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Thursday, November 10, 2005

Shell Annoys Putin

09.11.2005 09:13 [] - The consulting company International Project Analysis has prepared a report for Royal Dutch Shell in which it states that the oil company is “excessively reliant” on contractors to manage large production projects and does not have control over its expenses because of a lack of control over its contractors, Russian business daily Kommersant reported. The consulting company mentioned Sakahlin-2 as an example. The report was based on analyses of 13 Royal Dutch Shell projects, including Sakhalin-2. Shell's recent efforts to increase expenses on the Sakhalin-2 project from $12 billion to $20 billion have recently annoyed Russian President Vladimir Putin. The president said during his state visit to The Netherlands that the addition financing would not be granted. The IPA report recommended maximally centralizing management of projects. It will probably complicate relations between Shell and the Russian government. The company has stated that selection of additional management personnel has already begun. Shell has problems in the United States as well. A Senate hearing yesterday was held on the activities of the largest oil companies in third quarter of the year. Managers from ExxonMobil, Royal Dutch Shell and ConocoPhillips took part. Thanks to the record high world oil prices, those companies also received record profits. Shells' profits were 68 percent higher in the third quarter of 2005 as compared to the third quarter of the previous year. Observers say that the Senate hearings are a run up to considerations of taxation of excessive profits. Such taxes were imposed on oil companies in the U.S. in the 1980s.

Wednesday, November 09, 2005

LUKoil to set up special company to produce, sell oil

MOSCOW, November 9 (RIA Novosti) - Russian oil major LUKoil has decided to establish a 100% subsidiary, LLC International, to produce and sell oil, the company said in a statement Wednesday. The new subsidiary will consolidate the company's accounting, objectively assess financial results, promptly respond to the market situation, improve and develop the production of oil, conduct research, and optimize oil sales with minimal infrastructure changes, the statement said. The new subsidiary will conclude the company's management reforms in this segment that began in February 2005. The decision to establish a new subsidiary was based on the experience of strategic partnership between LUKoil and ConocoPhillips, the company said. "Leading international oil companies, which have separated this business, have been able to achieve positive results and maximum transparency," the statement said. LUKoil refineries produce more than 40% of oil in Russia. In the first half of 2005, LUKoil's production reached 550,800 metric tons.

Tuesday, November 08, 2005

Russia Eyes Mediterranean Refinery

November 8, 2005 ANKARA, Turkey - The Moscow Times - Turkey plans a new oil refinery at its southern port of Ceyhan, the terminus of a twin pipeline from Iraq and another line from Baku that will carry Caspian crude, a Turkish energy official said on Monday. "There are plans to set up a refinery and a petrochemical plant at Ceyhan, and Russia is interested in these projects," said the official, who asked not to be identified. The plan is likely to be discussed when President Vladimir Putin visits Turkey next week for a gas pipeline inauguration, he said. "Russia also wants to take part in a project for storing gas under Tuz Golu [Salt Lake] in central Anatolia," the official said. Italian Prime Minister Silvio Berlusconi and his Turkish counterpart, Tayyip Erdogan, will also attend the ceremony in the Black Sea town of Samsun on Nov. 17. "The three leaders will also discuss some other projects that are of interest to their countries," said the official, without giving further details. The ceremony will inaugurate the Blue Stream pipeline, which has carried gas to Turkey from Russia since 2003. The $3 billion, 1,250-kilometer pipeline stretches from southern Russian gas fields to the Turkish capital, Ankara, after passing under the Black Sea. It is jointly owned by Gazprom and Italy's Eni and has a capacity to carry 16 billion cubic meters per year. Turkey buys gas from Russia, its top supplier, on two lines. Aside from the Blue Stream, a western route, opened in 1987, runs through the Balkans and can carry 14 bcm annually. Turkey has been in talks with Gazprom to reduce the price of its gas purchases but has had no success. It was not clear whether the leaders would take up the price issue in Samsun next week. Turkey has contracts to buy a total of 22 bcm from Russia in 2006, eight bcm of it through Blue Stream and the rest via the western line. It has so far this year bought 2.123 bcm through Blue Stream, compared with 3.238 bcm in the whole of last year. Turkey, which also buys gas from Iran via a pipeline and from Algeria and Nigeria in liquefied form shipped in tankers, is expected to consume about 25 bcm this year, up from 22.2 bcm last year. It has gas purchase contracts totaling 35.766 bcm for 2006. The official said the Mediterranean port of Ceyhan would become an energy hub for nearly 200 million tons of crude with planned inputs from Russia, Iraq and the Caspian. An oil pipeline from Baku to the port will carry 1 million barrels per day of Caspian oil in an effort to bypass congested Turkish straits when it comes on stream toward the end of this year. Turkey is also pushing for a 1.4 million-bpd crude link from Samsun to Ceyhan to pump Russian oil to the Mediterranean. More than 143 million tons of hazardous cargo, mostly Russian crude and refined oil products exports, traversed the narrow and treacherous Bosporus in 2004, passing through the center of Istanbul, a city of 12 million people. Ceyhan is also the terminus of a twin pipeline that can carry up to 1.5 million bpd from Iraq's Kirkuk oilfields, but sabotage attacks have repeatedly halted the flow.

Monday, November 07, 2005

Russia, China to launch new energy projects

MOSCOW, November 7 (RIA Novosti) - Prime Minister Mikhail Fradkov outlined new Russian-Chinese energy projects at a Kremlin meeting Monday. "We discussed prospects of bilateral economic cooperation, primarily in the energy sphere," Fradkov told Russian President Vladimir Putin after returning from the 10th meeting of Russian and Chinese prime ministers in Beijing. Russia has been eyeing China, its largest neighbor in Asia with a fast-growing economy, as a major economic partner for a long time. Both countries are currently emphasizing cooperation in the oil, gas and electricity industries. According to Fradkov, Russian oil companies Transneft and Rosneft and China's National Petroleum Corporation are developing a number of oil supply projects, including construction of an offshoot of the Pacific Pipeline to China. The cost of the 4,000-kilometer pipeline linking the European part of Russia with the Pacific Coast has been estimated at $15 billion to $18 billion. In the gas sphere, Russian gas monopoly Gazprom has prepared a concept of operations in West Siberia and the Far East, the premier said. Under the concept, the company is planning to create a unified gas transportation system and it is regarding China as a potential partner in the project. Fradkov also said Russia and China "are working on large projects" in the electric power industry that will increase the annual electricity output by 40-60 billion kWh. During the talks, the sides also discussed the increase of Russian equipment exports to China, including civil aircraft and energy and mining equipment, Fradkov said. "The Chinese leadership considered this possibility and proposed organizing several trade shows with Russia's participation," the premier said. Fradkov called the current 3%-share of machinery exports in the bilateral trade too low.

Thursday, November 03, 2005

Russian Oil Firm To explore In Nigeria

02.11.2005 11:10 [] - Russia's state-owned oil firm Zarubezhneft signed a deal with Nigeria to explore two offshore blocks in the Gulf of Guinea, the country's Energy Minister Viktor Khristenko said on Tuesday. "We want to help encourage cooperation between Russian firms and countries in equatorial Africa, especially with the regional leader Nigeria," the head of Federal Energy Agency Sergei Oganesyan said. The intergovernmental commission had been set up in 2004 and its first concrete result was the signing this year of the first oil deal between Nigeria and Zarubezhneft to explore and develop two offshore blocks. It did not specify the names of the blocks or other terms. A Zarubezhneft official said the company was talking with Nigerian authorities, but declined further comments.

Wednesday, November 02, 2005

Investment in three oil PSA projects to hit $16 billion

MOSCOW, November 2 (RIA Novosti) - Total investment in the Russian oil sector's production sharing agreement projects (PSA) Sakhalin-1, Sakhalin-2, and Kharyaga will hit $16 billion by the end of 2005, a senior Russian Industry and Energy Ministry official said Wednesday. On January 1, 2005, investment in these PSAs stood at more than $11 billion, Olga Rybak said during the fifth All-Russia Oil and Natural Gas Week. She added that this year project operators intended to invest over $5 billion. In 2004, profits from the implementation of these projects had exceeded $71 billion, and total profits were more than $400 million, she said. Sakhalin-1 and Sakhalin-2 oil and natural gas projects, led by ExxonMobil and Royal Dutch Shell, and the Kharyaga oil project in Siberia, led by France's Total were launched in 1996.

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