RusEnergy

March 25, 2008 - Oilvoice.com - Schlumberger officially inaugurated the Schlumberger Siberian Training Center, in Tyumen, West Siberia, in the Russian Federation on March 21. Vladimir Yakushev, governor of the Tyumen Region, and Andrew Gould, chairman and chief executive officer of Schlumberger, officiated at the opening ceremony in front of more than 170 guests drawn from regional government, oil company and Schlumberger representatives. The new state-of-the-art center has been designed to provide basic and advanced training in the Russian language for Schlumberger field engineers and specialists as well as to offer specialized courses for the Russian oil and gas community. The site covers 150 hectares and is entirely self-sufficient with accommodation for 160 students in custom-designed study-bedroom cottages. Total investment will exceed $100 million. The center is the latest and largest of such centers that Schlumberger is opening around the world. Opening the facility, Governor Yakushev remarked, "On behalf of the government of the Tyumen Region, I would like to thank Schlumberger for selecting the Region for making the investment and building this Training Center. I am sure that the Center will contribute considerably to the training of oilfield service workers not only in the Tyumen Region but also in Russia as a whole." The center includes classrooms, workshops, fully equipped laboratories and field technical equipment to provide Schlumberger geoscientists, field engineers, field technicians and maintenance engineers from the Russian Federation and Russian-language countries with new technology skills. Training courses will be held in artificial lift, directional drilling, well cementing and stimulation, data services and information solutions as well as in integrated project management. A strong focus will be placed on technologies applicable worldwide, as well as on fit-for-purpose applications for the Russian market. "The Siberian Training Center is the very latest of only three new-generation training centers that we are opening around the world. These new centers are designed to respond to the challenge of training the future generations of engineers and technicians that the industry will need. They are remarkable not only by their size, but also by the training opportunities that they provide," commented Gould, Schlumberger chairman and CEO. Construction of the center started in February 2006. The first phase, which included completion of the specialist driver-training facility, opened in January 2007 and the main facility and accommodation blocks opened in February 2008. The training capacity is expected to double over the next year to reach 350 students.

March 25, 2008 - Russia Today - Russia’s oil sector may get a $US 4 billion tax cut after the issue was discussed at the annual board meeting of the Economic Development Ministry. The tax cut proposal will be put to the government by the end of the week. Tax administration has often been cited as one of the most serious issues facing the Russian economy. The country’s Finance Minister, Aleksey Kudrin says the economy is not yet ready for VAT reform, which could cause a budget deficit and will take several more years. But he says oil tax cuts may be the way forward. “Thanks to the mineral production tax we have managed to strengthen our tax system. Now, due to the strengthening rouble and growing development costs for the industry, we are going to propose a $US 4 billion dollar tax break package for oil companies,” Kudrin said. The inflow of cash from oil receipts into the Russian economy has caused higher inflation and rouble appreciation, according to Kudrin. Nevertheless, business representatives say that the hand-out for oil means other sectors won't get tax breaks. “The Ministry of Finance is focusing on the big productive profit-making sectors, stimulating their growth, but practically loosing the diversification of the economy,” said Boris Titov, the Chairman of Business Russia organisation. Currently, oil provides up to 40% of federal budget revenues. Russia has been increasingly dependent on oil earnings, as the price of crude has shot up fivefold in the last six years.

YUZHNO-SAKHALINSK, March 21 (RIA Novosti) - Russia's Rosneft has decided to construct an oil refinery near the Far Eastern port of Nakhodka, the state-run oil company's head said on Friday. A declaration of intent on the project, which is predicted to have an annual capacity of up to 20 million metric tons, has been signed following ministerial approval. "A contractor - company Akseks - was picked in a tender, that drew up a project feasibility study and determined a construction site," Sergei Bogdanchikov told a news conference. He said that out of seven sites under consideration, one located on the coast of the Sea of Japan 15 kilometers from Nakhodka, met all the criteria. "According to the draft feasibility study, the venture will produce petrochemicals [not gasoline or diesel], given that there are sufficient gasoline and diesel production enterprises in the regions as well as potential consumers," Bogdanchikov said. He referred to a plant in Japan, with a capacity of 200 million tons, a 100-million-ton facility in South Korea and China's development in the sector. "Therefore, the outlook for petrochemical products is that demand will rise." Rosneft's policy is to reduce the volume of crude exports and to increase the volume of oil products with high added value. Bogdanchikov said that the feasibility study will be finalized and an investment decision made, once governmental ministries and departments have considered the project. Nakhodka is the terminus of the East Siberia-Pacific Ocean pipeline project, designed to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and then on to energy-hungry China and Asia-Pacific markets. The company intends to invest $1 billion in the reconstruction of an oil refinery in Komsomolsk-on-Amur, also in Russia's Far East, between 2008 and 2012. The company's head said that under new regulations in Russia, diesel fuel and gasoline must meet Euro 3 emission standards from 2009, Euro 4 from 2010 and Euro 5 from 2012. "I can assure you that diesel fuel produced by the Komsomolsk plant already meets Euro 5 standards and is sufficient to meet Far Eastern demand," Bogdanchikov said. He said Rosneft is planning to set up sales departments in a number of regions in Siberia, which he said was a natural outcome of rising production. "We produced some 101 million tons last year and we expect around 112 million tons this year," he said. The company's development strategy envisions output of 130 million tons of oil in 2010, as much as 160 million tons in 2015 and 170 million tons in 2020. Siberia and the Far East will account for 70% of production growth.

March 20, 2008 - Russia Today - Russia has finally decided how it will let foreign firms invest in its economy. The new law has been a long time coming. The Russian government is to set out the rules under which foreign investors will be able to work in strategic sectors of the economy. On Friday the State Duma will adopt a bill regulating foreign investors’ access to strategic sectors of the Russian economy. The sectors defined as strategic range from energy and the natural monopolies to aerospace and the mass media. “The same laws exist in all developed and democratic countries, for example, in the US and in many European countries. We just have to protect our own market,” explained Martin Shakkum from the Russian State Duma Constuction Committee. The draft law bans firms controlled by foreign governments from controlling Russian companies in strategic industries, and it requires investors to get permission from the Russian authorities if they wish to take a stake in a Russian firm in strategic sectors. Some say the law looks protectionist, but analysts believe it’s a temporary measure. “For the present it’s pretty natural, although it’s probably not completely beneficial, and I suppose that sooner or later many limits to those sectors which are now called strategic will be relaxed,” said Evgeny Nadorshin, Chief Economist of Trust Bank Russian lawmakers stress the law will not block investors from strategic industries. “It is not a prohibitive law. It has restrictions only on the exploration of mineral deposits of federal importance such as oil and gas and a number of rare metals,” added Martin Shakkum. Some changes were made to the final draft of the law. Power grids, telecom companies and Internet providers are no longer classed as strategic. Investors are now waiting to see how the law will work in practice, to see what they can and cannot buy in Russia.

March 20, 2008 - International Herald Tribune by Andrew E. Kramer - MOSCOW: Russian security services detained an employee of BP's Russian joint venture and are accusing that man and his brother of industrial espionage, according to a statement released Thursday by the FSB, the main successor agency to the KGB. The arrest of the brothers bodes ill for BP's work here and is quite likely also to send a chill through the community of Russian employees at Western companies, particularly those out of favor, as BP has been. Ilya and Aleksandr Saslavsky, well-known in the foreign business community, were Russians who both held U.S. citizenship. Both were graduates of Oxford University and active in alumni organizations. The brothers detention came a day after raids on the offices of BP and the joint venture company, TNK-BP, which BP owns together with three Russian oligarchs. It is the only major Russian oil company with partial foreign control, other than a production sharing agreement including Exxon Mobil on Sakhalin Island. TNK-BP was formed in 2003 with the blessings of President Vladimir Putin and Tony Blair, then the British prime minister, who attended the signing ceremony. Since then, as oil prices have risen far beyond expectations, Putin's government has attempted to unwind such deals as unfavorable to Russia. The venture, though, has been a great success for the British oil major and accounts for about a quarter of the company's total worldwide production. It is a focus of attention by Tony Hayward, BP's chief executive; any unwinding of TNK-BP could be devastating to BP. The joint venture, though, was under pressure to sell a large Siberian gas field to Gazprom. It had agreed to a deal but never closed on it. Also, the Kremlin may be maneuvering to buy out BP's partners from the company that is Russia's third-largest, analysts have suggested, though the partners say they are not selling. A TNK-BP spokeswoman declined to comment Thursday on the arrests. Ilya Saslavsky worked at TNK-BP. The other brother, Aleksandr, had worked "as an energy consultant in New York and Moscow," according to a biography he sent by e-mail to alumni of British universities while running for president of the British Alumni Association last year. It did not specify his employer. From 2000 until 2003, a man by that name worked at Eurasia Group, a global risk assessment company, according to Alexsandra Lloyd, a spokeswoman. Russian security services laid out their case in a statement. "The brothers were illegally collecting classified commercial information for a number of foreign hydrocarbon companies that wished to have advantages over their Russian rivals," the FSB said in the statement carried by Russian news agencies. It said the brothers were detained on March 12 while seeking classified information from a Russian source. Russian media reported it was a secret addendum to a published government report on Russia's energy strategy through 2020. On Wednesday, the FSB had searched the headquarters of TNK-BP and the representative BP office itself in Moscow, and seized documents. The FSB statement Thursday said the seized items included, "material evidence of industrial espionage." The service said it found "copies of documents issued by Russian state and executive agencies, reports, analytical materials." The service said it had found: "business cards of representatives of foreign defense departments and the Central Intelligence Agency." Alex Turkeltaub, a managing director at Frontier Strategy Group, an American risk consultancy company, said groups within the Russian government may be seeking to acquire valuable oil assets from foreign investors as part of a power struggle as Putin steps down as president this spring. Putin has said he will remain as prime minister to Dmitry Medvedev, now a first deputy prime minister, who was elected president on March 2. "The worst interpretation is that the scramble for power and influence in the new cabinet is shaping up already," Turkeltaub said. Alternatively, he said, the dispute is more narrowly focused on the brothers' activities in the industry or with the alumni groups. "The least likely version is that they were actually engaged in economic espionage," Turkeltaub said. A year ago, Royal Dutch Shell was accused of environmental shortcomings that some observers said were partially trumped up and forced to sell half its oil development on Sakhalin Island to Gazprom as a result.

MOSCOW, March 18 (RIA Novosti) - Stroytransgaz, one of Russia's largest engineering and construction companies, said on Tuesday it plans to build a second gas refinery in north-central Syria by 2010. Stroytransgaz, which is partly owned by Russian energy giant Gazprom and builds oil and gas facilities in 15 countries, launched preparation work for the processing plant with designed annual capacity of 1.3 billion cubic meters last fall. The refinery will be located 75 km (47 miles) south-east of Al-Rakka, and 230 km (143 miles) away from Homs. Stroytransgaz is already building a gas processing plant in Syria with capacity of 2.5 billion cubic meters at an estimated cost of $210 million, expected to come on stream in January 2009.

March 14, 2008 – Reuters – A close ally of President-elect Dmitry Medvedev has been nominated for the board of state oil giant Rosneft, a first signal that Medvedev is seeking to install his people in key posts. The Federal Property Fund has proposed its head, Yury Petrov, Medvedev's former teacher at Leningrad State University, for the Rosneft board, a property fund spokesman and Rosneft said. A Kremlin source said the nomination was intended "to put his name on the map," adding, "So one should not exclude he would go much higher." Rosneft is chaired by a close ally of President Vladimir Putin, Kremlin deputy chief of staff Igor Sechin. Sechin is a highly influential figure and the informal leader of a faction of former KGB officers within the government. This faction has clashed with a more liberal camp within the Kremlin, in which Medvedev has been a leading figure. Sechin is expected to leave the presidential administration when Medvedev takes over but keep his Rosneft role. Vedomosti reported Thursday that Petrov had been nominated specifically as Medvedev's counterweight to Sechin's power within Rosneft. "It is part of the ongoing arrangements," a government source said about Petrov's appointment, referring to a widely expected government and presidential administration reshuffle following Medvedev's election victory this month. Putin has said he is willing to serve as Medvedev's prime minister after May 7, when Medvedev is sworn in as president. Political analysts and government sources say the two men are already working on how to split their responsibilities, with Medvedev being eager to bring in some of his allies. Putin and Medvedev say they will work harmoniously and respect the constitutional division of powers between president and prime minister. Political analysts and Kremlin watchers are eager for any news about Sechin's role after May, as they say it would provide guidance on whether Putin is in fact ceding power or whether Medvedev will stay in his shadow. Rosneft will hold a shareholders' meeting in June to elect a new board.

March 13, 2008 - Russia Today - Bio Fuel Development in Russia has been in the headlines this week, with both President Putin and Prime Minister Viktor Zubkov calling for more capacity. One Russian gas company, Itera, is expanding its bio fuel operations and is currently constructing two bio ethanol plants in the United States. Itera’s chairman Igor Makarov explained that a downturn in relations with Gazprom served as an impetus for looking for other types of fuel. Itera created a joint company Bio Energy International LLS with its American and European partners. At the moment they are building two plants in the United States, both with a capacity of 400 tonnes of ethanol a day. They should be completed by the end of 2009 and similar projects in Ukraine, Lithuania and Belarus are being discussed as well. Itera’s top official is sure that at the moment Russia has enough energy resources but in the long-term it is necessary to build the same bio fuel production base in Russia. Itera has started to examine the markets of Russia but admits that setting up production of bio fuel is only possible with the assistance of the State. Entrepreneurs are waiting for a legal base for development of bio fuel production in the country while Europe and the US have already quite a developed legal base for this and even have special tax benefits.

MOSCOW, March 7 (RIA Novosti) - Russia's major private crude producer LUKoil has closed a deal to buy $580 million worth of oil and gas assets in Uzbekistan, the company said on Friday. "LUKoil Overseas [LUKoil's overseas oil and gas production arm] has closed a deal with the oil company SoyuzNefteGaz to acquire a 100% stake in SNG Holdings Ltd., including SoyuzNefteGaz Vostok Ltd., which is a party to a production sharing agreement for the fields in Southwest Gissar and Ustyurt Region in the Republic of Uzbekistan," the company said in a press release. The deal gives LUKoil access to seven fields in Uzbekistan, with estimated reserves of 100 billion cubic meters. The production sharing agreement was signed on January 23, 2007 for 36 years and came into effect on April 23, 2007. An estimated $700 million will be invested in the project. The company said $70 million has been invested so far. The company said hydrocarbons from Southwest Gissar fields will be processed at the Shurtan Gas and Chemical Unit while the dry gas produced there will be shipped via Gazprom transportation networks: Central Asia-Center and Bukhara-Urals. Crude will be shipped to the Bukhara and Fergana refineries via the Shurtan terminal. Oil and gas derivatives (gasoline, diesel fuel, industrial oils, fuel oil, liquefied natural gas, kerosene, etc.,) will be marketed by the CIS Vostok Marketing Limited.

MOSCOW, March 6 (RIA Novosti) - Italy's oil and gas giant Eni and electricity company Enel plan to launch natural gas production at deposits in northwest Siberia in early 2010, Enel said on Thursday. Eni and Enel acquired the deposits in the Yamalo-Nenets Autonomous Area in 2007 through liquidation auctions of Russia's once most powerful oil firm Yukos. "Gas under this project will start flowing at the beginning of 2010. In two to three years we expect to meet 50% of the requirements for gas fuel for our electric power plants [wholesale power generating company OGK-5], largely in the Urals," Enel CEO Fulvio Conti said. In April 2007 Eni and Enel invested $852 million in setting up a joint venture, SeverEnergia (formerly Enineftegaz), 60% owned by Eni and 40% by Enel, to purchase a group of promising gas fields in northwest Siberia, in particular, Arcticgaz, Urengoil and Neftegaztechnologia.