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Thursday, June 22, 2006

Russia Doesn't Need to Be Thankful for Chance to Ship Crude/Gas to Europe, Schroeder Said

SchroederJune 20, 2006 - Kommersant - The speech of former German Chancellor Gerhard Schroeder was the obvious highlight of Renaissance Capital's 10th Annual Investors Conference in Moscow June 19, 2006. It appears Schroeder has nothing to hide, neither his engagement by Russia, nor mistakes of the West or even the amount of €250,000 remuneration. The interest of investors in Schroeder’s speech at the conference arranged by Renaissance Capital hardly roots in his former political standing of the German chancellor or even in today’s office of a top manager of Gazprom’s North European Gas Pipeline Co. Schroeder is very close to the masterminds of political and economic decisions in Russia and he is viewed as the key lobbyist of Russia in the E.U. and worldwide. This spring, Schroeder was elected to chair the supervisory board of Swiss North European Gas Pipeline Company (NEGPC), where he represents Gazprom, holder of 51 percent. Yesterday, the former chancellor made clear Europe will depend on the crude in the following decades and Russia has been always a very reliable supplier. There is no energy partner comparable to Russia, Europe is well aware of it and shouldn’t pretend the Russians are to be thankful for the permission to ship crude and gas to Europe, Schroeder said.

Russia Sets Its Energy Agenda Ahead of G8 Summit

22.06.2006 11:28 [] - Russia is holding out against its European partners' demand that it agrees to energy trading rules proposed by the European Union. The energy issue will become the crunch question for the G8 summit, which Russia is set to host in St. Petersburg next month. Russia's ambition to boost uranium exports to fuel nuclear power plants in the European Union is also shaping up as a new issue for the St. Petersburg gathering in mid-July that will cast the spotlight on Russia's role as an emerging energy superpower. The negotiation on a broad energy cooperation blueprint pits EU hopes of seeing free energy markets against Russian determination to keep control of the aces in its pack: world-class natural resources and a huge pipeline network. The EU wants to lock Russia into the Energy Charter treaty to ensure a level playing field for energy players in Russia, where state gas firm Gazprom uses its monopoly to hold sway over 25 percent of EU gas supplies. The Charter promotes transparent energy trade and guarantees "free transit" of energy across members' territory. Russia has signed it. But its parliament, which usually acts on a nod from the Kremlin, has yet to ratify it and is not likely to do so before the summit. The July 15-17 meeting brings together leaders of the United States, Russia, Britain, France, Germany, Italy, Canada and Japan. Diplomats expect Russia to pay lip service to Charter principles at the summit, without giving anything away. "You would have no ambiguity any more on the priority of rules applying in energy trade (if Russia ratified)," said Andre Mernier, head of the Energy Charter Secretariat in Brussels. "That would tremendously increase confidence in Russia." EU nations have rallied to demand Russian ratification since January, when Gazprom shocked Europe by briefly disrupting gas flows along a key pipeline to win a pricing row with Ukraine. Gazprom blames Ukraine for the crisis and says its actions, as a treaty member, are proof the treaty is no use. President Vladimir Putin, likely also to face attack from some G8 states for his record on democracy, added to controversy on Tuesday, June 20. He suggested observing the Charter would depend on Russia's relations with a country at any particular time. "We are ready to do this (observe the Charter), but not for each and everyone, but only with those of our partners who meet us half way and with whom we can reach agreement on cooperation based on equal rights," he said. Russia's main objection is the Charter would enable EU gas importers to negotiate prices directly with rising Central Asian suppliers like Turkmenistan and Uzbekistan. Their gas flows through Gazprom's pipelines, allowing it to call the shots. Gazprom is also worried the treaty may make it share access to a pipeline it is building under the Baltic Sea to Germany. Western diplomats say the Russians fear that ratification could also strengthen shareholders of fallen oil giant Yukos who are suing Russia for more than $30 billion. "It's hard to see where their motivation to ratify the treaty may come from," said one EU diplomat. Russia would take some convincing of the value of free markets in energy, he said. Many of the disputed areas are governed by the Treaty's Transit Protocol, which is still at the draft stage. Diplomats say they've been here before: Russia spent years dallying over ratification of another pact, the Kyoto Protocol, before suddenly agreeing to it. The situation is fraught with legal ambiguities. Even without ratification, Russia may already be subject to the treaty, since under its terms a mere signature makes it binding unless it cuts across national legislation. Russia meanwhile is rushing through a law to ensure there is a "single channel" of gas exports, enshrining Gazprom's position in law and holding the treaty at bay. Officials say Russia feels the treaty would do nothing to further Gazprom's quest to get involved in marketing gas all over Europe, since it focuses on trade, not distribution. Gazprom has already run up against political opposition to a possible acquisition of British gas distributor Centrica. Nor would it help Russia in another disputed area: uranium. The EU limits Russian uranium imports —- most of it going to fuel nuclear plants —- to 20 percent of the market and has promised to lift the quota to 25 percent to meet demand from new EU states such as Slovakia. But Russia is after an even bigger share of the pie and wants to get rid of the quota. "The argument in the EU is that if we ourselves totally depend on Russia for the supply of (uranium fuel) rods, we might face a problem in the future," one EU official said. Putin last month said Russia would hold off ratification until it had got a satisfactory deal on uranium quotas. Russia is also pushing for more access to the U.S. uranium market. The United States has anti-dumping measures in place to prevent a flood of Russian uranium swamping its market, but has exempted Cold War stocks of highly enriched uranium (HEU). Russia wants HEU exports, which provide 10 percent of U.S. electricity, extended beyond the exemption's expiry in 2013.

Turkmenistan Turns Tables on Russia, Threatens to Cut Gas Supplies

Turkmenistan22.06.2006 11:27 [] - Turkmenistan has raised the stakes in its gas pricing dispute with Russia. On Wednesday, June 21, the Central Asian state threatened to cut gas supplies altogether if Russia’s natural gas monopoly Gazprom did not raise the purchase price by more than a half. Meanwhile the price Turkmenistan charges Gazprom is of vital importance to Ukraine, because the majority of natural gas it buys from Russian monopoly actually comes from Central Asia. MosNews has already reported on Tuesday that Gazprom currently buys Turkmen gas for $65 per 1,000 cubic meters and charges Ukraine $95 for this gas. Yesterday Turkmenistan said that it wants to raise the price of its blue fuel to at least $100 beginning in the second half of 2006. With transportation costs factored into the new price that would make the price of gas that Gazprom sells to Ukraine equal at least $130. Reuters agency quoted the Turkmen Foreign Ministry, which said in statement that “if such a contract [to raise the price of gas from $65 to $100 per 1,000 cubic meters] is not signed with Gazprom over the next month and a half… then Turkmenistan would stop gas supplies”. The Russian gas monopoly was not available for comment. A source close to negotiations between Gazprom chairman Alexei Miller and Turkmen President-for-life Saparmurat Niyazov told the agency that Milled had asked for a break in negotiations for consultations with top Russian officials. It was unclear when the talks with Niyazov would resume.

Russia, Italy Provide Mutual Access to National Energy Markets

22.06.2006 11:26 []On Tuesday, June 20, Russian and Italian leaders agreed to open up energy markets to each other's investors. The statement was made after a meeting between Russian President Vladimir Putin and Italian Prime Minister Roman Prodi. Putin and Prodi agreed on access by Russian energy companies to the Italian market in exchange for access by Italian companies to oil and gas extraction in Russia. "In fact, we are implementing the Energy Charter's supplementary protocol without formally ratifying the document in parliament," the Russian President was quoted by the Itar-Tass agency as saying. Despite European pressure, Russia has not ratified the Energy Charter, a document that would require it to open its export pipeline network and other energy assets to foreign investors. Prodi said Italy and Russia have opened "a new phase of energy cooperation". "We no longer have the relations of a seller and a buyer. Russia will be present on the Italian market in the production of electric power," the Italian leader said.

YUKOS may be liquidated

RBC, 21.06.2006, Moscow 14:29:34.YUKOS may be liquidated, as stated in the audit report on the company's 2005 financial statement prepared by Horwath, the company's auditor. The value of the company's net assets was lower than its authorized capital as of December 31, 2004 and December 31, 2005, which may result in the company's liquidation under Article 99 of Russia's Civil Code. The company's losses exceeded RUR95bn (approx. USD3.5bn) in 2005.

Rosneft state oil co. to manage Udmurtneft - Putin

IZHEVSK, June 21 (RIA Novosti) - President Vladimir Putin said Wednesday that state-controlled Rosneft oil company would manage regional producer Udmurtneft [RTS: UDMN], recently sold to leading Chinese oil producer Sinopec. "This deal will certainly strengthen Rosneft and raise its capitalization," Putin said during a visit to Izhevsk, the capital of Udmurt Republic in the Volga region, adding that Rosneft would launch an initial public offering of its shares in the near future. State-run Rosneft will acquire 51% of Udmurtneft from China's Sinopec, which won a tender Tuesday to buy the asset from TNK-BP [RTS: TNBP], respected Russian business daily Vedomosti said. On Tuesday, TNK-BP said it had agreed to sell 96.7% in the oil producer, which is based in the Volga-region republic of Udmurtia and provides 8% of TNK-BP's oil output, to China Petroleum & Chemical Corporation, part of the Sinopec Group. Sinopec will then finance the Rosneft deal for Udmurtneft, which the Russian oil company will repay from the new asset's earnings. In May, Rosneft concluded an option deal with Sinopec to buy 51% in Udmurtneft if Sinopec won the tender, Rosneft said in a news release quoted by the paper. A high-ranking Kremlin source said Wednesday that Russia and China had agreed that Udmurtneft's main unit would remain in the Udmurt Republic and that it would pay taxes to the local budget. "In general, I think, it would be good for the republic," Putin said. "It would help the republic to develop its energy sector."

Russia, S. Korea to sign gas supply deal this year

MOSCOW, June 22 (RIA Novosti) - Russia and South Korea are planning to sign an agreement on supplies of natural gas to the southeast Asian country by yearend, a deputy chairman of Gazprom's management committee said Thursday. "We are planning to sign an intergovernmental agreement on supplies of gas at the end of 2006," said Alexander Medvedev, who is also general director of Gazprom's export arm, Gazexport. Gazprom and Kogas, a South Korean state-controlled importer of liquefied natural gas (LNG), signed a 5-year cooperation agreement on supplies of Russian gas to South Korea in May 2003. To meet the country's increasing demand and to ensure a stable supply of natural gas, KOGAS imported 22.3 million tons of LNG in 2005. South Korea imports LNG from Qatar, Oman, Indonesia, Malaysia, Brunei, Australia and Russia.

Monday, June 12, 2006

Russia is reliable natural gas supplier - U.S. treasury secretary

John W. SnowST. PETERSBURG, June 10 (RIA Novosti) - Russia is a reliable supplier of natural gas, the U.S. treasury secretary said Saturday. John Snow, speaking after the G8 finance ministers' meeting in St. Petersburg, said in reference to the gas dispute between Russia and neighboring Ukraine at the beginning of the year that a satisfactory resolution had been reached. Italian Minister of Economy and Finance Tommaso Padoa-Schioppa, when asked about risks related to energy supplies from Russia to the European Union, declined to discuss the issue. The minister said it was a bilateral issue between the EU and Russia, and was not part of G8 talks.

Thursday, June 08, 2006

Rosneft's tentative IPO date announced

RBC, 07.06.2006, Moscow 13:19:19.Rosneft's IPO will be held in mid-July, Director of the National Depository Center Nikolai Yegorov told journalists today, adding that shares would be floated simultaneously on MICEX and the LSE. The company has set up an issuer account with Sberbank, while the National Depository Center, MICEX' current depository institution, has a custodial account at Sberbank to carry out settlements in connection with the IPO, Yegorov explained. Announcing the tentative timeframe for the floatation, he stressed that it was all that could be disclosed at the moment. The road show for Rosneft's IPO begins on June 26.

Thursday, June 01, 2006

Russian Government Sets Record $200 Per Ton Oil Export Tariff

01.06.2006 MosNews - On Thursday, June 1, Russian government introduced a new, record high oil export duty for Russian crude. The duty is set at $199.8 per ton, an increase of from the previous duty of $186.4 per ton of crude and bituminous crude petroleum products. The export duty on light petroleum products will amount to $146.9 per ton, and that on dark petroleum products to $79.2 per ton. As MosNews has reported on previous occasions, export tariffs for Russian oil are determined once every two months as a result of bimonthly monitoring of world oil prices. The export tariff in effect on June 1 is based on March-April monitoring. In those months the world price of Urals blend of oil remained stable at around $67 per barrel. Export tariffs for crude oil still exceed those for light and dark oil products, although they have been brought more in line recently, and Russian oil companies are trying to make a transition to oil products which bring them more profit. Windfall revenues from oil export duties are poured into the country's Stabilization Fund, which currently holds almost 2 trillion rubles ($74 billion). Russia is using the money from Stabilization Fund to pay off its external debts early. Later in the year the Russian government plans to invest part of Stabilization Fund money into foreign governments' bonds and blue-chip stocks.

LUKoil in talks to buy Slovenian refinery

06-01-2006 RBC News - Nafta Lendava, Slovenia's only oil refinery could be sold to LUKoil before the end of this year
LUKoil, Russia's leading oil producer, plans to buy and reconstruct Nafta Lendava, a Slovenian refinery. The director of Nafta Lendava, M. Dominko, confirmed that a delegation from LUKoil had visited the refinery to inspect it. Slovenia's Economy Ministry also confirmed that LUKoil was interested in Nafta Lendava and was in talks with Slovenian authorities to buy it. Slovenian Economy Minister Andrej Vizjak, a member of Slovenia's delegation to Moscow, told RBC Daily that the refinery would be sold before the end of this year, noting that LUKoil was not the only bidder. The company's financial reports would be published soon, and a public tender would be held after that, Vizjak said. LUKoil has not commented on the issue.
Nafta Lendava is Slovenia's only oil refinery. The capacity of the company, which is fully owned by the government, is estimated at about 600,000 tons a year. Slovenian Economy Minister Andrej Vizjak said LUKoil had a good chance of winning the Nafta Lendava tender, thanks to its ability to ensure long-term and reliable supplies of petroleum products to the refinery. "LUKoil has long been expanding its operations in Eastern Europe. It owns the Burgas Oil Refinery and 120 gasoline stations in Bulgaria. LUKoil also controls Beopetrol, Serbia's second-largest chain of gasoline stations (178 stations), Petrotel oil refinery and about 280 gas stations in Romania. LUKoil has invested about $50 million in the construction of 30 gas stations, oil storages and transport infrastructure in Macedonia.
Slovenia is seen as the richest among the republics of the former Yugoslavia, and its economy is growing apace. It is very attractive to investors, but Russian companies has had little opportunity to buy businesses there as most of them are owned by the state.
Shortly before the visit of the Slovenian delegation to Moscow, LUKoil President Vagit Alekperov visited Ljubljana and met with Slovenian Prime Minister Janez Jansa. Slovenia confirmed LUKoil's interest in the acquisition of Nafta Lendava, the Luka Koper port operator and the Petrol gas station chain. A controlling interest in Luka Koper is held by the government, and its investment funds KAD and SOD control about 29 percent of Petrol. The Slovenian media says LUKoil has also showed interest in Slovenia's coast infrastructure, planning to build an oil transportation center there.
Andrei Gromadin, an analyst at Russia's MDM Bank, says LUKoil has long been eyeing oil refineries and gas stations in Eastern Europe. "The company already has oil refineries in Bulgaria and Romania, and it is buying new gas stations abroad. Slovenia is one of the richest Balkan countries, and many European companies want to expand there. The largest oil refineries of the former Yugoslavia are in Croatia and Serbia. Not so long ago LUKoil made a bid for a 25 percent stake in Croatia's national oil company INA, but failed, and the asset went to Austria's OMV. Now, it wants to buy a Slovenian refinery and reconstruct it, getting a foothold on the Balkan market. Other large European traders could also bid for Nafta Lendava, including Hungary's MOL and Poland's PKN Orlen, which has just purchased the Lithuanian refinery Mazeikiu Nafta, and Austria's OMV. "Political and corporate management agreements play an important role in privatization tenders like this, and LUKoil has a good chance to win," Gromadin believes.
Sergei Suverov, at Gazprombank, says LUKoil is focusing on the Balkan market, attracted by lower competition and higher margins there. "There is a global deficit of oil refining facilities, and LUKoil's interest in regional expansion is justified," he noted. Suverov said LUKoil would have to invest tens of millions of dollars in Nafta Lendava. LUKoil could be in a better position than other bidders because it would guarantee stable oil supplies to the refinery," the analyst stressed. "LUKoil might hold talks on Nafta Lendava together with ConocoPhillips," he suggested.

Russia introduces new oil export duty

RBC, 01.06.2006, Moscow 09:31:33.– Russia's oil export duty will be set at a record high of $199.8 per ton based on Prime Minister Mikhail Fradkov's decree signed on May 18. The oil export duty will be raised from the current level of $186.4 per ton of crude and bituminous crude petroleum products. The new export rate is based on the world Urals price that had remained stable at around $67 per barrel until late April. The export duty on light petroleum products will amount to $146.9 per ton, and that on dark petroleum products to $79.2 per ton.

Lukoil buys 41.8% stake in Udmurtnefteprodukt

MOSCOW, June 1 (RIA Novosti) - Lukoil (RTS: LKOH), Russia's largest privately owned oil producer, announced Thursday that it had struck a $26 million deal to buy a 41.8% stake in regional oil company Udmurtnefteprodukt. "Lukoil is entering a promising new market, with an estimated volume of 350,000 metric tons [approximately 3,500,000 barrels] of light distillates, which will lead to an increase in the company's sales and, consequently, in its profits," Lukoil said in a press release. It said it would subsequently bring up to 95% its stake in Udmurtnefteprodukt, a major retail distributor of petroleum products in the oil-rich region of Udmurtia, about 1,000 kilometers (625 miles) east of Moscow. Lukoil's newly acquired asset has over 100 filling stations and 7 storage facilities. According to an Alfa Bank valuation, it is worth $125 million.

Itera says to buy 80%-stake in Maanwende for $122 mln

MOSCOW, May 31 (RIA Novosti) - Itera, Russia's No. 1 independent natural gas producer, said Wednesday it would buy an 80%-stake in Norway-based Maanwende B.V. for $122 million from its holding company. The deal to buy the stake from Cyprus-based Itera Holdings Limited, which owns 99.99% of Itera, was approved by the board of directors May 25. The oil and gas company said in a statement that Maanwende owned two oilfields in Russia's Khanty-Mansi area in West Siberia. No other details of the deal have been disclosed so far. Itera is the world's fourth largest natural gas company in terms of reserves. It holds a virtual monopoly on gas trading in two key former Soviet republics, Georgia and Ukraine, which lie at the gateway to western European energy markets. The company is also an increasingly important player in the energy-rich Caspian Sea region. Itera, whose charter capital is 60 million rubles ($2.23 million), plans an initial public offering of its shares in 2007.

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