RusEnergy

RBC, 27.09.2007, London 17:57:06.Russian oil company Tatneft and British and Dutch oil company Royal Dutch Shell have signed an agreement on strategic partnership in the sphere of heavy oil extraction in Tatarstan, the Russian company's press release states. The document was signed by Shafagat Takhautdinov, Tatneft's General Director, and Chris Finlayson, Russia Country Director of Shell. According to this agreement, Tatneft and Shell Exploration Company (RF) B.V. Will compile a joint program on the development of oil fields in Tatarstan. The two companies are also projected to conduct a feasibility study at the oil fields already being developed by Tatneft. Furthermore, this cooperation will enable Tatneft and Royal Dutch Shell to purchase new licences for oil field development in Tatarstan and other Russian regions.

RBC, 27.09.2007, Moscow 09:54:25.On Wednesday, Surgutneftegas once again became the biggest gainer on the stock market, when its preferred shares surged 9.15 percent on MICEX and 8.99 percent on the RTS. The trade volume hit a new record high of 187.2m shares. According to today's RBC Daily newspaper, Surgutneftegas has been trading actively since the beginning of summer. Market participants say that traders have been keen to scoop up the stock, with the trade volume peaking on MICEX on August 13 at RUR5.48bn (approx. USD291m), a record that was beaten the following day with RUR7.78bn (approx. USD311m) (in both common and preferred shares). However, the trade volume reached an all-time high of RUR9.9bn (approx. USD396m) on August 27, when Surgutneftegas preferred shares soared 6.77 percent and common shares rose 2.67 percent on MICEX on the back of rumors of a possible merger with the state company Rosneftegaz. The most recent jump followed Surgutneftegas General Director Vladimir Bogdanov's statement denying rumors of the state wanting to take over the company, when the chief referred to such reports as speculative play. On the back of this news, on Wednesday preferred shares soared 9.15 percent to RUR16.335 (approx. USD0.65) on MICEX and 8.99 percent to USD0.65 on the RTS. The trade volume on MICEX amounted to RUR2.98bn (approx. USD119m), while a new record was set in the number of deals, as 187.2m shares changed hands 14,861 times.

MOSCOW/CAIRO, September 27 (RIA Novosti) - Russia's Novatek [RTS: NVTK] said Thursday it had bought 50% in a concession agreement for oil and gas exploration and development of the El-Arish offshore deposit in Egypt from Tharwa Petroleum S.A.E. The other 50% will be held by Egypt's Tharwa Petroleum. Financial details of the deal were not disclosed. The offshore block with an area of approximately 2,300 sq km (888 sq miles) is located along the Mediterranean coast to the north of the Sinai. Half of the block lies at depths of up to 50 meters (164 ft) with the remaining area reaching up to 500 meters (1,640 ft). The agreement provides for a minimum exploration period of four years, which will include geophysical studies and the drilling of two wells. Under the deal, Novatek, Russia's largest independent gas producer, can extend the exploration period to nine years if preliminary results require further study. The concession agreement provides for a 20-year development period for each commercial discovery with a possible five-year extension. "The El-Arish offshore block is the company's first international project," Novatek CEO Leonid Mikhelson said at the signing ceremony in Cairo. "Our participation in the concession is consistent with Novatek's long-term strategy of expanding its resource base and geographically diversifying its core activities in order to establish a stable base for production growth." Novatek remains a relatively small player, with only 4% of Russia's gas production and a geographically concentrated reserve base. Gazprom holds a 19% stake in Novatek, which gives the state-controlled energy giant some influence on the company's strategy.

MOSCOW, September 24 (RIA Novosti) - Russia will run out of crude oil reserves in 50 years, and the country's natural gas will be depleted in 75 years, a geologist specializing in oil production said Monday. Yevgeny Kozlovsky, who served as geology minister in the Soviet Union, said the forecast was based on predicted production levels and the size of current reserves, including possible new finds. The scientist, who heads a department at the Russian State Geological Prospecting University, said investment in prospecting totaling at least 50 billion rubles ($2 billion) was needed annually to increase reserves, as well as highly-skilled staff capable of using the funds effectively. "This is a question of allocations and staff," he said. Kozlovsky said that the post-Soviet era has not brought any new major discoveries, as there are no incentives for companies to invest in prospecting. He proposed that laws be approved to grant companies the right to develop deposits they have discovered. Kozlovsky also urged for favorable tax conditions to be introduced for companies developing problematic deposits. He said that Russia could potentially produce an additional 150 million metric tons of oil (1 billion barrels) annually.

MOSCOW, September 25 (RIA Novosti) - German and Russian manufacturers will supply the pipes for the first stage of the trans-Baltic project to bring Russian natural gas to Europe, the project operator said Tuesday. The Nord Stream joint venture said in a news release the international tender to supply high-quality steel pipes for the first pipeline was awarded to Europipe, the world's largest pipe producer, and Russia's OMK. The project operator, with Russian energy giant Gazprom owning a 51% stake and Germany's BASF and E.ON. holding 24.5% each, said the decision was taken at a shareholders' committee Monday following a thorough evaluation of bids from qualified German, Japanese and Russian companies. "All bidders had to prove their technical ability to supply high pressure large-diameter steel pipes for offshore use," the company said. Nord Stream said both Europipe and OMK could provide the necessary capacities for manufacture and delivery of the required pipes in 2008 and 2009. Both suppliers are Det Norske Veritas (DNV) certified suppliers, guaranteeing the highest international standards. The news release said this was a highly significant decision regarding the requirements for the project and also the overall budget as one pipeline is made from around 1.1 million metric tons of steel. "By committing itself to two-year contracts, which are expected to be signed in October, Nord Stream secures the pipes for the first line at the current price level," Nord Stream said. "At the same time, the expected development of the steel market was taken into account to also provide for security on the contractors' side." Three quarters of the tender will be awarded to Europipe and one quarter to OMK. Basis for the split are technical, commercial and capacity-related criteria. For the second pipeline, there will be a completely new tender, with the number of technically qualified pipe mills participating expected to rise. The ambitious Nord Stream pipeline project is estimated at around $12 billion and is scheduled to be completed in 2012. The first of two parallel pipelines, approximately 1,200 kilometers (750 miles) long, each with a transport capacity of some 27.5 billion cubic meters per annum, is to become operational in 2010. In the second phase, capacity should double to about 55 billion cubic meters a year. Gas imports to the European Union, 336 billion cubic meters in 2005, are projected to grow by 200 billion cubic meters to 536 per year by 2015. Connecting the world's biggest gas reserves with the European gas pipeline network, Nord Stream will meet about 25% of that additional requirement. The project will be an important contribution to long-term security of supplies and a test of energy partnerships between the European Union and Russia.

Sep. 25, 2007 - Kommersant - The Anglo-Dutch Shell Oil Co. has begun its third production project in Russia. On Thursday, Tatneft plans to sign an agreement with Shell forming a joint venture to develop shale oil deposits in Tatarstan. There are 12 such deposits known in the Cheremshano-Bastryksky licensed zone in Tatarstan with a total recoverable reserves of 26 million tons. Tatneft expects the joint venture to produce 1.5 million tons of shale oil per year by 2017. Shell produces 2.5 percent of the world's oil and 3 percent of the world's natural gas. It owns 27.5 percent of shares in Sakhalin Energy, operator of the Sakhalin 2 project; 50 percent of Salym Petroleum Development, the project to develop the eponymous deposits; 27 filling stations in Moscow and St. Petersburg; and 50 percent of Shell and Aerofuels, which fuels airplanes at Domodedovo Airport in Moscow. Salym Petroleum Development is expected to produce 4 million tons of oil this year, and Sakhalin should produce around that amount as well. Shell already produces shale oil in a joint venture with Chevron and Western Oil Sands LP in which Shell owns 60 percent. They produce 7.5 tons of shale oil per year from oil-bearing sands in Canada as part of the Athabasca Oil Sands Project. The company expect to boost production to 12.5 million tons per year by 2010 and to meet 10 percent of Canada's oil needs with it. The 12 deposits in Tatarstan had long been considered unprofitable. That changed when Tatneft succeeded in having them recategorized as high-viscosity oil deposits, freeing them from the mineral use tax under a Federal Mineral Use Agency (Rosnedra) decision earlier this year. Technological developments have also lowered the cost of shale oil production in recent years. Tatarstan is a particularly promising site for its production because its deposits are located at a depth of 80-200 m. instead of 1-1.5 km., which is usual throughout the world.

24 September 2007 - Upstream OnLine - Russia's Ministry of Natural Resources has eased pressure on London-listed Urals Energy, saying it had removed its objections to the company's reserves reporting figures. Last year, the ministry accused a number of London-listed companies working in Russia of puffing up their reserves in international reports compared with those registered by Russia's state commission responsible for monitoring reserves. But on Monday it said that the situation had been reversed after Urals Energy had provided additional information and reserves reported domestically were now higher than those reported abroad. This was not a problem, Reuters reported. "According to the data provided by Urals Energy, the company's reserves registered by the state commission are bigger than those estimated by independent auditor DeGolyer and MacNaughton," the ministry said in a statement. "In some cases, independent valuations are 30% lower than those registered by the state," it added.

24 September 2007 - Upstream OnLine - Russian oil company Tatneft has chosen Shell as a strategic partner to help it develop a heavy bitumen oil deposit It gave no other details of the agreement, Reuters said. "The deal will be signed on September 27," said a Tatneft spokesman. Tatneft has said it controls deposits that may contain billions of tonnes of heavy bitumen oil.

// For $9 billion
Sep. 20, 2007 Kommersant - Iraq’s Foreign Minister Hoshyar Zebari made it clear that Baghdad is ready to offer Russian companies some preferences in restoring and reconstructing the Iraqi economy, he said during a visit to Moscow yesterday. Sources indicate that access to the Iraqi contracts, primarily in the oil and energy sectors, will cost Russia a minimum of $9 billion as part of a deal to write off 90% of Iraq’s $10 billion debt. Restoring Russian-Iraqi bilateral economic cooperation has been a main theme during Zebari’s visit to Moscow. Discussions began yesterday morning during negotiations between Zebari and his Russia colleague Sergei Lavrov. The Iraqi minister reported that the two sides “have agreed to continue discussing the economic questions as part of an intergovernmental commission, first on the specialist level, then on the level of ministers.” “Our main goal is to sign a memorandum with Russia regarding economic trade cooperation,” the Iraqi foreign minister said. In addition Zebari expressed hope that “in the future we will be able to organize a visit to Moscow for Iraq’s ranking ministers.” “We need the help and support of all influential states, including Russia,” Zebari said. Until recently, according to Moscow, Baghdad’s non-constructive position had hindered bilateral cooperation. Russia argued that contracts won by Russian companies under Saddam Hussein, who was overthrown in 2003, did not require renegotiation. Iraqi authorities, however, insisted that the deals were drafted with violations. For example, contracts for developing oil fields were awarded to Russian companies without tenders. Moscow requested that Baghdad consider its willingness to write off a large part of Iraq’s $10 billion debt. But Baghdad would not budge. “The Russians want access to the Rumeila oil fields in exchange for writing off debt,” Iraqi Finance Minister Baqir Jabr declared in May. “But that’s not going to happen.” In part the Iraqi position is understandable. As a member of the Paris Club Russia took upon itself the responsibility of forgiving 80% of Baghdad’s loans. Russia couldn’t turn back on its obligations, but neither did it rush to write-off the debt. In the end Baghdad came to the conclusion that cooperation with Russia could be mutually beneficial. In part because a significant portion of Iraq’s industrial facilities that are in need of repair and restoration were built by Soviet specialists. “In various regions of Iraq there are thermal hydroelectric stations that we helped to build,” Sergei Lavrov said yesterday. “They are in need of modernization. An entire contingent of our companies is ready to take on this work and the Iraqis have responded to this initiative with interest.” Zebari highlighted that Baghdad is ready to allow Russian companies to restore and reconstruct Iraq. “The Iraqi market is open for competitive participation by all companies. We have no preferences.” As for the oil sector, Zebari announced yesterday his intentions “to meet with the president of Lukoil and discuss questions of renewing the contract for Western Kurna-2.” “I’d prefer not to speak about concrete details, but the restored activity of the intergovernmental commission will be an important step in restoring our cooperation,” the Iraqi minister said. Western Kurna-2 is Iraq’s largest oil field with estimated reserves of at least 3 billion tons. Russia’s Lukoil received the right to refine this vein in 1997, but currently the fate of the contract is not clear.

09.20.2007 - The Moscow Times - Anatoly Chubais, chief executive of Unified Energy System, could be appointed energy minister in the new Cabinet, Vremya Novostei reported on its web site Wednesday. Under a plan that Prime Minister Viktor Zubkov submitted to President Vladimir Putin on Tuesday, the Industry and Energy Ministry will be split in two, and Chubais will head the energy ministry, a source familiar with the plan told the newspaper. UES spokeswoman Margarita Nagoga was away from her office Wednesday afternoon and unavailable for comment. The company will cease to exist in July after it spins off a number of subsidiaries. Chubais in May proposed that a ministry should take on some of the monopoly's duties, such as supervising power stations. A UES deputy chief executive, Yakov Urinson, could replace Chubais at the utility to oversee the remaining sell-offs, the report said. The Industry and Energy Ministry currently has responsibility for the liberalizing of energy prices, a reform that Chubais has long called for. Under a plan proposed by the ministry and backed by the government in December, by 2011 electricity prices will be fully liberalized and domestic gas prices for industrial users will rise to $125 per 1,000 cubic meters. Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, said Wednesday that he did not believe that Chubais was yet considering any future career engagements, Interfax reported. "Chubais is not planning any further career options after the reorganization of UES," Shokhin said, Interfax reported. "I have asked him about it -- he is busy and he is not thinking [about future employment]."

21 September 2007 - Upstream OnLine - Chevron secured crucial backing from theKazakhstan's President Nursultan Nazarbayev for the Tengiz development today, but foreign investors remained wary as a row over the Kashagan project remained unsolved. Chevron boss Dave O'Reilly flew to Kazakhstan today for talks with Nazarbayev, a day after a Kazakh parliamentarian urged the government to halt Chevron's venture developing the Tengiz oil deposit due to ecological violations. O'Reilly quoted Nazarbayev as telling him that "Tengiz is an excellent example of how the government and a foreign investor can work together successfully", according to the Kazakhstan Today news agency. "Today during our meeting both the president of Kazakhstan and the prime minister expressed support for our company's activities," a Reuters report quoted him as saying. Kazakhstan's recent assertiveness in its dealings with foreign oil companies has alarmed investors, jittery in the wake of the government's row with an Eni-led consortium developing Kashagan. Kazakh officials suspended Kashagan operations last month, also accusing it of environmental breaches. Kazakhstan says Kashagan is an isolated case stemming from the project's continuous start-up delays and cost overruns, and denies it is part of a wider campaign against foreign investors. Tengiz came under fire earlier this year when officials threatened to halt its licence if it did not produce a plan to deal with sulphur stocks. The case was eventually dropped. However, concerns about investment climate rose again last week when Kazakh lawmakers started considering draft legislation that would allow the government to break the terms of contracts with oil investors. Kazakh Economy Minister Bakhyt Sultanov, speaking to reporters in Astana, defended the law. "I don't think it will negatively affect investment climate because everyone must understand that every state must have a legal basis to take into account its economic interests and national security," he said.

09-21-2007 RIA Novosti - Iraq's foreign minister said Friday his country could offer Russian oil and gas companies considerable advantages to operate in Iraq, and expects a deal later to clear 80% of Baghdad's Soviet-era debt. Iraqi Foreign Minister Hoshyar Zebari told a RIA Novosti news conference: "Russian oil and gas producers are welcome in Iraq, and the Iraqi government is ready to grant them significant advantages." The minister said such benefits could be on the table prior to special oil and gas legislation being approved, but added that the offer should not breach free competition principles. Zebari also said the benefits will be fixed in a memorandum up for adoption following work to be carried out by the Iraqi-Russian commission later this year. Zebari added that his country did not feel burdened by contracts signed by the previous regime. But he recalled that Iraq owed Russia Soviet-era debt worth $13 billion and pointed to certain progress in resolving the issue. "We have found Russia to be understanding on the issue of settling the debts. We expect to sign an agreement with Russia to write off 80% of Iraq's debts by the end of the year," Zebari said. The Russian Finance Ministry earlier said the debt was some $10 billion. Zebari said Russian officials told him that the share to be written off could increase to 90%. When asked whether the debt settlement issue was connected with benefits promised to Russian oil and gas companies, the minister said: "We are not linking these two problems." But he stressed that any advance on these issues could "facilitate the signing of a framework agreement between the countries."

MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - On September 19, the European Union (EU) Commission adopted a plan that will drastically change the energy map of the Old World. The EU wants to prevent non-EU members from investing in its energy infrastructure. These measures will primarily be directed against Russia's Gazprom, which supplies Europe with a quarter of the gas it consumes. Formally, the European Commission's plans are born of noble intent - to make the EU energy market more open and competitive by compelling major energy companies to sell part of their pipelines and electricity networks or transfer control over them to independent companies. The Commission believes this will help prevent monopoly prices and that monopolists do not want to make serious investment in the energy infrastructure, which the Old Europe so badly needs. But at the same time, the EU wants to protect itself against non-EU predators which are eager to buy its gas- and electric-distribution networks. Under the plan, these restrictions should remain in force until outside investors divide their vertically integrated companies which control the whole chain of energy supplies. Besides, governments of non-EU states have no right to interfere in management of European gas- and electric-distribution networks. After fulfilling these demands, each non-EU country will have to sign an agreement with the EU which would allow its companies to claim the purchase of energy facilities in the European Union. It is an open secret that these restrictions are primarily aimed against the state-controlled Russian Gazprom. It already owns a number of energy assets in the EU and has repeatedly voiced its intention to buy more. The European Commission's plan to liberalize the energy market has already annoyed major EU members - France and Germany. The energy giants Electricite de France and E.ON, which will be hit by the reform, are operating in these countries. France and Germany believe that it will be very hard to carry out the EU plan. Moreover, it will engender serious difficulties in the energy market by causing a huge wave of legal disputes between the operating companies.

19.09.2007 - The Moscow Times - A former Itera and Sibneft senior executive, Alexander Korsik, has been tipped to take over as chairman of embattled oil firm Russneft at an extraordinary shareholder meeting Wednesday. Korsik's appointment would be a further step in Russneft's takeover by Oleg Deripaska, whose investment vehicle Basic Element is awaiting regulatory approval for purchase of the firm, Kommersant said Tuesday. Deripaska proposed Korsik as chairman, the paper said. Russneft principal owner and former CEO Mikhail Gutseriyev is believed to have left for London after being charged with illegal business practices and tax evasion at the end of August. The Federal Tax Service has filed 11 lawsuits against eight current and former shareholders in privately held Russneft. Russneft spokesman Eduard Sarkisov said Tuesday that he had no knowledge of the shareholders' meeting and planned board reshuffles. An industry source confirmed that Russneft called the meeting for Wednesday. Basic Element spokesman Sergei Rybak was at a meeting Tuesday and unavailable for comment. Korsik would replace current chairman Vyacheslav Marchenko on the five-member board. Marchenko is CEO of GMG-BIN, a group of companies linked to Mikhail Gutseriyev, Kommersant reported. Korsik quit as CEO of Itera in August after only six months in the position. Previously, he was first deputy CEO of Sibneft from 1997 until 2005, when Gazprom bought the company.

RBC, 19.09.2007, Moscow 19:22:37.LUKoil President Vagit Alekperov, as well as his spouse Larisa and son Yusuf, have bought a further RUR551,445,290 (approx. USD21.75m) worth of shares in the Russian oil company. According to a LUKoil statement, the company's chief executive has increased his stake in the oil giant from 1.785 to 1.813 percent, having acquired 238,120 shares in a RUR457.6m (approx. USD18.05m) deal registered on September 17. His wife, Larisa Alekperova, purchased 27,000 shares for RUR51,673,950 (approx. USD2.04m), and his son bought 22,000 shares for RUR42,104,700 (approx. USD1.66m).

RBC, 18.09.2007, Moscow 19:56:18.At an extraordinary meeting today, shareholders of the UK-listed company Sibir Energy approved a deal with the Moscow city administration, in which the city undertakes to transfer its refining and sales assets in the Moscow Oil and Gas Company (MOGC) to Sibir Energy, in exchange for an 18.03-percent stake in the combined company. As part of the deal, the Moscow city administration-owned Central Fuel Company (CFC) will subscribe to 69,714,254 common shares (an 18.03-percent stake) in the British company. In exchange for the stake in Sibir Energy, CFC will transfer to the company 35,010 common shares in MOGC. In addition, Sibir Energy will pay $200m for 7,780 preferred shares in MOGC held by CFC. When the deal is completed, MOGC will become Sibir Energy's wholly owned subsidiary, and CFC will hold an 18.03 percent stake in the enlarged Sibir Energy.

RBC, 18.09.2007, Moscow 14:16:35.LUKoil's management has expressed hope that the company's agreement with Iraq on the Western Kurna-2 project would remain effective even after Baghdad passes a new law on oil, Andrei Kuzyaev, President of LUKOil Overseas, told journalists today. He pointed out that cooperation with Iraq was vital for the Russian-Arabic dialog. Kuzyaev also noted that an active political dialog between Russia and Iraq would promote the development of the Western Kurna-2 project. However, LUKoil's report for the first six months of 2007 states that prospects for the contract between the company and Iraqi government on the development of Iraq's oil fields remained unclear.

RBC, 18.09.2007, Moscow 12:40:20.LUKoil is looking into the possibility of constructing an oil refinery in Latin America as part of the prospective joint venture agreement with Venezuela's state company Petroleos de Venezuela (PDVSA), President of LUKoil Overseas Andrei Kuzyaev told journalists today. He did not divulge the projected capacity of the plant, but pointed out that refined oil products would be supplied to foreign markets. Kuzyaev also said that the site for the refinery's construction would be located either in Venezuela or in another country in Latin America. Kuzyaev added that the joint venture with PDVSA would also produce synthetic oil. LUKoil and Venezuela's authorities are currently in talks on the creation of this joint venture. However, Kuzyaev has expressed hope that the document would be signed before the year-end.

19 September 2007 – Upstream OnLine - Russia's Deputy Prime Minister Sergei Ivanov said his country will cease flaring associated gas during oil production in order to conserve resources, according to local media reports. "We will not allow anyone to flare associate gas, at least in Russia," Interfax quoted Ivanov telling at a meeting in the Khanty-Mansiysk autonomous region. "The decision has already been made," he added. "We aren't rich enough yet to allow ourselves such a luxury, not to mention the environment," Ivanov said. Khanty-Mansiysk Governor Alexander Filippenko was quoted as more than 7 billion cubic metres of associated gas are burned off during oil production in the region each year.

19 September 2007 - Upstream OnLine - Russian producer TNK-BP, which is half owned by UK supermajor BP, is keen to enter Venezuela's upstream sector, Russian media has reported. A report published this morning in Kommersant claimed TNK-BP has sent a letter to Russian Foreign Minister Sergei Lavrov asking for state support for its plans to enter Venezuelan energy sector by creating a joint venture with PDVSA. "We have indeed received a letter from TNK-BP, but we can't give details," the foreign ministry's spokesman told Reuters. TNK-BP declined to comment. Yesterday Lukoil reconfirmed its intention to set up a production deal with PDSVA.

19 September 2007 - Upstream OnLine - Russian player Lukoil said today that it and partner ConocoPhillips hope to seal exploration deals for three blocks in Turkmenistan's offshore play by the end of the year. Lukoil, which is 20% owned by ConocoPhillips, won the right to explore the blocks in the Turkmen sector of the Caspian Sea in June. "Talks with the Turkmen Energy Ministry are ongoing... We hope to conclude these and sign a contract towards the end of this year," Reuters quoted Lukoil boss Vagit Alekperov as telling reporters at a business conference in Moscow. ConocoPhillips will be Lukoil's partner in Turkmenistan and both companies will hold 50% stakes in the project. "We think the shelves contain both gas and oil," Alekperov said, without giving further details.

18 September 2007 - Upstream OnLine - Russia's Lukoil will not sign a contract with Venezuela until exploration of the Junin-3 Block in the country’s Orinoco heavy crude belt is complete, Lukoil vice president Andrei Kuzyayev said today. Lukoil and Venezuela's state-controlled oil company PDVSA signed an initial agreement two years ago for a joint venture in the Orinoco belt, which produces 520,000 barrels per day at the four Junin blocks. Lukoil has been exploring the area since then, and last month the company's president Vagit Alekperov said a production deal would be finalised by the end of this year. But Kuzyayev, speaking at the Russian-Venezuelan forum in Moscow along with Venezuelan vice president Jorge Rodriguez Gomez, said the date of any agreement was entirely unknown. "I'm not going to talk about 2007 because we don't have any news on the date of the contract. We're busy with exploring and evaluating it, and then we'll have an idea," Reuters quoted Kuzyayev as saying. Under a new Venezuelan law that limits foreign investment, Venezuela would receive 60% of the project with Lukoil taking the 40% balance.

18 September 2007 - Upstream OnLine - Novatek has started producing methanol at the Yurkharovskoye gas condensate field in a move which will help the Russian gas producer slash its costs at the field, which lies on the Tazov peninsula deep within the Arctic Circle. Methanol is used to prevent condensation in gas-gathering systems in cold areas such as Yurkharovskoye. The plant will produce 12,500 tonnes of methanol per year, Novatek said. Before the methanol plant was brought on stream, methanol deliveries were made to the field via the Ob River and Tazov Bay in summer, and via a seasonal road during winter. Both options carried considerable cost, although Novatek would not give a figure. Novatek added the on-site methanol plant also cuts out the environmental risks associated with delivering methanol by river and road, as well as cutting production costs and ensuring operational stability.

18 September 2007 - Upstream OnLine - Total has named Pierre Nerguararian as the head of its exploration and production subsidiary in Russia. "Nerguararian was appointed on 17 September, replacing Jean-Pierre Dolla who had been managing Total E&P Russia for three or four years. This is a classical rotation of management," a Total spokeswoman said. Dolla has returned to Total's headquarters in Paris. Nerguararian was previously managing director of Total E&P France. His appointment comes at a time where Total's interests in Russia are expanding. Total is set to take a 25% stake in the operating company that will manage the $15 billion first phase development at the Shtokman gas field. Gazprom holds the remainder.

18 September 2007 - Upstream OnLine - Russneft is set to elect Alexander Korsik as its new chairman tomorrow, replacing former owner, billionaire Mikhail Gutseriyev, who fled Russia to avoid tax fraud charges, according to reports. Korsik is the former chief executive of independent gas producer Itera and a long-time veteran of Russia's foreign ministry, sources at Russneft and Basic Element told Thomson Financial. Basic Element owner Oleg Deripaska is in the process of buying Russneft. Gutseriyev, who founded Russneft in 2002, resigned earlier this year amid what he called "persecution" by the authorities aimed at forcing him to sell his business. Russian investigators issued an international arrest warrant for Gutseriyev in August, accusing him of massive tax fraud and saying he had fled the country to avoid arrest. His company's assets have been frozen by a Moscow court.

Upstream OnLine - 17 September 2007 - UK-listed explorer Imperial Energy has formed a joint venture with the Tomsk Regional Administration - Imperial Energy Tomsk Gaz - in a bid to move in on Russia's commercial gas market. The Tomsk Administration will hold 26% of the venture. Imperial said it has already identified potentially significant gas deposits in a number of East Siberian licences, including blocks 77 and 69. Imperial will provide the gas to the joint venture company which will then be supplied to customers via Imperial Energy Tomsk Gaz. In tandem with the Tomsk move, Imperial is set to ask auditors DeGolyer & MacNaughton to report on its gas reserves in a number of selected fields as well as updating information on its oil reserves. The audit, which will be ready for publication in the second quarter of next year, will be carried out on an SPE basis. Imperial is also taking steps to start the process of increasing its Russian registered gas reserves.

14 September 2007 - Upstream OnLine - Timan Oil & Gas' Geoterm unit has identified six prospective offshore targets, with an estimated resource potential of about 3 billion barrels, within Izberbash licence, in Block 2 in the Caspian Sea. The estimate was filed with the State Register of Natural Resources under the Russian State Classification system's Category C3. Category C3 resources are defined as prospective recoverable hydrocarbon volumes located within ready-to-drill prospects. Geoterm holds two offshore licences in the Russian sector of the Caspian Sea, a Thomson Financial report said.

12 September 2007 - Upstream OnLine - AIM-listed PetroNeft Resources has seen its losses deepen in the first half of the year, thanks in part to higher administrative costs, but said it still plans to pump first oil from the Lineynoye and Tungolskoye fields in 2009. In the six months ended 30 June 2007, PetroNeft booked a net loss of $944,471. In the same period last year, the company's loss came in at $532,626. petroneft said its administrative expenses had risen to $780,043 in the 2007 half-year from $543,279 in the year-ago period. In a statement, company chairman David Golder said petroneft was actively looking for new acquisitions, adding that PetroNeft will continue to strengthen its finance team over the remainder of this year. The company is also looking to tie up funding to help it pump first oil from Lineynoye and Tungolskoye in 2009.

11 September 2007 - Upstream OnLine - Russian billionaire Vladimir Yeytushenkov still hopes to win control of the $7 billion Bashkiria oil assets through his Sistema conglomerate despite wide expectations they will pass into the control of state energy companies, its chairman said today. Yevtushenkov told an investment summit in Russia that he was talking to all interested parties such as state-controlled gas export monopoly Gazprom and state-controlled oil major Rosneft , Reuters reported. "I'm in the middle of this fight. The situation is in fact more complicated than it may seem from newspaper reports," said Yevtushenkov, who has personal wealth of over $9 billion with most of his assets in telecoms and high-tech business. "It can drag on for eternity. There should be some development this year. We will have to either sell the assets or buy out the entire stock," he said. The Bashkiria oil assets were initially controlled by the government of the Urals region of Bashkortostan on behalf of the Russian Federation, but have changed hands many times in recent years. In August, the Moscow Arbitration court ruled the assets should be handed to the state due to a series of illegal transactions in the shares. The assets include mid-sized oil producer Bashneft; refineries Novoil , Ufimsky , Ufaorgsintez and Ufaneftekhim and retailer Bashkirnefteproduct . Sistema bought stakes of around 25% in each of the units several years ago and has said it wanted to help the current major shareholders build a transparent, vertically integrated company on the basis of existing and new assets. Russian exchanges suspended trading in the shares pending clarification of legal suits as the current owners – whose identity is unknown - have filed for arbitration. Analysts have long said the Bashkiria oil assets could eventually fall under the wing of state-controlled companies as the Kremlin wants to tighten its grip over the energy sector. Interfax news agency reported last week the government would split the assets between Rosneft and Gazprom. The agency cited unnamed sources as saying Gazprom would get oil-producing assets of Bashneft , while Rosneft would get four refineries and a network of petrol stations. Rosneft's chief financial officer Peter O'Brien told Reuters today his company would consider buying Bashkiria refineries when they are offered for sale.

11 September 2007 - Upstream Online - Kazakh President Nursultan Nazarbayev told Turkmen officials today that the two countries should take advantage of "beneficial" energy prices, a move that could upset the traditional buyer of its resources, Russia. Nazarbayev also hinted that construction could soon begin of the US-backed trans-Caspian pipeline, which would bypass Russia and take 30 billion cubic metres a year of Turkmen gas along the seabed to Azerbaijan and overland to Europe. The pipeline is scheduled to come on stream in 2010-2011. Analysts have said Russian gas export monopoly Gazprom might oppose the project as it would pose a threat to Russia's monopoly on Central Asian gas exports to Europe. Nazarbayev is visiting Turkmen President Kurbanguly Berdymukhamedov in the Turkmen capital Ashgabat for two days, Reuters reported. Meetings between the Kazakh leader and the previous Turkmen president, Saparmurat Niyazov, who died in December, were rare. "The energy issue is one of great global importance. Everyone is looking for an alternative to a single source," Nazarbayev told a news conference with Berdymukhamedov. "We have a common interest: to sell our energy resources on the international market and sell at prices which are beneficial and will help the development of our nations and people in the future." Berdymukhamedov, who will soon attend a UN General Assembly meeting in the US, backed Nazarbayev's call for a competitive market environment. "We are also exploring north-south transport routes," he said, re-emphasising Turkmenistan's intention to build a gas pipeline to China through Kazakhstan. The pipeline, with an annual capacity of 30 billion cubic metres, will start in the east of the country on the right bank of the Amu Darya River and pass through Uzbekistan and Kazakhstan. Transit country Kazakhstan said it would allow 1300 kilometres of the pipeline to be built on its territory. It is still unclear whether Uzbekistan has agreed to the plan. In May, the two leaders signed an agreement with Russian President Vladimir Putin to build a new natural gas pipeline around the Caspian Sea, a move that bolstered Russia's dominance over the region's gas exports.

11 September 2007 - Upstream OnLine - Russian producer Rosneft said today it will not renew its existing crude oil supply contract to China after 2010 unless China offers better terms. The comment came as Russia, the world's second-largest crude exporter, is building its first pipeline to China. Rosneft is due to deliver the bulk of crude via the 600,000 barrels per day link, which is due to come on stream at the end of next year. But state-run Rosneft's chief financial officer Peter O'Brien told the Reuters Russian Investment Summit that the company may decide against sending crude via the route as other export options were more attractive. "The current contract we have is really not competitive with other netback options. We will not extend it as such after 2010," said O'Brien. Netback is a measure of profitability of crude oil exports. "Any discussions about exports to China have to be done on the basis of them competing with other netback options," Reuters quoted him as saying. Rosneft produces around 2.2 million bpd and refines slightly less than 1 million bpd. It sends the remaining oil to Europe via major Black and Baltic Sea ports but also has an agreement with China to supply around 200,000 bpd of oil via rail. The deal is part of a broader agreement between company and China, which lent Rosneft over $6 billion to help it buy assets of Yukos in 2004 and took railway supplies as collateral. Industry sources have said Rosneft was looking to renegotiate the debt deal as it considered it to be very expensive, but O'Brien said the two issues should not be linked. "I would separate the loan and the off-take agreement. They are two separate items," he said. But he said that the cost of refinancing for Rosneft has changed for the better in the past years and the company will work with credit providers to cut the cost of debt servicing. "Our current supply agreement with (China National Petroleum Corporation) expires in 2010. We will consider a competitive offer," he said. Rosneft has to supply a total of 48 million tonnes of crude (352 million barrels) to China before the deal expires.

Sep. 10, 2007 - Kommersant - Russia’s Industry and Energy Ministry has approved the Eastern Gas Program worth 2.4 trillion rubles. The dates of the fields’ development and exports will depend on results of Gazprom’s negotiations with buyers in China and Korea. China’s denial to accept the terms of Russia would kill the export component of the program.
Industry and Energy Ministry sanctioned September 3 the program of creating a unified system for gas/gas supply production and delivery in Eastern Siberia and Far East in view of potential exports to the markets of China and other states of Asian and Pacific region, Anatoly Yanovsky, chief of the energy policy department of the ministry, announced Friday.
The program provides for creating four centers of gas production located in Sakhalin, Yakutia (Chayanda field), Irkutsk and Krasnoyarsk territories. Each of them will have its own gas processing facilities.
Of all proposals to develop the fields with regard to potential exports, the most promising one is Vostok-50, which provides for exporting 50 billion cu meters of gas to the Asian and Pacific states by 2030. In this case, Sakhalin will be developed first and foremost. Development of Chayanda will start in 2016 and of Kovykta – no earlier than in 2017, provided no decision is passed to supply gas to the Unified Gas System.
The absolute priority is domestic needs, representatives of Industry and Energy Ministry said, specifying they will be met in any case. The definite dates of fields’ development and respective exports depend on the outcome of commercial talks between Gazprom, China’s CNPC and Korean COGAS. Russia presses for the equal yield from the gas exports, claiming the prices for Asian and Pacific states should depend on the prices for Europe. But the Chinese are yet unready to buy gas at Europe’s cost.

07 September 2007 – Upstream OnLine – Turkmenistan raised natural gas production by 11% in the first eight months of the year, state media reports said today without providing figures. The Central Asian state rarely publishes official statistical data and many economic indicators are a state secret. Turkmenistan is the biggest gas producer in the former Soviet Union after Russia, with exports of more than 50 billion cubic metres of gas per year. It produces around 200,000 barrels of crude per day. Oil production rose 9% in January-August compared with the same 2006 period, state television said. Turkmenistan plans to produce 80 Bcm of gas this year and export 58 Bcm to Russia and neighbouring Iran. Oil production is seen at 10.4 million tonnes this year, a Reuters report said.

MOSCOW, September 10 (RIA Novosti) - Oil company Tatneft based in the Russian Volga republic of Tatarstan said Monday its oil production increased 1.9% to 17 million tons (127 million bbl) in January-August 2007 year-on-year. The company's reported a 0.7% increase in oil output to 2.2 million tons (15.9 million bbl) in August 2007 against August 2006. Oil production in Tatarstan has grown 2.6% to 21 million tons (157.6 million bbl) since January, and the republic reported a 1.4% increase year-on-year in oil output to 2.7 million tons (19.8 million bbl) in August. Tatneft and its subsidiaries handle upstream and downstream operations and account for over 80% of oil output in Tatarstan.

MOSCOW, September 10 (RIA Novosti) - LUKoil [RTS: LKOH], Russia's largest independent crude producer, and China National Petroleum Corporation (CNPC) have signed a cooperation agreement, LUKoil said in a statement Monday. The two companies will cooperate in production, refining and processing of oil and natural gas, expanding their cooperation under existing projects, and launching new joint projects in third countries. LUKoil and CNPC will also consider cooperation in the export of oil and gas to China, as well as hydrocarbon processing in China. LUKoil and CNPC are currently operating two co-production projects in Kazakhstan that produced 3.4 million metric tons of crude and 119 million cubic meters of natural gas in 2006.

06 September 2007 - Upstream OnLine - Russian producer Lukoil has teamed up with Indonesia's Pertamina to explore three blocks off the south-east Asian nation, company boss Vagit Alekperov said today. Alekperov told Russia's state television Vesti-24 the company's geologists believe the three blocks might hold up to 150 million tonnes of reserves. He did not say how much of the venture will be divided between Lukoil and Petramina. The exploration deal was signed during Russia's President Vladimir Putin visit to Indonesia, a company release said.

04 September 2007 - Upstream OnLine - Imperial Energy has hit oil with the North Chertalinskoye-403 and Nyulginskoye-2 wells, in West Siberia. Imperial said North Chertalinskoye-403 could tap potentially substantial oil deposits. "The reservoirs are in the Bajenov, Jurassic and Tyumen sections with net oil pay in aggregate estimated at 68 metres identified through logs and cores," Imperial said in a drilling update. The Tyumen section will be flow-tested later this month, with other zones pencilled in for testing later this year. Nyulginskoye-2 hit what Imperial described as promising oil intervals in the Cretaceous and Tyumen sections. The company estimates net oil pay of about seven metres. Logging and coring has been carried out, with flow-testing planned for later this month. 7

MINSK, September 5 (RIA Novosti) - Iran and Belarus have signed a contract allowing state-owned oil company Belarusneft to produce oil at the Jofeir deposit in Iran, Belarusneft's press service said Wednesday. The contact was signed by Alexander Lyakhov, Belarusneft's general director. "The two contract stages are worth some $450 million, and when the project comes to the final stage, oil production will total some 40,000 barrels a day," the service said. The project will be funded by Belarusneft and the National Iranian Oil Company in amounts fixed by the agreement. In early May, Belarusneft and the National Iranian Oil Company approved a general deposit production plan. Belarusian specialists studied the feasibility of remote oil production in Iran, estimated the Jofeir deposit reserves, and worked out technical documentation. Two wells have already been drilled, and two oil-derricks shipped to the field. In September, geologic exploration of new layers of the deposit will begin. During Belarusian President Alexander Lukashenko's visit to Iran in the fall of 2006, the two states signed a memorandum of understanding on oil field exploration. Belarusneft plans to attract investment from Petrovietnam, the Vietnamese State Oil and Gas Corporation, which can finance 100% of the joint project in Iran. To that end, a joint venture (JV) will be registered in Vietnam. If the Iranian party agrees, the JV will be the contractor for production at the Jofeir deposit, which lies in southern Iran. Lukashenko has called for Belarus to diversify its energy sources, and he has boosted ties with both Iran and Venezuela. Belarus's economy was jolted over the New Year after Russia doubled gas prices and removed preferential oil tariffs. About 50% of the oil Russia delivers to Commonwealth of Independent State (CIS) countries goes to Belarus. Russian oil supplies to Belarus made up 19.7 million metric tons in 2006. In February 2007, a Petrovietnam delegation visited Belarusneft oil and gas group, negotiating joint ventures in Iran and Venezuela, and cooperation in gas and oil industry and other minerals. Initial successes include an exchange of visits and the agreement between Belarusneft and Vietsovpetro.

MOSCOW, September 5 (RIA Novosti) - Three Russian companies - Gazprom, Lukoil and Novatek - will participate in the fourth round of bidding for the right to operate oil fields in Libya, the National Oil Corporation (NOC) said Wednesday. In all, 35 companies have qualified for Bid Round 4, including Ukraine's Naftogaz, as well as Gas de France, ExxonMobil, Wintershall, Statoil, Sonatrach, OMV, Shell, BP, ENI, Chevron, Petronas, ONGC and RWE. The NOC also said it has approved a list of 21 companies that have qualified as "investor," including MOL, Hellinic Petroleum, Oil India, Japan Petroleum, Mitsubishi Corp., Mitsui Oil, Korea Gas, Nippon Oil, Centrica, E.On and Fenosa. Libya has the largest proven reserves of low-sulfur oil in Africa and, at 5.1 billion metric tons, the fifth-largest reserves among OPEC countries. Libya's natural gas reserves are estimated at 1.49 trillion cubic meters (the fourth-largest in Africa, after Algeria, Nigeria and Egypt).

MOSCOW, September 5 (RIA Novosti) - Russian prosecutors said Wednesday billionaire Mikhail Gutseriyev, a former RussNeft chief wanted for fraud and tax evasion, is currently in Turkey. "Gutseriyev disappeared on July 30, and investigators put him on the wanted list," said Viktor Gvozdev, a spokesman for the Prosecutor General's Office. "We have established that he flew from Minsk airport [Belarus] to Turkey." The Moscow City Court upheld Wednesday an arrest warrant for the fugitive businessman and the ruling to arrest 100% of RussNeft's shares. The court also banned any transactions with the arrested shares. The Russian Embassy in Ankara said it had no information that Gutseriyev was staying in Turkey. Gutseriyev, 49, whose personal wealth has been estimated at almost $3 billion, was ranked Russia's 31st richest man in 2007 by Forbes. A relative said the last time Gutseriyev was seen in public was on August 23, when he attended the funeral of his son Chingiz. The son was fatally injured in a car crash a month after Gutseriyev resigned as chief executive of RussNeft, one of Russia's top ten oil and gas companies, in late July. The businessman said he had been forced to quit and dismissed the charges against him as "ridiculous and withstanding no criticism." The billionaire also said he had no plans to sell the company or move his assets overseas, but later said he would pass control of the holding to a new owner capable of resolving RussNeft's problems. This announcement coincided with reports that BasEl, owned by Kremlin-friendly tycoon Oleg Deripaska, intended to buy Gutseriyev's former company. BasEl is awaiting a decision from the anti-monopoly authorities on the deal. RussNeft has refused to comment on the share arrest. "There will be no comments for the moment," Eduard Sarkisov, company vice president, said. BasEl representatives could not be reached for comment. If tried and convicted, Gutseriyev faces up to six years in prison, in a case reminiscent of legal battles for the now bankrupt oil firm Yukos. The Yukos case was widely seen in the West as targeted against its founder Mikhail Khodorkovsky for funding the opposition and as part of a Kremlin campaign to regain control of oil and gas assets.

RBC, 05.09.2007, Moscow 12:45:28.The Moscow City Court has ruled the seizure of 100 percent of RussNeft shares lawful, the court's press office reported today. Yury Kulebyakin, RussNeft shareholders' attorney, noted that the court violated his defendants' rights, as the investigation did not produce any evidence of the company's former chief Mikhail Gutseriyev's involvement with companies which hold RussNeft shares. Nevertheless, the General Prosecutor's Office asserted its right to seize property of third parties as presumably obtained by criminal conduct.

05 September 2007 - Upstream OnLine - Reserves in Russia's far eastern peninsula of Kamchatka could rival oil and gas-rich Sakhalin, Kamchatka project developer Rosneft claimed today. State-run player Rosneft estimates developing the Kamchatka shelf will cost around $24 billion, company head Sergei Bogdanchikov was quoted as saying by Russian news agency Interfax. Rosneft, which has a 60% stake in the project, has so far invested around $90 million there and will inject between $270 million and $300 million next year. "The project's size is equal to Sakhalin 1 or Sakhalin 2, or even surpasses it," Bogdanchikov said in the Kamchatka town of Vilyuchinsk, which he was visiting along with President Vladimir Putin. It is unclear whether the Kamchatka reserves are oil or gas, but Rosneft's partner Korean National Oil Corporation has previously said there could be up to 10.3 billion barrels of oil. "We've already prepared everything to begin work on two exploratory wells, and drilling will start in 2008," Bogdanchikov said. The Exxon Mobil-led Sakhalin 1 has estimated reserves of 307 million tonnes of oil (2.3 billion barrels) and 485 billion cubic metres of gas. Sakhalin 2, controlled by Russian gas monopoly Gazprom, has reserves of around 150 million tonnes of oil and 642 Bcm of gas.

05 September 2007 - Upstream OnLine - Russian prosecutors have said that fugitive oil tycoon Mikhail Gutseriyev, who has been the focus of an international manhunt since he accused to Kremlin of trying to steal Russneft, has been traced to Turkey, a Moscow court heard today. However, Gutseriyev's lawyer Alla Yaminskaya said there was no evidence he had left Russia, adding he was at an undisclosed location undergoing medical treatment. Gutseriyev, former owner of oil player Russneft, disappeared from view soon after accusing the authorities of fabricating criminal charges to force him out of his company. Gutseriyev is wanted on tax evasion charges in a case observers say is a new front in a long-standing Kremlin campaign to wrest back control of Russian energy assets from private investors. Prosecutors at a court hearing today said Gutseriyev travelled from Russia to ex-Soviet neighbour Belarus, and from there flew to Antalya, a resort city in southern Turkey. "There is no doubt that it is him that left the country," Reuters quoted prosecutor Viktor Gvozdyev as telling the court. "Gutseriyev is not the sort of person you could get mixed up with someone else." It was not clear if Gutseriyev had travelled onward from Turkey. Unconfirmed media reports have placed him in London while others have said he is in Azerbaijan. The court turned down an application from Yaminskaya to revoke his arrest warrant. She said border police may have mistaken someone else for Gutseriyev, and there was no evidence he had left Russia. "He is undergoing medical treatment," she said, though she did not say where. Shortly before he disappeared, Gutseriyev agreed to sell Russneft to Kremlin-friendly tycoon Oleg Deripaska for a price market sources put at $6 billion. Gutseriyev's 21-year-old son Chingiskhan died suddenly last month in Moscow after what the family said was a car accident. A leading newspaper called the death mysterious, saying police and ambulance services had no records of such a crash. Yesterday Deripaska asked Russian anti-trust authorities to approve the purchase of Russneft. But the sale has been complicated because of a separate court ruling ordering the seizure of Russneft shares. A Russneft appeal against the seizure was rejected by a Moscow court today. Some market sources told Reuters a power struggle is under way inside the Kremlin between those happy for Deripaska to buy the company and hawks who want to use the courts to nationalise it outright, passing the assets to a company such as Rosneft.