RusEnergy

RBC, 26.02.2007, Moscow 09:26:13.LUKoil will not surrender its option to purchase 20 percent in the Kharyaga oilfield and will exercise it in court if required, LUKoil's President Vagit Alekperov told RBC in an interview. He also added that LUKoil was still in talks with other participants of the consortium over the project and was considering its economic expediency. Although the project's economic conditions are unfavorable, the company will not abandon the project, Alekperov said. In addition, Alekperov also gave his opinion about the construction of the Kharyaga-Indiga oil pipeline with a capacity of 12m tonnes. Alekperov believes that before making billion dollar investments, the resource base should be distributed and Transneft guaranteed that the volume required to load the pipeline's capacity would be supplied.

TOKYO, February 27 (RIA Novosti) - Shareholders in the Sakhalin I oil and gas project in Russia's Far East and regional authorities disagree on the best method of transporting the gas, the governor of the Sakhalin Region said Tuesday. Ivan Malakhov said transporting the liquefied natural gas by sea is more advantageous than constructing a gas pipeline to China, which is favored by the Sakhalin I shareholders. The project, which is operated under a production-sharing agreement (PSA) by Exxon Neftegas Limited, a subsidiary of U.S. oil major Exxon, is located on Sakhalin Island's northeastern shelf and is expected to bring in around $52.2 billion to the Russian budget by 2054, when it is scheduled to end. "The main thing is that the gas and oil pipeline have actually been built and so there are no further costs. We could discuss additional pumping stations but those costs are nothing in comparison to constructing a pipeline from Sakhalin under the Tatar Strait," Malakhov said. Malakhov said the facilities required for transporting liquefied natural gas by sea will create new jobs in the region and boost the development of the sector for production and transportation of LNG. The governor is in favor of integrating the Sakhalin-I and Sakhalin II facilities to deliver gas to the LNG facility in the south of the Island for its eventual transportation by sea. Sakhalin II comprises an oil field with associated gas, a natural gas field with associated condensate, a pipeline, a liquefied natural gas plant, and an LNG export terminal. The project's two fields have estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas. Vladimir Salamatov, director of the economics ministry's department for investment and innovation policy, said Monday the Sakhalin I shareholders preferred the gas pipeline project to China than transporting LNG by sea to Japan. "So far, the impression is that the China gas project is commercially more viable, but a final decision has yet to be made," Salamatov said. Sakhalin-I is expected to produce about 258 million metric tons (1.89 billion barrels) of oil and 356 billion cubic meters of natural gas over its lifespan.

TOKYO, February 26 (RIA Novosti) - Russia is interested in the participation of Japanese investors in the development of East Siberian deposits and the construction of the East Siberia-Pacific Ocean oil pipeline (ESPO), the Russian industry and energy minister said Monday. Minister Viktor Khristenko held a meeting Monday with Japanese Foreign Minister Taro Aso to discuss cooperation in energy and other sectors. Both ministers head the Russian-Japanese intergovernmental commission on trade and economic cooperation. Khristenko said the Japanese market "fits in with the strategy Russia is implementing in the east." He said Russia has already approved a program of auctions on natural deposits in East Siberia, which will be named later this year. "We are interested in foreign investors," Khristenko said. "Supplementary exploration makes us realize that we can open new deposits, which will provide for the construction of the second stage [of the ESPO]." The East Siberia-Pacific Ocean oil pipeline is slated to pump up to 1.6 million barrels per day of crude from Siberia to Russia's Far East, of which about 605,000 bbl/d will then be sent on to China and the Asia-Pacific region via the offshoot. The first stage of the ESPO was launched last April and was initially scheduled for completion in the second half of 2008. It will link Taishet, in the Eastern Siberian region of Irkutsk, to Skovorodino, in the Amur Region. The second stage will involve the construction of a Skovorodino-Kozmino pipeline, to pump 367.5 million barrels per year, and an increase in the Taishet-Skovorodino pipeline's capacity to 588 million barrels annually. Vladimir Salamatov, the director of ministry's department for investment and innovation policy, said the officials discussed to what extension Japanese companies would like to participate on tenders for new natural deposits in East Siberia. "Both sides stressed that Japan has an interest, while Russia offers enough attractive proposals for investors to come there," Salamatov said. He added that no concrete agreements were reached during today's talks.

TOKYO, February 26 (RIA Novosti) - Sakhalin II shareholders should work to restore financing from the European Bank for Reconstruction and Development for the hydrocarbon project off Russia's Pacific coast, a Russian minister said Monday. The EBRD delayed its decision on a second loan to the oil and gas project, when the then Shell-controlled operator came under intense pressure from regulators last year, and a controlling stake was sold to Russian energy giant Gazprom [RTS: GAZP]. Experts say the bank's participation could allay foreign investors' fears in the wake of the environmental scandal surrounding the project. "Although the EBRD's share in the aggregate funding is no more than 5%, it is a substantial factor in the project's implementation. I am sure that Gazprom and its partners should do all they can to ensure funding for the final stage of the project," said Industry and Energy Minister Viktor Khristenko, who is also the Russian co-chairman of the Russian-Japanese intergovernmental trade and economic commission. Before the deal with Gazprom, the shareholders had asked the development bank for another $300 million. However, Gazprom officials said the sum was not vital for the project, estimated at over $20 billion. EBRD President Jean Lemierre said last month the bank could consider new cooperation arrangements under the project with the new core shareholder. Gazprom purchased 50% plus one share in Sakhalin II for $7.45 billion, becoming the project's majority shareholder in December. Royal Dutch Shell and Japan's Mitsui and Mitsubishi now hold 27.5%, 12.5% and 10% in the project respectively. The former operator could still face court proceedings on compensation for environmental damage estimated by Russian regulators at between $10 billion and $30 billion.

02-09-2007 - Regnum News - Development of the Shtokman field has a strategic meaning for Gazprom. That was stated at a session at Gazprom dedicated to Shtokman gas field development. As REGNUM is told at Gazprom, the field was mentioned to become major resource base for Russian gas exports to Europe via the Nord Stream pipeline, as well as produce of liquefied natural gas. Participants of the meeting discussed major tasks of the coordination group to manage the Shtokman field project development. Besides, they discussed the process of elaborating the action plan and the project schedule that determine synchronization of the start of extraction, gas transit via the gas pipeline and produce of liquefied natural gas with Gazprom’s long-term balance.
Information: The Shtokman gas field is locate din central part of the Russian section of the Barents Sea shelf. Estimated field reserves are 3.7 trillion cubic meters of gas and over 31 mln tons of gas condensate. Sevmorneftegaz (100% Gazprom affiliate) has a license for finding, geological exploration and extraction of gas and gas condensate at the Shtokman gas field.

SAKHALIN I 13 February 2007 - Upstream onLine - ExxonMobil has not yet completed a sales deal for gas from the Sakhalin I development off Russia and is still in talks with other parties, the supermajor's boss Rex Tillerson said today. "We do continue to look at all the other options on gas sales, because we have not concluded anything ... with the Chinese," Tillerson said, speaking at the Cambridge Energy Research Associates CERA Week conference in Houston. "There's still great interest from the Japanese to purchase the gas. There's great interest from the Indians to purchase the gas. And we continue to have discussions with all those potential customers," Reuters quoted him as saying. Tillerson said ExxonMobil's obligation to the Russian government is to achieve the best value for the gas it produces. ExxonMobil reached a memorandum of understanding to supply gas from Sakhalin I to China National Petroleum Corporation in November 2004. Tillerson said the company's current plan would be to build a pipeline to China that mostly ran along the route of an existing pipeline. Sakhalin 1 is being closely watched after Gazprom took the majority stake in Sakhalin 2, operated by Shell. Many analysts believe the takeover amounts to a renationalisation. However, Tillerson said he believes the Russian government is happy with the company's performance.

 RBC, 14.02.2007 - Moscow – Gazprom, Itera, and Norilsk Nickel are interested in buying YUKOS's assets. According to Nikolai Lashkevich, spokesman for the company's receiver, these companies have expressed their interest in the form of letters and consultations. YUKOS's receiver Eduard Rebgun will start taking official bids from potential buyers after the launch of trade has been reported in the media. Lashkevich also said that Rosneft had not announced such intentions.

ASHGABAT, February 15 (RIA Novosti) - Turkmenistan's new president met with the Russian premier Thursday and said he will be working to boost energy cooperation with Russia. Turkmenistan holds the world's fifth-largest natural gas reserves and substantial oil resources. It is the second gas-rich republic in the former Soviet Union after Russia, which controls the transit route for Turkmen gas exports to former Soviet republics and Europe. "I think Russian-Turkmen relations will be further consolidated in all areas, including the energy, oil and gas sectors, and in the humanitarian sphere," Gurbanguly Berdymukhammedov said at a meeting with visiting Prime Minister Mikhail Fradkov. A former health minister and deputy prime minister, Berdymukhammedov was elected president Sunday. He replaced authoritarian President-for-Life Saparmurat Niyazov, who ruled the country for 21 years and died of heart failure in late December 2006. Fradkov thanked Berdymukhammedov for finding time to meet with the Russian delegation, and said Russia expected the new Turkmen leader to continue the policies of his predecessor. The premier said he hoped both sides would meet their obligations. "We share a common approach to nearly all issues, and we have agreed to stick to the earlier reached agreements," Fradkov said. In September, Turkmenistan raised the gas price for Russia from $65 per 1,000 cubic meters to $100 for the period of 2007-09. The parties also agreed that by July 1, 2009 they would negotiate an adjustment depending on European gas prices for long-term deliveries, Russian energy giant Gazprom [RTS: GAZP] said.

02-09-2007 - Upstream onLine - Sweden's West Siberian Resources said today its net proven and probable oil reserves as of 1 January 2007 increased by 81% to 306.8 million barrels. The increase in proven and probable reserves represents a replacement ratio of 222%, excluding acquisitions. Proven, probable and possible reserves increased to 445.6 million barrels. West Siberian's oil reserves have been revised following a recent independent reserve appraisal carried out by DeGolyer & MacNaughton, in accordance with reserve definitions consistent with those approved in March 1997 by Society of Petroleum Engineers.

02-09-2007 - Upstream onLine - Israel has called on Russia to speed up talks on natural gas deliveries, which it said would become feasible from 2011 when it gets a pipeline connection with Turkey, according to reports. Interfax news agency quoted Israeli National Infrastructure Minister Benjamin Ben-Eliezer as saying Israel wanted Russia's gas monopoly Gazprom to supply between 2 billion and 5 billion cubic metres of gas per year. "I count on a breakthrough at today's talks which will allow to sign a memorandum of understanding between the governments in the near future," Interfax quoted Ben-Eliezer as saying before a meeting with Gazprom's head Alexei Miller. Gazprom said in a statement released late today that the two men had discussed the project for Russian gas supplies to Israel but declined further comments. Ben-Eliezer said Israel and Turkey were currently discussing building a 610 kilometre pipeline under the Mediterranean from the Turkish port of Ceyhan to Ashkelon in Israel. "The project could be fulfilled by 2011," he said, adding that Turkey would most likely fund the construction. Russia wants to expand the Blue Stream gas pipeline, which runs under the Black Sea to Turkey, to ship more gas to southern Europe and possibly to Israel. The pipeline, which Gazprom owns jointly with Italy's Eni , has capacity of 16 Bcm a year but is underused as Gazprom says Turkey had overestimated its gas needs. Apart from Russia, Israel is in talks with Azerbaijan to get its gas from the Caspian Shah Deniz field. It currently has an agreement with Egypt to buy 1.7 Bcm of gas over 15 years, with an option for a further five years.

02-09-2007 - RBC NEWS - Sakhalin Energy says it has entered into an agreement with Japan’s Osaka Gas to supply 200,000 tonnes of liquefied natural gas (LNG) a year to Japan. The duration of the contract exceeds twenty years. Sakhalin Energy, operator of Sakhalin-2, says it has already signed contracts for 98 percent of Sakhalin-2’s LNG. LNG supplies will be made from a LNG plant with an annual capacity of 9.6 million, which is being built near the Prigorodnoye village on the coast of Aniva Bay in southern Sakhalin. The construction will be completed soon, and the plant will start operating in 2008. Over 60 percent of Sakhalin-2 LNG will go to nine companies in Japan, and the rest – to the Republic of Korea and to North America. Sakhalin-2 envisages the development of the Lunskoye and Piltun-Astokhskoye fields with total reserves of 600 million tonnes of oil and condensate and 700 billion cubic meters of natural gas. The operator of the project is Sakhalin Energy, in which Shell Sakhalin Holdings B.V. (controlled by Royal Dutch/Shell) has 55 percent, Mitsui Sakhalin Holdings B.V. (founded by Mitsui) has 25 percent, and Diamond Gas Sakhalin B.V. (controlled by Mitsubishi Corporation) has 20 percent. The second stage of the project was announced in May 2003. Along with the construction of offshore platforms in Aniva Bay (southern Sakhalin), the second phase of Sakhalin-2 includes the construction of an oil terminal and a LNG plant with a capacity of 9.6 million tonnes, estimated at $2 billion. In December 2006 Gazprom purchased 50% + 1 share in Sakhalin-2 for $7.45bn.

MOSCOW, February 9 (RIA Novosti) - U.S.-based oil major Chevron and other international giants are interested in acquiring Yukos assets, a spokesman for the Russian company's bankruptcy receiver said Friday. The company, once Russia's largest crude producer, was declared bankrupt August 1 after three years of litigation with authorities over tax arrears. "The bankruptcy receiver's office has indeed received letters from a number of large international companies, including U.S. company Chevron, expressing interest in buying some of Yukos' assets," Nikolai Lashkevich said. A consortium of appraisers estimated Yukos assets at $22 billion. The Yukos group, whose founder Mikhail Khodorkovsky is serving an eight-year prison term for fraud and tax evasion, now faces multi-billion dollar claims from creditors, including state-controlled oil company Rosneft, Rosneft-owned former production unit Yuganskneftegaz, the Federal Tax Service, and more than 20 other companies.

TOKYO, February 9 (RIA Novosti) - Osaka Gas has signed a preliminary agreement with Sakhalin Energy, the operator of a vast oil and gas project off Russia's Pacific Coast, on long-term deliveries of liquefied natural gas (LNG), the Japanese company said Friday. According to the agreement, signed in Moscow Thursday, the operator of Sakhalin II will supply 200,000 metric tons of LNG annually for 23 years, beginning in April of 2008. LNG will be delivered to Japan's fourth-largest LNG buyer, from a plant which is in the final stages of construction in the south of Sakhalin Island and which will have a capacity of 9.6 million tons a year. Ate Visser, commercial director of Sakhalin Energy, said: "Japanese customers represent over 60% of the term sales from Sakhalin LNG. This reflects both the proximity of Sakhalin to Japan, as well as customer confidence in the Sakhalin II project and its shareholders." In December, Russian energy giant Gazprom acquired 50% plus one share in Sakhalin Energy for $7.45 billion after months of pressure from Russian authorities, who accused the formerly Shell-led project of environmental damage to the island. The move was considered by experts as the Kremlin's attempt to review disadvantageous production-sharing agreements of the 1990s. Royal Dutch Shell and Japan's Mitsui and Mitsubishi now hold 27.5%, 12.5% and 10% in the project respectively. Sakhalin II comprises an oil field with associated gas, a natural gas field with associated condensate, a pipeline, a liquefied natural gas plant, and an LNG export terminal. Most of the LNG from the project will be exported to Japan, which is seeking to diversify its energy imports. The remainder is contracted for delivery to South Korea and the North American West Coast. The project's two fields have estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas.

06.02.2007 - MosNews - The president of Russia’s largest private oil company Lukoil said on Tuesday, Feb. 6, that all Russian crude must be refined inside the country. Vagit Alekperov was speaking at a meeting between Russian President Vladimir Putin and the leaders of the Russian Union of Industrialists and Entrepreneurs. He said that a halt in crude exports should be a top priority for all Russian oil companies. Russian oil companies currently export 50 percent of the crude extracted in the country. In addition, they export 50 percent of refined products. Russia consumes 25-27 percent of refined products, Alekperov said, quoted by RIA Novosti. Lukoil president said that transition to the tougher Euro-5 car emissions standard by 2015 will require a $5 billion investment in Russian refining facilities. Also, additional funds and the concentration of labor are required to build new petrochemical facilities in Russia, Alekperov said. In this connection, he proposed that the Russian government shifts the tax burden from environmentally friendly to environmentally hazardous enterprises to stimulate the establishment of petrochemical complexes.

02 February 2007 - Upstream onLine - Russian oil output hit a new post-Soviet high of 9.85 million barrels per day in January as unusually warm weather supported production, Energy Ministry data showed today. January production increased 0.6% versus December and 4.5% against January 2006, when harsh weather slashed oil output to 9.43 million bpd, the lowest level of the year. The year-on-year growth came at a much higher rate than 2.1%, expected for this year by the Energy Ministry, which lowered its forecast on Thursday from the previous expectation of 2.5%. The ministry cited slow development of new fields and depletion of old deposits as the main reasons for the slowdown. Analysts also expect the output to expand by no more than 2.5% in 2007 as new fields in East Siberia will not come on stream before the next decade, Reuters reported. Meanwhile, output by gas monopoly Gazprom increased in January to 51.2 billion cubic metres, Russian Energy Ministry data showed.

31 January 2007 - Upstream onLine - Russia may have another giant gas field on its hands in its far east - or it may just be a vast overestimate of one field's potential, its federal subsoil agency RosNedra said today. The Angaro-Lenskoye field in Eastern Siberia has total estimated reserves of 1.22 trillion cubic metres. If proven, that would put it in the same league as Kovykta, the region's biggest gas field, with reserves of 1.9 trillion cubic metres. If the field turns out to be another giant, it could have an impact on negotiations by state gas monopoly Gazprom to take a majority stake in Kovykta, which is operated by a unit of TNK-BP. However, so far the proven volume of reserves at Angaro-Lenskoye is only one thousandth of the estimated amount, 1.5 billion cubic metres, and the little-known company that holds the licence to develop the field, Petromir, has yet to confirm the numbers. "The difference between this field's estimated and proven reserves is quite significant, and the agency has recommended to the company to have the reserves confirmed within a limited period of time," a RosNedra spokeswoman said. The new deposit has the potential to change Russia's gas export plans, analysts said, giving Gazprom a new option in its plan to build two pipelines to China. "If it is really that big, Eastern Siberia might become the main source for gas exports to China, and Russia might even make it without building gas pipelines from the existing energy hubs of Sakhalin and Yamal to China," said Valery Nesterov from Troika Dialog.

01/29/2007 - Upstream onLine - Russian state oil company Rosneft and the country's biggest shipping company, Sovkomflot, have set up a joint venture to serve Rosneft's offshore projects. "It (the agreement) will allow the oil company to ease the burden connected with the non-core business of providing sea components to its offshore and other big projects in Russia," Rosneft said. Sovkomflot has 56 ships, with total deadweight of more than 4.3 million tonnes, and focuses on shipping oil and refined products. Sovkomflot already serves the ExxonMobil-led Sakhalin 1 offshore oil project and operates Rosneft's Belokamenka floating storage facility near the Barents Sea port of Murmansk, Reuters reported.

01/25/2006 - Upstream onLine - Oilfield services giant Halliburton has won a contract worth up to $100 million to supply a range of services at Russian joint-venture TNK-BP's Uvat field in the Tyumen region in Siberia. The three-year contract could also be extended for up to three one-year periods, Halliburton said. It said the work includes the provision of drilling fluids and drill bits, as well as waste management, cementing, directional drilling and logging services. The Uvat field lies between 600 and 800 kilometres north-east of the city of Tyumen. Halliburton said it would deploy new technology to minimise the impact of its activities in the environmentally sensitive area. It said four drilling rigs would start work in the second quarter of the year from three "super-pads" designed to lessen the environmental impact of drilling.

MOSCOW, February 7 (RIA Novosti) - LUKoil Overseas, a subsidiary of Russia's largest oil company LUKoil [RTS: LKOH], said Wednesday it had discovered oil reserves in excess of 100 million barrels in Colombia. The oil was found through the Condor project, in the foothills of Eastern Cordillera, in the western part of the Llanos oil basin. This is the first discovery by Russian producers in the western hemisphere, the company's news release said. A contract on the Condor block was signed between LUKoil Overseas and the Colombian national oil company Ecopetrol on April 7, 2002. The document includes exploration activities at the block for six years and the development of the field for 22 years in the case of a commercial discovery, the news release said. LUKoil Overseas has a 70% share in the project while Ecopetrol holds 30%. The project operator is LUKoil Overseas Colombia Ltd. LUKoil is currently preparing the deposit for commercial development, the news release said.

RBC, 06.02.2007, Moscow 17:33:40. – Russian President Vladimir Putin doubts that Russia needs to become the world leader in oil production in the near future, the Russian leader told a meeting with the management of the Russian Union of Industrialists and Entrepreneurs. According to the president, Russia is the global leader in natural gas production and may reach the leading position in oil output this year. However, he added that he was not sure Russia needed that. Putin added that the government would provide stability, legislation, and a favorable investment climate for Russian businesses.

MOSCOW, February 6 (RIA Novosti) - The president of Russia's largest oil company, LUKoil, said Tuesday that all Russian crude must be refined inside the country. This is a top priority task for Russian oil companies, Vagit Alekperov said at a meeting between President Vladimir Putin and leaders of the Russian Union of Industrialists and Entrepreneurs. Russian oil companies currently export 50% of the crude extracted in the country. In addition, they export 50% of refined products. Russia consumes 25-27% of refined products, Alekperov said. The LUKoil president said the transition to the tougher Euro-5 car emissions standard by 2015 will require a $5 billion investment in Russian refining facilities. Also, additional funds and the concentration of labor are required to build new petrochemical facilities in Russia, Alekperov said. In this connection, he proposed that the Russian government shift the tax burden from environmentally friendly to environmentally hazardous enterprises to stimulate the establishment of petrochemical complexes.

02/ 06/ 2007 - MOSCOW. (Ian Pryde for RIA Novosti) - It is hardly surprising that the main headline in the Western media from President Putin's annual press conference with Russian and international journalists last Thursday was his total rejection of accusations that Russia had used energy as a political weapon in its dispute with Belarus and, last year, with Ukraine and Georgia. Let's take a closer look at Western views on Russia's energy, although as usual there was much else of interest in the three-hour question and answer session. Writing in the Financial Times' survey of "The World in 2007" on January 24, for example, Quentin Peel, the paper's international affairs editor, asserted that one "worry is the increasingly nationalistic behavior of Moscow, with consequences for energy security," and that America's "weakness and distraction in the Middle East seem to provide opportunities for Russian assertiveness, especially in using its energy wealth." This is odd. Oil has always been highly political and it is naive to think it could be otherwise. Why, one wonders, is Russia not allowed to assert itself and defend what it sees as its national interests? After all, the most influential school of international relations is realism, which claims that is precisely what all nations do. While the West provides ample evidence to support realist notions in international affairs, its criticism of countries outside the West often rests on idealism and standards which the West itself fails to meet as well as it ought to. The inevitable result is that the West undermines its own influence by leaving itself open to charges of hypocrisy and double standards, charges which the Third World and Western left-leaning intellectuals have been making for decades. During the 1990s, many in the West criticized Russia's policy of subsidized energy supplies to the former Soviet republics as being anti-market, non-transparent and designed to maintain its informal empire after the collapse of the Soviet Union. The international financial institutions constantly called for the break-up of Gazprom and its monopoly and an end to subsidies on the domestic market - despite the fact that millions of people would be unable to afford the much higher market prices. Anyone who has experienced a harsh Russian winter knows this is no joke, but literally a matter of life and death. Russia's inept tactics in the gas wars have resulted in a PR disaster for the country, but it is par for the course that many in the West have chosen to concentrate on alleged bullying, rather than on Russia's broader strategy of ending these massive subsidies of billions of dollar a year to the inefficient economies of Ukraine, Belarus and Georgia. As Putin has pointed out, Russia has also increased energy prices to Armenia, with which it has particularly good relations. Western realism It is indeed ironic that the West now criticizes Russia for using the energy weapon. In the early 1980s, the Reagan administration opposed construction of the Trans-Siberian natural gas pipeline for fear it would make Western Europe dependent on the Soviet Union for energy supplies. It therefore prohibited U.S. companies from supplying parts to the pipeline and tried to extend the ban to foreign-based companies that were subsidiaries of U.S. firms or used U.S.-licensed technology. U.S. Chamber of Commerce President Richard Lesher wrote to Reagan in February 1982 that the pipeline policy could be likened to a "strategy of economic warfare." In 1985, the U.S. was more successful with the energy weapon when it prevailed upon King Fahd of Saudi Arabia to flood the market with oil in 1985-86 to weaken the Soviet economy. In mid-2001, the U.S. renewed the 1996 Iran-Libya Sanctions Act (ILSA) for five years, which penalized any foreign company dealing with Iran or Libya in amounts of over $20 million, a laughably low hurdle in the oil and gas business. Defenders of this approach would doubtless argue that the context of the Cold War and state-sponsored terrorism make such actions acceptable, but this hardly applies to the Jackson-Vanik amendment, which was originally passed in 1975 to punish Communist states by imposing trade sanctions for their refusal to allow Jewish emigration. Now, with Russians enjoying more freedom to travel than at any time since 1914, some circles in America, especially in Congress, want to retain this wholly anachronistic Cold War relic as a lever against Russia. The European Union is also very astute in defending its own interests. President Putin complained yet again during his press conference that while Brussels wants European companies to have access to Russia's natural resources, the European Union's single market is largely closed to Russian exports, an impasse which Putin hopes can be resolved through normal negotiations. Nor are the individual members of the EU reticent when it comes to defending their national interests. The economic absurdities of the Common Agricultural Policy led the United Kingdom to demand annual rebates from the EU budget, while the French loudly and vigorously defend their inefficient farming sector. The Polish vetoing of closer EU ties with Russia is merely a recent example. Examples abound in the real world of countries asserting what they perceive to be their national interests. Indeed, cynics might argue that nation-states do nothing else, even though this often comes at a high price to themselves and sometimes other countries as well, for not all policies are thought through properly, and they often result in unforeseen consequences. The EU has frequently been weakened and its decision-making slowed down or even paralyzed for years in some key areas, while decades before the current crisis in the Middle East, American foreign policy was criticized for being against its own national interests. Russia's national interests Certainly Russia has done considerable long-term damage to its reputation in Europe, more than it realizes. But the contretemps on energy is no worse, and certainly far less bitter and extended, than the long-running trade disputes between Japan and the U.S. in the 1980s and the more recent disagreements between Europe and the U.S. which culminated in the "banana wars." In fact, despite the saber-rattling and brinkmanship, Russia quickly agreed to lower prices and looser conditions than it originally demanded, with a long transition period which would gradually see prices rise to European levels. But of course the entire economy of the developed world is based on hydrocarbons, and there are simply no other viable alternatives at the moment. Russia's actions have inevitably led to a more intensive European debate on energy and energy security, with Angela Merkel rethinking the governing coalition's agreement to scrap nuclear energy. Russia can hardly afford any repetition of these gas wars, since the result will be to further undermine the confidence of its main trading partner and close neighbor, and switching supplies to the Far East is a less viable option than appears at first sight. Russia feels that the security of energy supplies to its main customers in Western and Central Europe are at risk from transit countries. But one of its proposed solutions, the Nord Stream pipeline running directly from Russia to Germany under the Baltic Sea, unleashed a storm of protest in Poland, which would lose out on the transit fees, and in Germany itself, not least because former Chancellor Gerhard Schroder is closely involved with Gazprom. The protests over the Nord Stream pipeline and the gas wars show just how difficult it will be for Russia to appease certain Western circles whatever it does. During her January meeting with Putin in Moscow, German Chancellor Angela Merkel demanded that in the future, Russia must inform Europe in good time about any expected interruptions to oil or gas supplies and suggested setting up a formal mechanism to ensure better communications. In contrast to the Soviet Union, however, modern Russia is poor at communications both internationally and domestically, and no longer enjoys a frighteningly powerful propaganda machine. At least a partial awareness of the problem is indicated by reports in mid-January of Gazprom seeking to engage international PR companies to polish up its image. Quentin Peel is wrong when he suggests that America's "weakness and distraction in the Middle East seem to provide opportunities for Russian assertiveness, especially in using its energy wealth." In the 1990s, following the collapse of the Soviet Union, Russia was weak, with its economy, like those of the other former republics, experiencing probably the biggest economic decline seen in peacetime in the twentieth century. Long-term trends It was, however, naive to assume that this state of affairs would last forever. Russia is becoming more active not only in the Middle East, but also in Asia and Asia-Pacific, Africa and Latin America, not to mention Europe and North America. These trends will continue irrespective of American strength or weakness for the simple reason that Russia sees itself as a great power. And, like China and India, Russia is embracing much from the West, but is doing so increasingly on its own terms. Russia is by no means above criticism, but Western accusations that the country uses its wealth as a political weapon - if indeed this was case - ring hollow and will be rejected by Russians as hypocritical and self-serving. Ian Pryde is CEO of Eurasia Strategy & Communications, Moscow. The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.

RBC, 31.01.2007, Moscow 11:19:10.Zarubezhneft will not purchase a 20-percent stake in the Kharyaga oil field, a source in the company told journalists, saying that was the decision the management had taken. Analysts think that it would not have been profitable for Zarubezhneft to invest in this expensive project once it had bought a stake in it even if the company had such an option. According to the Zarubezhneft source, the company's management did receive a proposal from the Nenets autonomous region to buy a 20-percent stake in the project, along with Nenets oil company. However, the proposal was declined, the RBC Daily newspaper reported today. Zarubezhneft does not have enough funds to purchase shares and invest in the project, as all the proceeds from the company's offshore project in Vietnam go straight to the federal budget. However, the company has not excluded the possibility of reviewing this decision in the future if Zarubezhneft receives revenue from projects in India, which it may carry out as part of the Russian-Indian agreement on cooperation.

RBC, 31.01.2007, Moscow 09:58:55.Foreign companies and Russian legal entities subject to non-residents will not be allowed to control strategic land owned by the government, the draft amendments to legislation on foreign participation in the capital of Russian strategic organizations indicate. The amendments will be considered by the government today. Non-residents will not be admitted to strategic deposit auctions and entitled to purchase stakes of more than 50 percent in companies licensed to develop such deposits. The draft law specifies the criteria of highly important deposits. Oilfields with reserves of more than 70m tonnes, gas fields with reserves exceeding 50bn cubic meters, gold deposits of more than 50 tonnes, copper deposits of over 500,000 tonnes and all continental shelf fields are referred to this group. Meanwhile, the draft law does not automatically define all such deposits as strategic. The latter list will be specified by the government.

MOSCOW, February 1 (RIA Novosti) - Foreign partners have every chance of joining the vast Shtokman gas project off Russia's Arctic coast, but the prerogative to select them remains with energy giant Gazprom [RTS: GAZP], the Russian president said Thursday. Norsk Hydro, Statoil and other companies were short-listed to develop the Shtokman offshore gas field in the Barents Sea, but Russian state-run gas monopoly Gazprom announced last October that it would develop the gas deposit on its own. "Gazprom has indeed announced that it will be the sole user of the Shtokman field, but that does not mean it will stop cooperating with other companies to implement the project," Vladimir Putin told a Kremlin news conference. The giant Shtokman field holds an estimated 3.2 trillion cubic meters of natural gas and 31 million metric tons of gas condensate in the Barents Sea, where Gazprom plans to build a liquefied natural gas plant. Some $12-14 billion will be invested in the project's first phase, and production will begin in 2011. Putin said Gazprom reserves the right to involve foreign companies in some capacity or other during the project's implementation. Russia will need the experience and technologies of foreign partners due to the "severe and complex conditions" at the deposit, Putin said.

MOSCOW, February 1 (RIA Novosti) - Tatneft [RTS: TATN] said Thursday its market capitalization grew 33% during 2006, reaching $10 billion at the end of the year. The oil company, which is controlled by the government of the Republic of Tatarstan in the Volga region, said the growth was due to efforts to improve corporate governance, increase its reserves, restructure, and divest non-core assets. Tatneft accounts for over 80% of crude output in Tatarstan, and produced 25.334 million metric tons (509,000 bbl/d) of oil in 2006, the same as in 2005.