Pipeliners

28 May, 2009 - Upstream OnLine - Russian giant Gazprom has decided to boost spending on the construction of a gas pipeline from Sakhalin to the Russian mainland to 50 billion roubles ($1.6 billion) this year, a senior executive said today. Gazprom recently started work on the link, which will run from Sakhalin to Khabarovsk before terminating at the Pacific port city of Vladivostok. The pipeline will be able to carry 30 billion cubic metres of gas per year. "Due to the accelerated pace of work it was decided to increase spending on the project this year to 50 billion roubles," Gazprom deputy chief executive Alexander Ananenkov said in a statement. The previously allocated budget was not revealed. Gazprom is now "actively mobilising construction efforts" and is buying pipe for the project, he said. The 1830-kilometre pipeline, which will terminate at Vladivostok, is due to come into operation in the third quarter of 2011. Gazprom added it is also considering building a gas liquefaction plant and gas chemical facility at Vladivostok. Both plants would source feedstock from the Sakhalin pipeline. During a visit to Tokyo earlier this month, Russian Prime Minister Vladimir Putin invited Japanese companies to take part in the construction of the pipeline, as well as the proposed LNG plant. A report published by Japanese newspaper Nikkei Business Daily at the time said Russia was seeking Japan's financial and technological assistance, but this claim has been neither confirmed nor denied by the Russians.

May 28, 2009 (Reuters) - MOSCOW, A trunk pipeline carrying natural gas exploded in the Russian region of Tver on Thursday, the Emergencies Ministry said, the latest in a series of pipe blasts testifying to Russia's antiquated energy infrastructure. The explosion on the Torzhok-Ukhta-2 trunk pipeline, which provides gas to Russia's northern regions, occured at around 0935 Moscow time (0535 GMT). No injuries have been reported, a ministry spokesman said. "We have extinguished the resulting fire. Efforts to replace the damaged section of the pipeline are now under way," the spokesman said. Russian gas export monopoly Gazprom (GAZP.MM), which controls the trunk pipelines, declined to comment on the incident. On May 10, a gas pipe explosion in Moscow sent flames 100 metres into the air and set buildings and cars ablaze, highlighting the need for Russia to renew infrastructure largely inherited from the Soviet Union.

05-27-2009 - AFP - MOSCOW, Russian gas export monopoly Gazprom is keen to participate in a pipeline to carry Iranian gas to Pakistan, the Kommersant daily reported on Wednesday, citing company and government officials. "We are ready to join the project as soon as we receive an offer," Russia's deputy energy minister Anatoly Yankovsky told the daily. The paper quoted another top government official as saying Moscow sees the pipeline as a means to divert Iranian gas from competing with Russian exports on the European market. "This project is advantageous to Moscow since its realisation would carry Iranian gas toward South Asian markets so that in the near future it would not compete with Russian gas to Europe," Kommersant wrote. Russian exports satisfy over one quarter of Europe's gas needs, but the European Union has sought to lessen its dependence with the construction of the Nabucco pipeline to pump Caspian Sea gas to Europe which would bypass Russia. The multi-billion dollar Iran-Pakistan pipeline, which aims to pump an initial 11 billion cubic metres of Iranian gas per year to Pakistan, could deprive the Nabucco project of one possible source for gas supplies. Gazprom spokesman Sergei Kupryanov confirmed the company's interest in the project, Kommersant reported. It cited an unnamed official in the company as saying Gazprom could serve as the pipeline operator or also participate in its construction. The start date for construction of the much-delayed pipeline is planned for september 2009 to be completed in June 2014, the paper reported. Iranian officials have said the supply of gas to Pakistan could begin in three to four years. The pipeline project, when initially mooted in 1994, had proposed to carry gas from Iran to Pakistan and India. But India withdrew last year from the talks over repeated disputes on prices and transit fees. The 900-kilometre (560-mile) pipeline is being built between Asalooyeh in southern Iran and Iranshahr near the border with Pakistan and will carry the gas from Iran's South Pars field. Iranian officials said Monday that the final contract would be signed in three weeks.

May 26, 2009 (UPI) - BAKU, Azerbaijan, Implementing the Nabucco gas pipeline to Europe requires overcoming "a range of difficult challenges," the energy minister of Azerbaijan said. "Azerbaijan agrees that the project is important and interesting, but indicates that the project participants are going to tackle a range of difficult challenges," said Natig Aliyev. Aliyev made his comments following a meeting with the European Union's special envoy for the South Caucasus, Peter Semneby. Europe is pushing aggressively for the $10.7 billion project as a means to move away from Russian energy dependence. Planners hope Nabucco would bring gas from Caspian and Middle Eastern suppliers through Turkey and north to European markets. Aliyev said European partners in the project should resolve matters concerning gas supplies and transit agreements before the pipeline is considered ready to go, the Azerbaijan Business Center reports. The report says it is "obvious" the project will fall short in terms of pipeline length and gas capacity. Europe had gathered regional parties at a May 8 summit in Prague, Czech Republic, to gather support for the pipeline, though several potential suppliers, including Turkmenistan, did not sign onto a final declaration on Nabucco. Europe emerged from the Prague summit with only Azerbaijan as a major regional gas supplier for Nabucco.

05-26-2009 - Upstream OnLine - Russia is set to start work on a new oil link to the Baltic Sea next month, pipeline monopoly Transneft said, launching a project that will allow Moscow to bypass Belarus. Transneft first proposed expanding the Baltic Pipeline System to Ust-Luga, near the Russian port of Primorsk, after a dispute with ex-Soviet neighbour Belarus disrupted oil flows to Europe via the Druzhba pipeline in 2006. "We plan the first welding on the pipeline on 10 June," Transneft spokesman Igor Dyomin told Reuters. Work had already begun to pave the way for the pipeline through the forest, he said. The new pipeline, known as BTS-2, will have capacity of 1 million barrels per day and is an extension of the existing Baltic Pipeline System. It will include a spur to feed crude to Surgutneftegaz' Kirishi refinery. The first phase of BTS-2 is due to be completed in September 2012. Russi is also building a pipeline to its Pacific coast to move oil from huge new fields in eastern Siberia to energy-hungry Asian markets, a move that will diversify Moscow's energy reach beyond its traditional markets in Europe. Initial estimates for the cost of BTS-2 were around $2 billion, but Transneft's latest estimate last June was for 120 billion roubles ($3.9 billion).

05-22-2009 - Upstream OnLine - Russia is close to tying up Austrian and Slovenian participation in the proposed South Stream gas pipeline, Energy Minister Sergei Shmatko said today. Russia also wants to make South Stream a "priority project" for the European Union, Reuters quoted Shmatko telling reporters following an EU-Russia summit in Khabarovsk. "In the last two or three weeks, we've held a series of negotiations with Austrian and Slovenian partners about an intergovernmental agreement," Shmatko told reporters. "This document is at an advanced level of preparation." Russia last week pinned down support for South Stream from Italy, Bulgaria, Greece and Serbia. Moscow wants to outpace the rival, Western-backed Nabucco pipeline, which would supply Europe with gas sourced from non-Russian producers. Shmatko said Russia and its European partners in the project would request that Brussels grant South Stream priority status. "We agreed with EU Energy Commissioner Andris Piebalgs that Russia once more, together with its European partners in the project, would prepare a circular for the European Commission about affording the project such status," Reuters quoted Shmatko as saying.

21/05/2009 - The Moscow News - The new Great Game in energy politics - the race between Gazprom's South Stream pipeline project and the European Union's planned Nabucco route - is escalating as countries are increasingly being pushed to take sides. In the latest developments, Italy's Eni agreed to double South Stream's capacity and Gazprom offered to buy Azeri gas in a deal that would be a major blow for Nabucco, while a tentative EU-backed deal to pump gas from Kurdish-controlled northern Iraq faltered after Baghdad vetoed the plan. The $8 billion deal with Kurdistan could have seen Nabucco pumping gas by 2014, a full year before Russia's rival South Stream project. Alexander Medvedev, deputy CEO of Gazprom, told Bloomberg television that it could buy all the gas from the Shah Deniz-2 field, which many had previously thought would be used for Nabucco. However, the reasons for the Russian monopolist's interest in Azeri gas remain unclear as it would be unlikely to make a profit on the Caspian Sea field. "We believe that Gazprom would buy this gas with the main aim of providing trouble-free gas supply to Europe," said Natalya Milchakova, senior oil and gas analyst at financial company Otkritie. "Nevertheless, we do not rule out that the government, as Gazprom's controlling shareholder, could force the company to adopt such a decision in order to offset the potentially competing Nabucco project." Gazprom is losing around 20 per cent of its income on gas from Central Asia as it is paying more than the export price to Europe and has also had to cut back on highly profitable domestic production due to the decrease in demand. "Azeri gas is too expensive to be sold domestically, so it can only be re-exported," Mikhail Korchemkin, managing director of East European Gas Research, wrote in an e-mail. "To re-export Azeri gas, Gazprom needs to cut down exports of Russian gas, the main source of its profit." Gazprom has denied that the offer is connected with Nabucco, stating that it is a long-term plan to increase the reliability of its deliveries and diversifying its export portfolio. "Russia and Azerbaijan are connected already with a developed gas-transport infrastructure," Gazprom's press office wrote on Thursday in an e-mailed response to questions. "The contract negotiations about purchasing Azerbaijani gas are a logical step not connected with the project Nabucco and directed towards the development of bilateral cooperation in the field of power." The State Oil Company of Azerbaijan, or Socar, is due to meet officials this month to discuss deals with Russia. Currently it only exports gas to its neighbours and both Nabucco and Gazprom could give it more options. "With Moscow we are negotiating this issue but I don't know how it will be able to transport gas from Shah Deniz and I don't think a big amount of that gas is able to be transported by Russia," said Vafa Guluzadeh, a longtime former national security advisor under Azerbaijan's late president, Heydar Aliyev, the father of current president Ilham Aliyev. "Azerbaijan wants to have many exits for the gas." In the longer term, Azerbaijan is looking to improve its relations with Europe and is likely to play a part in Nabucco. However, it also wants to remain on good terms with Russia and therefore some compromise would need to be agreed. "If I was the decision-maker in oil and gas resources, I would sell all oil and gas resources through Nabucco," said Guluzadeh. "But we are on the [Russian] border and that is why we are taking into consideration that the appeasement of aggressors may be the only way." Buying gas to limit the amount available from Azerbaijan would cause problems for Nabucco and some suggest that even with the participation of Shah Deniz, the pipeline may not be viable as the field wouldn't be able to export more than 10-11 billion cubic metres of gas per day. "It supplies gas to Georgia under a long-term contract, and opportunities for additional gas exports are limited," said Milchakova. "We assume that the owners of the Nabucco pipeline would prefer to see some Middle Eastern countries as key gas suppliers, rather than Azerbaijan or another gas producer from the CIS." While Azerbaijan and Central Asia remain a priority for the EU project, because they will at least be used as transit countries, the deal with Kurdistan would have provided enough gas to fill the pipeline. "It's an important and promising development for the acquisition of a huge volume of natural gas for Turkey and for Europe via Nabucco," Nabucco managing director Reinhard Mitschek told Reuters. Kurdish gas could have made Nabucco operational by 2014, a full year before Russia's rival South Stream project, but the Iraqi central government has overturned the deal. The Middle East's on-going political strife has the potential to disrupt Europe's Nabucco deadlines. "Nabucco has actually had Central Asian [gas] from the former Soviet Union in mind primarily," Pavel Sorokin, oil and gas analyst at Unicredit, wrote in an e-mail. "However, Iran/Iraq gas can indeed be used as well, but the political instability in the region can be a problem in terms of attracting investors and providing security, which would virtually render Nabucco's main reasoning (security and diversification of import routes into Europe) useless." Despite the problems Nabucco faces, Guluzadeh said he expected it to go ahead and Azerbaijan to be involved. However, he claimed that Russia and Gazprom could raise tensions in the region to maintain their dominance in the energy market. "Russia is trying to become a superpower in energy and dictate to Europe," said Guluzadeh. "But the Europeans are not stupid, they understand and that is why I think Nabucco will go ahead and succeed but the Russians will do their best to stop it." Gazprom's South Stream was also sped up after Russia agreed deals with Italy, Serbia, Greece and Bulgaria and is set to be completed by 2015, but Slovenia or Romania would still need to sign up. Although it is in competition with Nabucco, both projects could be successful and would ease consumer worries after the tensions with Ukraine in January. "If both pipelines are built, it may be a problem utilizing their full capacity (provided the route through Ukraine also remains in operation), as demand in Europe may not grow as fast," Sorokin said.

May 21, 2009 - Oil & Gas Journal by Uchenna Izundu - LONDON, Eni SPA and OAO Gazprom plan to double the capacity of the South Stream pipeline to 63 billion cu m/year. The line will deliver Russian gas directly into Europe by December 2015 under a new agreement. The original capacity was slated at 31 billion cu m/year and signifies their commitment to diversify gas supply routes following Gazprom's price spat with Ukraine earlier this year which stopped flows into Europe (OGJ Online, Jan. 2, 2009). Although the European Commission is keen to promote supply diversity, its preference lies with the proposed 31 billion cu m/year Nabucco pipeline, which would bypass Russia, and is slated to come onstream in 2014. However, there is no firm gas production committed from the Caspian and Middle East and financing is another key challenge. The European Commission has been earnestly trying to garner the necessary political support from the transit countries, including Turkey (OGJ Online, May 14, 2009). Only Azerbaijan has agreed to support Nabucco and Kazakhstan, Turkmenistan, and Uzbekistan—owing to political pressure from Russia—have declined. Iran is another potential gas supplier, but tensions between Washington and Tehran over Iran's nuclear program, means that it is difficult for Europe to pursue this option. Earlier this week, Russian Energy Minister Sergei Shmatko told reporters, "I consider South Stream to have every chance of being realised earlier than Nabucco." Gazprom has denied that Nabucco is a competitor because it has its own market and partners, and according to its forecasts, Europe will require a minimum of 100 billion cu m of additional gas by 2015. Gazprom has also pushed South Stream's 2,000 km development by signing deals with transit states Bulgaria, Greece, Serbia, and Italy for the construction of the €8.6 billion line. The agreements with the Bulgarian Energy Holding Co., Greece's Desfa and Serbia's Srbijagas outline preinvestment cooperation and the need to set up joint ventures to design, build and maintain the pipeline in their territories. The JV will carry out feasibility studies in each state focusing on detailed assessment of all technical, legal, financial, environmental, and economic factors. Gazprom will hold 51% in the joint venture with Serbia while Srbijagas will hold 49%. With Bulgarian Energy Holding, each company will have independent investment decisions on South Stream based on the results from their feasibility studies. Gazprom Chief Executive Alexei Miller said the pipeline would be launched on Dec. 31, 2015, but efforts would be made to start earlier if possible. Russian Prime Minister Vladimir Putin and his Italian counterpart Silvio Berlusconi were present during the signing of the agreements. According to press reports, Russia is willing to buy all the gas from the Shah Deniz project in Azerbaijan to underpin its projects. Nevertheless other challenges also surround South Stream such as the multibillion investments required to develop Russia's huge gas reserves, the majority of which in the remote Yamal region of northern Siberia. The economic downturn has made it very difficult to determine future gas demand and the gas liberalization process in the EU also raises complications. Gazprom's profits have been affected by the slump in gas demand and gas prices and finding money to develop South Stream could now be especially problematic. Gazprom and Eni have established a joint venture to construct the pipeline that will be laid under the Black Sea to Bulgaria, Greece, Serbia, Hungary, and Italy. Putin told reporters that he hoped Russia's relations with other European countries would be favorable like that it had with Italy.

20 May, 2009 – Upstream OnLine – Iraq is in talks to possibly export surplus natural gas through the Arab Gas Pipeline to the Middle East and Europe, Oil Minister Hussain al-Shahristani said today. "We are in talks to connect the Iraqi (gas) surplus to this pipeline in order to export it to Arab states and then to Europe," Oil Minister Hussain al-Shahristani said, referring to a gas pipeline originating in Egypt. Shahristani spoke during a press conference with Egyptian Oil Minister Sameh Fahmy, who was making a visit to Baghdad.

05-21-2009 - Upstream OnLine - The construction of the ground section of the Nord Stream gas pipeline is “entering the home stretch”, Gazprom board chair Valery Golubev said today. The Gryazevets-Vyborg pipeline, which is the ground section of the Nord Stream pipeline, is 917 kilometres, of which 597 kilometres run in the Leningrad region. Four compressor stations will be located in the region. The maritime section of the gas pipeline will begin from the last of them, Portovaya, and run to Germany. “There is no doubt that the remaining 320 kilometres will be built by 2010 so that the gas pipeline could be commissioned by the middle of next year,” he said in an Itar-Tass report. Meanwhile, Russian Energy Minister Sergei Shmatko said environmental issues might affect the Nord Stream project schedule. "We think that current processes related to the acquisition of permissions, including environmental ones, will be completed shortly," the minister said during a video conference between Moscow and Berlin earlier this week. "Nevertheless the Gazprom and Nord Stream companies are taking measures to make up for possible delays, I mean delays in full performance of work on the Russian side," Shmatko said. Gazprom has a 51%stake in the joint venture and BASF (Wintershall and E.ON Rurhgas) have equal shares of 20% each. The Netherlands' N.V. Nederlandse Gasunies has 9%.

// EU's overtures to eastern Europe and Moscow's gas war among contentious issues for talks at remote venue
05-21-2009 - Guardian by Luke Harding - Khabarovsk - Russia and the European Union were today holding a summit intended to improve their battered relationship, amid mutual exasperation and irritation in Moscow at the EU's recent attempts to lure eastern European countries away from Moscow's orbit. Russia's president, Dmitry Medvedev, was hosting a two-day EU-Russia summit in the far eastern city of Khabarovsk, close to Vladivostok and Russia's Pacific coast. EU leaders, including the European commission president, José Manuel Barroso, arrived in the city this morning. The summit comes at a time of growing frustration between Brussels and Moscow over a host of issues ranging from energy policy to the war in Georgia. The EU was irritated by Russia's gas war in January with Ukraine and Medvedev's failure to pull Russian troops out of the breakaway Georgian republics of South Ossetia and Abkhazia. For its part, the Kremlin is annoyed by the EU's attempt earlier this month to improve ties with half a dozen post-Soviet countries. A summit of 33 countries in Prague brought the EU's 27 governments together for the first time with the leaders of Ukraine, Georgia, Moldova, Armenia, Azerbaijan and Belarus. Russia believes the EU's "eastern partnership" initiative is a challenge to its own strategic and security interests in a region it regards as its backyard. Medvedev insists that Moscow enjoys what he calls "privileged interests" in states occupying the volatile buffer zone between the EU and the Russian Federation. Today Medvedev joked with a group of students that the remote summit venue, 3,800 miles from Moscow or 5,300 miles via the epic Trans-Siberian Express, had been chosen to remind the Europeans of Russia's vast size. Several EU delegates moaned when Russia held last year's summit with the EU in western Siberia, Medvedev said. "They complained: 'Oh, it's a long way.' We said: 'If you don't like it you can fly somewhere else.' They thought for a bit and said: 'OK, we're ready,'" Medvedev said. He added: "They [the Europeans] should understand how big Russia is and should feel its greatness. On the other hand, we also want a partnership with the EU. It's important for us to get together." Today analysts were pessimistic that this latest EU-Russia summit would make much progress. "Russia and EU relations are in stalemate. There is a serious lack of mutual understanding, a lack of willingness to understand each other, and a lack of strategic common values," Fyodor Lukyanov, editor-in-chief of Russia in Global Affairs, told the Guardian. He went on: "Relations with Obama and the US are now better. At the same time relations with the EU are getting worse. Since the 1990s Russian-EU relations have been governed by the assumption that Russia would go the European way without applying for membership. This model is now exhausted. They need a new model." According to Lukyanov, the Kremlin was furious after the EU pressured Belarus this month not to recognise South Ossetia and Abkhazia. "The message was: choose Russia or not Russia. It was absolutely unnecessary from the European side. Alexander Lukashenko [Belarus's president] wasn't going to recognise them anyway for his own reasons," Lukyanov said. Today Barroso stuck a conciliatory note. "Russia and the EU are interdependent. The global financial and economic crisis stresses the need to develop the potential of our relationship, remove obstacles and co-ordinate our efforts," he declared, saying that "regular and frank dialogue" was the way to overcome "difficult" issues. This afternoon Medvedev took his European colleagues on a scenic boat trip along the vast Amur river. The Amur, which is home to the giant Kaluga sturgeon, passes remote sandy bays and a rustic embankment of willows and oaks, before winding its way to nearby northern China. Negotiations are due to start tomorrow.

May 20, 2009 - Eurasia Daily Monitor by Pavel K. Baev - On May 16 while Moscow was captivated by the spectacle of the "Eurovision" song contest, Prime Minister Vladimir Putin escaped to Sochi to devote himself to gas politics. Italian Prime Minister Silvio Berlusconi was his first guest, followed by the ceremony marking the signing of deals between Gazprom and its counterparts from Bulgaria, Greece and Serbia on constructing the South Stream gas pipeline. He then met with Turkish Prime Minister Recep Tayyip Erdogan. Putin usually excels at this high-level networking, but this time tensions existed even with his close ally Berlusconi. Gazprom and ENI cannot finalize the South Stream deal as the Italians, perhaps assuming that the Russian side is becoming desperate, are demanding a greater share of gas for their own trading in South-Eastern Europe (www.gazeta.ru, May 15). Turkey expects serious concessions for granting permission to build South Stream across its exclusive economic zone in the Black Sea, and wants to add another trunk to the Blue Stream pipeline in order to become an exporter to Europe and not just a transit state (www.lenta.ru, May 18). The tactical goals of Russian maneuvering are clear - to eclipse the Nabucco pipeline project, which has been advanced by the rather incoherent efforts of the European Commission and to deny it any Caspian sources of gas - but the strategic rationale still remains shaky (Kommersant-Vlast, May 18). Gazprom cannot count on expanding its exports to the EU, which is firmly set on stabilizing its energy consumption and introducing alternative sources. Consequently, there will be no inflow of new profits to cover the construction costs of the South Stream project. These costs are estimated at 19-24 billion Euros, while Gazprom's CEO Aleksei Miller suggest a far smaller figure of $8.6 billion, presumably referring to the underwater section crossing the Black Sea (Vremya Novostei, May 18). The main surprise, however, was the joint Gazprom-ENI decision to double the capacity of the pipeline from 31 to 63 billion cubic meters (RBC Daily, Kommersant, May 18). In essence, this means that Ukraine stands to lose about half of its transit of Russian gas, and Moscow has clearly indicated that it will not join the EU-Ukraine agreement on modernizing its gas infrastructure (RIA-Novosti, May 18). This ambitious plan for diversifying the channels of exporting gas to Europe and consolidating control over the potential sources of gas, particularly in the Caspian area, requires investments that appear unrealistic in times of tight credit. Gazprom's balance sheet now appears so depleted - mostly due to the 40 percent drop in export to Europe in the first quarter - that the decision to cut its dividends by more than seven times came as no surprise (RBC Daily, May 19). The company can certainly rely on the state to finance its "strategic" projects, but by the time of disbursing the funds for South Stream's construction in 2011, the reserves accumulated by the Central Bank might be exhausted. This perspective looks more likely, since every week brings more worrisome news about the scale of the economic recession in Russia, now deepening beyond the lower end of the reluctantly revised official forecasts. The latest GDP figures show a decline of 9.5 percent in the first quarter, compared with the same period in 2008 (the previous estimate was 5-6 percent) but it also marks a 23.2 percent decline compared with the previous quarter (Nezavisimaya Gazeta, May 18). Despite the gradual rise in oil prices, industry registers the greatest contraction, reaching 16.9 percent in April against the same month in 2008 (Kommersant, May 19). This freefall astonishes many experts, who use the relative stability on the stock market to exacerbate tensions between several economic teams within the government -where only the Minister of Economic Development Elvira Nabiullina, is prepared to contemplate the prospect of an 8 percent decline in GDP in 2009 and zero growth next year (www.newsru.com, May 19). The main focus of the anti-crisis policy is still set on softening the social costs of the industrial catastrophe, and sheltering from bankruptcy the hopelessly inefficient state corporations. As a result, the crisis is not fulfilling its purpose of clearing the economic deadwood, and provides few stimuli for innovative business activity. It is the energy sector that is expected to resume its natural role of rent-provider and thus set Russia back on track to petro-prosperity. Meanwhile, Western consideration of alternative sources and "green" technologies is perceived as wishful thinking or an anti-Russian conspiracy. Hence, the priority is given to energy projects, which makes little economic sense in the current depressed market. For Putin, this is irrelevant, as he is firmly asserting his central role in decision-making on gas matters and going into every detail in talks with Berlusconi, Erdogan, or with Norwegian Prime Minister Jens Stoltenberg (Kommersant, May 20). Medvedev is left with a ceremonial role and finds consolation in designing grand initiatives, like a new conceptual approach to energy security that is supposed to replace the Energy Charter -unlikely to feature in the discussions at the Russia-EU summit in Khabarovsk on May 20. Last week, Putin casually delivered a particularly stinging warning that both members of the "tandem leadership" will make decisions about their political future by assessing the results of their joint work, but that he knew Medvedev is a "very decent man" who will always do the right thing (RIA-Novosti, May 19). More than anything else, this attitude reveals that the two co-rulers and their intertwined courts are out of touch with the reality of the unfolding crisis: they both want to avoid facing the political implications of the gloomy macro-economic statistics. Everything in the political system of Putinism was in perfect harmony - huge oil revenues with internal stability, and a corrupt bureaucracy with an assertive foreign policy - and now nothing works, and a dose of "liberalism" administered from the Kremlin is no cure. The recent spectacular explosion of a gas pipeline in Moscow was just one malfunctioning of the old Soviet infrastructure, which might prove an apt metaphor for the regime.

05-20-2009 - Eurasianet - Turkmen natural gas is still not reaching Russia following a pipeline explosion in April, the vice-chairman of Gazprom has revealed. The Kremlin-controlled energy behemoth does not want to renegotiate the terms of its purchase obligations of Turkmen gas, Gazprom Vice Chairman Alexander Medvedev insisted. "We are ready to take Turkmen gas in accordance with our contractual arrangements," the Russian news agency Interfax quoted him as saying on May 19. But when asked when deliveries would resume, Medvedev became evasive. "The question is better put to our colleagues in Turkmenistan," he said. The Turkmen budget, which relies heavily on gas sales, is taking a big hit amid the export stoppage, analysts say. Separately, Gazprom has been ordered by the Russian government to cut its dividend, as falling demand for gas is damaging the company’s profitability. Investors will now get a return of just over 1 cent per share.

May 19, 2009 (RIA Novosti) - BERLIN, Russia will propose including the South Stream gas pipeline to pump natural gas from Russia to the Balkans and onto Europe in a list of EU priority projects, a Gazprom deputy CEO said Tuesday. "We are drafting an application for inclusion of the South Stream project into the list of EU priority projects, and we see no grounds why this application should be rejected," Alexander Medvedev told journalists during a break at an international energy conference in Berlin. Medvedev said the Western-backed Nabucco project had been included in the list, but that Gazprom did not consider it a rival. "We will, together with the EU, work on this project [South Stream], which will have a positive effect on Europe's energy security," he said. Asked whether France's GDF Suez could join the project, the deputy CEO said the participants had already been determined. "On the underwater section, this is the Eni company, and at this stage, we are not considering expanding the list of participants at land or at sea," he said. Medvedev earlier told a news conference that GDF Suez would become a shareholder in the Nord Stream project to pump natural gas from Russia to Germany and onto Europe via the Baltic Sea. "Gaz de France will join Nord Stream before the end of this summer," he said. Nord Stream is currently run by Gazprom, with a 51% stake, Germany's Wintershall Holding and E.ON Ruhrgas, holding 20% each, and Dutch Gasunie with 9%. Nord Stream is due to eventually pump 55 billion cu m of gas annually. The first 1,200-km leg is to be commissioned in 2010. Ex-German chancellor Gerhard Schroeder, the head of the Nord Stream project operator shareholders' committee, said on Tuesday EU members interested in stable energy supplies should not criticize the Nord Stream project but participate in its implementation instead. A number of countries, including Estonia, Poland, Sweden and Finland, are against Nord Stream, saying it would be environmentally dangerous. Certain experts say Poland, in particular, is worried about its possible loss of profit as a transit country of Russian gas. "If there are questions in essence, we resolve them. For example, we have allocated 100 million euros for an environmental survey of the Baltic Sea," Schroeder said. Rainer Seele, chairman of the large German gas distributing concern, Wingas, said the interests of external investors, including Russia's Gazprom, should also be taken into account when developing a European energy security concept. "The interests of those planning to invest in the European Union should be taken into account here. Only acting together with Russia and not against it, can Europe reliably and on a long-term basis provide for its demand for imported gas," Seele said Tuesday. He also said there was unlikely to be any other gas producer apart from Russia that would be ready to commit to long-term agreements to supply gas to the European market. Europe has expressed concerns about being dependent on Russia, which supplies a quarter of its natural gas needs. Calls for diversified supplies intensified following a recent bitter price dispute between Russia and Ukraine, when Moscow cut off gas to Ukraine, affecting consumers across Europe. Moscow has argued, however, that South Stream and Nord Stream would cut EU dependence on transit states like Ukraine and improve European energy security.

05–19–2009 – MosNews – The Nord Stream and South Stream pipelines that will transport Russian gas to the European Union are going to protect European consumers from the transit countries’ possible misconduct, Germany’s ex-Chancellor Gerhardt Schroeder has said. Speaking at a business meeting in Russia’s Kaliningrad on Monday, Schroeder, who chairs the Nord Stream shareholders' committee, said that Russia cannot be blamed for recent gas shortages at the EU. “When we get Russian gas, the problem is not the supplier, but the fact that 80 percent of the pipeline is located in the Ukraine. We should look for independence not from Russia, but from such transit schemes,” he was quoted by RIA Novosti as saying. “Both Nord Stream and South Stream allow to avoid unstable transit countries,” Schroeder added. As Ukraine missed the deadline to pay for the Russian gas, transit shipment of gas to the EU via Ukraine was halted in January. The shipment did not restart until several weeks later, when Russia’s Gazprom signed a new contract with Ukraine’s Naftogaz. “The gas dispute between Russia and Ukraine has showed how vital stable gas supplies are for the people and the economy. Europe relies on several energy suppliers, including the most reliable, Russia and Norway,” Schroeder said. Nord Stream, a 1,220 kilometers’ long pipeline, will pass under the Baltic Sea from Russia’s Vyborg, near St. Petersburg, to Germany’s Greifswald and on to the Netherlands, UK, Denmark and France. The project is expected to be put into operation next year. The project’s shareholders are Russia’s state-owned gas giant Gazprom (51 percent), Germany’s Wintershall Holding and E.ON Ruhrgas (20 percent each), and the Netherlands’ Gasunie (9 percent). French Gaz de France is negotiating participation in the project. The 2,000 kilometers’ South Stream, with completion planned by 2015, will pump natural gas from southern Russia under the Black Sea, bringing it via Bulgaria, Serbia, Hungary, and Greece to terminals in western Austria and southern Italy.

05-19-2009 - MosNews - Moscow and Ankara have agreed on gas contract extensions and provisions for the construction of the second leg of the Blue Stream pipeline, officials say. Russian Prime Minister Vladimir Putin met with Turkish officials at the Black Sea resort city of Sochi, where regional leaders held negotiations on a separate project, South Stream. Putin held direct talks with his Turkish counterpart, Recep Tayyip Erdogan, before inviting Turkish Energy Minister Taner Yildiz and Gazprom chief Alexei Miller to the table, Turkish daily Hurriyet reports. Both sides agreed to extensions of current gas contracts, which bring about 211.8 billion cubic feet of Russian gas to Turkish markets each year. Those contracts expire in 2012. Regarding pipelines, the leaders agreed on expansions to Blue Stream under the Black Sea. Officials expect the 754-mile Blue Stream at full capacity to transport 565 billion cubic feet of natural gas per year by 2010. In 2005, Russia and Turkey proposed a second leg of the route following European moves to develop plans for the Nabucco gas pipeline from Central Asian and Middle Eastern suppliers. Planners are looking to Blue Stream to supply markets in the Middle East, including Israel.

May 18, 2009 - (UPI) - MOSCOW - Russian natural gas giant Gazprom and Italian gas company Eni agreed to double the capacity of the proposed South Stream natural gas pipeline. Gazprom Chief Executive Officer Alexei Miller and Eni CEO Paulo Scaroni signed an agreement to raise the capacity to 63 billion cubic meters a year. The Moscow Times reported Monday. Prime Ministers Vladimir Putin and Silvio Berlusconi were in attendance, the Times said. The pipeline crossing the Black Sea to Bulgaria is likely to include branches to Serbia, Hungary, Austria and Greece, as well as to Italy. It is expected to cost $11.6 billion, the Times said. Construction is expected to be completed by 2015. "We … see the potential for this deadline to be moved forward, and we will do our best for the project to begin operation earlier," Miller said. On Friday, Gazprom signed agreements with energy companies from Bulgaria, Serbia and Greece to initiate construction studies. The company has not signed equivalent agreements with companies in Slovenia or Romania that are necessary to complete the links to Austria, the newspaper said.

May 18, 2009 – (UPI)  – SOCHI, Russia, - Gazprom officials signed a series of bilateral agreements at an energy summit in the Black Sea resort town of Sochi on the proposed South Stream gas pipeline.Delegates from Russia, Serbia, Italy, Greece and Bulgaria met in the Russian resort city to sign agreements on the South Stream gas pipeline. Planners expect South Stream to bring 1.1 trillion cubic feet of natural gas from Central Asia to Italy and Greece through the Balkans. Gazprom and its Serbian counterpart, Srbijagas, agreed on the terms of a joint venture for export design, construction and operational components of the South Stream leg through Serbian territory, with Gazprom holding the 51 percent majority. A similar agreement was reached with Italy's ENI. Meanwhile, Gazprom agreed to comparable terms for South Stream on a parity basis with DESFA SA, the Greek gas transmission operator.  An agreement with Bulgaria requires Gazprom and the Bulgarian Energy Holding Co. to conduct independent investment decisions on South Stream based on feasibility studies on the project. Sofia had lashed out at Russian gas monopoly Gazprom for politicizing the issue of South Stream, though Moscow inevitably backed down on demands to use Bulgarian infrastructure for gas exports. Gazprom stated the project companies will take part in feasibility and design studies on South Stream until final investment decisions are made.

18 May 2009 - The Moscow Times by Anatoly Medetsky - A fight to provide Europe with natural gas escalated sharply over the weekend as Gazprom and Italy's Eni agreed to double the capacity of their planned South Stream pipeline and the rival Nabucco project finally secured enough gas to become viable. Gazprom chief Alexei Miller and Eni chief Paolo Scaroni signed an agreement Friday to boost the South Stream's capacity to 63 billion cubic meters a year from 31 bcm after the Italian company pressed for the boost, Miller said. He said it would cost 8.6 billion euros ($11.6 billion) to build the pipeline, which will cross the Black Sea to Bulgaria and potentially have two legs going through Serbia, Hungary, Greece — and likely Slovenia — and ending in Austria and Italy. The agreement, signed in the presence of Prime Minister Vladimir Putin and his Italian counterpart, Silvio Berlusconi, also defined how Gazprom and Eni would divide the gas to sell from the pipeline. Neither company said why they agreed to expand the pipeline or what proportion of the gas they would own. Also Friday, Gazprom and national gas companies from Bulgaria, Serbia and Greece signed deals to create joint ventures in these countries to perform feasibility studies and construction for the project. Construction will finish by the end of 2015 at the latest, Miller said, adding that Gazprom and its partners would try to speed up the work. "We … see the potential for this deadline to be moved forward, and we will do our best for the project to begin operation earlier," he said, Interfax reported. Miller said the agreements on Friday marked the start of work to actually implement the project. Gazprom, however, has not yet enlisted Slovenia or Romania to fill the gap as the one remaining transit link for the pipeline to reach Austria. For Russia, which has long touted itself as the only realistic gas supplier for Europe from the east, South Stream would capture an extra slice of a lucrative market where Gazprom already provides a quarter of the imports. In a further attempt to underline the futility of seeking alternative deliveries, Putin on Friday took a dig at Nabucco as an ill-conceived way for Europe to grow more independent from Russia by importing gas from Central Asia and the Caspian Sea area. "For starters, before investing billions of dollars in a pipeline, burying the money in the ground, they need to understand where the gas will come from for this pipeline," Putin said, referring to Nabucco backers. "By all means, if there's confidence that the project will be implemented, for God's sake let them do it." On Sunday, two companies that are key partners in Nabucco announced that they had entered a deal that would give them enough gas to fill the pipeline by 2014. Austria's OMV and Hungary's MOL received 10 percent each in Pearl Petroleum, a company that is investing $8 billion in two Iraqi gas fields. OMV will produce gas from "very large gas reserves … which has significant potential to serve as feedstock for the Nabucco pipeline," Helmut Langanger, the company's executive vice president who signed the deal, said in a statement. The European companies acquired the stakes from United Arab Emirates-based Crescent Petroleum and Dana Gas, OMV and Dana announced in separate statements. OMV paid $350 million for its stake, while MOL gave 3 percent of its shares to each of the Arab companies in exchange for the interest in Pearl Petroleum. Badr Jafar, a Crescent Petroleum executive director, said the project had the potential of "linking the region's significant gas reserves to Europe by pipe for the first time." He stressed that the partners would first seek to meet the local demand. The fields — Khor Mor and Chemchemal, located in Iraq's semiautonomous Kurdistan region — could produce more than 3 billion cubic feet of gas by 2014, Dana Gas said. Nabucco's first phase, expected to be completed by 2015, will require half of this amount to operate. This is the exact amount of gas that will remain available after the fields supply the local market and Turkey, Reuters reported, citing an unidentified industry source. The deal is not a sure bet, however, with some challenges coming from Iraq's shaky statehood. Iraq's Oil Ministry has attacked oil and gas contracts awarded by the Kurdish regional government to international oil companies as illegal. Kurdish authorities have denied any wrongdoing, saying the agreements comply with the Iraqi constitution. Deputy Foreign Minister Alexander Saltanov downplayed Nabucco's progress, saying on the sidelines of an economic forum in Jordan that it wasn't "tragic" for Russia and would not prevent the country from being a key supplier to Europe, Reuters reported. Germany's RWE, another shareholder in Nabucco, signed a potential supply deal for the pipeline in Turkmenistan last month that gave the company rights to develop a Caspian Sea gas field. In a further victory for Nabucco, the European Union won Turkey's consent at an energy summit in Prague earlier this month to sign a transit agreement for the pipeline by the end of next month. Estimated to cost 7.9 billion euros to build, Nabucco is planned to take Caspian and Asian gas at the eastern Turkish border and carry it to Austria. Its other shareholders are Bulgaria's Bulgargaz, Romania's Transgaz and Turkey's Botas.

05-18-2009 - MosNews - Russia has dismissed suggestions that the signing of deal accelerating the Nabucco gas pipeline project, which could reduce Europe's dependence on Russia, is a blow for Moscow. Austria's OMV and Hungary's MOL formed a consortium with the United Arab Emirates' Crescent and its affiliate Dana Gas on Sunday to pump up to 3 billion cubic feet per day of gas from Iraq's Kurdish region. Around half that could feed the Nabucco pipeline to Europe. Russia opposes the Nabucco scheme and is developing the rival South Stream project to supply Europe, Reuters reports. Moscow signed deals to accelerate South Stream on Friday. "I don't see any tragic events (in this Iraq deal)," Alexander Saltanov, Russia's special presidential representative for the Middle East and deputy minister of foreign affairs, told Reuters on the sidelines of the World Economic Forum in Jordan Sunday. Supplies from Iraq's Kurdistan region through Nabucco would not make Russian gas supplies any less attractive to Europe in the future, Saltanov said. Europe relies on Russia for around a quarter of its imports. Russian supplies to Europe were briefly cut last winter due to a dispute with Ukraine, leaving thousands without heating and adding urgency to Europe's search to diversify gas sources, Reuters adds.

05-18-2009 - The Financial Times by Carola Hoyos - Europe took a surprise step towards reducing its dependence on Russian gas yesterday as two of its oil companies agreed to develop a big gas field in Kurdistan, Iraq's semi-autonomous region. OMV, of Austria, and Hungary's MOLagreed the deal, which will feed the planned Nabucco pipeline. The 3,300km pipeline is the centrepiece of Europe's energy policy and attempts to reduce imports from Russia by providing the region with gas from central Asia. However, it is struggling to find suppliers. OMV and MOL, with their regional partners, are to invest $8bn (€5.9bn, £5.3bn) in Kurdistan's gas fields and believe they could pump as much as 3bn cubic feet of gas - almost twice as much as the combined consumption of Belgium and Luxembourg. About half that gas could flow to Europe via Nabucco. However, Kurdistan's ability to export gas is entangled in a dispute with Baghdad. The two sides are deeply divided about how to share the country's vast oil and gas wealth among its regions. OMV and MOL each bought 10 per cent of Pearl Petroleum, which is developing Kurdistan's Khor Mor gas field. Pearl is jointly owned by Crescent Petroleum and Dana Gas, two regional exploration and production companies, and has spent $605m developing the field for the local Kurdistan market. OMV agreed to make an initial investment of $350m, while MOL exchanged 3 per cent of its shares for its 10 per cent stake in Pearl. MOL and OMV each hold a 16.67 per cent stake in Nabucco . On top of finding too few potential gas suppliers, the pipeline is having to compete with South Stream, the pipeline being being built by Gazprom, Russia's powerful gas monopoly, and Eni, the Italian energy group. Paolo Scaroni, Enichief executive of Eni, told the Financial Times on Friday that because of problems finding potential gas suppliers, he doubted Nabucco would ever become a reality. "Nabucco will fly only when it will be fed by gas from Turkmenistan, Kazakhstan and perhaps Iran," Mr Scaroni said. "From what I have read, that is not going to happen."

//Key countries sign on to Russia's South Stream project, giving it an edge over the rival Nabucco pipeline proposal in a race with geopolitical repercussions
05-18-2009 - Business Week by Jason Bush - On May 15, Russia signed deals with Italy, Serbia, Bulgaria, and Greece, bringing the South Stream project, a major new gas pipeline to Europe, one step closer to reality. At a meeting in Sochi, attended by Russian Prime Minister Vladimir Putin and Italian Prime Minister Silvio Berlusconi, Russia's Gazprom (GAZP.RTS) and Italy's ENI (ENI.MI) agreed to double the planned pipeline's capacity to 63 billion cubic meters. In addition to ENI, Gazprom signed memoranda of understanding with Greek natural gas transmission company DESFA, Serbia's Srbijagas, and Bulgarian Energy Holding. The participating countries also signed documents needed to start work on the 2,000km (1,243-mile) pipeline. With completion planned by 2015, South Stream eventually will pump natural gas from southern Russia under the Black Sea, bringing it via Bulgaria, Serbia, Hungary, and Greece to terminals in western Austria and southern Italy. The agreement represents a significant diplomatic coup for Russia in a great geopolitical race that will help determine the source of Europe's energy supplies for decades to come. That race has been visibly gaining pace over recent weeks. Backers of a rival pipeline to southern Europe are now vying to put together the necessary political support. "It's very much down to the wire now," says Chris Weafer, chief strategist at UralSib (USBN.RTS), a Moscow bank. "There's definitely a race on to get all the signatures in place."
Concerns About a Stranglehold: It's no coincidence that the agreements on South Stream come just days after a key summit in Prague designed to give political impetus to Nabucco, a proposed rival pipeline through Turkey that is backed by the European Commission and the U.S. In the eyes of the EU and the U.S., the key advantage of Nabucco is that it would bypass Russia, diminishing Europe's already heavy dependence on Russian gas. Imports from Russia presently account for around 40% of gas imports and 25% of gas consumption in Europe. Concerns about Russia's stranglehold on Europe's energy have only intensified recently, following this January's damaging price spat between Russia and Ukraine, which briefly saw Russia's gas supplies to Europe suspended. Those fears help explain the recent burst of activity surrounding Nabucco, a project that has been under discussion since 2002. In addition to the Prague summit, the EU has also been busy courting Turkey, a key transit country, which is expected to sign an agreement in June paving the way for Turkey to host the pipeline. Previously, there had been concerns that Turkey would try to use the pipeline as a bargaining chip in EU accession negotiations. But despite the recent progress on Nabucco, it all still looks to many analysts like a case of too little, too late. "I believe Nabucco still looks very problematic," says Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies. "It might work, or it might not, but I don't think it's going to work quickly." He argues that the pipeline probably won't be viable until around 2020—much later than the 2014 starting date currently being advanced. It doesn't help that Russia, eager to safeguard its dominant position as Europe's energy supplier, is already one step ahead of the game. The agreements reached in Sochi underscore Russia's success in winning over key customers and transit countries for South Stream—a project that contradicts the EU's stated policy of diversifying Europe's energy supplies.
Where to Get the Gas: Even without the competition from South Stream, major question marks continue to hang over the whole economic viability of the Nabucco project. One key problem is financing: So far the EU has only committed a small fraction of the €7.9 billion ($10.6 billion) needed to build the pipeline. An even more basic question is where the gas for Nabucco (ultimately targeted at 31 billion cubic meters per annum) will come from. The original idea behind the pipeline was to ship gas from the Caspian region and Central Asia, with gas-rich countries such as Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan supplying the fuel. The snag is that of these four countries, only Azerbaijan signed up to the Prague agreement backing the project. The other three Central Asian countries, under diplomatic pressure from Russia, pointedly declined to do so. In any case, no one has figured out how Central Asian gas could be linked up with Nabucco. A pipeline under the Caspian is impossible until all the bordering states resolve a long-running dispute over the sea's legal status, giving Russia an effective veto. Analysts therefore believe the only way Nabucco can be viable is if Iran can now be talked into supplying gas for the project—a scenario that the U.S. previously fought. And despite recent overtures from U.S. President Barack Obama to improve relations with Iran, it's still far too soon to talk of any diplomatic thaw. Meanwhile, the Russians are making progress with South Stream, which currently appears to be the more economically viable of the two. In sharp contrast to Nabucco, the Russians have no shortage of gas that could potentially be transported to Europe via the pipe, and the Russians also seem committed to financing the project. "It's expensive, controversial, and hard to implement," says Valery Nesterov, oil and gas analyst at Russian investment bank Troika Dialog. "But at least it has investment guarantees, and a resource base, to be secured by Gazprom. Though not without problems, the financial guarantees and resource base are still more realistic than those secured by Nabucco."
Snail vs. Tortoise: It's far too early, though, to declare victory for the Russians. The South Stream project also faces many daunting obstacles. Indeed, the great pipeline race might be said to resemble a marathon contest between a snail and a tortoise. "At this stage, it's not clear where the gas is going to come from for either route," says UralSib's Weafer. Although Russia has huge gas reserves that could potentially be shipped Europe's way, most of those reserves are still sitting deep under the Arctic tundra, in the remote Yamal region of Northern Siberia. The cost of bringing them to market is gargantuan—around $250 billion, according to estimates by Royal Dutch Shell (RDSA). The current global recession has only increased the uncertainty about future gas demand, making Gazprom even more reluctant to invest. Russia and the EU have so far failed to hammer out legal agreements that would regulate joint ventures between Gazprom and Western partners. "It's a real mess," says Weafer. Then there's the tremendous cost of the South Stream pipeline itself. Officially estimated at between €19 billion and €24 billion ($25.6 billion to $32.4 billion), it's around three times as expensive as the alternative Nabucco route. Those costs could now be especially problematic, at a time when the global financial crisis is depressing gas prices and Gazprom's profits. "Gazprom is facing financial difficulties in the years to come," says Nesterov, "and the cost of the project is tremendous." So despite South Stream's diplomatic head start, the outcome of the great pipeline race is still far from certain. And neither pipeline is likely to provide any quick solution to Europe's mounting long-term energy needs.

05-18-2009 - Upstream OnLine - The race to build new gas pipelines to Europe speeded up today as Russia, keen to maintain its grip on the continent's market, said it would finish its scheme before a rival EU-backed project. The West's Nabucco pipeline secured a deal at the weekend to obtain gas from Iraq's Kurdistan region, to help cut dependence on Russia's gas supply, but the central government in Baghdad today voiced opposition to the agreement. "I consider South Stream to have every chance of being realised earlier than Nabucco," Reuters quoted Russia's Energy Minister Sergei Shmatko telling reporters earlier today. "Nabucco has a range of issues which still need to be resolved," he added. Russia signed deals on Friday to accelerate South Stream, due to start in 2015. It also rebuked the US and former Soviet satellite nations for backing Nabucco. Moscow had the edge until this week. The European Union relies on Russia for around a quarter of its gas. Nabucco had political backing but little gas to sell until two of its shareholders, Austria's OMV and Hungary's MOL joined up with the United Arab Emirates Crescent and Dana Gas to source supply from Iraq's Kurdistan. This project could now supply enough gas to kick-start the project and supply Europe by 2014. "It's an important and promising development for the acquisition of a huge volume of natural gas for Turkey and for Europe via Nabucco," Nabucco boss Reinhard Mitschek said of the deal. The existing timetable would put Nabucco supplies a year ahead of South Stream. "The competition between South Stream and Nabucco is hot," id Agata Loskot-Strachota, energy security analyst at the Warsaw-based, state-funded Centre for European Studies, told Reuters. "If the projections made ... are confirmed, this deal gives a strong push to Nabucco." The scheme to pump gas from Iraq's Kurdistan still needs to surmount political and operational obstacles, notably from Iraq's own Oil Ministry. The ministry said today it rejected deals signed by the Kurdish Regional Government with Crescent and Dana in 2007 to appraise and develop the fields that would supply Nabucco. Iraq would supply Europe from another field, the Akkas field, government spokesman Ali Dabbagh said. Iraq expected enough gas from that field could be produced for export to Europe by 2014, he said. Iraq's oil and gas ministry has criticised oil and gas contracts that the KRG has signed with international oil companies, calling them illegal. The KRG, which has clashed with Baghdad over draft oil legislation, has countered that the deals are legal and comply with Iraq's constitution. "Any contract now signed with Iraq is very risky," Borut Grgic of the Brussels-based Institute for Strategic Studies, tol dthe news agency. Nabucco itself has been dogged by squabbles between shareholders. Transit country Turkey has threatened to block the project unless it can keep 15% of the gas that goes through the pipeline. There are also questions as to how much gas is in the fields in the Kurdistan region and how quickly it can be brought to market. According to US government data, the fields in Iraq's Kurdistan contain around 3.6 trillion cubic feet. That would be insufficient to pump the 3 billion cubic feet per day that the companies claim they can pump by 2014. But Iraq's oil and gas reserve estimates are based on old data, and were likely to be revised up as more thorough appraisal of resoures is undertaken, analysts said. Crescent and Dana have been appraising the fields since signing a deal with the Kurdish Regional Government in 2007. The 3300 kilometre Nabucco pipeline was initially planned to carry Caspian gas via Turkey, Bulgaria, Romania and Hungary to Austria. The first phase of the pipeline was to have capacity of around 1.5 Bcf, with the second phase double that. OMV and MOL each have a 16.67% stake in Nabucco. Other stakeholders are Bulgaria's Bulgargaz, Romania's Transgaz, Turkey's Botas and Germany's RWE.

05-18-2009 - Upstream OnLine - China has started building a crude oil pipeline to Russia hard on the heels of a loan-for-oil deal struck between the two countries last month, according to reports. Official news agency Xinhua said Chinese vice premier Wang Qishan announced the launch at a ceremony today in Mohe in China's north-east Heilongjiang province, where the transnational pipeline starts. In April agreed to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run oil producer Rosneft in exchange for 300 million tonnes (2.2 billion barrels) of Russian oil to be transported over the pipeline over 20 years. The planned pipeline will run about 67 kilometres in Russia and 960 kilometres in China to end at the Daqing oilfield. Russia started construction of the pipeline to China in late April. About 15 million tonnes (110 million barrels) of crude every year will be sent to China from Russia upon the completion of the pipeline, which is scheduled for October 2010, and the volume will be increased in the future, a Reuters report said. China currently receives most of its Russian oil supplies via rail.

5/18/2009 - Daily News Bulletin by ProQuest LLC - MOSCOW: Gazprom (RTS: GAZP) believes new offshore gas pipelines need to be built to develop the European gas transportation system, a source at the company told journalists on Friday. In the run-up to the signing of an agreement between Gazprom and Italian, Greek, Serbian and Bulgarian energy companies on the South Stream gas pipeline, the source said that, given the new realities, energy security systems should be based on the construction of offshore gas pipeline systems free from transit risks. When "the weak political regimes and economies of transit countries start using the transit through their territory as a method of foreign economic competition and pressure, energy supplies via a system of land-based gas pipelines become insufficient," the source said. "Sea-based pipelines are an optimal way of building new gas pipelines to Europe both in terms of security and in terms of technical, economical and environmental factors," the source said. The source also described as unfounded "the popular view that Russia is making the EU dependent on its energy supplies by building these gas pipelines." European countries depend on Russia for 30% of their gas supplies on average, he said.

05–15–2009 – (Dow Jones) - ROME Eni SpA (E), Italy's biggest energy company by market capitalization, said Friday it signed a new understanding agreement with OAO Gazprom (GAZP.RS) that will boost the project's annual natural gas capacity to 47 billion cubic meters from the original 31 billion. "Eni and Gazprom confirmed their full commitment to develop the project, given its strategic relevance to provide, through a new route, significant contribution to secure direct gas supplies to Europe," said the Rome-based company in a statement. Eni CEO Paolo Scaroni signed the deal in the presence of Russian Prime Minister Vladimir Putin and his Italian counterpart Silvio Berlusconi in Russia Friday.

05-16-2009 - The Wall Street Journal by Guy Chazan - Russian and Italian energy companies agreed to double the capacity of a new gas pipeline from Russia into the heart of Europe that will bypass Ukraine, in a new challenge to a rival project backed by the U.S. and Europe. Italy's ENI SpA and OAO Gazprom, Russia's state-run gas export monopoly, agreed to increase South Stream's annual capacity to 63 billion cubic meters from 31 billion cubic meters. "Most of this gas will substitute gas currently crossing Ukraine, and some new gas," said Paolo Scaroni, ENI's chief executive. The agreement, which was signed in the presence of Russian Prime Minister Vladimir Putin and his Italian counterpart Silvio Berlusconi in the Russian resort of Sochi, should give fresh momentum to South Stream, one of the Kremlin's pet projects. It also underlined Russia's determination to create new export routes for its gas that skirt Ukraine, following a string of disputes that have led to disruptions in Russian gas flows to Europe and undermined Moscow's reputation as a reliable energy supplier to its core market. Gazprom also signed deals in Sochi with the main energy companies of Serbia, Bulgaria and Greece, three of the key transit countries for the pipeline, which will run from Russia under the Black Sea to Bulgaria. Around 80% of the natural gas Russia now delivers to Europe goes via Ukraine, but Moscow asserts that the bitter rows with Kiev over pricing have put a question mark over the route's long-term viability. The last, in January, led to a cutoff in Russian gas deliveries to Eastern Europe, leaving hospitals, schools and homes without heat in the depths of winter. In a bid to avoid future disputes, Russia has sought to gain control of Ukraine's gas network, so far without success. It reacted furiously to an agreement signed between Ukraine and the European Union in March that foresaw the EU investing millions of dollars in Ukraine's gas network, saying that as sole gas supplier to Ukraine it should have been asked to participate in such an upgrade. Some EU countries, meanwhile, have expressed concern about the bloc's growing reliance on imported Russian gas and fear South Stream -- and Nord Stream, a sister pipeline to be built under the Baltic Sea to northern Germany -- would only reinforce that dependence. The EU has backed Nabucco, a pipeline that would bring gas from Central Asia to Europe via Turkey, bypassing Russia. Russia has dismissed Nabucco as politically driven, and questioned where it would get its gas. The pipeline's backers hope to be able to source gas from Central Asia and the Middle East, but Mr. Scaroni said at this stage Nabucco could count only on the Caspian state of Azerbaijan. "Europe uses 600 billion cubic meters of gas a year," he said. "Azerbaijan can send 10 billion cubic meters into Europe. That's nothing in terms of Europe's security of supply."

May 14, 2009 - (UPI) - ANKARA, Turkey. Citing domestic needs, Turkish officials rebuked claims that measures for the Nabucco natural gas pipeline were set for a swift approval by the end of June. Regional leaders emerged from an energy summit in Prague, Czech Republic, last week with declarations in support of the $10.7 billion Nabucco pipeline. Turkey would host a major leg of the 2,051-mile pipeline, and many analysts expect Ankara to sign on to its part of Nabucco by the end of June. The Guardian newspaper in Britain reported earlier this week that Turkey and the European Union reached a "breakthrough" on Nabucco negotiations, with anonymous officials saying "there is no conditionality" to the deal. Turkish officials had set June 25 as the target date for the measure, but anonymous officials speaking to Turkish daily Hurriyet said there were still sticking points on the deal. "There is still disagreement on the issue of how the income tax will be shared," the official said. "We are driving a hard bargain on that issue." Turkey had dropped demands for discounted prices on 15 percent of the Nabucco gas passing through its territory but has not backed down on measures for domestic gas consumption, Hurriyet reports.

May 14, 2009 - (UPI) - ASTANA, Kazakhstan. In a modest blow to Nabucco, Kazakhstan signed a measure approving the construction of a natural gas pipeline with Russian gas giant Gazprom. Kazakh President Nursultan Nazarbayev signed a law granting construction of a 994-mile pipeline to carry domestic and Turkmen gas, the Financial Times reports. The pipeline will carry 700 billion cubic feet of regional gas each year in a move that solidifies the position of Gazprom in the Central Asian energy sector. The European Union and regional leaders gathered in Prague, Czech Republic, last week for a conference on the Southern Corridor of energy transit networks, including the long-heralded Nabucco gas pipeline. Turkmenistan had signed onto agreements with Germany's RWE, a Nabucco partner, in what was seen as a blow to Gazprom following a pipeline disruption earlier this year. Europe sees Nabucco as the answer to its plans to move away from Russian energy reliance. Nabucco would bring gas from suppliers in the Caspian region and the Middle East along a Turkish route north to European markets. The leaders emerged from the Prague summit with a declaration of support from key parties to Nabucco, including Azerbaijan. However, Kazakhstan and Turkmenistan did not sign the final declaration.

May 13, 2009 – (UPI) - KIEV, Ukraine. Moscow is politicizing issues in the European energy sector through its Nord and South Stream gas pipeline projects, the Ukrainian president said. Viktor Yushchenko told the Interfax-Ukraine news agency Russia was using European moves to diversify the regional energy sector as a political move to secure its influence with its own pipeline projects. "These are politicized projects," he said. South Stream would bring Russian gas along a southeastern route to Italy while Nord Stream would bring gas along the floor of the Baltic Sea to Germany. A January dispute between Moscow and Kiev over gas contracts and debts prompted Russian gas monopoly Gazprom to disrupt gas supplies to Ukraine for weeks. Europe gets about a quarter of its gas from Russia, and 80 percent of that travels through Soviet-era pipelines in Ukraine. Yushchenko said it was difficult to "find grounds for spending $12 billion to $15 billion to implement these projects rather than to ensure the (gas) transit through the existing system." He also lashed out at the justification for the projects, saying the problem was not a lack of infrastructure but a lack of a common energy policy. "These projects do not add anything to Europe," he said. "There is no problem with the transit. What is needed is joint ideology on gas production, transit and consumption."

May 14 2009 - The Financial Times by Isabel Gorst - Nursultan Nazarbayev, the president of Kazakhstan, has signed a law approving the construction of an additional gas pipeline to Russia that will bolster Gazprom's control over central Asian gas exports. The 1,600km pipeline will carry 20bn cubic metres of gas from Turkmenistan and Kazakhstan north to Russia. The European Union has urged the two countries to join the planned Nabucco pipeline project to bring gas to the west without crossing Russia, but the countries have refused to commit to it.

13 May 2009 - Balkan Insight - Belgrade. Serbia's state owned gas company will on Friday sign an agreement with Russian gas giant Gazprom for the construction of a part of the South Stream gas pipeline that will go through Serbia. General Director of Srbijagas Dusan Bajatovic said he will sign the agreement with the president of Gazprom Alexei Mueller in the southern Russian city of Sochi. He said they will sign an agreement on the formation of a joint venture for the part of the South Stream pipeline that will go through Serbia, media report. The Gazprom-led project aims to bring Russian, Caspian and Central Asian gas to Europe and is a rival to the EU-backed Nabucco pipeline, which aims to reduce European reliance on Russia for its energy supplies. According to the agreement on on the South Stream construction, signed on 24 December, 2008 in Moscow, Gazprom will owe 51 per cent and Serbijagaz 49 per cent of the property of the joint venture for the pipeline’s construction. The joint venture will be located in Switzerland. The two companies will also form a daughter company in Serbia for gas distribution, but that date is still yet undecided. The signing will be followed by a feasibility study that will determine the gas pipeline's exact course. The predicted length of the pipeline through Serbia is estimated to be around 450 kilometers. Serbia's government will discuss the proposed agreement Thursday. In earlier statements, Bajatovic has said that the pipeline through Serbia could carry between 23.1 or 21.4 billions of cubic meters of gas annually. The national companies of Greece, Bulgaria and Italy are also scheduled to sign agreements with Gazprom in Sochi. The pipeline through Serbia is scheduled to be finished by December 31, 2015.

05-12-2009 - FOCUS News Agency - Athens. The Hellenic Gas Transmission System Operator /DESFA/ and the Russian Gazprom had signed an agreement on establishing a joint venture, which will build and manage the Greek part of South Stream pipeline, Naftemporiki informs. According to the information, the Greek Minister of Development Kostis Hatzidakis will meet with Russian Ambassador to Greece on Wednesday to discuss details on the signing of the agreement. It will be signed Friday in Moscow. Such agreements had been signed with Serbia and Ukraine - countries through which the north part of the pipeline will pass. The southern part of the pipeline will past through Greece and will reach Italy through underwater equipment. Its capacity is about 10 bln cu m per year. Significant part of the facility will pass through Bulgaria, from where it will ramify to Serbia and Greece. No agreement has been signed yet between Gazprоm and Bulgaria due to dissensions on the network use. It is about to be signed after Russian and Bulgarian Prime Ministers Vladimir Putin and Sergey Stanishev had agreed on Moscow to built separate networks on the pipeline’s transit.

05-12-2009 (Dow Jones) -- ROME, Eni SpA (E) Chief Executive Paolo Scaroni said Tuesday he will meet with Russian officials Wednesday to seek a deal on the South Stream natural gas pipeline project it has with OAO Gazprom (GAZP.RS), as the two energy companies appear to be far from agreement. Scaroni, on the sidelines of a conference in the Egyptian Red Sea resort of Sharm el Sheik, told reporters he was going to Moscow Wednesday to see if an accord on South Stream could be reached. Scaroni said a deal wasn't close. Italian Prime Minister Silvio Berlusconi is scheduled to meet his Russian counterpart, Vladimir Putin, Friday in Crimea and may sign an agreement on South Stream. A dispute has erupted between Eni and Russian state-controlled Gazprom over the role the Italian oil company will play in the South Stream gas pipeline, Reuters said last week, citing an unidentified person within the Italian government. The person said Eni wants to be able to market gas from the pipeline in the countries the pipeline will pass through but that Gazprom was only offering the right to bring gas into Italy and a role in managing the pipeline, Reuters wrote. South Stream is a project that aims to carry Russian and Caspian gas to Western Europe via a pipeline under the Black Sea and landing in Bulgaria, so bypassing Ukraine.

May 12, 2009 - Deutsche Presse-Agentur - Visiting Russian Prime Minister Vladimir Putin invited Japanese business leaders to invest in a Russian pipeline project, while companies from both countries drew up an agreement to jointly develop an oil field in eastern Siberia, media reports said Tuesday. Putin, who arrived in Japan Monday, met with local business leaders prior to his summit talks Tuesday with Prime Minister Taro Aso. He invited Japan's private sector to invest in the development of a pipeline project to carry oil across Siberia to the Pacific coast. Meanwhile, a joint venture between Japan Oil, Gas and Metals National Corp (JOGMEC) and Russia's Irkutsk Oil Co is planned to start exploration in a field about 700 kilometers north of Irkutsk at a cost of about 15 billion yen (153 million dollars), according to the Japanese government-affiliated body. Once the two areas eyed by the Japan-Russia joint venture are ready for commercial oil production, a Japanese private-sector firm would take over the operations from JOGMEC. The oil will be transported to Japan via the Eastern Siberia-Pacific Ocean pipeline, which is entering the second phase of construction.

05-12-2009 - Upstream OnLine - Nabucco pipeline engineers have begun detailed planning along the gas route between the Caspian region and Europe, taking the project into its next phase, the Vienna-based consortium said today. The consortium's engineers in Austria, Hungary, Romania, Bulgaria and Turkey will help prepare for negotiations with gas suppliers and enable local approvals for the project, which plans to pump gas through 3300 kilometres of pipeline from 2014. The project has gained impetus following the gas price row between Russia and transit country Ukraine in January, which left over a dozen European countries without gas for two weeks. But funding, the sourcing of natural gas and some disagreement between consortium members have also weighed on the project, which has had to push back some of its target dates, a Reuters report said. The European Union's agreement in Prague last week to smooth the way for more gas imports from the Caspian region was an "important political milestone" for the project, consortium head Reinhard Mitschek said in a statement. "The participation of very important supply countries and Turkey at this EU summit showed the strong political will of all involved to utilise the fourth corridor as a new supply route for Turkey and Europe," Reuters quoted Mitschek as saying. Nabucco is expected to start pumping gas in 2014 if an intergovernmental agreement on the €7.9 billion ($10.41 billion) project can be agreed as expected in June. Nabucco shareholders are Austria's OMV, Hungary's MOL, Romania's Transgaz , Bulgaria's Bulgargaz, Turkey's Botas and Germany's RWE.

• Ankara reaches agreement with EU on new pipeline
• Caspian energy bonanza could be unblocked
11 May 2009 - The Guardian by Ian Traynor - The European Union and Turkey have struck a ground-breaking gas pipeline deal unlocking a potential energy bonanza in the Caspian basin after more than a year of deadlock, according to senior EU officials. The agreement, to be signed in Ankara on 25 June, represents a major boost to the EU's ill-starred Nabucco pipeline project, which is intended to transport natural gas to Europe from central Asia, the Caucasus and the Middle East, and is the key to breaking the Kremlin's stranglehold over Europe's gas imports. "This is a complete breakthrough," said a senior EU official involved in the tough negotiations with Turkey. "The Turks have accepted our terms. There is no conditionality." The €9bn Nabucco project is at the centre of a contest pitting Russia against the EU and involving Turkey, Germany, Austria, Azerbaijan and the authoritarian regimes of central Asia in the effort to secure Europe's gas needs while curbing the hold Moscow and the gas monopoly Gazprom have over the supply lines. The case for Nabucco is debated, but was reinforced by Russia's gas war with Ukraine in January, which caused havoc with Gazprom supplies to eastern and central Europe. There had been similar disputes in 2006 and 2007. Nabucco, stretching more than 2,000 miles from Turkey's eastern border to Europe's main gas hub outside Vienna, would be the main route for pumping gas to Europe not controlled by Gazprom. But the plan had faltered over deadlock between the EU and Turkey over the pipeline transit agreement. More than half the pipeline is to be located in Turkey, making it the gatekeeper of Europe's energy supplies. Ankara has been driving a hard bargain, insisting on collecting a "tax" on the gas being pumped and demanding 15% of the transit gas at discounted prices. This, say EU officials and the six-company consortium that is to build and run the pipeline, would render Nabucco financially unviable. The stalemate was broken at a summit in Prague last Friday between the EU and the countries involved. "The 15% demand has gone," Andris Piebalgs, the EU commissioner for energy, told the Guardian. "We've agreed on cost-based transit. We're very close to a conclusion." A senior Czech official organising the summit likened the negotiations to "bargaining in an Istanbul souk", while an EU envoy to the region worried that "nothing is done until it's done". But the European commission president, José Manuel Barroso, said President Abdullah Gül of Turkey assured him the deal would be signed within weeks. "That's what President Gül told me," he said. The Turkish leader indirectly linked any Nabucco deal with progress on Ankara's negotiations with Brussels on joining the EU. The negotiations are being blocked by Greek Cypriots, while several big EU states are quietly happy to see Turkey's EU bid frozen. But Barroso and others insisted that Ankara was not setting conditions for a Nabucco agreement. The EU imports about one-third, or 140bn cubic metres, of its gas from Russia. The "southern corridor" – Nabucco and two other pipelines – is supposed to pump 60bn cubic metres a year, or 10% of requirements by 2020, bypassing Russia. Building of the Nabucco pipeline has been delayed while the projected costs have soared, leading critics to describe the scheme as a pipedream. But the Prague summit and the imminent pact with Turkey appear to have resurrected the project. The consortium that is planning to build and manage a pipeline stretching more than 2,050 miles from Turkey's eastern border through the Balkans to Baumgarten, east of Vienna, is headed by OMV, the Austrian oil and gas firm, with four national energy corporations – Botas of Turkey, Bulgargaz of Bulgaria, Transgaz of Romania, and MOL of Hungary, plus RWE, the German energy group that joined the consortium last year even though its government prefers collaboration with Gazprom and opposes Nabucco. All six are grouped in Nabucco Gas Pipeline International. As well as Nabucco, the Europeans spoke specifically for the first time about supporting the building of a pipeline under the Caspian Sea connecting Turkmenistan and central Asia to Azerbaijan. The central Asian gas was up for grabs, said the senior EU official, and if Europe did not get there first, it would go to Russia or China. If Nabucco is to happen, it will initially need the gas from Azerbaijan's BP-run Shah Deniz-2 field. But officials in Brussels view Turkmenistan, with its vast gas deposits, as the key to its longer-term viability. The Russians are pressing the central Asians and Azerbaijan hard to try to put a stop to Nabucco and retain control of all the supply routes to the west. The Turkmens attended the Prague summit, but declined to commit, apparently deciding to try to play the Russians off against the Europeans.

11 May 2009 - New Europe by Kostis Geropoulos - Two weeks after the Sofia energy summit, the EU made yet another attempt to reduce its reliance on Russian natural gas this time during the Prague summit with the participation of the countries of the so-called southern corridor. The EU did what it does best issuing a lukewarm statement signed by the participants, agreeing “to give the necessary political support, and where possible technical and financial assistance to the construction” of the project. WOW! Talk about spin control. The agreement was signed by the leaders of Egypt, Turkey, Georgia and Azerbaijan. The representatives of Kazakhstan, Turkmenistan and Uzbekistan did not sign it, possibly succumbing to pressure from Moscow. Iraq, which was also invited at the Prague summit, did not send anyone, although it is expected to sign an energy agreement with the EU soon. So far, efforts to build new pipelines bypassing Russia have failed to produce results, with energy firms wanting promises of gas supplies from producers, energy-rich states demanding that the firms first lay their pipes, and transit states issuing high demands for their services. Still, you can’t blame the EU for trying. “It’s understandable. The EU wants to diversify their gas supplies because they are not very reliable from Russia because of the disputes. They want gas from the Caspian region, LNG from Qatar and also from Iraq through pipeline,” Muhammad-Ali Zainy, a senior oil economist and analyst at the Centre for Global Energy Studies, told New Europe, telephonically from London. However, Zainy, who is a native of Iraq and was once a senior official at the ministry of oil before defecting to escape Saddam Hussein’s regime, explained that for the time being the only Iraqi gas available is free gas from Iraq’s Akkas field, close to the border with Syria. The field is believed to contain up to seven trillion cubic feet of gas - representing up to six percent of Iraq’s gas reserves. Gas from the Akkas field could go through Syria and Turkey via the planned Arab Gas pipeline to supply a pipeline to Europe, Zainy said. Asked if Iraq is a feasible source for Nabucco, Zainy said: “Not now. Not even after a few years.” Iraq is not producing a lot of gas. He explained that most of Iraq’s gas is associated gas and that comes with oil production. In order for Iraq to have enough gas to meet domestic demand and have a surplus, Iraq would need to start producing four to six million barrels per day - maybe in 2015. “But, at this time it would be really difficult for Iraq,” he said. Zainy has little faith in Iraq’s government and the ministry of oil to manage the country’s resources. “So far I found them inept and they don’t know what is good for Iraq,” Zainy said. London-based HSBC analyst Paul Spedding said Iraq’s gas infrastructure is not developed. “It’s more a case of having it as another option. The more potential suppliers you have for Nabucco or any other southern export route the better,” he told New Europe, adding that the EU is putting its hopes into gas supplies from Turkmenistan and Azerbaijan. The Nabucco project faces difficulties due to its political complexity and cost. The issue of transit via Turkey, which doesn’t want to be just a transit country, also remains a challenge. But Zainy said this is not time for Ankara to be difficult. “I really don’t think Turkey is going to be a sticking point because Turkey would really like to be a hub for gas that goes to Europe and they will try to be reasonable,” he said. “There are prospects for gas to pass through Turkey and one of them is the Nabucco pipeline that will gather gas from Azerbaijan and perhaps Turkmenistan, but they also have to address the Iran situation, which is geopolitical.”

05-08-2009 - Upstream OnLine - A dispute has erupted between Italian giant Eni and Russian state-controlled Gazprom over the role Eni will play in the South Stream gas pipeline, an Italian government source claimed today. The Gazprom-led project aims to bring Russian, Caspian and Central Asian gas to Europe and is a rival to the European Union-backed Nabucco pipeline, which aims to reduce European reliance on Russia for its energy supplies. Eni and Gazprom are 50% partners in the company which is conducting feasibility studies for the pipeline, but the Italian producer's final role in the pipeline has not been defined. The government source said Eni wants to be able to market gas from the pipeline in the countries the pipeline will pass through but that Gazprom was only offering the right to bring gas into Italy and a role in managing the pipeline. "The Italian group wants to enter into the second phase of the project, that of selling the gas in the countries the pipeline will pass through... the Russians are putting up opposition, the talks are, however, still fluid," the source told Reuters. Eni did not want to comment. A Gazprom spokesman declined immediate comment. The Italian Prime Minister Silvio Berlusconi and his Russian counterpart Vladimir Putin are scheduled to meet at Sochi in Russia on 15 May. A previous meeting in April, when a statement on South Stream was expected, had been cancelled because of the Italian earthquake in Abruzzo. The disagreement is the latest setback for the project, which had appeared to be speeding ahead of Nabucco, following Nabucco's difficulties in securing gas supplies. On Wednesday, a source familiar with the situation told Reuters plans for Russia and the transit countries to sign an agreement on South Stream next week in Sochi were in doubt after the parties failed to agree on terms. However, Serbian state gas company Srbijagas will sign a deal with Russia's Gazprom on 15 May on Serbia's participation in the South Stream gas pipeline, a spokesperson with Serbia's Energy Ministry said today. No one from the Slovenian Ministry of Economy, which is in charge of the South Stream pipeline in Slovakia, will attend a signing ceremony in Sochi next week, an official said. Eni and Gazprom have signed a series of Memoranda of Understanding on the development of the South Stream project since 2007. South Stream will pass under the Black Sea and through Bulgaria, Serbia and Slovenia to Austria.

8 May 2009 - MosNews - A landmark meeting of EU Central Asian and Middle Eastern nations was marred on Friday when three key nations, Uzbekistan, Kazakhstan and Turkmenistan, did not sign an agreement on the Nabucco gas pipeline scheme, aimed at reducing Europe's dependence on Russian energy, Russian website Gazeta.ru reports. Two gas-rich nations - Azerbaijan and Egypt - and two key transit nations - Turkey and Georgia - signed the agreed text at a meeting in Prague. However, the representatives of Kazakhstan, Turkmenistan and Uzbekistan refused to sign the text, according to diplomatic sources. Iraq, also invited to the meeting, did not send a representative. US, Russian and Ukrainian observers were also invited to the high-level meeting by the European Union, aimed at giving a kick-start to the long mooted Nabucco pipeline projects. The main aim is to bypass Russia and Ukraine, whose dispute over gas prices halted key supplies to Europe in January, leaving thousands of households without heating in the middle of a severe winter. Once completed, the Nabucco pipeline would straddle 3300-kilometres (2050-miles) from Turkey to Austria. It is hoped that it will start pumping gas to Europe by 2014.

07 May 2009 – Russia Today – Greenpeace Russia believes it has a frank and constructive relationship with the builders of Nord Stream pipeline according to Russia’s Ria Novosti news agency. Yahoo StumbleUpon Google Live Technorati Scoop del.icio.us Digg Sphinn Furl Reddit Program director of Greenpeace Russia, Ivan Blokov, says the perception is common to representatives of non-government organizations monitoring the project, despite the fact that issues remain to be resolved about the laying and proposed route of the pipeline. "Regarding the construction itself, the non-governmental organizations have questions for the laying of onshore pipeline, and its underwater part. These are the issues we were unable to solve last April 28 at the public hearing on the offshore portion of the pipeline," he said.According to Blokov, the decision on contentious questions will largely depend on the implementation of the project and the degree to which comments from NGO’s are considered. But he noted that in general a gas pipeline is better environmentally than an oil pipeline, saying - "In terms of a possible accident the gas pipeline is a lot safer for the Baltic Sea than an oil pipeline. In the case of a blow-out, a gas leak won’t cause as much damage to the ecosystem of the sea as an oil spill." Nord Stream has spent over 100 million euro on environmental impact studies, and presented in a 2,000 page report in March. It says the outlined route avoids sensitive areas, as well as historic wrecks on the seabed, and the operator is also committing to clearing the waters of leftover WW2 mines. Nord Stream gas pipeline is an international 7.5-billion euro project. The 1220-kilometre pipeline will connect Russia and Germany along the seabed of the Baltic Sea. It will deliver gas extracted from one of the world’s largest fields, the Shtokman field in the Barents Sea. Once the first line is launched, it will deliver 27.5 billion cubic metres of fuel to Europe annually, with the volume increasing to 55 billion cubic metres a year by 2014.