipment of an unspecified quantity of gas to Russia from Azerbaijan, starting in January 2010. In connection with the potential export commitment, technical inspections of the 228-kilometer gas pipeline from Baku to Dagestan (Novo Filya) are expected to begin shortly. The pipeline, which has been idle since 2007, can handle up to 8 billion cubic meters (bcm) of gas per year. Local and international media have interpreted the agreement as meaning that Baku has changed its energy policy to favor Russia, after earlier this year, in February, expressing support for the rival Nabucco project. In a March 30 interview with ANS television, however, SOCAR President Rovnag Abdullayev stressed that the deal with Gazprom will not touch gas from Stage 2 of the Shah Deniz project, a mega gas source (10-12 bcm per year), scheduled to come online in 2014-2015. It is Stage 2 gas that has been the focus of competition between Russia and European Union countries. "This gas [from "Shah Deniz] is a matter for separate negotiations," Abdullayev said. "The memorandum with Gazprom is about gas from SOCAR’s own fields." Selling gas for a good price "is one of the main interests of Azerbaijan and we are considering any route and conducting talks with companies and countries," said Abdullayev, repeating a long-standing company position. The price SOCAR will receive for gas delivered to Dagestan will be a topic for future talks, he added. Abdullayev presented the prospective deal as a means to an end -- access to additional markets beyond the North Caucasus via Gazprom’s Russian pipeline network. Gazprom, in turn, has interest in supplying gas to Iran via Azerbaijan, he said. "We [SOCAR] are also interested in gas supplies to other countries with use of Gazprom’s infrastructure as transit lines. There are many issues of mutual interest and they all are represented in the memorandum," he said Ilham Shaban, an independent Baku-based energy expert, observes that SOCAR has more than enough gas of its own to sell without touching the Shah Deniz field. "SOCAR has sharply increased gas production from its own fields during the last two years," Shaban said. The company has sufficient gas to supply "about 1.5 bcm" to Gazprom for Dagestan as of 2010, he estimated. After refusing imports of Russian gas in early 2007, SOCAR has spent about $1 billion increasing its own gas production, according to company data. In 2008, company production stood at 8 bcm of gas, double the level of 2006. SOCAR’s production target for 2010, the year gas deliveries to Dagestan would begin, is set at 9.5 bcm. While gas supplies "are always linked with politics," noted Shaban, SOCAR has merely hit on "a very good deal" for its extra gas. Aside from improving Azerbaijani-Russian relations, "[i]t could catalyze the efforts of Western countries and governments which plan to import large volumes of Azerbaijani gas in the future," he continued. "Finally, it will restart the pipeline and will diversify Azerbaijani gas supplies even more and bring in additional revenue, which is important in the current [global financial] crisis." With oil now selling at a mere $48 per barrel, capitalizing on Azerbaijan’s other energy resources has gained greater importance. As the Nabucco project promoters fumble over financing, Gazprom has made several ambitious offers to Azerbaijan since 2007. [For background see the Eurasia Insight archive]. It has offered to modernize the country’s underground gas storage system, buy all gas from Stage 2 of Shah Deniz, and provide swap supplies of Azerbaijani gas to European customers via Russia. Like a trader keeping his options open, SOCAR chief Abdullayev, however, stresses that the Gazprom memorandum in no way means that Baku is backing out of the Nabucco and TGI (Turkey-Greece-Italy) projects. "Talks are going on with all participants," he told ANS television. "We are even interested in a trans-Adriatic pipeline. The major issue for us is to try to sell gas for the best commercial terms." Italy has expressed interest in buying up to 9 billion cubic meters of Azerbaijani gas beginning in 2015; Greece has its sights on 2 billion cubic meters, or 45 percent of its annual needs. Vafa Guluzade, a former presidential advisor and longtime Russia skeptic, concurs that Azerbaijan will not cut off Europe with such deals in the works. "Azerbaijan is not going to sell all its gas to Russia and Baku will not refuse Nabucco," Guluzade said. Pro-opposition political analyst Hikmet Hajizade calls the Gazprom deal "normal energy policy." "European integration is a priority for Azerbaijan and it is not going to change," Hajizade told the 1news.az news portal on March 30.

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