RusEnergy

31.05.2005 14:56 MSK MosNews - In order to attract the investment it needs to thrive, Russia should set clear rules and apply laws consistently, U.S. Secretary of Commerce Carlos Gutierrez said on Tuesday, May 31. The U.S. official is currently in Moscow, on his first visit to Russia since his appointment. Gutierrez, quoted by the Associated Press agency, said that Russia had made major progress in economic reforms in the past 15 years, but needed to do more to attract investment and boost its trade with the United States. Speaking to U.S. and Russian business representatives before meetings with Russian officials, Gutierrez said Russia must apply laws consistently and crack down on widespread piracy to create a better investment environment. "Regulations need to be consistently interpreted and uniformly applied from year to year and from company to company," he said. "As businesspeople, there's one thing we ask for, and that is certainty." Gutierrez said U.S. exports to Russia increased by 20 percent last year, but that "when you look at the Russian-U.S. trading relationship ... one of the immediate conclusions is that it could be so much bigger." Amid concerns among foreign businesses and diplomats about increasing state control over the economy and persistent anti-Western sentiment in the Kremlin, Gutierrez said Russia must understand it needs investment to sustain powerful growth. "Investment creates jobs, jobs create happiness," he said. "We believe it all starts with investment, we believe it all starts with creating climate so that people feel comfortable about putting their money in." Gutierrez reiterated persistent U.S. pressure on Russia to crack down on violations of intellectual property rights, saying that 80 percent of all business software in Russia is pirated. "Violators need to face prohibitive financial penalties and real jail time" instead of "insignificant, slap-on-the-wrist" punishments such as suspended sentences that allow pirates to go back into business.

MOSCOW, May 31 (RIA Novosti) - The Meshchansky court has sentenced former Yukos CEO Mikhail Khodorkovsky, and his business partner Menatep head Platon Lebedev to nine years in prison. Volna CEO Andrei Krainov got a five-year suspended sentence.

MOSCOW, May 31. (RIA Novosti) - Sakhalin Energy, which operates the Sakhalin-II oil and natural gas project, signed another long-term contract on the sale of its liquefied natural gas (LNG) on Monday. Vedomosti, a leading business daily, reported today that the company had found a buyer for 70% of the LNG, about half of which would go to Japan. Sakhalin Energy signed the contract with Hiroshima Gas Co Ltd. This Japanese company will annually receive about 210,000 metric tons of liquefied natural gas for 20 years. The companies are continuing to coordinate the terms of the huge LNG contract. The Japanese company plans to transport the gas on its ice-resistant ship, which can store 20,000 cubic meters of gas. This is the fifth contract on LNG deliveries to Japan. Past contracts were concluded with Tokyo Gas (1.1 million tons per year for 24 years), Kyushu Electric (0.5 million tons per year for 22 years from 2009), Toho Gas (0.3 million tons per year for 24 years from 2010) and Tokyo Electric (1.5 million tons per year for 22 years). Moreover, Sakhalin Energy and Shell Eastern Trading signed a contract for the annual delivery of 1.6 million tons of LNG to Mexico for 20 years and another contract was signed with Kogas of South Korea on the annual delivery of 1.5 million tons of natural gas for 20 years from 2008. Taiwan's Chinese Petroleum Corp, which would like to diversify gas-supply sources, is studying the possibility of buying Sakhalin LNG. Sergei Suverov, the head of Gazprombank's market-situation center, does not doubt that Sakhalin Energy will find buyers for its LNG because the product is becoming increasingly popular. Although Sakhalin Energy will attach priority to the Japanese market in the near future, the market is growing slowly and is extremely competitive. Suverov said that those involved in Sakhalin-II should eventually devote more attention to the rapidly growing U.S. and Chinese markets. The Sakhalin-II project's surveyed deposits contain 150 million metric tons of oil and 500 million cubic meters of natural gas.

YUZHNO-SAKHALINSK, May 30 (RIA Novosti) - Sakhalin Energy and Japanese company Hiroshima Gas have signed a 20-year contract on the supply of liquefied natural gas (LNG) to Japan, a Sakhalin Energy spokesman said Monday. "The purchase and sale transaction with Hiroshima Gas is already the fifth agreement with Japanese energy companies. LNG supplies are expected to start in 2008," the spokesman said. Sakhalin Energy CEO Ian Craig said that the agreement reaffirms Russia's capability, and that of Sakhalin in particular, to become an important long-term energy supplier to Japan. This is also the first agreement envisaging the use of small craft for transporting LNG. Hiroshima Gas plans to use its own ice-class craft with a capacity of 20,000 cu m to carry LNG to its own terminal in the south of Honshu island. Usually 125,000 cubic-meter capacity tankers are used for transporting LNG. The gas will be transported from a new plant under construction with a capacity of 9.6 million tons a year near the Prigorodnoye settlement on the Aniva Bay coast in Sakhalin's south. The plant will become Russia's first natural gas liquefying enterprise. The plant is more than 65% complete. Hiroshima Gas is not the first Japanese company Sakhalin Energy has dealt with. The company has concluded transactions with Tokyo Gas for annually providing 1.1 million tons during 24 years, with Tokyo Electric to annually supply 1.5 million tons for 22 years, with Kyushu Electric for providing 500,000 tons a year for 22 years and with Toho Gas to annually supply 300,000 tons during 24 years. Similar agreements were made with the Baja Mexico company to annually supply 1.6 million tons during 20 years, and with the Korean gas corporation Kogas for providing 1.5 million tons a year for 20 years, beginning in 2008. The Sakhalin-II project outlines the development of two deposits, Piltun-Astokhskoye (a mainly oil deposit with associated gas) and Lunskoye (a mainly gas deposit with associated gas condensate and an oil fringe) on the northeastern shelf of the island. Both deposits were discovered in the 1980s. The aggregate commercial hydrocarbons reserves of both deposits are in excess of one billion barrels (150 million tons) of oil and more than 500 billion cu m (18,000 trillion cubic feet) of natural gas, which is approximately equal to five-year export term of Russian gas to Europe.

27.05.2005 13:04 MSK MosNews - International Finance Corporation, a unit of the World Bank, said on Thursday, May 26, that it acquired a one percent stake in Russia's leading independent gas producer Novatek. This is the first World Bank investment in Russia's natural gas sector. IFC, which is a private lending arm of the development bank, said it hoped that a move would encourage more investments in Russia's gas sector. "We hope the market sees this as a sign of our confidence in the role that domestic producers can play in country's energy strategy," Rashad Kaldany, the IFC's director for oil, gas, mining and chemicals, told Reuters. The IFC did not say how much it paid for the stake, but it is estimated to be around $35 million. As MosNews reported on Thursday, Russian state bank Vnesheconombank also bought a 5.6 percent of Novatek. The gas producer is currently planning an IPO of 20 percent of its shares and is awaiting state approval for a sale of a 25 percent stake to French oil and gas giant Total.

MOSCOW, May 27 (RIA Novosti) - Vagit Alekperov, president of Russian oil major LUKOIL, told investors in New York Tuesday his company planned to increase its gas share to 30%. LUKOIL currently produces about seven billion cubic meters of gas, including 4.5 billion cubic meters of casing-head gas, and plans to up its output to some 50 billion cubic meters of gas by 2015, Gazeta.Ru reported. "LUKOIL's 1.1 trillion cubic meter deposits enable it to boost gas production," Mikhail Bakulev, an analyst with the AVK investment brokerage company, said. Gazprom alone may hinder the implementation of ambitious LUKOIL plans because the natural monopolist does not always allow independent gas producers to use its pipeline network. However, Alekperov did well to improve relations with Gazprom. In late March 2005, he signed a strategic partnership agreement with Gazprom until 2014. LUKOIL voiced its readiness to finance the development of Gazprom's gas transport system. The companies also stated their intention to jointly implement oil and gas projects in Russia, the Caspian region and Uzbekistan. LUKOIL agreed to sell all the gas from the Nakhodka deposit in Western Siberia) to Gazprom in 2005 and 2006 straight from its gas wells. Gazprom will therefore receive 11 billion cubic meters of gas per year. "LUKOIL will not quarrel with Gazprom. LUKOIL will have to eliminate the monopolist's possible gas shortages," Dmitry Mangilev, an analyst with the Prospect investment company, said. Both companies consider this cooperation scenario to be quite profitable. The natural monopolist pays less for gas, subsequently raising end-consumer prices. LUKOIL "spends nothing on transportation and it isn't facing any pipeline-access problems," Mangilev said. Sergei Glazer of Vostok-Nafta, a Gazprom minority share holder, also expressed doubt the LUKOIL could face problems. "Independent producers often have trouble selling their gas, storing it inside pipelines. No one voices such claims to LUKOIL," Glazer said. "The company helps Gazprom to develop the infrastructure of new regions. This is why Gazprom and LUKOIL have established a special relationship."

26/05/2005 (16:06) RZD News - Gazprom's Headquarters has hosted on May 25 a working meeting between Alexey Miller, Gazprom's Management Committee Chairman and Eivind Reiten, Hydro's President and CEO. The meeting explored the implementation of a joint Memorandum of understanding stipulating the study of cooperation prospects for Gazprom and Hydro when developing the Shtokman gas condensate field and producing liquefied natural gas. In addition, the parties discussed Gazprom's possible involvement in Hydro-led oil and gas field development, Ormen Lange inclusive. At the same time, the meeting addressed potential joint gas marketing in the USA and Great Britain and oil & gas production in third countries. Eivind Reiten underscored that Hydro would contribute to promoting business cooperation between the firms on the European gas market as well as confirmed Hydro's willingness to take part in the North-European gas pipeline project.

25.05.2005 12:09 MSK MosNews - Russia's largest private oil company Lukoil plans to expand its presence on the U.S. market, the company's CEO Vagit Alekperov said on Tuesday, May 24 at a press conference in New York. "At the present time we sell about eight million tons of oil products in the U.S.," Alekperov said. "The company operates 2,000 gas stations in the northeast part of the United States. This is approximately 30 percent of the total number of our gas stations and at the present time we are increasing the number of stations that work in the U.S. under the Lukoil brand name." The general director of Lukoil-USA Vadim Gluzman explained that three weeks ago the company began to refurbish and re-brand the gas stations that it bought from Getty and Mobil. "Today we have 88 gas stations operating under the Lukoil brand; by the end of the year there will be 200 of them, while the full re-branding program will take up to three years," Gluzman said. "This should definitely have a positive effect on the company's financial activities since right now we have to pay the ExxonMobil corporation almost $25 million annually for the use of the Mobil brand at our gas stations." Lukoil's CEO also said that the oil company is continuing to work on ways of creating a constantly active energy bridge between Russia and the United States. He stressed that "in order to make the U.S. market profitable for Russian oil, there is a need for sea ports and oil terminals that can make large shipments of this oil". Alekperov also noted that Lukoil is "very actively" developing partner relations with U.S. corporation ConocoPhillips, which holds a stake in the Russian company. Last year Lukoil purchased 795 gas stations from Conoco in New Jersey and Pennsylvania states. "We are working along with ConocoPhillips on oil projects in Russia's Timano-Pecherskaya region," he said. "We have no joint projects in the U.S., but we are conducting staff exchanges. 15 of our specialists work in ConocoPhillips headquarters in Houston, TX, while the same number of Americans are working in leadership positions in our company."

26.05.2005 15:25 MSK MosNews - Vagit Alekperov, CEO of Russia's largest private oil company Lukoil, said on Wednesday, May 25, that his company hopes to sign a $1 billion production contract with Venezuela's state oil company Petroleos de Venezuela by the end of this year. "We're discussing a number of projects in the Orinoco River basin fields," Alekperov, quoted by Reuters, said at an investors' conference in New York. He said the company was also interested in Venezuelan offshore energy production. Fresh from a visit to state oil company Petroleos de Venezuela in Caracas, Alekperov said he expects a visit from PDVSA officials next month in Moscow. Lukoil wants to invest up to $1 billion in oil projects in Venezuela, the world's fifth largest oil exporter. The Russian oil major is pursuing an active expansion policy and is currently looking to widen its oil and gas development operations to the Caspian countries, North Africa, South America and the Middle East Gulf. "We have to use our chance to be present in these countries," Alekperov said about the rising status of the company, which has the world's second largest oil reserves for a private company. Lukoil's net profits rose 11 percent last year due to high oil prices and rising output. Excluding one-time gains in 2003, the company's net profits leaped by 72 percent. Lukoil's energy production last year was 1.83 million barrels of oil equivalent per day, which it hopes to expand to 2.8 million to 2.9 million barrels of oil equivalent per day in 2014.

 RBC, 26.05.2005, Moscow 11:56:56.TNK-BP President Robert Dudley is hoping that tax claims against Tyumen Oil Company (TNK) will be settled in a reasonable way. The company is continuing to analyze and discuss the materials in the case, he said. As reported, the federal tax service's claims to Tyumen Oil Company reached RUR26bn (approx. USD937.25m).

05-24-2005 Reuters - By Dmitry Zhdannikov and Richard Mably - Oil major LUKoil has suspended talks on buying foreign refineries, including in Germany, because high operating margins have raised asset prices too high, a senior LUKoil executive said Monday. Russia's largest oil producer still wants downstream assets in Europe and the United States, but will bide its time until the price is right, first vice president Dmitry Tarasov said in an interview. "For vertical diversification certainly we need some refining in Europe and the U.S," Tarasov said. "But refining margins are very high so prices are too high now. We are not negotiating with any company, there is nothing for sale." In March, Tarasov said LUKoil was interested in buying into Ruhr Еl, the German refining assets belonging to Venezuela's state oil giant Petroleos de Venezuela, or PDVSA. Last year, LUKoil was offered the chance to buy into refining and retail in Italy, France, the Czech Republic, Bosnia, Croatia and Slovenia, Tarasov had said previously. LUKoil's only remaining viable option for now in refining is Lithuania's Mazeikiu. Yukos wants to sell its 53.7 percent stake in the Baltic states' only refinery as it faces ruin under a $27.5 billion tax claim in Russia. But Lithuanian Prime Minister Algirdas Brazauskas said last week that he favored TNK-BP as a potential buyer for the Yukos stake in Mazeikiu. "Everybody knows that we were thinking about buying Mazeikiu since the beginning," said Tarasov, referring to a past failed bid by LUKoil for the plant. Tarasov also denied industry reports that LUKoil was talking to PDVSA about buying parts of its U.S. refining assets, Citgo. He said negotiations with PDVSA were focusing on upstream activities. LUKoil wants to invest up to $1 billion in oil projects in Venezuela, the world's No.5 crude exporter. LUKoil's president Vagit Alekperov, now visiting Caracas, has said LUKoil was considering supplying crude to Citgo, which uses 1.1 million barrels per day. Tarasov also said LUKoil and its new U.S. partner ConocoPhillips, which has an 11 percent stake in the Russian firm, were focusing mainly on upstream activities in Russia although downstream discussions had also begun. "We have a big retail portfolio in the United States and Conoco is one of the leaders in U.S. refining. So we are looking for possible synergies," Tarasov said. LUKoil has 2,200 filling stations in the United States.

MOSCOW. May 24 (Interfax) - Russian Prime Minister Mikhail Fradkov, during a meeting in Moscow on Tuesday with U.S. Energy Secretary Samuel Bodman, advocated wider Russian-U.S. cooperation in the energy industry, an industry he described as the main area of Russian-U.S. cooperation. Bodman said at the meeting that one of the main goals of his current visit to Moscow was to express support for more extensive trade between the two countries, above all in the energy industry. Bodman said Russian-U.S. trade had made good progress but slowed down somewhat in 2004. "I see your visit as a logical continuation of the meeting between our presidents," said Fradkov. "We are ready to give consideration to issues of energy dialogue and a wide range of aspects of constructive interaction, which is a guarantee of stability and security throughout the world," the Russian premier said.

24.05.2005 IntelliNews Today - BoD of TNK-BP approved capital investment of USD 136mn in Kovykta gas field. The amount will be used to construct gas pipeline from Kovykta field to Zhigalogo village.Such investment is demanded by the current Kovykta license terms. The pipeline will be used to supply customers in Zagorodsk town in Irkutsk Region as early as 2006. The total cost of the building pipeline network in the region was estimated at USD 1.1bn. Most of the investment will be made between 2005 and 2008.The first gas supplies are scheduled for 2006. It is believed that by 2010 the supplies of gas from the field will amount to 2.8bn cubic meters a year. This is the first stage of Kovykta project and it involves provision of gas to Irkutskaya Oblast. After this decision BoD will review the possibility of gas supplies to Chita and Buryatiya regions. It seems like such decision of TNK-BP was influenced by assurances given to the head of BP by Russian president during their meeting.

24.05.2005 7:11 [Neftegaz.ru] - Russian oil refining grew 3.7% yoy to 65.42 million tonnes in January-April 2005, according to the Russian Federal State Statistics Service. The national oil major Lukoil refined 11.155 million tonnes of oil in the first four months of the year. The statistics service said gasoline production increased 5.7% year-on-year to 10.059 million tonnes in January-April, and diesel production increased 5.5% to 19.042 million tonnes. Russian refineries produced 18.777 million tonnes of heating oil in January-April, up 3.9% year-on-year; 2.43 million tonnes of aviation kerosene, up 3.5%; and 864,000 tonnes of lubricants, down 4.3%.

RBC, 24.05.2005, Moscow 11:36:30.LUKoil president Vagit Alekperov has met Venezuelan energy minister Rafael Ramirez, who is also the head of the national Petroleos de Venezuela S.A. (PdVSA), LUKoil press department has reported. The two parties discussed the implementation of the memorandum of understanding signed between LUKoil and PdVSA in November 2004.

MOSCOW, May 23 (RIA Novosti) - Moscow's arbitration court has postponed hearing on Tyumen Oil Company's (TNK) complaint about additional back taxes claims. The hearing was put off as the case papers are being studied at a court of cassation, a RIA Novosti correspondent reported from the courtroom. The Federal Tax Service's Inter-regional Inspectorate raised the claims against TNK in November 2004. The results of the audit of TNK's activities over 2001 when it was an independent company before merging with British Petroleum concern in September 2003 showed it had owed around 4 billion rubles (more than $143 million) in taxes (2.5 billion rubles in back taxes and about 1.5 billion in penalties and fines). However, on April 11, TNK received a new audit document that said the company had to pay 22 billion rubles in taxes for 2001. Thereby, the company has to pay a total of 26 billion rubles in back taxes. TNK-BP's press service confirmed the report. "We have time to set out our position, to agree to or contest the claims," said the press service. TNK-BP is a large vertically integrated oil and gas company. It was founded in September 2003 through the merger of TNK, SIDANKO, and BP's major Russian assets. BP owns 50% in the company, while the other 50% is owned by a team of Russian investors in Alfa Group, Access Industries, and Renova (AAR). TNK-BP's output in 2004 was 1.44 million barrels a day or around 73 million tons a year.

20.05.2005 14:58 MSK MosNews - The world oil price could grow to $80-100 per barrel by late August, Vasily Petrov, an expert from the Russian Center of Strategic Developments said on Friday, May 20. The forecast was published in Russia's Independent Gazette (Nezavisimoya Gazeta) political daily. The oil industry is experiencing a bear market, as oil prices plunged to their three-month low in secondary trading. Oil prices reached their first peak in September 2004, after which they declined. A second peak was registered in March. Petrov says that the third peak could come in late summer, as China is expected to sharply increase its demand for electric power and will require a large amount of oil to process it into diesel fuel. Alexei Belashov from the Barrel investment company is more moderate in his forecasts. "The demand in China is strong and growing and its economy is developing. However, it is necessary to take into account the fact that the United States is introducing quotas on Chinese products, like textiles. Nevertheless, the United States is trying in every possible way to restrain the upsurge in China's growth," he said. According to Belashov, the Saudi Arabian Energy Minister Ali bin Ibrahim Al-Naimi has said that oil reserves are sufficient and oil-producing nations would be able to meet the demand. "That is why I do not see any strong prerequisites for growth, like in the situation when oil prices leaped to $60 per barrel. At that time, there was uncertainty in the Far East and the dynamics of China's demand was unclear. Besides, the U.S. petroleum stocks had declined significantly. Today they are growing and there are no reasons for any anxiety," Belashov said. The world oil market is now looking for a fair oil price, expected to hover between $45 and $50 per barrel. "The only thing that could prompt rapid growth is the start of a U.S. military campaign against Iran. This event would cause a swift rise in oil prices. However, this is unlikely to happen. The U.S. is bogged down in Iraq," the expert added.

05-23-2005 Kommersant - by Dmitry Sidorov - US Secretary of Energy Samuel W. Bodman arrived in Moscow yesterday. His goal is to resume the US-Russian dialogue, to be more exact, to discuss the possibilities of increasing oil supplies to the U.S., the cooperation in the production of depressed gas and the plans to boost security measures at nuclear centres. He described to Kommersant correspondent Dmitry Sidorov in Washington not only the prospects but also the problems of energy talks.
Samuel Wright Bodman was born in 1938 in Chicago. In 1983 he was named President of Fidelity Investments. In 1987, he became Chairman and CEO of Cabot Corporation, company with global business activities in specialty chemicals and materials. Since 2001, he has been in many other publicly owned corporations. In 2004-2005 - Deputy Secretary of the US Treasury. Since February 1, 2005 - US Secretary of Energy.
- Who are you planning to meet in Moscow?
- I am going to spend two days in Moscow. I have two meetings already scheduled: with Economic Development and Energy ministers German Gref and Viktor Khristenko, and with the head of the Federal Atomic Energy Agency Mr. Rumyantsev. But I can't absolutely guarantee that they will take place.
- Has the meeting with the president been planned?
- We asked about it and about the chance to talk to some other high-ranking officials. I cannot give their names, we haven't received their responses yet.
- As I can understand your Moscow visit stems from the decision taken by George W. Bush and Vladimir Putin in Bratislava to continue energy talks between the U.S and Russia. What is new in this dialogue?
- My visit is indeed the result of the decisions taken in Bratislava [the summit held on February 24, 2004]. Following them, US Commerce Secretary Carlos Gutierrez and I, from the American party, need to promote the resumption and the development of the energy dialogue with Russia. I am going to discuss possible exports of Russian depressed natural gas to the U.S.A, an increase in Russian oil supplies and the development of the commercial relations between Russian and American companies. I would like to emphasize that the level of Russian oil supplies to the U.S. cannot be called considerable so far.
- The U.S. has spoken much lately on its interest to boost Russian oil export. How would you assess the readiness of the Russian party to do it?
- Each deal is in the sphere of the responsibility of the private sector. Its representatives have expressed serious concerns over the supremacy of law power in Russia within the last year.
- Does this mean you are going to discuss with your partners the YUKOS case?
- I will raise some issues that cause concerns of the representatives of the US private sector and that served the cause of, as I put it, a pause in the discussion of energy cooperation. Among them are the review of the decisions on the contract in Sakhalin [the attraction of overseas investment to Sakhalin 3 project has been suspended until the law on strategic resources of raw materials is passed.] and an array of problems that emerged following the judicial motions concerning YUKOS, the supremacy of law, the propriety and taxation. This is what the representatives of the American companies talked with me about during the meetings before the Moscow visit. We will also examine the ruling of the court in the YUKOS case, if it happens during our stay in Moscow.
- Tax claims have been lately put forwards against TNK-BP as well. Are you going to discus it in Moscow?
- I would not like to dwell on the problems of this company. This is Russia's internal matter. As far as I know, BP has lately invested in new projects in Russia. The company's management feels quite comfortable about these investments. I can only say that the situation you're asking about is the evidence to the fact that the rules charged after the performed investments can cool the desire to invest in Russia.
- You are going to discuss the export of Russian depressed natural gas to the U.S. Your predecessor Spencer Abraham declared in Washington less than two years ago that the US market would be opened for the exporters of depressed natural gas. What has changed?
- My aim is to try to convince Russians that they must profitably use their large natural gas resources. I will also try to convince American companies to cooperate with Russian in this sphere.
- What subjects are you going to discuss with Alexander Rumyantsev?
- I hope to discuss with Mr. Rumyantsev issues of the rapid reaction of our countries to nuclear incidents and the creation of a new plan on the safety of nuclear centres both in Russia and the U.S.
- How the arrest of the Russian former Atomic Energy minister Evgeny Adamov at the US request may influence your meetings in Moscow?
- As I remember, the Adamov case is handled by the Department of Justice. I cannot comment on the ongoing investigation. This is the answer I will give my partners in Moscow too, if they want to discuss it.

05-20-2005 Reuters - Norway's Norsk Hydro wants to take a 20 percent stake in the vast offshore Shtokman gas field, a spokesman for the firm said on Thursday, up from the 15 percent it had been seeking. Norsk Hydro is one of crowd of energy firms lining up to partner Gazprom in developing the Shtokman field, which has estimated reserves of 3.2 trillion cubic meters of gas and 31 million tons of condensate. Norsk Hydro said it was offering Gazprom terms in line with a memorandum of understanding signed in December, in which Norsk Hydro said Gazprom could get a stake in projects including its Ormen Lange development. Norsk Hydro's competitors for the Shtokman work include its compatriot Statoil, which has told Gazprom it wants 25 percent of Shtokman in return for 10 percent in its Snoehvit field. Other hopefuls are ExxonMobil, ConocoPhillips, Chevron, Total and Royal Dutch/Shell.

19.05.2005 10:27 [Neftegaz.ru] - Russia's biggest independent gas producer Novatek is going to convert 20 percent of its shares into American Depositary Receipts, the Russian securities markets watchdog said on Wednesday. The amount represents 607,100 shares. Novatek declined to say whether the permission meant an imminent ADR issue, but the board has recently asked management to start preparations for a public share offering. In February, Novatek sold about 3 percent of its shares to institutional investors. The International Finance Corporation has said it was ready to buy up to 1 percent of shares from shareholders for up to $35 million.

RBC, 16.05.2005, Moscow 19:31:08.Sibneft's net income under Russian accounting standards surged by 15 times to some RUR45.576bn (approx. USD1.64bn) in 2004 against 2003, the company has reported. Sales revenue increased 60 percent to some RUR183.638bn (approx. USD6.89bn). The company's gross profit totaled some RUR90.757bn (approx. USD3.26bn) at the end of the first quarter this tear, 270 percent up from 2004. Sales revenue grew 6 times to some RUR74.602bn (approx. USD2.68bn) in the reported period.

05.16.2005 (17:58) - RZD News - JSC Sibneft recorded revenue of 49.802 billion rubles for the first quarter of 2005 from 37.71 billion rubles, net income lowered 19 percent to reach 7.516 billion rubles from 9.282 billion rubles. Sibneft is a vertically integrated oil company, building businesses in petroleum exploration, production, refining, and marketing. Sibneft has proved reserves in excess of 4.5 billion barrels of oil, which ranks the company among the top twenty private oil companies globally. The company and its producing subsidiaries hold about 45 oilfield exploration and development licenses in the Yamal-Nenets and Khanti-Mansiisk autonomous regions (in the West Siberian petroleum basin), as well as in the Omsk and Tomsk regions and in Chukotka. About 80% of Sibneft's total SPE reserves are concentrated in the Noyabrsk area, including 50% found in the five largest fields held by Sibneft-Noyabrskneftegas - Sugmutskoye, Sutorminskoye, Vyngapurovskoye, Sporyshevskoye and Muravlenkovskoye. The Priobskoye oilfield is among Sibneft's most promising fields, and its development license is held by the Sibneft-Yugra subsidiary. Priobskoye currently boasts proved reserves of more than 200 million barrels; however the field's probable and possible reserves are the highest in the company. Sibneft completed 3D seismic exploration of the field in 2003 and, in 2004, began active development of the deposit. The reserves life for Sibneft fields in the year 2003 was 23 years for proved reserves and 41 for total reserves. Sibneft believes that the optimum range for reserve life should be of at least 12 to 15 years based on proved reserves. At present, Sibneft produces associated gas together with crude oil at its fields in the Noyabrsk area. Over 90% of associated gas produced by Sibneft-Noyabrskneftegas is either sold to petrochemicals company Sibur or used by Sibneft for its own requirements. In 2003, Sibneft began full natural gas production at the Zapadno-Ozyornoye field in Chukotka. Beginning in 2005, gas from the field will be utilized to fuel a thermoelectric power station in the regional capital, Anadyr. Under favorable market conditions, natural gas could become an important source of manufacturing growth and additional revenue for Sibneft, reports AK&M.

RBC, 16.05.2005, Moscow 17:17:15.LUKoil's net income under Russian accounting standards grew 75.5 percent to some RUR25bn (approx. USD897m) in the first quarter of 2005 compared to the same period last year. The company's sales revenue surged 60 percent to some RUR122.492bn (approx. USD4.39bn) in the period in question; sales income amounted to some RUR34.289bn (approx. USD1.23bn), 80 percent up from January to March 2004. Income before tax advanced 80 percent to some RUR33.162bn (approx. USD1.18bn).

05.13.2005 - Kommersant -The Minister of Natural Resources (MNR) Yuri Trutnev announced yesterday that his ministry "plans to use forceful measures in situation around Kovykta." Also yesterday, the representative of MNR told Kommersant, that by the middle of the summer the ministry will finish the audit of Rusia Petrolium responsible for extracting the natural gas from Kovykta deposit. The result of this audit can become the revocation of the company license to exploit the Kovykta deposit. The Kovykta deposit (Irkutsk region) is the largest untouched condensed natural gas deposit in Russia. According to the geologist estimate, the Kovykta contains about 2 trillion cubic meters of natural gas. The Rusia Petrolium (subsidiary of TNK-BP, which owns 62, 89 percent of the company stock) has a license to exploit the deposit. The license agreement says that starting from 2006 the company should provide 9 billion sq.m of the gas from the deposit to the market of Irkutsk region. However, Rusia Petrolium did not even start yet the extraction of the gas. The company explains the delay by absence of the transport infrastructure which is necessary for the gas distribution from the Kovykta deposit. TNK-BP for several years now tries to negotiate with Gazprom a possibility to export the gas from Kovykta. The company even invited Gazprom to participate. However, these negations did not produce any positive results. In last June the MNR commission demanded from Rusia Petrolium to follow the license agreement about the agreed time frame of the gas production start. The MNR representative told Kommersant, that in December Rusia Petrolium presented the project of changes in the license agreement. "They, for instance, offered to postpone the beginning of the deposit exploitation for five years. The Ministry examined these proposals and left unsatisfied with them," the source told to Kommersant. He also mentioned that the ministry in the nearest time will start checking if Rusia Petrolium made any attempt to correct its disregard to the license agreement. The ministry official also said that in the middle of Summer there will be a commission created to supervise for proper use of natural resources. This commission might adopt the decision to revoke the Kovykta license. Another source inside of the ministry thinks there are good 75 percent that Rusia Petrolium will lose the Kovykta license. "The political decision about the license revocation is already practically made," the source said. Trutnev confirms this opinion by saying "the government cannot wait forever while TNK-BP will reach the agreement with Gazprom." "When they were getting the license, they had to think than what to do with the infrastructure," Trutnev announced. Then he added that this approach should be applied for Gazprom as well, because the concern is late with exploitation of several deposits. The MNR representative explained that the Minister meant new natural gas deposits in Yamal. The TNK-BP representatives refused to comment problems surrounding the Kovykta. Kommersant will follow further events. Rusia Petrolium will not share revenue with stockholders The TNK-BP affiliates such as Rusia Petrolium, East-Siberian Gas Company (ESGC) and Verkhnechonskneftegaz are not going to pay out the dividends for 2004. Director General of ESGC Alexander Sobol' told this information to the news agency Interfax . He explained that all earned cash will be spent for the deposit exploitation and preparation to build the pipeline. The annual stockholder meetings will be conducted for ESGC and Verkhnechonskneftegaz on June 29. The stockholders of Rusia Petrolium will gather on June 28.

VIENNA, May 13 (RIA Novosti, Borislav Pechnikov) - Norway intends to expand its oil cooperation with Russia. As the statement by Norway's Minister of Energy Thorhild Widvey which was made public on Friday via the Vienna headquarters of the Organization of Petroleum-Exporting Countries (OPEC) says, he as the head of a representative Norwegian delegation plans to arrive in Moscow by air next week. During five days he intends to hold talks with Russian Minister of Natural Resources Yuri Trutnev, Russia's Minister of Industry and Energy Viktor Khristenko, deputies of the State Duma (parliament's lower house), and high-placed representatives of Russian oil companies on intensifying the development of hydrocarbon projects in the Barents Sea region. Widvey said Oslo had amassed vast experience of using first-class technology and expertise in developing the riches of the Barents Sea, and Norway wanted to offer this experience and technology to its Russian partners.

MOSCOW, May 12 (RIA Novosti) - Russia's overall hydrocarbon resources equal 251.6 billion of oil equivalent, with established reserves amounting to 89.4 billion tons. Speaking at a government meeting on Thursday, Natural Resources Minister Yury Trutnev said that "most of the established reserves are located on land... in West and East Siberia and in the European part of the country." Before 1992, oil and gas rehabilitation on the country's mainland exceeded production, but in 1990-1995 rehabilitation volumes plunged due to a reduction in geological exploration work, he said. Since the late 1980s, the country has been facing a significant reduction in exploration drilling and seismic exploration, the minister added. A certain increase in geological exploration that began in the late 1990s showed that Russia's continental part still had a certain hydrocarbon potential. "But the number and quality of discovered fields do not meet the demands of the country's economy," he underlined. He said that over 75% of oil and gas fields on land were being developed. The average exhaustion of deposits is nearing 50%, while average resources of discovered onshore fields are five times lower than in 1975. As a result, a lack of high-quality hydrocarbon fields is increasing, which means that by 2015 cost-effective oil reserves may be exhausted, he said. Trutnev spoke in favor of developing new fields. The most promising way to recover hydrocarbon reserves, in his opinion, is to develop the Russian shelf, which has huge oil and gas resources. Yet the number of fields discovered there is small. Most of discovered shelf fields are situated in the Barents and Kara Seas, as well as in the Okhotsk Sea, on the Sakhalin shelf. These are such gigantic gas fields as Shtokman, Rusanovskoye and Leningradskoye in the West Arctic and the largest oil fields on the northeastern shelf of Sakhalin.

12/05/2005 - RZD News - The government of the Russian Federation intends from now on to devote special attention to the development of gas-fields on the continental shelf, not on land. Measures to raise the effectiveness of the development of the mineral resources of Russia's continental shelf will be the principal item on the agenda of the government's meeting here on Thursday. The main report on the subject is to be presented by Minister of Natural Resources Yuri Trutnev, a Russian government press service official has told Itar-Tass. The report is actually a draft strategy to study and tap the oil and gas potential of the country's continental shelf until the year 2020, the government official said. At present, "Not more than 9-12 percent of the continental shelf has been explored. However, it can be expected that large unique offshore mineral deposts will be discovered". The source said, the possibility of finding large mineral deposits on land has decreased by 80 percent since 1975. Besides, already 75 percent of deposits in Russia have been developed and depleted by half. As a result of implementing the strategy to tap the oil and gas potential on the continental shelf, the source said, it is supposed that by 2020 the prospected reserves will amount to about 13,000 million tonnes of oil and 20,000,000 million cubic metres of gas. So, by 2020, oil production on the shelf may amount to 95 million tonnes a year, or almost ten times as much as that in 2010. As far as gas is concerned, its produciton may amount to 30,000 million cu. m. by 2010 and to 320,000 million cu. m. a decade after that. Government analysts believe that by 2020 "The shelf may rank second or third among Russia's mineral resources mining provinces". The area of the country's continental shelf is 6.2 million square kilometres, with 4 million sq. m. being regarded as promising as to presence of mineral deposits. Despite the fact that the investment attractiveness of the study and development of the continental shelf is low due to high risks, an unfavourable geographic and economic disposition, and legislation shortcomings, the Ministry's estimates are that attracted investments, mainly foreign ones, would amount to 70,000 to 110,000 million US dollars by 2020 while the expected expenditure of the Federal budget are to run at 35,000 million roubles. On the whole, "The aggregate Federal budget revenue from the development of the continentnal shelf are to amount to 100,000-130,000 millin USD by 2020". Those present at the government meeting are also expected to consider a number of the Ministry's proposals connected with the creation of additional incentives to attract foreign investments, including the introduction of a differentiated rate of tax on the production of economic minerals, depending on geological and climatic conditions for the conduct of work, reports ITAR-TASS. The Cabinet is also to mull the possibility of reducing or cancelling duties on the imported marine and research equipment. The Ministry of Natural Resources also intends to suggest that the government mull "the founding of a national compnay to study and develop the resources of the continental shelf".

12.05.2005 11:16 MSK - MosNews - The Russian Ministry of Natural Resources proposes simplifying legislation regarding production sharing agreements (PSA) for the development of shelf deposits. The ministry prepared its suggestion for the regular meeting of the Russian government set to take place on Thursday, May 12. The current set of procedures for drafting and implementing production sharing agreements has been called "complex and multi-tiered", Interfax reported. Before the implementation of the PSA can begin the parties have to undergo 28 stages of preparation and coordination. In this context, the Ministry of Natural Resources considers it necessary to de-bureaucratize the process of signing PSAs and offers a possible scheme for simplifying the mechanism for drafting and concluding the agreements. According to these proposals, the procedure would consist of four stages and it would take 5-6 months to prepare a single PSA project. In other words, the total time taken to conclude a PSA would be reduced to a sixth of what it takes at present. The first stage of the process calls for a government decision defining what areas of subsurface resources could be made available to an investor on PSA terms. In the second stage a specially authorized state body would conduct a tender for the right to develop these areas, with major world oil companies invited to bid. After this the government would approve a list of participants in a consortium, as well as the respective stakes held in it by the participants in the tender. At the final stage the authorized state body would, on behalf of the Russian government, sign a PSA with the consortium for development of shelf deposits.

12.05.2005 14:28 MSK - MosNews - Russia's Natural Resources Minister Yuri Trutnev said on Thursday, May 12, that the Russian-British oil giant TNK-BP may face repressive measures for failing to stick to the schedule for the development of a huge Kovykta natural gas deposit. "We do not exclude the possibility of taking certain measures against the company due to its delays in developing Kovykta deposit," Trutnev, quoted by RIA Novosti, told reporters. "At the same time I understand TNK-BP's problem, they have no necessary infrastructure to develop Kovykta. Still, the government cannot wait forever, while the company reaches an agreement with Gazprom." TNK-BP and its subsidiary Rusia Petroleum which holds a license to Kovykta had already been accused of failing to start any development on site back in September 2004. As MosNews reported back then, Natural Resources Minister Yuri Trutnev said that Rusia Petrolem has not yet started production at the project and that the ministry is now considering withdrawing the license from the company (and ultimately its owner, TNK-BP). At that point TNK-BP denied the accusations and declared that it is fulfilling all of its obligations under its contract. The Russian-British oil giant has been in talks with natural gas monopoly Gazprom regarding Gazprom's participation in the project, but no final agreement has been reached yet. A month ago Alexander Medvedev, head of Gazprom's export arm Gazexport, said that Kovykta project, which hinges on Gazprom approval and is already behind schedule, was unlikely to get the go-ahead before the firm's merger with state-run Rosneft Oil Company is wrapped up. Yuri Trutnev also said that when "TNK-BP took out the license they should've thought about infrastructure development". At the same time the Russian minister noted that the international oil giant is not the only company that may face repressive measures for delaying project development. "The same approach, it seems to me, should be used against Gazprom which also delays development of several deposits," Trutnev said.

11.05.2005 16:25 MSK - MosNews - Russian President Vladimir Putin has ordered the government to draft legislation that would limit foreign investment in those sectors of the Russian economy that are linked to national security. The news was reported by the presidential press service on Wednesday, May 11. The Kremlin press service, quoted by Reuters, said Putin wanted a bill concerning sectors ensuring "national security, enterprises working on state military orders, natural monopolies and strategic natural resources" ready by Nov. 1. It was not immediately clear whether Putin's order would have any impact on government plans to free up restrictions on foreign ownership of shares of natural gas monopoly Gazprom. Putin's order followed a decision made by the Russian Anti-Monopoly Ministry to forbid the purchase of engineering giant Power Machines by Germany's Siemens. The purchase was opposed by the military circles of the Russian government who said that the sale would present a threat to Russia's national security, as some of the Russian concern's products have military use. It is also seen by some Western observers as an answer to a disagreement with Western leaders over Russia's record on democracy and its treatment of former Soviet dominions during this week's celebrations in Moscow marking the 60th anniversary of the end of World War Two.

11.05.2005 13:00 - [Neftegaz.ru] - Russian company Sibneft is likely to buy two oil and gas deposits for $31 million as it plans to explore for reserves in eastern Siberia. Sibneft will explore the Srednetaimurinsky deposit in the Krasnoyarsk region, which may hold 1.2 billion barrels of oil resources and 430 billion cubic meters of gas, the company said Thursday in a statement. It will also develop the Zimny field, with about 114 million barrels of crude, the company said.

RBC, 11.05.2005, Moscow 16:53:33.Russia's oil exports revenue in the first quarter of this year grew 44.4 percent to USD14.845bn, as the Russian Federal Customs Service has said. In the reported period, Russia exported 55.239m tons of oil, up 0.3 percent from a year earlier. To non-CIS members, Russia supplied 49.865m tons of oil worth USD13.707bn. According to the Russian Federal Customs Service, oil and gas condensate production grew 3.6 percent to 114m tons.

06/05/2005 (14:30) - The Moscow Times - Sibneft would be unable to take part in auctions for licenses to mine mineral resources, if the company's accounts were frozen and it had tax arrears. This aspect has become particularly important in connection with rumors about back-tax claims against Sibneft, UFG analysts have noted, commenting on the oil company's victory at two tenders for the right to explore and produce hydrocarbons. In the opinion of analysts, the value of the reserves that have been acquired is so far difficult to estimate. Specifically, it is difficult to compare the value of reserves, because of unclear classification of reserves under Russian standards, while their precise conversion into reserves estimated in accordance with SEC or SPE methodologies is impossible, UFG experts remarked. Guta Bank's analysts assume that Sibneft has acquired the field in Eastern Siberia in accordance with its long-term plans. The advantage of this field is its location not far from a backbone oil pipeline, the experts pointed out. Other experts noted that Sibneft was continuing to increase its reserves, and the price paid by the company for the new licenses was not high. The fact that Sibneft has been granted a license for a field in Eastern Siberia, which is Russia's most promising region in terms of oil and gas reserves, indicates that the company is planning to further develop its business in that region

06/05/2005 (10:23) The Moscow Times - Sibneft, the country's fifth-biggest oil producer, will pay about $31 million for two oil and gas deposits in Russia as it plans to explore for reserves in eastern Siberia. The company will explore the Srednetaimurinsky deposit in the Krasnoyarsk region, which may hold 1.2 billion barrels of oil resources and 430 billion cubic meters of gas, the company said Thursday in a statement. It will also develop the Zimny field, with about 114 million barrels of crude.

06.05.2005 14:27 MSK - MosNews - The Russian Audit Chamber has accused Sakhalin Energy Investment Company, which operates the Sakhalin-2 oil and gas project in Russia's Far East, of breaking a product-sharing agreement which led to $2.6 billion in damages, Russia's daily newspaper Business reported on Friday, May 6. The paper reported that on May 16, the supervisory board of the Sakhalin-2 project will decide whether it is lawful to give all of the project's shipbuilding contracts to foreign companies. Russian companies say that Sakhalin Energy is "taking discriminating steps" towards them. Mikhail Boyarkin, deputy chief of Concern of Medium and Small Tonnage Shipbuilding (KCMK) told the paper that Sakhalin Energy unexpectedly gave a contract to build four terminal tugboats to the Singaporean firm Keppel, because the Amur shipbuilding plant (part of the Concern) allegedly did not have time to build them. "But if we have built 56 nuclear submarines, we could easily cope with the tugs, all the more so as Sakhalin Energy approved the plant to work on Sakhalin II," Boyarkin said. "Not a single shipbuilding company in the [Russian] Far East is involved in Sakhalin II," he concluded. "Taxpayers' money is going to the West and to foreign contractors." Under the product sharing agreement, Russia's share in the project should be 70 percent, but Boyarkin said it did not exceed 10 percent, the paper reported. He added that according to the Audit Chamber's calculations Sakhalin Energy inflicted $2.6 billion worth of damages on Russia. A source in the Audit Chamber told the paper, on the condition of anonymity, that the figure was accurate. "The said figure is very accurate, but this is the minimum sum," the source said. "Nobody calculated the damages inflicted by delays in fulfilling the commitments, and in reality the damages amount to billions of dollars." The Audit Chamber source conceded that corrupt officials were partly to blame for the problems. Shipbuilders are not the only ones who are unhappy about the way Sakhalin Energy made its decisions. The hydro construction work group Bureyagesstroy along with U.S. Ackerman Technology participated in the tender for constructing offshore platforms. "In January 2000 we found out that we won the tender, but the contract was given to Ackerman Technology working in conjunction with the Finnish company Quadrigemini," one of Bureyagesstroy's officials told the paper. "Sakhalin Energy gave us no explanations and provided us with no documents." Sakhalin Energy has declined to comment on this information.

06.05.2005 7:53 - [Neftegaz.ru] - Russian independent gas producer Nortgaz has filed a suit against Russian Finance Ministry for over 119 billion rubles (over $4.3 billion) in damages over the loss of a license for a West Siberian gas deposit, Moscow Court of Arbitration told reporters.Russia's Ministry of Natural Resources and the Federal Agency for Subsurface Resources Use are also involved in the case.Nortgaz has confirmed that the company estimates the cost of developing and lost future profits from the Severo-Urengoyskoye deposit in West Siberia at the stated amount.At the moment it is not known whether this lawsuit has been accepted for hearing.The Ministry of Finance said on Wednesday evening it had not yet received a copy of the statement of claim. However, the Ministry of Natural Resources confirmed that it had received the documents.

04 May 2005 Gateway to Russia - OJSC Zapsibgazprom of JSC Gazprom (Tyumen) plans to increase the dividends for the 2004 and to pay 15.624 million rubles on the basis of 0.02 ruble per ordinary share and 1.116 rubles per preferred stock. For the year 2003, Zapsibgazprom paid dividends at the rate of 0.01 rubles per common stock and 0.161 rubles per preferred stock. The summary dividend payments amounted to 2.874 million rubles. Zapsibgazprom includes 150 subsidiaries and operates in over 30 regions of the Russian Federation. Gazprom directly owns 76.69 percent of company's shares.

05.05.2005 12:28 MSK MosNews - Independent natural gas producer Nortgaz has filed a lawsuit against Russia's Finance Ministry seeking over 119 billion rubles (over $4.3 billion) in damages over the loss of a license for a West Siberian gas deposit. The RIA-Novosti news agency quoted the press service of the Moscow Court of Arbitration as saying that Nortgaz had lodged its application to take legal action against the Finance Ministry of the Russian Federation. Russia's Ministry of Natural Resources and the Federal Agency for the Use of Subsurface Resources are also involved in the case as third parties. "The lawsuit reached the court on April 26. At the moment it is not known whether this lawsuit has been accepted for hearing," a spokesman for the court's press service said. Nortgaz has confirmed that a statement of claim had been submitted, explaining that the company estimates the cost of developing and lost future profits from the Severo-Urengoyskoye deposit in West Siberia at the stated amount. "This sum includes the cost of developing the Severo-Urengoyskoye deposit and also future earnings which the company could have made if Moscow's Arbitration Court had not withdrawn Nortgaz's license to develop this deposit. The license had been due to run until 2018," RIA-Novosti quoted a Nortgaz spokesman as saying. The Ministry of Finance said on Wednesday evening it had not yet received a copy of the statement of claim. However, the Ministry of Natural Resources confirmed that it had received the documents. On April 15 this year the Moscow Arbitration Court upheld a claim by Russia's natural gas monopoly Gazprom and requested the Natural Resources Ministry to cancel the license of natural gas producer Nortgaz to develop the Severo-Urengoyskoye deposit. The license to develop the Severo-Urengoy deposit was awarded to Gazprom's daughter company Urengoygazprom in 1994, and was later divided into two licenses, one of which went to Urengoygazprom, and the other was given to Nortgaz. Gazprom argued that the license was registered illegally, as there was no auction when the license was awarded to Nortgaz. Nortgaz argued that the statute of limitations on the issue had already expired and that Gazprom had no grounds to appeal to the court, as Urengoygazprom is a beneficiary in the case.

05.05.2005 11:18 [Neftegaz.ru] - Russian oil major Lukoil boosted its oil output in January-April 2005 by 3.8 percent to 28.481 million tons compared with 27.433 million tons for an accounting period a year ago. The natural gas production in January-April climbed 5.4 percent up to 1.832 bcm from 1.737 bcm. Lukoil’s export oil deliveries via Transneft system in January-April amounted to 10.472 million tones against 10.934 million tones a year ago. The export oil shipments in April via Transneft system came to 2.548 million tones versus 2.914 million tones for an accounting period in 2004.