Pipeliners

Ankara moving ahead on Blue Stream

2009-07-07T07:49:00.001-07:00

ANKARA, Turkey, July 6, 2009 - (UPI) -- Ankara has offered its proposal for moving forward on the second leg of the Blue Stream natural gas pipeline to the Middle East, Russian officials say. 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. Russian Energy Minister Sergei Shmatko said following a meeting with Turkish officials that Ankara was moving forward with Blue Stream developments, Itar-Tass reports. "We have some interesting projects, including Blue Stream-2," he said. Officials expect the 754-mile Blue Stream at full capacity to transport 565 billion cubic feet of natural gas per year by 2010. "This year the Russian-Turkish intergovernmental commission will take place," the minister said. "We have to submit our gas marketing surveys to take a decision on the construction of Blue Stream's second branch." Russia last week secured agreements for gas purchases from the Shah Deniz gas field in Azerbaijan to feed the South Stream gas pipeline to southern Europe. Moscow said it was interested in including Turkey in that project as well.

Concerns remain over Nord Stream

2009-07-07T07:46:00.001-07:00

July 6, 2009 - (UPI) - HELSINKI, Finland, The Nord Stream natural gas pipeline received tacit approval from the Finnish government, though a regional consortium has asked for more environmental studies. Nord Stream would travel along a dual route through the Gulf of Finland and the Baltic Sea to Germany. Littoral states in Scandinavia complain about the potential environmental impact of pipeline construction, which is complicated by World War II munitions strewn about the Baltic Sea floor. Nord Stream AG in June concluded a two-day meeting in Germany to vet public and shareholder comments on a transboundary environmental report submitted by the project consortium in March. The Uusimaa Regional Environment Center, a group representing parties along the coast of the Gulf of Finland, called environmental studies conducted by the Nord Stream AG consortium "sufficient" but has requested more information, the New Europe weekly reports. Paul Corcoran, the chief financial officer at Nord Stream AG, said construction should be completed in time for a 2011 launch date. For his part, Sebastian Sass, the head of European relations for the company, said his group would provide "necessary" clarifications after studying the Finnish complaints. Nord Stream would ultimately transport more than 1.9 trillion cubic feet of gas per year to European customers.

Six attacks on natural gas pipelines

2009-07-07T07:44:00.001-07:00

July 6, 2009 – (UPI) - DAWSON CREEK, British Columbia, A series of bombings of natural gas pipelines in northeastern British Columbia in Canada are "domestic terrorism," authorities said. The first attack was reported in early October. This past weekend, the Royal Canadian Mounted Police confirmed a sixth bombing caused a leak in an EnCana Corp. line south of Dawson Creek, British Columbia. No one has been injured in the bombings, but they have caused leaks that could prove hazardous, authorities said. Safety measures led to a shutting of valves once a pressure drop was noted shortly following the latest attack, an EnCana release said. "These are bombings," RCMP Cpl. Dan Moskaluk said. "It's certainly nothing short of domestic terrorism." EnCana in January offered a $500,000 reward for information leading to the prosecution of those responsible for bombings of company pipelines near Dawson Creek. "We take the bombings of our facilities very seriously. The safety of our workers and the people who live in the communities where we operate is of paramount importance. That's why we are putting up this reward to help stop these bombings and end the threat that they pose to people in the Dawson Creek area," Mike Graham, EnCana executive vice president, said in a company release. The RCMP said four bombings occurred from last October to January. There have been two attacks reported this month, with the latest occurring between 2 a.m. and 3 a.m. Saturday. It wasn't far from the site of a bombing last Wednesday. An EnCana release Saturday said repair crews working the site of the Wednesday damage about 5 miles south of Dawson Creek heard a loud noise. When they investigated they discovered a leak in a 12-inch pipeline. "The pipeline leak also appears to be have been caused by an explosion," the company release stated. "The elements of this incident thus far, are consistent with the previous blast sites and the RCMP considers this latest bombing linked to the others," Moskaluk said in a statement. "This does change the dynamics of the events in certain terms, the main being our heightened concern for public safety, given that this explosion went off in close proximity of working crews and within a couple of kilometers of a populated rural area." Moskaluk said investigators were able to reach the scene of Saturday's blast quickly, allowing for better opportunities for "fresh" evidence gathering. Before Moskaluk used the "terrorism" term, authorities had characterized the attacks as "vandalism." The attacks began about the time an anonymous letter was sent to British Columbia media demanding oil and natural gas operations cease. It referred to the companies working the resources as "terrorists" that were "endangering our families with crazy expansion of deadly gas wells." "Whoever is responsible for these bombings has to be stopped before someone gets hurt. We hope this reward will encourage anyone who has knowledge of those responsible for the bombings to come forward and help put an end to these dangerous attacks that threaten the well-being of our staff, those who work for us and the residents and communities in the Dawson Creek area," Graham said in January. Investigators said they believe the person responsible lives in the area of the attacks and other residents may know who is carrying out the bombings.

Sahara gas pipeline gets go-ahead

2009-07-07T07:35:00.001-07:00

3 July 2009 - BBC - Nigeria, Niger and Algeria have signed an agreement to build a multi-billion dollar pipeline to take Nigerian gas across the Sahara to the Mediterranean. The giant project, which will cost an estimated $13bn (£8bn), aims to deliver up to 30 billion cubic metres of gas per year for the European market. France's Total, Anglo-Dutch firm Shell, and Russia's Gazprom have all expressed an interest in investing in the scheme. The pipeline will run for 2,580 miles (4,128km) through the three countries. BBC Africa analyst Richard Hamilton says that when built, it will be one of the great feats of engineering in the world and dwarf several existing pipelines, such as the one beneath the North Sea. He says one concern is security, as a pipeline could be a target for Tuareg rebels or al-Qaeda in North Africa, both of whom are active among the unpatrolled expanses and porous borders of the Sahara.
Russian concerns: Energy analysts say there has been interest in this project for many years, but lack of investment and an unclear regulatory environment in Nigeria meant that the plans stayed firmly on the drawing board. European Union nations now hope it will enable them to diversify their gas supplies - and most pressingly, reduce their reliance upon Russian gas - but many analysts say Gazprom may have a head start in participating in the scheme. This is because only last week, Gazprom signed a separate $2.5bn deal with Nigeria's state-owned gas firm NNPC to build new gas refineries, pipelines and power stations in Nigeria. European Union states are keen to reduce their reliance upon Russian gas because of Gazprom's numerous price disputes in recent years with Ukraine. These rows have seen Gazprom temporarily cut supplies to Ukraine, which in turn has reduced Russian gas deliveries to western Europe that are piped through Russia's neighbour. "We have the expertise and I don't think there is a problem with finance in this project," said Algerian Energy Minister Chakib Khelil. Nigeria has estimated natural gas reserves of 180 trillion cubic feet, the seventh-largest in the world.

$10 billion plan signed for pipeline that would ship gas from Africa to Europe

2009-07-07T07:33:00.001-07:00

07–03–2009 – ABUJA, Nigeria (AP) — Nigeria, Algeria and Niger have signed an agreement to create a $10 billion pipeline that would ship gas across the Saharan desert to Europe, Nigeria's state oil company said Friday. The plan comes as Europe seeks new sources of gas imports as it currently depends on Russia for much of its needs. The project was approved by energy ministers from all three governments, said Mohammed Barkindo, the managing director of Nigeria state oil company, the Nigeria National Petroleum Corporation. It is expected to come on line in 2015. "The inter-governmental agreement that has been signed today between the government of Algeria, Niger and Nigeria gives this project official stamp of approval," Barkindo said. "So it is a significant milestone." Nigeria's energy minister, Rilwanu Lukmanu, said the countries are now looking for partners for the project. "We will be talking to prospective partners who might be interested," Lukmanu said. Last month, Russia's state natural gas supplier Gazprom and Nigeria's main oil company agreed to create a joint venture to explore and produce oil and gas in Africa's most populous country. Gazprom's chief in Nigeria has said the Russian firm would invest $2.5 billion in the new venture. If Gazprom should gain control over Nigeria's gas resources, that could strip European consumers of a possible alternative to Russian gas supplies. It has been a difficult time for Gazprom as production is declining and the severe financial crisis is forcing it to delay the launch of major new gas fields that would supply Europe with energy.

Europe to get 35% of Russian gas via South Stream by 2015

2009-06-29T13:46:00.001-07:00

MOSCOW, June 26 (RIA Novosti) - The South Stream gas pipeline will account for 35% of Russian gas supplies to Europe by 2015, Gazprom CEO Alexei Miller said on Friday. "We have taken the decision to increase the pipeline's capacity to 63 billion cubic meters. This means it will account for 35% of all Russian gas supplies to Europe in 2015," Miller said at an annual meeting of Gazprom shareholders. South Stream is a rival to the Western-backed Nabucco pipeline, designed to bring gas from Central Asia and the Caspian to Europe bypassing Russia. The European Union, nervous about growing energy dependence on Russia, is backing the project despite the current economic crisis. Miller described Gazprom's pipeline as "balanced and economically efficient," and said the South Stream and Nord Stream projects were the company's "strategic investment" in improving European energy security. Intergovernmental agreements have been signed with Bulgaria, Serbia, Hungary and Greece to lay the surface pipeline. Similar agreements are currently being negotiated with Slovenia and Austria. Investment in the South Stream project has been estimated at 25 billion euros ($35 billion).

German ex-FM Fischer to promote Nabucco

2009-06-29T13:19:00.001-07:00

BERLIN, June 26, 2009 (UPI) - Former German Foreign Minister Joschka Fischer has been hired to lobby for the EU gas pipeline Nabucco. Fischer, a former Green Party leader, is due to sign a six-figure contract with the Nabucco pipeline consortium for a political and PR consulting job, the German Manager Magazine reports in its Friday issue. Germany's RWE and Austrian OMV will pay the salary of the former politician who has been teaching at Princeton University for the past three years. The 2,000-mile Nabucco pipeline is a key European energy project. It is intended to bring 31 billion cubic meters of gas per year from the Caspian Sea to Austria via Turkey, Bulgaria, Romania and Hungary. The EU with Nabucco wants to decrease Europe's energy dependence on Russia. Washington also backs Nabucco. Differences between the consortium and transit countries and Russia's repeated efforts to torpedo Nabucco have delayed a final agreement on the project. Nabucco is also in danger because gas supplies are not yet secured. Kazakhstan's Deputy Energy Minister Acet Magauov said at the NATO summit in Astana Friday that Kazakhstan will not have gas to supply the pipeline, Radio Free Europe reports. EU officials are nevertheless optimistic that a deal on Nabucco can be signed this year. The magazine writes that Fischer is employed first and foremost to massage Turkey, a key transit country. Ankara has been bargaining with its support for the project, linking it to a quicker EU accession process and demanding 15 percent of the pipeline's gas as transit fees. The consortium may hope that Fischer is able to drive back Turkey's demands. "Fischer is highly regarded in Turkey because he was always open to it joining the EU," Manager Magazine writes. That pretty much makes Fischer a competitor of his ex-boss and political ally, former German Chancellor Gerhard Schroeder, who is lobbying for the Russian-backed Nord Stream pipeline aimed at connecting Russia and Germany directly under the Baltic Sea. Schroeder heads the advisory board for the Nord Stream consortium, made up of Russia's state-controlled energy giant Gazprom, Germany's Eon and Dutch Gasunie. His decision to back Nord Stream for money was harshly criticized at the time, because Schroeder had signed an agreement with the Kremlin to green-light the pipeline while still in office.

GDF Suez can count on 9 pct in Nord Stream-Gazprom

2009-06-26T13:07:00.001-07:00

June 26, 2009 - (Reuters) - MOSCOW, France's GDF Suez (GSZ.PA) will likely get a nine percent stake in the Nord Stream pipeline, running from Russia to Germany, the project leader, Russia's Gazprom (GAZP.MM), said on Friday. "The level of participation of Gaz de France (GDF Suez) will be the same as of Dutch Gasunie," said Gazprom's export chief Alexander Medvedev. Gazprom has 51 percent of the project, Gasunie has 9 percent and Germany's E.ON EONG.DE and BASF (BASF.F) share the rest.

Gazprom says Nabucco getting special treatment

2009-06-25T07:44:00.001-07:00

MOSCOW, June 25 (Reuters by Simon Shuster) - The European Union is discriminating against Russian-backed gas pipelines in favour of Nabucco, the head of Gazprom's foreign department, Stanislav Tsygankov, said on Thursday. "When you look at the regulatory treatment of Russian-linked projects compared to European ones, one is reminded of the famous book by George Orwell that says all animals are equal but some are more equal than others," Tsygankov told a news conference. "Nabucco is getting the green light everywhere ... while our gas transport projects, South and North Stream, are constantly facing regulatory barriers."

Nord Stream upbeat despite latest hiccup

2009-06-22T15:32:00.001-07:00

06-19-2009 - Upstream OnLine - The Russia-led Nord Stream gas pipeline group said today it was upbeat about getting permits from all Baltic Sea countries, despite identifying about 50 World War II munitions dumps along the link's subsea route. "About 50 munitions (sites) in total have been identified on the route and will be handled safely in line with the existing practice...," Nord Stream spokeswoman Irina Vasilyeva told Reuters. The Nord Stream consortium aims to have the twin pipeline up and running in 2011, bringing 55 billion cubic metres of Russian gas to Germany and further to other EU countries each year across the Baltic seabed. But the timetable came under threat after several Baltic countries expressed concerns that the pipeline could damage the environment, especially as it would pass close to dumped World War II munitions. Permits to build and operate the pipeline are needed from Russia, Finland, Sweden, Denmark and Germany. Russia's Natural Resources Ministry said yesterday that Sweden and Denmark had asked to receive further documents covering the project's ecological impact. Vasilyeva said the request was a step forward rather than a step back for the project as it was taking talks on a number of outstanding unresolved issues to a national level after three months of successful multi-national consultations, which de facto cleared the project. "This step has concluded the public participation phase of the Nord Stream project," she said adding the group hopes to solve outstanding issues over the summer and start construction of the 1220 kilometre pipeline as planned in early 2010. The Nord Stream project involves Russian gas export giant Gazprom, Germany's E.ON and Dutch player Gasunie. Many European politicians want reduced dependency on Russian gas, which already supplies about one quarter of Europe's gas demand. Gazprom argues that new pipelines will lessen the continent's dependence on transit states and thus boost energy security.

Kazakhstan using Azeri pipeline

2009-06-22T08:13:00.001-07:00

BAKU, Azerbaijan, June 19, 2009 - (UPI) -- Azerbaijan is seeking to interest other Caspian producers in using its export pipelines. Since it became operational in May 2006, the Western-financed and operated $3.6 billion, 1,092-mile, 1 million-barrel-per-day Baku-Tbilisi-Ceyhan pipeline has become Azerbaijan's main export pipeline. The Azeri government has consistently sought to convince other Caspian oil-producing nations to utilize the pipeline's export capacity. Baku's efforts to acquire other nations' exports increased after the brief Georgian-Russian military confrontation last August, which completely shut in Azeri exports, costing the nation more than $1 billion in lost revenues. Beginning in October 2008, Kazakhstan began to use the BTC pipeline. Azerbaijan's Analiticheskoe I Informatsionne Agenststvo FINEKO reported June 18 that since then BTC has carried more than 1 million tons of Kazakh oil, 163,000 tons in May alone. According to the Azerbaijan State Statistics Committee, during the first five months of May 2009 Kazakh oil exports via the BTC pipeline totaled 754,800 tons. In a further sign of increased cooperation, in the wake of last year's military conflict, the State Oil Co. of the Azerbaijan Republic and Kazakhstan's KazMunaiGas last November signed an agreement on delineating principles of a joint Trans-Caspian Project oil export system.

New delays for Nabucco?

2009-06-22T08:12:00.001-07:00

BAKU, Azerbaijan, June 19, 2009 (UPI) -- Turkish officials delayed the signing of intergovernmental agreements for the Nabucco gas pipeline but promised a move as early as July. The Nabucco gas pipeline consortium has not set a firm date for the signing of an agreement on the $10.7 billion project. It was expected Ankara would host a signing meeting Thursday, but Turkish energy officials have delayed that for another month, the Trend news agency reports. Mihaly Bayer, the Hungarian envoy to the project company, Nabucco Gas Pipeline International, had complained over the slow process on the agreements but joined Turkish officials saying agreements would be reached soon. Applications from potential suppliers would follow the signing of the intergovernmental agreement, with financing moving ahead in 2010. Nabucco would travel 2,050 miles from the Caspian Sea through Turkey north to European markets. Europe sees the project as a means to diversify the regional energy sector, which is dependent on Russian natural resources. The project faces obstacles because of a lack of firm commitments from potential supplier nations, while Turkish demands for discounts delayed a pending meeting on the pipeline.

Gazprom linked to Pakistan pipeline by Iran

2009-06-15T07:23:00.001-07:00

06-12-2009 - Financial times by Anna Fifield - Gazprom is in talks with Iran and Pakistan to build a large section of a long-awaited gas pipeline between the two countries, a senior Iranian energy official says. The participation of Russia's state-controlled energy group could kick-start the pipeline project, which has been delayed because of disagreements that have led India to pull out. "Both we and Pakistan are talking with Gazprom and we have agreed that Gazprom can be a partner [to construct] the pipeline inside Pakistan," Hojatollah Ghanimifard, vice-president for investment affairs at the National Iranian Oil Company, told the Financial Times. The proposed 2,600km gas pipeline would transport gas from Iran to Pakistan and India, providing them with 60m cubic metres of gas a day initially, eventually rising to 150m cu m a day. The project, valued at $7.6bn, has been under discussion since 1994 but has been bedevilled by delays, most recently because of disagreements between India and Pakistan over transit fees. India has now walked away from the deal. But Mr Ghanimifard said the project was making progress. "Last week I was in Russia, I had the pleasure of talking to high authorities in Gazprom and I proposed to them that this was in the interest of Pakistan and invited them to become involved," he said. He added the Pakistani portion of the pipeline would stretch about 900 km. "They liked this idea and accepted. We are going to see each other trilaterally in Tehran," he said. He said the meeting was due to take place before the end of July. Gazprom said: "We are interested in this project - but so far there have been no specific negotiations." Analysts say Gazprom is interested partly because it seeks a way to channel Iranian gas away from Russia's traditional markets in Europe. Its interest and technological expertise could also inject momentum into the delayed project, they say. India, which imports about 70 per cent of its oil and gas, would still have the option to join at a later date, Mr Ghanimifard said. "When you're talking about a long relationship that will last decades, we cannot say that even though they are out for a few years, they will be out forever," he said. About 700km of pipeline from the South Pars gas field has already been built inside Iran, and the remaining 200km to the Pakistani border is under construction, Mr Ghanimifard said.

NATO backs Nabucco in Baku

2009-06-10T13:51:00.001-07:00

BAKU, Azerbaijan, June 10, 2009 (UPI) -- NATO pledged its support for the Nabucco natural gas pipeline to Europe and recognized the importance of Azerbaijan as a key energy supplier, officials said. "NATO realizes the importance of the Nabucco project and backs Azerbaijan," said Michael Gaul, a top economic security official at NATO. "Undoubtedly, Azerbaijan as a supplier plays a very important role." His comments came during an energy security conference organized in Baku by the Azeri Foreign Affairs Ministry. Europe sees the $10.7 billion Nabucco project as the answer to its energy diversification needs as it moves to ease its dependence on Russia as an energy supplier. Nabucco would travel some 1,900 miles from the Caspian region through Turkey to European energy markets. Gaul said energy security in the region was a top priority for NATO as energy demand increases, the Azerbaijan Business Center reports. "In the future, by 2013 our energy needs are going to increase by 50 percent and that will create additional difficulties in the area of safety and the environment," he said. Nabucco officials say signing of intergovernmental agreements is scheduled for June 25.

Gazprom CEO sees no fund problems for South Stream

2009-06-10T13:06:00.001-07:00

PORTO CERVO, June 10 (Reuters by Stephen Jewkes) - The South Stream gas pipeline that will transport Russian gas into Europe will have no funding difficulties and will be operative by the end of 2015, Gazprom Chief Executive Alexei Miller said on Wednesday. "The current capex plans will be honoured 100 percent. There are no problems whatsoever in funding it," Miller said, speaking to reporters on the sidelines of a conference. South Stream, which will have a capacity of 63 billion cubic metres per year, will be built by Gazprom and Italy's Eni and will cross the Black Sea to reach Bulgaria, Greece, Serbia, Hungary, Italy and possibly Austria. "It is not competing with the Nabucco project," he said, adding the feasibility study for the project will be decided by mid-2010. Nabucco is a rival pipeline project backed by the European Union. Miller said that a figure had already been set for the amount of gas Eni will be able to sell in the transit countries of South Stream but refused to give the number. Miller also commented on problems with supply of gas from Ukraine and Turkmenistan. Miller said Ukraine can and should pay for the gas it receives. He acknowledged Ukraine had paid for its May gas imports, adding payment had come from reserves of the Ukraine central bank, "an unorthodox solution", he said. Moscow cut supplies to Ukraine, and later to Europe, in January during a three-week stand-off over Ukraine state energy company Naftogaz's debts and the price of gas. He said Ukraine now needed to pump in some 19.5 billion cubic metres of gas to replenish its storage sites which will cost around $4.2 billion, adding that Ukraine's daily gas offtake fell sharply this week from last week. "I will have a meeting with the Naftogaz head next week to see what's happening," he said. Miller said he hoped the European Union summit on June 18-19 would discuss the creation of a joint EU-Russian consortium to help fund EU gas supplies. Asked when and under what terms Gazprom would restart Turkmenistan gas purchases, Miller said: "I intend to visit Turkmenistan in the next few days to discuss the gas situation". Turkmenistan and Russia have been in talks since April over how to resume the flow of gas after it was severed by a gas pipeline explosion, which Turkmenistan says Russia caused. Miller said that there is more gas than necessary in Europe today, adding no shortages are foreseeable in the short or long term. He said only 5 percent of reserves in the Arctic offshore fields have been explored. Development of the giant Shtokman gas field, which has estimated reserves of 3.7 trillion cubic metres, has not been delayed, Miller said, adding "an investment decision will be taken by March 2010". The North Stream pipeline project was also on schedule and will be commissioned in 2011. "It's a very important project and the cheapest export corridor for Russian gas," he said. North Stream is planned to link Germany and Russia via the Baltic Sea. Asked about Gazprom's interest in Slovenia's Petrol company, Miller said no decision had been taken yet. "We have received an offer (to buy) it," he said.

Transneft launches construction of 2nd stage of Baltic pipeline

2009-06-10T12:56:00.001-07:00

UNECHA, June 10, 2009 (RIA Novosti) - Russia's oil pipeline monopoly launched on Wednesday the construction of the second stage of the Baltic Pipeline System, designed to diversify the country's oil exports. The official ceremony of welding the first joint of pipeline was held in the Bryansk region in western Russia. The ceremony was attended by Russian Deputy Prime Minister Igor Sechin, Transneft CEO Nikolai Tokarev, Energy Minister Sergei Shmatko and regional administration officials. The Baltic Pipeline System-2, with an estimated cost of 120-130 billion rubles ($3.9-4.2 billion), will run from the Bryansk Region to the northwest Leningrad Region port of Ust-Luga with a branch going to the Kirishi oil refinery. The project will be funded through long-term ruble-denominated bond issues by pipeline monopoly Transneft. The bonds will be placed through a private offering among state-controlled financial organizations. The construction of the BPS-2 is to be completed two years later. Oil will start to be transported in late 2012 with an initial throughput capacity of up to 30 million metric tons (220 million bbl), which will subsequently be raised to 50 million tons per year (367 million bbl). The first stage of the Baltic Pipeline System, with a capacity of 12 million tons of oil annually and designed to transport oil from both Russia's oil-rich regions and Kazakhstan, was commissioned in 2001. Its current capacity is 75 million tons. The BPS-2 project emerged during an oil dispute between Russia and Belarus in January 2007, when Russia cut off supplies to Europe for four days via the Druzhba pipeline after Belarus refused to let Russian oil pass through the country without payment of a transit duty.

BP voices support for Baltic pipeline

2009-06-05T16:22:00.001-07:00

06-05-2009 - Upstream OnLine - UK oil major BP yesterday called on Russia to remove investment barriers to increase energy production and voiced support for a new gas pipeline under the Baltic. "There is wide agreement today that protectionism in all forms, be it in trade or in inward investment, is short sighted and is not a remedy in times of economic distress," BP's Chief Executive Toni Hayward was reported as saying on The Guardian at Russia's Economic Forum. "These barriers will slow down overall investment in the sector. Russia's oil production has recently started to decline and the demand for Russia's gas potentially also outstrips available supply," said Hayward. "The threat is that, in an attempt to shelter domestic producers and employment from international competition, first the government starts to erect trade barriers, subsides to tariffs. "Next, other countries retaliate and before we know it we are spiraling out of control - this very process brought the global economy to its knees in the 1930s," said Hayward. Russia says its joint project with German and Dutch companies to build a pipeline under the Baltic Sea would help boost security as it would cut Moscow's reliance on transit states like Ukraine. Previous disputes between Russia and Ukraine have led to cuts across Europe and prompted many European politicians to call for the reliance on Russian gas to be reduced. But the Baltic Sea project was delayed due to ecological concerns in Baltic states. "One concrete example of this (Russia-EU energy partnership) is the Nord Stream pipeline," said Hayward in his first public support of the project. BP is not part of Nord Stream, which involves Russia's Gazprom, Germany's E.ON, BASF and Dutch Gasunie. "This critical linkage between Russian gas producers and European energy consumers will enhance energy security and ensure freer flows of gas to European markets. It is a real physical manifestation of greater economic integration between Russia and Europe," said Hayward. BP has a bumpy history of relations with Russian authorities and its partners in the TNK-BP joint venture.

More Banks Involved in Russian-German Pipeline Venture

2009-06-02T14:10:00.001-07:00

June 01, 2009 - Deutsche Presse-Agentur by Clive Freeman - The economic crisis will not delay construction of a controversial undersea gas pipeline from Russia to Germany, according to a director of the Swiss-based Nord Stream concern promoting the project. But the financial situation may result in "dramatic changes" in the number of banks participating, says Dirk von Ameln. "More and more banks are lacking the large amounts of money we would like to borrow from them," he says. "Whereas a year ago the talk was of three, four, or possibly a maximum of five banks being involved with big packages, now it could be as many as 10 to 20." This did not mean there was a risk of the project being delayed, he adds, because "we have an agreement with our shareholders that they will provide us with shareholder loans should there be any delay in the bank financing." "We can go ahead. It's not the money we are lacking," he told journalists in Berlin. Work is set to begin in April 2010 on the 1,200-kilometer Nord Stream pipeline, which will run along the bottom of the Baltic Sea, mostly in Finnish waters, from Wyborg, west of St Petersburg, to Lubmin, near Greifswald in Germany. When finished, it will have a 27.5 billion cubic meter gas capacity. Work on the second leg of the project is expected to start in 2013. The German government's attitude towards the project remains "very, very positive," says von Ameln. "But he cautions that the Nord Stream pipeline alone will not answer Europe's growing energy needs. Additional gas pipelines would have to be built, he says. One is a South Stream pipeline that will lead to more Russian gas being transported across Europe via Bulgaria to Italy by 2013. Russia's Gazprom and Italy's Eni will be the builders. This project foresees a 900-kilometer pipeline crossing the Black Sea, from Beregovaya on the Russian coast, to Varna in Bulgaria, and reaching a maximum water depth of 2,000 meters. Early last year Russia and Serbia announced the setting up of a joint company when signing the South Stream agreement, which allows for the pipeline to pass through Serbia. The plans provide for a large gas storage facility to be built near Banatski Dvor in Serbia. Russia and Hungary have a similar type arrangement in respect of the Hungarian section of the pipeline. Before stepping down as premier of Italy, Romano Prodi was asked by Gazprom if he would like to become chairman of South Stream AG, an offer he subsequently rejected, unlike former German chancellor Gerhard Schroeder, who readily accepted an offer to head Nord Stream when he was voted out of office. Critics of Nord Stream claim Europe might become dangerously dependent on Russian natural gas, particularly since Russia could face problems meeting a surge in domestic as well as foreign demand in the years ahead. But von Ameln discounts such theories, saying that by 2025 Europe will need to import 195 billion cubic meters more gas than it does today if it is to cope with increasing energy demands. "For 35 to 40 years we have had successful gas imports from Russia. These connections function," he stressed, adding "that the more the EU-Russia relations normalize the more people can view each other as good neighbors." Russia's Gazprom energy concern has a 51% stake in the venture and is in line for a windfall once the 7.4-billion-euro (10.3 billion dollars) Nord Stream project is realized. Seventy percent of the project finance is to be raised through loans this summer and another tranche 12 months later. The rest will be invested by the project's four shareholders, which include Germany's BASF and the Netherlands' Gasunie, in addition to Gazprom. Russia needs permits from five countries -- Finland, Sweden and Denmark among them -- through whose territorial waters the pipeline will pass. It is expected the necessary permission will be granted by the end of the year, despite environmental reservations in some of the northern countries concerned. The pipeline is destined to by-pass Ukraine, which earlier this year was involved in an energy dispute with Russia.

Moscow Playing with Multiple Options on Black Sea Pipelines

2009-06-02T13:57:00.001-07:00

May 29, 2009 Eurasia Daily Monitor by Vladimir Socor - On May 17 in Sochi the Russian Prime Minister Vladimir Putin and his Turkish counterpart Recep Tayyp Erdogan concluded a deal on natural gas. Putin and Gazprom CEO Aleksei Miller promised to proceed with the Blue Stream Two gas pipeline project in a revised version through Turkey. Erdogan and Putin announced this in the wake of their meeting in Sochi (Hurriyet, Zaman, May 18). Blue Stream Two is envisaged as an overland prolongation of the existing Blue Stream One pipeline. Blue Stream One runs north-south from Russia directly to Turkey, on the seabed of the Black Sea. With a design capacity of 16 billion cubic meters (bcm) annually, Blue Stream One currently operates at half that capacity. The proposed Blue Stream Two, in its revised version, will continue across the Anatolian mainland into south-eastern Turkey. The original version of Blue Stream Two was intended to run the length of Anatolia westward, approximately on the same route as the Nabucco project from Turkey to Austria. In 2007, however, Russia abandoned that version of Blue Stream Two and pushed strongly for the South Stream project instead. South Stream will run east-west on the seabed of the Black Sea, from Russia directly to Bulgaria and onward to Europe. Designed to bypass the Ukrainian transit system and (unrelated to that goal) to forestall Nabucco, the South Stream project also pursues the lesser-known goal of bypassing Turkey, consistent with Russian policy to avoid transit routes that are not under its control. The Turkish AKP government has tried to bring Russia back to Blue Stream Two, even in a modified form whereby Gazprom might join Nabucco and use part of its capacity for deliveries of Russian gas (negating Nabucco's entire strategic rationale). However, Gazprom is not interested. Turkey dislikes the South Stream project for bypassing the country and depriving it of an opportunity to become an international energy hub. Ironically, Russia still needs Turkish consent to proceed with the South Stream project. Even if the pipeline circumvents Turkish territory, it is planned tentatively to run through Turkey's exclusive economic zone in the Black Sea. Thus, Ankara might procrastinate on this Russian project and seek a reward for its acceptance, having already demonstrated considerable capacity for stalling on Nabucco. Partly for this reason, Moscow is now returning to Blue Stream Two, albeit in a modified form. The basis for the revised Blue Stream Two is both commercial and political. Commercially, it will carry gas for consumption in Turkey and transport via its territory to gas-poor Middle Eastern countries, presumably from 2012 onward. Turkey's long-term agreement with Russia, signed with the USSR in 1986 for gas deliveries by pipeline via the Balkans (the "western route" from Turkey's vantage point), is due to expire in 2012 (Platts Commodity News, May 21). That gas travels across Ukraine before reaching the Balkans and Turkey. Hoping to bypass Ukraine, the Kremlin proposes to switch deliveries for Turkey, from the Balkan ("western") route toward the underwater Blue Stream One; and to supplement those volumes for transport further afield (primarily to Israel) -although declarations to that effect can hardly be taken at face value. As part of that vision, Turkey might become an international "hub," complete with gas storage capacities. Politically, Blue Stream Two will reward Turkey for cooperating with the Russian South Stream project. The promise of Blue Stream Two might facilitate Turkish consent to the Russian use of Turkey's exclusive economic zone in the Black Sea. That consent is indispensable to South Stream, since the only alternative is to build it in the Ukrainian exclusive economic zone in the Black Sea. A Russian underwater pipeline specifically intended to bypass Ukraine will be unlikely to receive Kyiv's consent (barring a Russian-orchestrated regime change in the country). The Ukrainian and Turkish exclusive economic zones are adjacent in the Black Sea, with no intermediate zone. To reach Bulgaria from Russia, the South Stream pipeline must run either through the Turkish zone or much of the Ukrainian zone and a small part of the Romanian zone. Moscow expects to secure Turkish consent and is trying to accelerate this through the promise of Blue Stream Two. Meanwhile, Moscow is building some counter-leverage to Turkey on that issue and is sounding out Romania. A Romanian delegation, headed by the Economics Minister Adriean Videanu (EDM, May 28, 29), was asked in Moscow recently to provide technical data relevant to pipeline construction on the seabed of the Black Sea within the Romanian exclusive economic zone. The Russian side also inquired about Gazprom conducting a study of the conditions on the seabed. Gazprom vice-president Aleksandr Medvedev -who alongside Energy Minister Sergei Shmatko took part in the talks- indicated that Moscow is considering laying an underwater section of the South Stream pipeline in the Romanian economic zone. The Romanian delegation agreed to hand over the technical data. Bucharest's official position is that it prefers and prioritizes Nabucco "at the present time" but does not rule out South Stream, if Nabucco fails to materialize (Agerpres, NewsIn, March 21; Radio Romania International, May 22; Rompres, May 26; Romania Libera, May 22, 25, 27). Laying a section of South Stream underwater in the Romanian zone might affect other Black Sea countries. It implies reducing the Bulgarian share in the overall volume of gas transported through South Stream. It has already signed the intergovernmental and project agreements with Russia and Gazprom respectively, for South Stream. Apparently, Moscow is not above playing with the idea of re-routing a portion of the gas earmarked for transport through Bulgaria under the project. Moscow's overture to Romania might create a non-Turkish option for laying the underwater pipeline. Moreover, (hypothetically the most intriguing consequence), using the Romanian zone will make sense if Gazprom decides to use the Ukrainian zone, instead of the Turkish zone for laying the South Stream pipeline. Indeed the shortest and comparatively shallowest, underwater route from Russia runs through the Ukrainian and Romanian maritime zones, which are adjacent to each other. All this maneuvering remains abstract, however, in the absence of Russian-dedicated volumes of gas. The Russian side claims to be able to supply both the South Stream and the Blue Stream Two pipeline projects at their declared capacities: South Stream at 63 bcm annually from 2015 onward (double the figure projected last year for 2013) and Blue Stream Two at 16 bcm annually, presumably from 2012 onward. The Russian stagnant gas production and looming shortfalls, however, invalidate such claims. No Black Sea country can count on the implementation of South Stream. They will all maneuver around each to secure Russian favor in connection with this project.

Pipeline blast forces closure of 195 gas wells in Turkmenistan

2009-06-02T13:35:00.001-07:00

May 29, 2009 (RIA Novosti) - PARIS, Turkmenistan has been forced to halt gas production at 195 wells following an accident along a stretch of pipeline leading to Russia, a Turkmen expert said on Friday. The problem with Turkmen gas deliveries began in early April, when a blast and ensuing fire caused Turkmengaz, the country's state-run gas company, to suspend supplies to Russia. Odek Odekov, director of the geological institute at the state oil and gas exploration corporation Turkmengeologiya, said that repairs had already been carried out to the pipeline, which was ready to pump gas, adding that the resumption in supplies was subject to commercial negotiations. "If the parties come to terms, we won't file a suit with an international arbitration tribunal. The parties are currently unable to agree who is at fault," he said. Turkmenistan earlier accused Russia of failing to warn Ashgabat that it was reducing gas imports, resulting in a buildup of pipeline pressure that caused the blast. In turn, Dovlet Atabayev, head of the European office of the state agency for hydrocarbon resources management and use under the Turkmen president, said that a working group had been set up to look into the reasons for the accident. "This is a purely commercial issue between the parties and there is no political context to it. The experts have to find the cause," he said. Odekov said that some gas was still flowing into Russia but declined to specify the volume. He added that the agreement contained a force majeure provision but any reduction in gas supplies required each side to notify the other three days in advance. However, the Russian side gave Turkmenistan just one day advance notice, in effect creating a vacuum bomb, he said. Experts earlier attributed the significant reduction in gas imported by Russian energy giant Gazprom from Turkmenistan to a drop in demand from European consumers amid the ongoing global economic crisis. Russian President Dmitry Medvedev said in mid-May that the issue of resuming supplies depended on the Turkmen side.

South Stream route sparks Serbian row

2009-06-02T13:20:00.001-07:00

May 28, 2009 (UPI) - NIS, Serbia, Administrators in the Serbian city of Nis called on government officials to pledge the route for the South Stream gas pipeline will not bypass their region. Officials from Russian gas monopoly Gazprom signed a series of bilateral agreements at a May 15 energy summit in the Black Sea resort town of Sochi on the proposed pipeline. 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. Dusan Bajatovic, the general director at Srbijagas, said the 280-mile leg of South Stream through Serbia will enter the country near the eastern city of Zajecar to Belgrade before branching off into northern and southern arteries. Opposition parties walked out of a city assembly meeting in protest of a decision to construct South Stream through Zajecar instead of Dimitrovgrad as originally planned, the Serbian broadcaster B92 reports. Administrators complained their region was neglected historically and local officials eventually adopted a declaration calling on Belgrade to reverse its decision regarding southern Serbia.

Gazprom boosts pipe spend to $1.6bn

2009-05-29T14:35:00.001-07:00

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.

Russian gas pipeline explodes northwest of Moscow

2009-05-29T14:19:00.001-07:00

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.

Gazprom eyes role in Iran-Pakistan pipeline

2009-05-27T07:57:00.001-07:00

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.

Baku wary of Nabucco optimism

2009-05-26T13:13:00.001-07:00

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.

Transneft digs in with Belarus bypass

2009-05-26T13:10:00.001-07:00

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).

Russia close to new South Stream deal

2009-05-26T08:22:00.001-07:00

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.

Problems in the pipeline

2009-05-26T08:08:00.001-07:00

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.

South Stream pipeline capacity to be doubled

2009-05-26T07:50:00.001-07:00

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.

Iraq in Arab gas pipe talk for Euro supply

2009-05-21T11:05:00.001-07:00

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.

Nord Stream section in "home stretch"

2009-05-21T11:02:00.001-07:00

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%.

Russia and EU begin summit amid mutual exasperation

2009-05-21T10:00:00.001-07:00

// 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.

Putin Raises the Stakes in his Black Sea Gas Gamble

2009-05-21T09:51:00.001-07:00

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.

Gazprom still not taking delivery of Turkmen gas

2009-05-21T09:39:00.001-07:00

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.

Russia to propose EU include South Stream in priority projects

2009-05-21T09:18:00.001-07:00

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.

South and Nord streams to secure EU’s gas stability - Schroeder

2009-05-19T11:27:00.001-07:00

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.

Russia and Turkey agree on extension of gas pipeline

2009-05-19T11:25:00.001-07:00

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.

Russia, Italy, double pipeline plans

2009-05-19T09:59:00.001-07:00

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.

Deals reached on South Stream pipeline

2009-05-19T09:53:00.001-07:00

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.

Gas Pipeline Fight Escalates Sharply

2009-05-19T09:48:00.001-07:00

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.

Nabucco related gas deal in Iraq “no tragedy”, Russia says

2009-05-19T09:44:00.001-07:00

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.

Nabucco hopes grow after $8bn Iraqi gas deal

2009-05-19T09:39:00.001-07:00

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."

Gas Pipelines: South Stream Gets a Boost

2009-05-19T09:37:00.001-07:00

//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.

Russia steals march in Europe pipe race

2009-05-19T09:34:00.001-07:00

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.

China gets to work on cash-for-oil pipe

2009-05-19T09:27:00.001-07:00

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.

Gazprom says offshore pipelines would lower transit risks

2009-05-19T09:23:00.001-07:00

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.

Eni Signs Gazprom Deal To Boost South Stream Proj To 47BCM/Yr

2009-05-18T15:57:00.001-07:00

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.

Russia, Italy to Double Capacity of Gas Pipeline

2009-05-18T15:50:00.001-07:00

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."

No smooth sailing on Nabucco, Turkey says

2009-05-15T07:54:00.001-07:00

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.

Kazakhstan signs Russian pipeline law

2009-05-15T07:52:00.001-07:00

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.

Yushchenko blasts Nord, South Stream

2009-05-15T07:50:00.001-07:00

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."

Kazakhs approve pipeline to Russia

2009-05-14T12:34:00.001-07:00

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.

Serbia, Gazprom to Sign South Stream Deal

2009-05-13T08:48:00.001-07:00

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.

Gazprom/DESFA agreed on Greek part of South Stream

2009-05-13T07:40:00.001-07:00

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.

Eni CEO To Go To Russia Wed On South Stream; Still No Deal

2009-05-13T07:37:00.001-07:00

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.

Russia's Putin Invites Japan's Interest in Oil Pipeline Project

2009-05-12T09:32:00.001-07:00

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.

Nabucco engineers get to work

2009-05-12T09:28:00.001-07:00

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.

Gas deal between Turkey and European Union breaks Russian stranglehold

2009-05-12T09:25:00.001-07:00

• 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.

Desperate EU seeks gas supplies from Iraq for Nabucco

2009-05-12T09:20:00.001-07:00

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.”

Duo 'at odds over South Stream'

2009-05-08T14:00:00.001-07:00

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.

Three key nations refuse to sign Nabucco pipeline agreement

2009-05-08T13:57:00.001-07:00

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.

Nord Stream shapes up with Greenpeace

2009-05-07T15:03:00.001-07:00

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.

Gazprom, Eni disagree over South Stream role

2009-05-07T14:58:00.001-07:00

May 7, 2009 - Reuters by Alberto Sisto - ROME, A dispute has erupted between Italian oil major Eni SpA and Russian state-controlled Gazprom over the role Eni will play in the South Stream gas pipeline, an Italian government source said on Thursday. 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 percent partners in the company which is conducting feasibility studies for the pipeline, but the Italian oil and gas 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 said. 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 slated to meet at Sochi in Russia on May 15. 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 said 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 May 15 on Serbia's participation in the South Stream gas pipeline, a spokesperson with Serbia's Energy Ministry said on Thursday. 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.

EU Pipeline Gets Boost Amid Slump

2009-05-06T07:50:00.001-07:00

May 6, 2009 - Wall Street Journal by Mark Champion - BRUSSELS -- The economic downturn is giving glimmers of hope to the European Union's efforts to build a supply route for natural gas from the Caspian Sea region. Falling demand and prices for fuel have cut Russia's appetite to buy up Central Asian gas, potentially freeing up fuel for the EU's beleaguered Nabucco pipeline project, analysts say, though it still faces huge obstacles. If built, the pipeline would eventually bring 31 billion cubic meters of gas per year to the EU. European Commission President Jose Manuel Barroso attends an energy summit last month in Bulgaria, where attendees were told European governments and gas consumers must pledge to back the Nabucco gas pipeline if Europe is to reduce its reliance on Russian gas. A summit Friday in Prague will for the first time, according to EU officials, bring together presidents, prime ministers and other leaders from all the players -- including Turkey, Azerbaijan, Iraq and Egypt -- needed to build gas pipelines to the EU from the Caspian Sea region and the Middle East. The EU has pushed Nabucco as a way of diversifying its supplies, making it less dependent on imports of Russian gas. This year, for the second time since 2006, a price dispute between Ukraine and Russia caused Russia to halt gas supplies to the EU for several weeks. The project has been plagued from the start by concerns that there wouldn't be enough gas to fill the pipeline, as well as by tortuous negotiations between Turkey and the pipeline's consortium over the terms of transit. According to Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies in England, a sudden collapse in demand and prices for natural gas as a result of the downturn is changing at least part of that equation. On April 9, an explosion on the pipeline connecting Turkmenistan to Russia prompted an angry response from Turkmen leaders, who also floated the idea of the need to diversify export routes. The explosion, which the Turkmen government blamed on Russian gas monopoly OAO Gazprom, halted supplies that were losing Gazprom large sums of money. The gas had been contracted last year, when fuel prices were at their peak, and Gazprom's export markets were drying up. The head of Russia's Oil and Gas Institute blamed the explosion on the poor state of Turkmenistan's pipeline network. "We are in a situation we never expected to be in," says Professor Stern, noting that until last year, Russia had been scouring the region to sign long-term contracts, buying up all the gas it could find. Now, instead, Gazprom has angered countries such as Turkmenistan, which says it suspects the company of trying to wriggle out of buying the contracted gas. At Friday's summit, EU officials say they are seeking firm political commitments from suppliers to provide specified amounts of gas, and from purchasers in the EU to buy it. Russia and the U.S. will also attend the summit, as observers. Even with the increased interest from Central Asian governments to sell their gas to Europe, getting Nabucco off the ground remains a tall order, analysts and officials say. One problem: A dispute over the legal status of the Caspian Sea makes it difficult to build a pipeline across the sea to connect the Central Asian suppliers with Nabucco. EU officials say a link could also be built by shipping gas, but this would be expensive, analysts say. Turkey has been in negotiations with the Nabucco consortium for months over the terms of transit for the gas, at times suggesting it may link any deal to progress in its own, troubled membership talks with the EU. Officials at the EU now say they hope they can secure a transit deal by June. As soon as those terms are set, the Nabucco consortium can start contracting gas to put in the pipe, according to Christian Dolezal, spokesman for the consortium. The consortium for the €8 billion ($10.65 billion), 3,300-kilometer pipeline includes Botas AS of Turkey, Bulgarian Energy Holding EAD, MOL of Hungary, Austria's OMV Gas & Power GmbH, Germany's RWE AG, and Transgaz SA of Romania. Nabucco is scheduled to start operating in 2014, although most analysts think that deadline won't be met. EU officials also note that gas pipelines take many years to get off the ground, and that of the three projects the EU is backing as part of its efforts to construct a so-called southern corridor for energy, one -- an 8 billion cubic meter-a-year connector pipe from Turkey to Italy through Greece -- is already partially built.

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

2009-04-30T12:20:00.001-07:00

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

Srbijagas: Contract with Gazprom on May 14

2009-04-30T12:15:00.001-07:00

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

Transneft sees steady Russian output

2009-04-30T11:55:00.001-07:00

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

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

2009-04-29T07:26:00.001-07:00

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

Putin Strikes South Stream Deal With Sofia

2009-04-29T07:21:00.001-07:00

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

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

2009-04-28T11:24:00.001-07:00

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

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

2009-04-28T09:34:00.001-07:00

04–27–2009 – Russia Today – Gas producers and consumers meeting in Bulgaria have highlighted Europe’s need for greater diversity in supply while the South Stream and Nabucco projects approach demand from differing viewpoints. Europe wants secure supplies from diversified sources. It is the single most frequent comment at the Energy Summit in Sofia, Bulgaria. Bulgaria itself is involved in two major projects – Russia’s South Stream and the European backed Nabucco. It wants to satisfy domestic energy needs and become a gas hub and its looking at two projects with different approaches. South Stream has enough commitments from producers to supply the pipeline. But disagreements over the route has delayed the signing of an agreement between Gazprom and the Bulgarian Energy company. The Nabucco project will start building the pipeline and then start attracting suppliers, according to Reinhard Mitschek, Managing Director of Nabucco Pipeline International.
“We count on any sources. That’s one of the USP’s of the pipeline, that’s not necessarily that we have to rely on one source. But we see gas from Azerbaijan, Turkmenistan, from Iraq, from Egypt, even from Iran, from Russia.”
Azerbaijan is one of the countries that can determine Nabucco’s fate. Its fields hold 12 billion cubic metres of gas. But developing them could cost about $18 billion. But Elshad Nassirov Vice President of SOCAR, Azerbaijan’s major energy company, says the country wants to see Nabucco participants signing transit and other agreements well before allocating its gas.
“Obviously projects should first get the legal side set up – sign inter governmental and host agreements. So far there is no legal framework for the Nabucco project in place.”
Russia’s Gazprom may consider joining Nabucco – upstream as a producer. But the company will not redirect volumes from South Stream, according to Stanislav Tsygankov, Head of the International Department at Gazprom, who notes that Russia could supply all demands itself for a number of years.
“According to calculations there is already enough gas discovered in Russia to last a minimum of 100 years. And clients in Europe and Russia have nothing to worry about.”
European consumers will need up to 200 billion cubic metres of gas annually by 2012. Russia currently provides up to one third of Europe’s needs and wants to know exactly how much Russian gas Europe will need in the future, while the EU is looking for diversified supply from central Asia. However its going to be a long time before Europe’s houses are heated by Turkmen or Azeri gas due to the lack of agreement between transit countries like Turkey.

Nabucco Project Faces Turkish Hurdles at Critical Turn

2009-04-28T08:43:00.001-07:00

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

'Pipeline On Rails' Looks Promising - Alberta Official

2009-04-28T08:36:00.001-07:00

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

'Nabucco nod will spur gas hunt'

2009-04-24T08:36:00.001-07:00

04-24-2009 - Upstream OnLine - A final investment decision to build the Nabucco gas pipeline - expected next year - should spur a multi-national search for gas to fill it, project leader Reinhard Mitschek said today. The managing director of Nabucco said fears that repeated delays to the 3300 kilometre pipeline project to wean Europe off its dependence on Russian gas could mean Caspian gas being grabbed by countries like China were unfounded. "I am sure that once the pipeline has been decided and the final investment decision is taken that will attract additional exploration and production activities in central Asia and the Middle East," Reuters quoted him telling told journalists on the sidelines of a conference in Sofia. "We see gas from Azerbaijan, Turkmenistan, Iraq, Egypt, even from Iran and Russia. We do not exclude any source... We are confident that the pipeline will reach plateau level earlier than expected." Nabucco is expected to open in 2014, if an intergovernmental agreement on the €7.9 billion ($10.41 billion) project can be agreed as expected in June. But the president of StatoilHydro's Azeri gas business told Reuters at the conference that first gas from the second phase of Azerbaijan's Shah Deniz field in the Caspian - seen as a major source for Nabucco - would be delayed to from 2014 to around 2016 because of the lack of progress on Nabucco transit agreements. Mitschek said that Europe's long-term gas demand growth was enough to justify several gas pipelines and that Russian gas export monopoly Gazprom's and Italian player Eni's South Stream pipeline, were not seen as a rival to Nabucco. "I refuse an approach of either South Stream or Nabucco," he said. Nabucco's shareholders are Austria's OMV, Hungary's MOL, Romania's Transgaz, Bulgaria's Bulgargaz, Turkey's Botas and Germany's RWE.

'EU needs to move on Nabucco'

2009-04-24T08:35:00.001-07:00

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

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

2009-04-24T08:26:00.001-07:00

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

Gazprom Pushes Brussels on Pipeline

2009-04-23T14:02:00.001-07:00

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

Bulgaria offers own version for the “South stream” network

2009-04-23T11:24:00.001-07:00

23.04.2009 - Bulgarian News - “The Bulgarian energy holding” and “Gazprom” to sign a transit agreement for the “South stream” gas pipeline, which to give possibility for the Russian company to pay taxes for the transition of gas to Greece and Italy if the holding constructs part of the network. This option offers the Bulgarian energy ministry to the Russian side, informed a source close to the negotiations. The Bulgarian side insists on the Russian company to construct own network on the project, while “Gazprom” refuses with the motive that this is economically not profitable. For Bulgaria, the acceptance of the Russian suggestion – the existing network to be used, would mean blocking the transit for neighboring countries and Sofia to be deprived of the possibility for alternative gas supplies. The Russian gas monopolist offers to build diversion of the gas pipeline to Greece, the capacity of which according to energy experts is filled. “The wish of the Russian side is absolutely unacceptable, in the ratified by the parliament intergovernmental agreement for “South stream” is written that a new gas pipeline will be built by the future joint company”, said deputy minister of economy and energy Yavor Kuyumdzhiev for “Dnevnik” newspaper. He confirmed the idea for the agreement. The intergovernmental agreement stipulates for a project company to be established with equal participation of the energy holding and “Gazprom”. Bulgaria insists on a multilateral agreement to be signed, which to guarantee the realization of the project. On Tuesday the spokesman of the Russian company Sergei Kuprianov cancelled the scheduled press conference in Sofia on which he was supposed to give some details on the Russian position on the project. The reason was he missed the plane to Sofia. The vice-president of “Gazprom” Alexander Medvedev announced to the information channel “Vesti”, that this year corporative agreements with Bulgaria, Serbia and Greece would be signed. He explained that the company would suggest to the European Union the project to become a priority one. The Russian side insists also during the energy forum, organized by president Georgy Parvanov, a protocol to be signed, with which “Gazprom” is not engaged to guarantee the securing of 31 billion m3 gas annually for the gas pipeline.

Gazprom to sign pipeline agreements

2009-04-21T08:10:00.001-07:00

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

'EU needs to source Nabucco gas'

2009-04-20T09:23:00.001-07:00

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

Latvia set to propose alternative to Nord Stream

2009-04-20T08:31:00.001-07:00

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

Medvedev, Halonen to talk energy security, bilateral ties

2009-04-20T08:26:00.001-07:00

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

E.ON seeks to reduce stake in Baltic gas pipeline

2009-04-20T07:53:00.001-07:00

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

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

2009-04-16T07:29:00.001-07:00

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

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

2009-04-15T07:28:00.001-07:00

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

Putin Touts Nord Stream To Schroeder

2009-04-15T07:24:00.001-07:00

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

Turkey Hopes to Sign Nabucco Pipeline Deal by June 2009

2009-04-14T08:15:00.001-07:00

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

Nord Stream partners start talks on Gaz de France invitation

2009-04-13T11:16:00.001-07:00

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

Financing 'not a problem' for Nabucco

2009-04-13T08:26:00.001-07:00

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

Georgia signs White Stream MOU

2009-04-13T08:12:00.001-07:00

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

Gazprom undermines Nabucco implementation

2009-04-09T07:31:00.001-07:00

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

Is Europe serious about energy security?

2009-04-09T07:13:00.001-07:00

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

GAZPROM RENEWS PUSH TO THROTTLE NABUCCO

2009-04-08T07:29:00.001-07:00

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

Gazprom wants Bulgarian gas pipelines for “South stream”

2009-04-07T07:29:00.001-07:00

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

Turkey wants extra Russian gas supplies from 2015 - Gazprom

2009-04-06T08:10:00.001-07:00

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

TURKMENISTAN: ASHGABAT SENDS SHOT ACROSS GAZPROM’S BOW

2009-04-03T12:53:00.001-07:00

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

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

2009-04-02T11:50:00.001-07:00

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

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

2009-04-01T11:35:00.001-07:00

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

Turkmenistan: international tender for Caspian pipeline spur opens, Gazprom must compete

2009-03-31T07:20:00.001-07:00

03–30–2009 – Eurasianet – Turkmenistan has launched an international tender for the construction of a pipeline that Gazprom had once considered a done deal. The move highlights increasing friction between Ashgabat and the Kremlin on energy issues. The tender for the East-West spur, which should link Turkmenistan’s vast gas deposits with the Moscow-controlled Prikaspiiski pipeline network, had to date only been associated with the state-owned Russian gas giant. Now, Gazprom will have to place a bid and compete against other international companies. The 600-kilometer spur is estimated to cost roughly $1.5 billion. In 2008, Gazprom pledged to finance the project using its own funds, but Russia’s economic woes have hit the gas giant especially hard. [For background see the Eurasia Insight archive]. Following the failure of Turkmenistan and Russia to ink a deal earlier in March during an official visit to Moscow by President Gurbanguly Berdymukhamedov, Russian media outlets have speculated that Russian officials are now worried that Ashgabat might try to double-cross the Kremlin. A source in Ashgabat told the Vremya newspaper on March 30 that "the Turkmen leader did not want to give the Kremlin assurances that the infrastructure will be used only to increase exports to Russia through the planned [Prikaspiiski] gas pipeline. And Moscow did not want to sign [away] billions in investment, given the high risk of shifting some or even the entire volume of gas in the Trans-Caspian gas pipeline [outside of] Russia." According to the tender, companies may compete to design and construct the spur which is being billed as between 800 and 1,000 kilometers in length. "This project will have significant positive impact on economic and political processes in different regions of the world, in addition to the obvious commercial benefits for participants as well as potential consumers," the Turkmen state news agency commented March 27.

No alternative to South Stream through Serbia - Gazprom

2009-03-30T07:41:00.001-07:00

Mar 30, 2009 BELGRADE, (Tanjug). Deputy Chairman of the Board of Executive Directors of Russian energy company Gazprom and Director-General of Gazexport Alexander Medvedev has said that the route of the South Stream gas pipeline through Serbia is a priority for Russia and Gazprom and that a route through Romania is not being considered as an alternative. Medvedev expects technical preparations for the project to be completed by the end of this year for all involved countries, and said that research has been requested for the section from Russia to Europe, to be followed by steps concerning the transit of gas to consumers. South Stream will be completed by the end of 2015 and pipeline capacity will be increased from 30 to 47 billion cubic meters, he said in an interview to Novosti daily.