RusEnergy

MOSCOW, October 26 (RIA Novosti) - Regulations on non-discriminatory gas pipeline access could be adopted in January 2008, if the Federal Antimonopoly Service reaches terms with energy giant Gazprom, FAS head said Friday. Igor Artemyev said the FAS proposed that after Gazprom has met its domestic and foreign gas supply obligations, independent producers should be granted equal access to the pipeline on a competitive basis. "The decision could be made in 2008, ... if Gazprom meets us halfway," Artemyev told the press adding that the gas monopoly has not yet agreed to the proposal. Artemyev said Prime Minister Viktor Zubkov told the FAS on Wednesday to coordinate the proposal with the relevant departments, and that a special conference headed by Deputy Prime Minister Alexander Zhukov could be held later this month. The Federal Antimonopoly Service could also respond to applications filed by two companies BasEl, owned by Kremlin-friendly tycoon Oleg Deripaska, and Swiss Glencore to buy the RussNeft oil company later this year, Artemyev said. RussNeft owns 30 oil producing companies, three oil refineries, two transport companies and a network of 300 gas filling stations. BasEl announced plans to buy RussNeft in mid-summer, and the FAS decided in early October to postpone its decision on the application for 60 days. Glencore submitted its application to the FAS for the acquisition of three RussNeft oil producing subsidiaries on September 11.

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.

22 October 2007 - Upstream OnLine - ExxonMobil is blocking the expansion of the Kazakhstan's share in the Kashagan oilfield, stalling talks between the Kazakh government and the Eni-led AgipKCO consortium which is developing the Caspian Sea field, according to Russian media reports. The Interfax news agency quoted unidentified sources as saying all other foreign members of the AgipKCO consortium had agreed on a preliminary deal which would see Kazakh state-run company KazMunaiGaz raise its stake in the project from its current 8.33% holding. The proposed compromise, under which all consortium members would proportionally reduce their stakes, could settle a dispute over cost overruns and delays at Kashagan. Interfax said KazMunaiGaz' stake could double if ExxonMobil were given the final nod. ExxonMobil has a 18.52% share in the consortium, while project leader Eni, Shell and Total have stakes of similar size. Smaller stakes belong to ConocoPhilips, with 9.26%, and Japan's Inpex, with 8.33%. Many partners, including Total, have called for a swift resolution, saying a deal should be reached by the end of the year. Eni has said the group is discussing the idea of increasing Kazakhstan's role in the development but has given few details. Kazakhstan has threatened to strip Eni of its leading role at Kashagan as it negotiates a new budget, which may exceed $100 billion, and timetable for pumping crude. Kazakhstan has said securing a bigger stake in Kashagan is not its main goal but it simply wants the field to come on stream as soon as possible as the country seeks to triple its oil production. Kashagan's start up has been repeatedly delayedned and is not expected before 2011 or 2012. The field is due to produce about 1 million barrels per day when it reaches peak output several years later.

19 October 2007 - Upstream OnLine - Foreign investors urged Kazakhstan's President Nursultan Nazarbayev to veto a planned subsoil law which will allow the government to break contracts with foreign companies, saying it would damage the country's business reputation. The debate over the subsoil law has thrown a new spotlight on Kazakhstan's relations with foreign investors at a time when the government is embroiled in a dispute with the Eni-led Agip KCo consortium over the Kashagan development. Kazakhstan's upper house of parliament approved amendments to existing subsoil legislation last month but Nazarbayev has yet to sign them into law. In their joint letter, the American Chamber of Commerce in Kazakhstan, the Kazakhstan Petroleum Association and other investors expressed their deep concern over the legislation. "(There is) a sense that there is absolutely no need for this type of very general legislation," Doris Bradbury, executive director of the American Chamber of Commerce in Kazakhstan, told Reuters. "It's absolutely essential for foreign investment, for any type of investment, that there be absolute certainty about contracts." Under the draft, Kazakhstan can force changes to oil contracts or break the terms of product sharing agreements if it deemed a threat existed to its national security. Signatories refused to disclose the letter due to its confidentiality but confirmed the authenticity of a Russian-language copy of it posted on a Kazakh news website. The letter, addressed to Nazarbayev and other senior officials, said the law "would damage investment climate in Kazakhstan and raise political risks associated with investment". It added: "We respectfully ask you to veto this draft legislation and, taking into account the importance of the matter, we thank you for considering this letter." Insiders in the business community told Reuters they see the subsoil changes as a consequence of the Kashagan dispute. The government has threatened to strip Eni of its leading role at Kashagan and impose billions of dollars of fines for production delays. Kazakhstan has previously used changes to its subsoil legislation to force the hand of investors. During a 2005 row over the purchase by China National Petroleum Corporation of assets in Kazakhstan owned by Canadian PetroKazakhstan, parliament amended the law to give Kazakhstan first right of refusal in such asset sales. As a result, national oil company KazMunaiGaz took a stake in the PetroKazakhstan during the takeover. "The changes in the legislation will ... certainly have a negative impact on the reputation of the Republic and may have a chilling effect on investor interest," one senior source in the Western business community told the news agency.

19 October 2007 - Upstream OnLine - Russian gas producer Novatek has signed a co-operation protocol with French giant Total to jointly explore and develop gas projects. "The protocol contemplates that the companies will form working groups to define Russian and foreign assets for joint participation in natural gas and gas condensate projects," Novatek said in a statement. Novatek added the protocol was supported by Russia's gas export monopoly Gazprom , which holds around 19.4% in Novatek.

18 October 2007 - Upstream OnLine - Russian producer TNK-BP hopes to bump up output at the giant but highly depleted Samotlor field in West Siberia, it said today. Igor Tsykin, general director of TNK-BP Samotlor, TNK-BP's unit developing the deposit, said the field was expected to produce around 657,500 barrels per day from 2008 to 2011, up by 2% from the 642,700 bpd forecast for this year. "We will produce 240 million barrels per year from next year," Tsykin told reporters after a news conference in West Siberian town of Nizhnevartovsk. "After 2011 we are planning to maintain Samotlor output at similar levels but there is nothing certain," he added. The field produced around 620,000 bpd last year. Tsykin also said the licences for Samotlor, which has reserves of about 4 billion barrels of oil, have been prolonged through to 2069. Once the Soviet Union's prized field, making up half of Soviet oil output when peaking at 7 million bpd in the 1980s, Samotlor is now 70% depleted. TNK-BP said late last year that it would invest $1 billion through to 2010 on rebuilding and reconstructing oil pipelines and improving its green record.

October 23, 2007 - The St. Petersburg Times - MOSCOW — Timan Oil and Gas, a British-registered company working in northern Siberia, won a rare court victory on Friday that will allow the small oil and gas firm to retain its main license. Moscow’s Arbitration Court ruled in favor of the firm, which had sought to expand its main exploration and production license at the Nizhnye-Chutinskoye field in Timan Pechora, the company said in a statement. The court heard the case on October 5, it said. The Natural Resource Ministry’s subsoil agency had asked its Komi Republic branch to revoke the company’s license in February, but was overruled by the court, which could not be reached for comment. Shares in the firm, listed on London’s Alternative Investment Market index, soared 17 percent on Friday. Timan Oil and Gas never received official notification from the Komi subsoil agency, the statement added. The company has also been targeted for investigation by the ministry’s environmental agency, which in summer began to crack down on smaller foreign energy firms. Investigations by the Natural Resources Ministry’s agencies often work most to wreak havoc on company’s share prices. “We are pleased to resolve this matter successfully and look forward to continuing exploration and production activity as previously planned,” Timan founder and CEO Alexander Kapalin said in a statement.

Oct. 23, 2007 - Kommersant - U.S. Secretary of State Condoleezza Rice urged Russia not to use its crude oil and gas reserves as political weapon. Rice expressed her views on the U.S.-Russia’s relations on Monday, at the Office of the Historian's Conference on U.S.-Soviet Relations in the Era of Detente, 1969-1976. “We respect Russia’s interests, but no interest is served if Russia uses its great wealth, its oil and gas wealth, as a political weapon, or that if it treats its independent neighbors as part of some old sphere of influence,” Rice said as quoted at the web of the U.S. Department of State. The democratic reforms in Russia neared Moscow and Washington, but “today, there is, to be fair, still a certain distance between us, and I have long thought that that reason for this difference is rooted in history itself; in different ways that our two nations continue to tell the story of the last decade,” the secretary of state said. The freedom of people to choose government and the freedom of government to choose a route is the source of security rather than the source of the threat, Rice made clear. “Russia has regained some of its strength and its cohesion. But at times, perhaps reflecting the view of the 1990s, we fear that this is sometimes seen in zero-sum terms of another era.” According to Rice, the strong Russia in the 21th century doesn’t mean a country with “a strong center, but with strong, independent institutions: and independent judiciary and legislature, and an independent civil society, with a free media and a vibrant nongovernmental sector.”

October 22, 2007 - Reuters - BRUSSELS -- European Union plans to prevent investment in its energy sector by companies from countries that do not open up their own power markets could dent bilateral ties, Industry and Energy Minister Viktor Khristenko said Friday. "Will EU efforts to limit 'objectionable' investment have an effect on Russia-EU industrial and energy cooperation? It is difficult to predict," Khristenko wrote in a letter published in the Financial Times. "Russia stretches across more than one geographical region, and we can diversify our industrial and energy cooperation by turning to Asian and Pacific countries," he wrote. "But I am convinced the EU has been and will remain our key player." The European Commission proposed last month to break up big utilities that control power supply, generation and transmission, but added a clause to prevent foreign firms, such as Russia's Gazprom, from buying pipelines and grids. The draft legislation would bar foreign companies from controlling EU networks unless they play by the same rules as EU firms and their home country has an agreement with Brussels. In his letter to the newspaper, Khristenko said there should be a balance between investment opportunities and state security concerns, and he questioned the logic of the EU's plan. "I am not sure that Brussels is trying to prevent by restricting foreign access to the EU energy market," he said. "It would be strange to fear money or to rank it depending on the country of its origin."

10/15/2007 MOSCOW (RIA Novosti political commentator Yelena Shesternina) - Vladimir Putin, accompanied by 13 ministers and heads of federal agencies, is leaving for Germany to attend another round of Russian-German consultations (the ninth in a series that has been held alternately in Russia and Germany since 1998). A delegation of equal importance - consisting of 11 ministers led by Angela Merkel - will depart for Wiesbaden in Hessen from the German side. The St. Petersburg Dialogue public forum has also timed its plenary meeting to coincide with the consultations. Both the Russian president and the German chancellor will address it. For Russian foreign policy, October has beaten nearly all records for state visits. Within one week the Russian capital hosted French President Nicolas Sarkozy and U.S. Secretary of State Condoleezza Rice, who was accompanied by Defense Secretary Robert Gates. On October 14 and 15, there are scheduled meetings in Germany, which shall be followed by a Caspian summit in Tehran. On October 26, Russian politicians will travel to Lisbon to attend a Russia-EU summit where officials from Moscow and Brussels will finally try to agree upon a new basic agreement. However, there is little chance that Poland will lift its veto.
In Germany, no such insurmountable problems loom.
Although pessimists predicted that with Gerhard Schroeder gone Vladimir Putin would find it much more difficult to establish a common language with the German chancellor and her team, thus far things have progressed smoothly. Since the beginning of the year Merkel and Putin have had four meetings. And every time they were productive - trade between the two countries is surging and last year reached a record sum of 50 billion euros (this compares with 13.5 billion euros for France). Also, German investments in the Russian economy in the first half of 2007 surpassed two billion euros. The latest meeting in a similar format between Russia and Germany was held in Tomsk in April of last year and produced eight agreements, the largest being a framework one between Gazprom and BASF on asset swapping. It specified the conditions under which the German partners could take part in the mining and transportation of resources from the Yuzhno-Russky deposit. At a final news conference Putin tried to placate those who thought Europe could become a hostage to "Russian gas expansion." "We keep hearing about a Russia-dependence threat and that Russian companies should be restricted in their access to European markets," he said. "But step into our shoes and look through our eyes. What should we do when we hear the same thing day in and day out? We perceive this as a threat to limit our access to the markets and begin looking for alternative markets." In Wiesbaden, too, Putin will likely talk about Europe's protectionist measures against Russia, especially since the occasion is fitting. In September, the European Commission drafted a plan, which could affect Gazprom in addition to other overseas companies. Essentially, the plan will raise a barrier for investments into the European energy infrastructure from non-European Union members. Two alternatives are given: either overseas companies are forced to give up their distribution networks, or these networks will be passed on to independent companies for administration.
In such a situation Russia is looking to Germany for protection.
Representatives of the German Ministry of Economics have hinted that such measures to hedge networks against "possible takeovers by foreign companies can be used only in individual cases." Former German chancellor Gerhard Schroeder actually described the EU policy as "shortsighted" saying that "Europe will create new obstacles to energy suppliers instead of making deliveries safer." Putin will have exactly two days to try to persuade the German chancellor to lobby the European Union to give Russian firms unrestricted access to Europe's energy market. It is unknown if Angela Merkel will even agree with Putin's ideas. Quite recently she came forward with an initiative to adopt a law on restricting investment from Russia and China in Germany - under the pretext that "an inflow of capital from Asia is threatening national security." In addition, a number of analysts claim it was she who suggested the idea of limiting energy investments from Russia to the EU. However, Moscow has planned to reciprocate protectionist EU steps. Putin has warned: if Europe passes laws imposing limits on Russian investments, Russia will respond in kind. The summit in Wiesbaden will be covered by more than a thousand accredited journalists - not only Russian or German. The interest is understandable. Aside from the economic issues, Putin and Merkel are almost certain to discuss politics - Iran, the status of Kosovo, the situation around the Conventional Armed Forces in Europe Treaty (Merkel has already articulated the German position by urging Russia to rejoin the treaty) and U.S. plans to deploy elements of a missile defense system in the Czech Republic and Poland (although Merkel calls the Russian proposals addressed to the White House "interesting", she still says she is not against the deployment of anti-missiles and a radar in Eastern Europe). In addition to Merkel, Putin is also expected to make a favorable impression on Germans - according to the latest polls, Russia's image in that country has declined in the past three years. A study by Die Welt shows that 73% of Germans "see the Kremlin in the role of an energy supplier as a threat", and 76% "are concerned by the weakening of democracy in Russia."

October 16, 2007 - The Associated Press - BRUSSELS, Belgium: Russia will wait for expert advice on how new EU energy rules would work before deciding whether or not the draft law targets Russia's state-owned natural gas monopoly OAO Gazprom, the European Union's energy chief said Tuesday. The EU executive raised hackles in Moscow by threatening to ban foreigners from its gas and electricity markets unless they follow free market principles and join European businesses in separating their supply operations from infrastructure such as pipelines and power grids. This takes aim at cash-rich Gazprom, which some Europeans fear would be well-placed to buy up energy units that companies such as E.On AG or EdF may have to offload as regulators try to break their grip over the supply chain. The European Commission says things must change because large companies are keeping prices too high, shutting off competition and preventing investment in new infrastructure. But it insists that rules preventing energy companies dabbling in both supply and network operations must also apply to non-EU firms. Gazprom would be the main target of this because it has already acquired a large number of stakes in EU energy businesses. But EU Energy Commissioner Andris Piebalgs said Russian Energy Minister Viktor Khristenko had agreed not to take a firm position on Europe's draft "unbundling" rules until experts had looked at the details. As "all the difficulties come into detail ... the minister said that he would very much welcome this consultation at expert level that will clearly identify 'are there issues, what type of issues' and only then will the minister take his political position," Piebalgs said. Khristenko told reporters that Russia wanted to actively consult with Europe on new energy initiatives, calming the waters by saying they share common goals. "We all agree on one objective and that is we want to ensure security of energy supply. We want to ensure predictability which will allow for sustainable development," he said. Russia's reliability as a gas supplier came into question nearly two years ago when it shut off European deliveries in a dispute with neighbor Ukraine. Europeans want Russia to sign up to international energy rules and open up to foreign investment but Moscow has refused, claiming it can be trusted. The European Commission said last month that non-EU companies must "comply with the same unbundling requirements as EU companies." It proposed that non-EU companies can buy all or part of an electricity or gas transmission network only if its home country signs a treaty with the EU in which it commits to return the favor of free market access. The plan to allow splitting up energy businesses needs the backing of the European Parliament and EU's 27 governments — which can make changes before it comes into force.

October 17, 2007 - International Herald Tribune by Judy Dempsey
BERLIN: Is the Caspian a sea or a lake?
The answer has immense repercussions for the energy industry. If it is a lake, there are no obligations by countries that flank it to grant permits to foreign vessels or drilling companies. But if it is sea, there are international treaties obliging those countries to an array of permits. The Caspian, one of the world's largest enclosed bodies of water, has become the center of a new power game involving the United States and Russia as well as its bordering countries, including Iran, over who should control the vast energy reserves under its depths. The Caspian's status has been in dispute since the collapse of the Soviet Union in 1991. Over the past few years, the United States has been trying to establish alternative energy routes that would weaken the regional dominance of Russia and Iran, while Russia has sought to control the transportation routes across these waters. When Vice President Dick Cheney visited Kazakhstan last year, he used the occasion to launch a fierce attack against President Vladimir Putin of Russia, accusing him of rolling back democracy and suppressing human rights. By delivering the speech in Kazakhstan, the Bush administration was staking out U.S. influence in the region, where it has stepped up plans to build a pipeline that would bypass Iran and Russia. On Tuesday, it was Putin's turn to put down his marker. On the first visit in 64 years by a Kremlin leader to Tehran, he met his Iranian counterpart, Mahmoud Ahmadinejad, whose country faces a fresh round of sanctions by the United Nations if it does not comply with Security Council demands for reining in its nuclear program. But while the standoff between Iran and the United Nations stole the limelight, the reason for Putin's visit was a summit meeting with Ahmadinejad and three Central Asian leaders who are now being wooed in the Caspian power game. In addition to Iran and Russia, Azerbaijan, Kazakhstan and Turkmenistan also have Caspian coastlines. And while all of them want a large stake in the oil reserves, and to use of the sea for transportation, none of them have been able to agree on the status of the coveted waters. Russia and Iran, historically, have agreed that the sea was a lake and that it should be shared equally between the two of them. That all changed after the collapse of the Soviet Union in 1991. Iran and Russia wanted earlier agreements, signed in 1921 and in 1940, to continue. Moscow had obtained consent from the newly independent republics of Azerbaijan, Kazakhstan and Turkmenistan that they would be bound by any agreements signed by the Soviet Union, of which they had been a part. But in 1998, Azerbaijan declared that since the Caspian was an international lake, it should be recognized as such. In practice, this would mean that the surface and seabed would be divided into five sectors determined by the length of each country's shoreline. Under such a scenario, Russia would lose out, and Iran even more so. Iran opposed this plan, since its share of the waters would be reduced to under 14 percent from about 20 percent, according to experts. As soon as Putin was elected president in 1998, he tried to break the deadlock to speed up energy links between Russia and the Central Asian countries and to pre-empt U.S. advances into the region. Energy analysts said that Putin, seeing that the United States and other Western energy companies were eager to forge energy exploration contracts with Kazakhstan and Azerbaijan and to influence the Caspian negotiations, tried to find compromises among all the coastal states. But attempts to determine the status of the Caspian have often proved hazardous. In 2001, Iran deployed a warship and fighter jets as a warning to Azerbaijan, which had sent vessels to explore for oil for British Petroleum along the southern Caspian oilfields. Azerbaijan, which depends on Russia for energy transit routes, had agreed to forge a separate deal with Putin in which those two nations divided a part of the seabed. A similar deal was struck with Kazakhstan. In both cases, Iran was excluded from the negotiations. "The summit in Tehran was about the future status of the Caspian Sea," said Johannes Reissner, Middle East expert at the German Institute for International and Security Affairs in Berlin. "Iran and Russia have enormous interests in resolving this status. But there are major disagreements between them." But while the standoff between Iran and the United Nations stole the limelight, the reason for Putin's visit was a summit meeting with Ahmadinejad and three Central Asian leaders who are now being wooed in the Caspian power game. "The summit in Tehran was about the future status of the Caspian Sea," said Johannes Reissner, Middle East expert at the German Institute for International and Security Affairs in Berlin. "Iran and Russia have enormous interests in resolving this status. But there are major disagreements "Over the past few years, Iran has felt increasingly isolated," said a European diplomat who requested anonymity because he was involved in the region. "It sees what Russia is doing. It is being excluded from the big decisions being made in the region." Russia has not managed to keep the United States out of its traditional sphere of influence. In 2005, the United States supported the Baku-Tbilisi-Ceyhan pipeline, which allows oil to be transported across Georgia and Turkey, bypassing Iran and Russia. The United States, too, is actively supporting the trans-Caspian pipeline, through which Turkmenistan would send natural gas under the Caspian to Azerbaijan and then on to Europe. According to EU diplomats, the U.S. would like to weaken Europe's dependence on Russia, and at the same time isolate Iran. Vladimir Milov, director of the Institute of Energy Policy in Moscow, said he was skeptical about a pipeline under the Caspian. "The perspectives for a trans-Caspian pipeline, putting aside the U.S. optimism, appear bleak due to unresolved Caspian seabed division disputes," he said last month. As if to confirm this, the Caspian summit produced no breakthrough. IRNA, the official Iranian press agency, said the five leaders agreed to form an economic cooperation organization. They are to meet next year in Azerbaijan, leaving open for the moment the viability of a trans-Caspian pipeline and the Nabucco project but confirming Russia's influence in the region.

BRUSSELS, October 12 (RIA Novosti) - The EU Gas Coordination Group will consider gas disputes between Russian energy giant Gazprom and Ukraine at a session in Brussels on October 25, a European Commission spokesman said on Friday. Deputy energy ministers from Russia and Ukraine, as well as Gazprom and Ukrainian gas officials have been invited to discuss the potential consequences of Gazprom's recent gas dispute with Ukraine for consumers in Europe. On October 2, Gazprom threatened to cut gas supplies to Ukraine if the country failed to pay off its $1.3 billion debt in October. The company and Kiev have since moved to allay Europe's concerns over Russian gas supplies via Ukraine, which were affected in early 2006 during a bitter price dispute between the former Soviet allies. Gazprom CEO Alexei Miller and Ukrainian Fuel and Energy Minister Yuriy Boiko signed a debt settlement agreement earlier this week. Ukraine currently pays $130 per 1,000 cubic meters for gas pumped from and via Russia. In 2008, the price is expected to appreciate further to $143-$180. The European Commission called the dispute a bilateral commercial conflict and convened an emergency session of the Gas Coordination Group to clarify it. The Group was established to facilitate coordination of security of natural gas supplies in the event of a major supply disruption.

10.04.2007 - IntelliNews Today - During 2008-2010, Tatneft plans to stabilize its annual output of crude oil at the level of 2006, which means at 25.4mn tons. The company will not be able to raise output. There are several problems, which constrain the production growth. The depletion rates of its fields are already substantial, so in order to lift production the company need to enter new regions which does not seem possible as of now. Currently, Tatneft puts a lot of effort in development of its petrochemical segment. To remind you, by 2008 the company plans to build a new petrochemical processing plant in Tatarstan. The refinery’s capacity is projected at 7mn tons of oil per year.

09 October 2007 - Upstream OnLine - The European Union has started talks with Turkmenistan about the country supplying gas to the proposed Nabucco pipeline, which is designed to ease the bloc's dependence on Russian supplies, EU foreign policy chief Javier Solana said today. Solana, who is in the Turkmen capital Ashgabat, said after meeting with Turkmen President Kurbanguly Berdymukhamedov that the talks were "constructive". "We discussed the possibility of creating a trans-Caspian route to link (Caspian) gas to the West. That is part of Nabucco," Reuters quoted him as saying. "Talks have started in a constructive way. Today both sides see that as a positive step." The EU and the US have been wooing Turkmenistan in hopes of easing its reliance on Russia, which buys most of Turkmen gas at below market prices, and opening new export routes giving Western markets direct access to the country's energy resources. Other countries mentioned in the past as possible suppliers to the 3300 kilometre Nabucco pipeline - which will run through Turkey and the Balkans to Austria - are Azerbaijan, Kazakhstan, Iran, Egypt and even Iraq. So far the five signatory countries to the €4.6 billion ($6.46 billion) pipeline - Turkey, Bulgaria, Romania, Hungary and Austria - have not secured any gas and without supplies it would be difficult to raise funding, analysts claimed. Berdymukhamedov has vowed to open up his Caspian nation to foreign investment and liberalise the economy, so far run like a Soviet-style command system. He is due to visit Brussels from 5 November until 7 November and travelled to the US last month where he said that talks with Russia on energy were tense, and hinting he was ready to discuss new export routes. "We hope that the president's visit to Brussels will be well prepared and yield constructive results," said Solana, adding that a team of EU energy officials will visit Ashgabat later this year.

01 October 2007 - Upstream OnLine - Kazakhstan’s oilfield developer Kor-Tazh, a unit of Houston-based Caspian Internation Oil Corporation (CIOC), has handed a contract for the design of a new well on its North-West Zhetybai oilfield to US services giant Halliburton. CIOC said Kor-Tazh was busy interpreting data from a 3D survey recently shot on the 5500-acre field, which lies about 40 miles (64 kilometres) east of the Caspian Sea. The company also said Kor-Tazh planned to re-enter three existing wells on the field, with work set to start by the end of the year.

01 October 2007 - Upstream staff - Russia will auction off oil and gas blocks of the Sakhalin 3 project as strategic deposits, Resources Minister Yuri Trutnev said today, signalling that foreign access to the project will be limited. "Sakhalin 3 should be part of strategic (fields)," Reuters quoted him as telling a news conference. US supermajor ExxonMobil had long hoped to revive its involvement in Sakhalin 3 after Moscow cancelled the deal a few years ago, saying the company's agreement to develop the large block had been never finalised. The move came along with other steps by the government to increase Russian control in the strategic energy sector. Last year Russia's gas export monopoly Gazprom took over control in the neighbouring Sakhalin 2 project from Shell following months of pressure from the state ecological agency. Russia has yet to approve a law on strategic deposits, which has been delayed due to disagreements between key ministries. Trutnev has said that, despite disagreements, Russia is still planning to cap foreign involvement in fields with more than 70 million tonnes of oil and 50 billion cubic metres of gas reserves. Trutnev has also suggested that companies developing large fields should be required to build large refining complexes in a bid to spur economic development in regions where these fields are located. Today, Trutnev said the state might identify six deposits, for which special investment will be needed, but did not name them. He also said oil and gas firms were under-investing in exploration in East Siberia and the Far East and added he would present the government with a new programme this year, which would guarantee bigger reserves replacement.

01 October 2007 - Upstream OnLine - Imperial Energy said today it had received positive results from the 3D seismic shoot at its Kiev-Eganskoye field at Block 80 in Western Siberia, indicating a potential increase in the quantity of recoverable reserves. The 380 square kilometres of 3D seismic was carried out at by the independent seismic company, Bashneftgeophysica Data obtained showed significant differences from the older 2D seismic data shot prior to Imperial obtaining the licence for Block 80. In particular, it showed that the 11 wells drilled during Soviet times did not even penetrate the main part of the Kiev-Eganskoye structure. Furthermore, reinterpretation of the data from those eleven wells, combined with the new 3D seismic results, indicated the presence of three new reservoirs of Jurassic and Cretaceous age not previously identified in Imperial’s reserve estimations. Imperial said it will be sharing the results with the Ministry of Natural Resources and the new data will be taken into account in Imperial’s updated reserves assessment to be published in Spring 2008.

YUZHNO-SAKHALINSK, October 4 (RIA Novosti) - Two tankers built by Japan to transport liquefied natural gas to the Asia Pacific as part of Russia's Far East Sakhalin II project have been named, a Sakhalin Energy spokeswoman said Thursday. The Grand Elena and Grand Aniva were named in a ceremony at the Mitsubishi Heavy Industries Ltd in Nagasaki in southern Japan, and are being chartered on a long-term basis by Sakhalin Energy Investment Company Ltd. for delivering gas from Russia's first ever LNG plant, currently under construction at Prigorodnoye, in the south of Sakhalin Island. The two 147,000 cubic meter LNG carriers were built for a Japanese-Russian joint venture between Nippon Yusen Kabushiki Kaisha (NYK Line) and Sovcomflot, a Russian state-owned shipping company. Chris Finlayson, Chairman of Board of Directors of Sakhalin Energy, has been quoted as saying: "This is another tremendous milestone for the Sakhalin II project, bringing us closer to the first shipments of Russian LNG to customers in the Asia Pacific. It is also another great example of the involvement of Russian companies in the Sakhalin II project." Ian Craig, Chief Executive Officer of Sakhalin Energy said: "With this achievement, Russia is now well and truly involved in LNG shipping. It takes the marketing and export of Sakhalin II LNG to new heights of achievement - not only have we achieved some major milestones with the construction of the project this year, but we also now have new shipping capacity to transport Russian LNG to customers." The Grand Elena and Grand Aniva are ice strengthened tankers designed for low-temperature operation ensuring all-season shipments. The LNG plant with a capacity of 9.6 million metric tons a year, due to be launched in 2008, has already sold the bulk of its gas 25 years in advance to Japan, the U.S., and South Korea. Sakhalin II has estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas. The Sakhalin Energy controlling stake of 50% belongs to Russian natural gas monopoly Gazprom [RTS: GAZP], with the minority partners in the project, Royal Dutch Shell, Mitsui and Mitsubishi, currently holding 27.5%, 12.5% and 10% stakes in the company respectively.

October 3, 2007 - Reuters by Maria Golovnina and Raushan Nurshayeva - ALMATY, Kazakhstan: Kazakhstan slapped a fine of $609 million on an oil venture run by Chevron on Wednesday but softened its rhetoric in a parallel battle with another group of major Western oil companies. Ecology Minister Nurlan Iskakov said the government imposed the fine on the Chevron-led oil venture developing the Tengiz oilfield for various violations, including what the government saw as Chevron's slow progress in dealing with vast sulfur stocks. Iskakov said that the matter was being handled by a Kazakh court. "Any company that does not fulfill ecological requirements will be dealt with in the harshest way," Iskakov said. Foreign investors in the Central Asian state are already increasingly wary in the wake of Kazakhstan's dispute with a consortium led by Eni over cost overruns and production delays at the huge Kashagan oil field. As in Tengiz, the Kashagan operators have been accused of violating ecological rules, also over sulfur stocks. Kazakhstan has threatened to strip Eni, an Italian energy company, of its leading role at Kashagan, the biggest oil find in three decades. But in a separate speech to oil investors in Almaty, Energy Minister Sauat Mynbayev struck a less aggressive tone over Kashagan, saying both sides should work out a compromise. "Let's accept a compromise decision: after the date of commercial production is set, we will demand a plan on sulfur stocks by that date," he said, adding that he would sign a special memorandum with the consortium on that. "If we sign this memorandum, nothing should prevent work at the project from continuing in its present form," he said. But the government also seeks financial compensation of more than $10 billion for the delays in production at Kashagan - a topic Mynbayev did not touch on. Chevron could not be reached for comment, but the U.S. energy giant had previously rejected criticism of its environmental record in the former Soviet state and said that it operated its sulfur stocks in a safe manner consistent with Kazakhstan's laws.

//Kovykta gas could go to China
10-03-2007 RBC News - Natural Resources Minister Yuri Trutnev is urging voters to accelerate development of the Kovykta gas field. He said Gazprom had submitted its Kovykta development plan, which consists of two projects, one for regional supplies and the other for exports. The possibility of gas exports to China could breathe new life into plans to build a gas pipeline along the East Siberia-Pacific Ocean pipeline, to connect Russia’s major gas fields in East Siberia, including Kovykta and Chayandinskoye. The plan had been supported by Yakutia’s authorities . In September, the Industry and Energy Ministry approved the Eastern Gas Program, under which the largest east Siberian gas fields, Kovykta and Chayandinskoye, would come online in 2017 and 2016, respectively. Under the approved Vostok-50 program Kovykta gas would be used for domestic needs only. Kovykta’s gas reserves are estimated at 1.9 trillion cubic meters. Gazprom plans to complete the acquisition of a 62.9 percent stake in RUSIA Petroleum, the project operator, from the Russian-British TNK-BP before December 1. The Natural Resources Ministry is campaigning for an earlier start on the Kovykta project. “The sooner we begin to develop this large gas field, the more cash we will get for the region’s social development and infrastructure construction,” he stressed. Trutnev said his ministry was in talks with various concerned organizations and departments, but that they “continue to resist.” A source at Gazprom told RBC Daily that an earlier start for Kovykta would only make sense if an agreement could be reached to sell gas to China. But first, it would be necessary to close the acquisition of the stake in the project. If an agreement is reached with China, Kovykta could produce between 35 and 37 billion cubic meters of gas a year, he estimated. TNK-BP, too, had lobbied to sell Kovykta gas to China. The possibility of gas exports to China could breathe new life into the idea of building a gas pipeline along the East Siberia-Pacific Ocean pipeline, to connect Russia’s major gas fields in East Siberia, including Kovykta and Chayandinskoye. The plan had been supported by Yakutia’s authorities. A working group has been set up to estimate the expediency of the project, including experts from Gazprom, Transneft and the Industry and Energy Ministry. A representative of the Industry and Energy Ministry told RBC Daily that the construction of the pipeline was still on agenda after the adoption of the Eastern Gas Program. The timeframe of the construction will be determined once there is more certainty with the project. “It is necessary to issue licenses for the largest gas fields, agree with China on gas exports, and implement a number of other measures,” the source said.

01 October 2007 - Upstream OnLine - Russia will auction off oil and gas blocks of the Sakhalin 3 project as strategic deposits, Resources Minister Yuri Trutnev said today, signalling that foreign access to the project will be limited. "Sakhalin 3 should be part of strategic (fields)," Reuters quoted him as telling a news conference. US supermajor ExxonMobil had long hoped to revive its involvement in Sakhalin 3 after Moscow cancelled the deal a few years ago, saying the company's agreement to develop the large block had been never finalised. The move came along with other steps by the government to increase Russian control in the strategic energy sector. Last year Russia's gas export monopoly Gazprom took over control in the neighbouring Sakhalin 2 project from Shell following months of pressure from the state ecological agency. Russia has yet to approve a law on strategic deposits, which has been delayed due to disagreements between key ministries. Trutnev has said that, despite disagreements, Russia is still planning to cap foreign involvement in fields with more than 70 million tonnes of oil and 50 billion cubic metres of gas reserves. Trutnev has also suggested that companies developing large fields should be required to build large refining complexes in a bid to spur economic development in regions where these fields are located. Today, Trutnev said the state might identify six deposits, for which special investment will be needed, but did not name them. He also said oil and gas firms were under-investing in exploration in East Siberia and the Far East and added he would present the government with a new programme this year, which would guarantee bigger reserves replacement.

28 September 2007 - Upstream OnLine - Russia's resources ministry asked the new prime minister on Friday to approve its plan to make oil companies spend billions of dollars on cutting the amount of gas wastefully flared off during oil production. "It will be possible only through the joint efforts of a number of ministries," a Natural Resources Ministry statement quoted its minister, Yuri Trutnev, as telling Prime Minister Viktor Zubkov in a letter. The ministry said oil companies should be allowed to develop oilfields only if they had a clear plan on how to use the associated gas. "Some 95% of associated gas should be used and not flared by 2011," it said. Only 26% of Russia's annual associated gas production of 55 billion cubic metres is processed, while some 27% is flared off and 47% is used at fields or wasted.

01 October 2007 - Upstream OnLine - Dragon Oil hit a production high of 39,637 barrels of oil per day last week, just short of its annual target of 40,000 bpd. The Turkmenistan-focused operator said it has brought development well A/122 on stream at an initial combined flow rate of 3563 bpd. The company added the CIS-1 platform-based drilling rig has spudded the Dzheitune (Lam) 22/124, while the Iran Khazar jack-up drilling rig has moved to spud a further development well, Dzheitune (Lam) A/123.

26 September 2007 - Upstream OnLine - Australia-listed Caspian Oil & Gas said today it had the started drilling at the first of 11 planned wells at its northern Fergana basin licences in Kyrgyzstan. The first well site is on the Ashvaz Block near the town of Mailisu, and is planned to test the northern limits of the producing Mailisu III field, Caspian said. The well will be drilled to a depth of about 800 metres and is expected to be completed within two weeks. The Mailisu III field has produced over 700,000 barrels of oil to date, the company said. Caspian has a joint venture in Kyrgyzstan with Santos. According to the farm-in agreement between the two companies, Santos is focused on the deeper potential, with Caspian retaining the rights to the shallow potential of some of the northern Fergana licences. The Ashvaz Block is one of those northern licence areas where Caspian retains 100% rights to any oil down to 1000 metres.

RBC, 01.10.2007, Moscow 13:10:05.Investment in hydrocarbon exploration in Eastern Siberia is currently 4 to 5 times below the required level, Natural Resources Minister Yury Trutnev told a press conference held by RBC today. He noted that resource development in Eastern Siberia was inadequate, which was linked to the absence of basic infrastructure. In particular, the construction of the Eastern Siberia - Pacific Ocean oil pipeline is expected to attract investment in the exploration of the region. According to Trutnev, the Ministry has approved plans of exploration and production companies as to the scope and rate of exploration of Eastern Siberia's reserves.