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Tuesday, September 30, 2008

$90Bln Gas Deal Between Russia and South Korea

russiasouth korea30.09.2008 - [Neftegaz.RU] - President Dmitry Medvedev and South Korean President Lee Myung-bak oversaw the signing of a preliminary agreement between gas export monopoly Gazprom and South Korea's state-run Kogas to send 10 billion cubic meters of natural gas to South Korea over a 30-year period starting in 2015, a Gazprom spokeswoman said. Both companies have yet to determine the route for gas deliveries, but Gazprom spokesman Sergei Kupriyanov said Monday that Russia had offered to lay the pipeline via North Korea, a relatively cheap but risky option considering Pyongyang's unpredictable policies, analysts say. If talks with North Korea fail, Russia will sell the fuel to South Korea in the form of liquefied natural gas, or LNG, the Moscow Times reports. A final agreement between Moscow and Seoul is expected in 2010, when a study on the route is completed. The gas contracts are estimated at $90 billion, given the current prices, but Kupriyanov declined to put an exact price tag on the agreement, saying the talks would continue.

Monday, September 29, 2008

TNK-BP Board Appoints David Peattie

September 29, 2008 - Oil Voice - TNK-BP has announced the appointment of David Peattie to its Board of Directors. The appointment is made with immediate effect. Mr. Peattie, a BP Group Vice President, has recently been appointed as Head of BP’s businesses in Russia and Kazakhstan. He is responsible for BP’s interests in TNK-BP as well as its businesses in the Russian Arctic, Sakhalin and Kazakhstan. Mr. Peattie was nominated by BP and replaces James Dupree who has recently moved from his responsibilities for BP’s Russian business to another role in the company. Mr. Peattie joined BP in 1979 as a petroleum engineer and has since moved through a series of commercial and leadership roles in Exploration and Production, Chemicals and Investor Relations. In 2007 he became a member of BP’s E and P Operating Committee and is operational deputy to the E and P Chief Executive, Andy Inglis.

Rosneft cuts flare deal with World Bank

29 September, 2008 - Upstream OnLine - The World Bank has signed a deal with Russian oil producer Rosneft to cut flaring by making use of gas from the Komsomolskoye oilfield rather than flaring it off, Rosneft said. Rosneft will cut the equivalent of 5.3 million tonnes of carbon dioxide emissions in 2008-2012, which can then be sold as carbon offsets, under the Kyoto Protocol, to European countries trying to meet climate targets. Kyoto's joint implementation mechanism allows investors to fund the reduction of greenhouse gases in former communist countries, then make a profit on these investments by selling the emissions cuts in the developed world. Developed economies and companies in the West buy these cuts to meet their commitments under the Kyoto Protocol, an international treaty to stave off global warming by reducing the world's emission of harmful gases such as carbon dioxide, a Reuters report said. State-controlled Rosneft will achieve the emissions cuts by harnessing associated gas at Komsomolskoye in Yamal-Nenets, the company said in a statement. Associated gas in Russia is most often flared. Trapping the gas for use can result in vast emissions cuts. Under the deal, the World Bank will act on behalf of the European, Danish, Italian and Spanish Carbon Funds, which will buy these cuts in the form of emissions reduction units (ERUs), which are traded on the global carbon market. "The World Bank...will formalise transactions with ERUs, as well as monitor and control compliance with procedures governing project implementation," the Rosneft statement said. Rosneft is ready to invest 4 billion roubles ($159 million) in the associated gas project and hopes to sell the ERUs, it said.

Seoul signs up for Russia gas

south korea29 September, 2008 - Upstream OnLine - South Korea has signed a $90 billion deal with Russia to receive 10 billion cubic metres of natural gas per year for 30 years via a pipeline that runs across North Korea, Seoul's Energy Ministry said. The deal, signed between state-run players Korea Gas Corporation (Kogas) and Russia's Gazprom will give South Korea the access to Russian gas from 2015, the ministry said in a statement. Earlier in the day, a Kremlin official said that the two countries were to sign the deal to supply Siberian gas to Seoul. The deal was announced to coincide with South Korean President Lee Myung-bak's state visit to Russia. Russia first pledged to supply gas to South Korea at the start of this decade but the project to build a pipeline to China and subsequently to South Korea has been repeatedly delayed. The delays came as Gazprom struggled to gain control over some of the biggest Siberian deposits to ensure it has enough resources to fill the link. The project is also complicated by the fact that the gas would have to be supplied either via the territory of North Korea or by a more expensive subsea route. The Asian pipeline project is gaining momentum as Russia seeks to expand into Asian energy markets and warns the European Union, which has difficult political relations with Moscow, that it should be prepared to face tougher competition for energy resources. Gazprom has managed to gain control over vast resources in East Siberia over the past year without paying a single rouble. The state has transferred deposits to the world's largest gas producer without holding auctions. The company, which already supplies a quarter of Europe's gas needs, said it hopes to reach a gas pricing deal with China next year to start gas deliveries in 2013-2014.

Petrovietnam eyes Nenets riches

Petroneft29 September, 2008 - Upstream OnLine - State oil monopoly Petrovietnam is seeking government approval to invest $614 milllion in an oil joint venture with Russian oil company Zarubezhneft to tap crude oil in Russia's Nenets region, a state-run newspaper reported. The Ministry of Planning and Investment-run Vietnam Investment Review weekly quoted the ministry as saying Petrovietnam would have a 49% stake in the $1.25 billion joint venture which would explore four oil blocks in Nenets, reported Reuters. The project, which would have a life span of 25 years, is expected to start producing oil in 2011 and peak at 6.4 million tonnes of crude oil per year by 2020, the report said. The four fields are estimated to hold up to 80 million tonnes of crude oil. Petrovietnam and Zarubezhneft already operate a joint venture in Vietnam called Vietsovpetro which produces oil from Bach Ho, the country's biggest field, with production averaging more than 150,000 barrels per day. Petrovietnam has been stepping up efforts to acquire oil and gas assets overseas including projects in Laos, Iran, Iraq, Mongolia, Tunisia and Algeria as it moves to raise oil production.

Friday, September 26, 2008

Russian Oil Reserve Could Affect Prices

26 September 2008 - The Moscow Times by A. Medetsky - Russia will work to influence global oil prices, Energy Minister Sergei Shmatko said Thursday. Oil prices now depend on such conditions as production levels in the members of the Organization of Petroleum Exporting Countries, financial speculation and U.S. oil reserves, he said. "We hold such a significant position in the high society of world oil that a Russian factor should appear and maybe not a single one," Shmatko told reporters in Petropavlovsk-Kamchatsky, where he was accompanying President Dmitry Medvedev on a tour of the Far East. "We didn't work on this before. We want to formulate these approaches." Russia currently accounts for 12.3 percent of the world's oil output, making it the biggest producer after Saudi Arabia. The decision to seek leverage over prices, Shmatko said, was prompted by oil prices' "rollercoaster ride" in the past few months, when they reached an all-time record in July, lost one-third of their value in the following weeks and began climbing again recently. As one tool, Russia could create a reserve of oil fields that can swiftly begin producing if necessary, Shmatko said. It could also change forecasts of its oil production as a way of affecting the price, he said. The government will finalize its proposals before sending a delegation to an OPEC summit in Algeria in December, Shmatko said. But he stressed that Russia would not act in concert with OPEC. Russia stepped up its contacts with OPEC earlier this month, when Deputy Prime Minister Igor Sechin led a delegation of government ministers and oil company CEOs to the OPEC meeting in Vienna. Sechin, who is also chairman of state-controlled Rosneft, the country's biggest oil producer, and the executives called for measures to support prices at a level that would allow companies to invest in new and more expensive fields. OPEC secretary-general Abdalla Salem El-Badri promised to travel to Moscow next month to foster cooperation. Russia's oil production is poised to decline this year for the first time after years of sustained growth, a result of heavy taxes, depleting fields and the rising costs required to bring new fields online. Rosneft spokesman Nikolai Manvelov said the company has fields in various degrees of readiness for operation, and some of them could fall under the category of "reserve" fields. He declined further comment on any possible proposals to influence world oil prices. A LUKoil spokesman sounded upbeat about Shmatko's plan, but declined to speak about any steps that the company would want to take. "We support all proposals by the government that seek to establish a fair price," spokesman Dmitry Dolgov said. Russia has already been affecting the world oil price, said Lev Snykov, an oil analyst at VTB. Its declining output growth in the past two years has been one of the reasons why the price grew, he said. The bank forecasts a third consecutive year of modest growth this year. One of the government's strongest leverages on global prices will be the pipeline that it's building to bring oil from eastern Siberia to the Pacific coast, he said. Other possible measures could be hard to enforce because private companies account for a large portion of output, he said. "It's very difficult to set a formula that everybody will follow," he said. "Reducing output to support prices if they fall — I don't think a policy like this will work in Russia."

Joint Oil Venture between Russia and Venezuela

26.09.2008 - [Neftegaz.RU] - A giant oil consortium to invest in joint oil ventures is planned by Russia and Venezuela. Venezuela’s President Hugo Chavez said, "They've offered us the chance to create an oil consortium...the largest in the world". State oil company Petroleos de Venezuela SA, PdVSA, and Russia's Lukoil Holdings, TNK, OAO Rosneft and OAO Gazprom are all to be included in the consortium. At a time when both countries seek more clout on the world stage, Russian and Venezuelan relations will be brought to a new level by creating this new consortium. Venezuela's communications ministry said in a statement that the ambitious venture would initially develop projects in Venezuela, and later in other Latin American countries. Developing projects would require considerable amounts of capital, Mr Chavez said, and called for the creation of a PdVSA Bank to help finance these projects. A bank controlled by Venezuela's state oil company would add yet another layer of responsibility to PdVSA. Over the last year, the company has created a series of new units that differ from its core business, including a construction company and a food distribution network.

Thursday, September 25, 2008

Dresdner drops Russia coverage

25 September, 2008 - Upstream OnLine - Investment bank Dresdner Kleinwort is cutting its coverage of the Russian oil and gas sector to reprioritise on other areas. The bank declined to comment on reasons for the move, which follows a collapse of Russian equity markets since the invasion of Georgia in August. Dresdner Kleinwort is the investment banking arm of Dresdner Bank, which German insurer Allianz agreed to sell to Commerzbank earlier this month, a Reuters report said. As part of the deal Dresdner Kleinwort is to face big job cuts. The bank declined to say whether other areas within its research department were being cut back.

Russia welcomed by OPEC

25.09.2008 - [Neftegaz.RU] - OPEC has stated that it would like to welcome Russia as its member although Russia has not applied for memebership. Algerian Oil Minister and OPEC President Chakib Khelil stated, "I have received no official request from Russia to become a member of the organization, even though we would like that". The RF Energy Minister Sergei Shmatko hoped September 19 that Russia and OPEC would seal the cooperation agreement in October in Moscow. Russia handed over the proposals during the OPEC summit in Vienna, the minister reminded. “We know that they are being considered positively,” Shmatko said, adding that Russia has been cooperating with OPEC for a decade and potential of the dialogue’s new format is very interesting. Although Russia isn’t currently an OPEC member, it regularly attends sittings of the cartel, which unites Algeria, Angola, Venezuela, Gabon, Iraq, Iran, Qatar, Kuwait, Libya, Nigeria, the United Arab Emirates, Saudi Arabia and Ecuador. Russia intends to attend the next meeting of OPEC that is slated for December 17, 2008 and also agreed earlier this month to sign a cooperation agreement with OPEC. Russia is the second-largest oil and gas producer, just behind Saudi Arabia, making closer ties to OPEC, which dominates world oil production. Russia joining OPEC could be potentially bad news for major fossil fuel consumers including the U.S. and Europe. OPEC decided September 10, 2008 to cut daily oil production to 28.8 million bbl due to excessive market supply of crude oil. This move reduces the production by 520,000 bbl/day, or by 1.8 percent vs. July of 2008.

Wednesday, September 24, 2008

Wintershall Focuses on Russia as Core Region, Restructures Board

September 23, 2008 - Rigzone News - Russia has become an increasingly important region for Wintershall Holding AG, partly due to the successful start of natural gas production by ZAO Achimgaz, a joint venture of OAO Gazprom and Wintershall Holding AG, in the Urengoy reserve in Siberia, and partly due to rising production in the Yuzhno Russkoye gas field. Consequently, the wholly owned BASF company based in Kassel will strengthen its Russian operations in the future and reflect the growing strategic importance of its Russian activities in the structure of its Board of Executive Directors. From October 1, 2008, all Wintershall's Russian activities will be aligned to "E&P Production" under Dr. Ties Tiessen. Moreover, the seat of the expanded Board Department will be moved from Kassel to Moscow. The head of "E&P Exploration and Development" so far, Bernhard Schmidt, is leaving the Company at his own request. The Chairman of the Board of Executive Directors of Wintershall Holding AG, Reinier Zwitserloot, will take on the interim responsibility for "E&P Exploration and Development." Zwitserloot said, "We would like to thank Schmidt for all his work over the years. I am confident that with the new weighting of the focal point we have laid the foundations for the next successful chapter of Wintershall's activities on the Russian market." Zwitserloot also announced that Wintershall was entering the main phase of production at Achimgaz and was also evaluating new E&P business opportunities in Russia, saying, "For this we will continue to focus on our long-standing and reliable partnership with OAO Gazprom."

Tuesday, September 23, 2008

Novatek launches phase 2 of Yurharovskoya

Novatek [RTS ticker: NVTK], Russia's largest private natural gas producerSeptember 23, 2008 - Russia Today - Russia's second biggest gas company, Novatek, has launched phase two of the Yurharovskoya gas field, near the Arctic Circle. This will increase the company’s gas production by 20%. But as Gazprom has a monopoly on export, Novatek will only be able to sell this gas on the domestic market. The second phase of development of Yurharovskoya gas field will give Novatek an additional 7 billion cubic meters of natural gas per year. That's enough to cover the annual growth of domestic gas comsuption according to Mikhail Popov, Deputy Chairman of Novatek. “Total supplies from this field will rise to 16 billion cubic meters. As we continue to develop this gas deposit, in 2 years, it will allow us to pump 34 billion cubic metres of gas from the field to our customers. We've already finished the construction of all the necessary infrastructure there.” Novatek built a pipeline to connect the field with a gas transportation system owned by Gazprom. But independent producers can use the pipeline system only to transport gas for domestic customers and not for export. The European Union is urging Russia to open up export pipelines to independent producers but so far without success. Claude Mandil, Former Executive Director of the IEA says this has implications for Russia’s use of ‘associated’ gas from oil production. “Many of these independent producers are actually oil producers, with associated gas, and if they cannot sell their gas they have just to flare it, which means to burn it, which is really a pity for supply, because it is gas which is lost, and awful for the environment.” The government has promised to make gas export and domestic sales equally profitable for all producers. They plan to increase domestic gas prices to 147 dollars per 1000 cubic meters by 2011. That's under a formula where transport cost is subtracted from export price. But experts say as gas prices for Europe have surged by 50 percent this year alone, such a small increase won’t make the domestic market any more attractive.

Former Yukos shareholder to sue Russia for $33.8 billion

BRUSSELS, September 23 (RIA Novosti) - GML, formerly the majority shareholder of Yukos, intends to sue the Russian government for $33.8 billion over the seizure of assets belonging to the now defunct oil company, an Internet publication said. said that GML, which is registered in Britain, argues that Russia violated a major international energy agreement - the Energy Charter Treaty (ECT) - by seizing the company's assets. The first court hearing on the case will be held at the Permanent Court of Arbitration in The Hague on November 17. Yukos formally ceased to exist in November 2007, after its assets had been sold off through a series of liquidation auctions to meet vast creditor claims. State oil company Rosneft bought up the lion's share of the production assets, becoming Russia's largest oil producer. Yukos founder Mikhail Khodorkovsky was sentenced to eight years in prison for fraud and tax evasion. He has consistently denied all charges against him, saying he was punished for supporting the tiny pro-Western opposition, and that the liquidation of Yukos was engineered by corrupt government officials aiming to seize lucrative oil assets. GML chief Tim Osborne insists that, despite the fact that Moscow signed but did not ratify the energy treaty, it is legally binding for Russia. "Russia is very keen to portray itself as a responsible member of the political family, and if it wants to join the WTO and the OECD and other rules-based organizations, at some stage it's going to have to abide by those rules," he told EUobserver. "The Russians are making every effort to portray the ECT as a lame duck, a still-born instrument," Osborne also said. The EUobserver also said that should GML win the suit, Rosneft could face legal problems.

Monday, September 22, 2008

RWE pullout from TGK-2 deal

RWE22.09.2008 - [Neftegaz.RU] - Germany's second-largest utility, RWE AG, won't buy a stake in Russian power generator OAO TGK-2 because the price is too high and the transaction would suffer from “high uncertainty'' on stock markets. RWE commented that the Russian market still remains “attractive'' and the firm are in talks with other acquisition targets in the country. The TGK-2 deal was part of RWE's expansion plan to develop abroad, particularly in eastern Europe and Russia by investing about $43.2bn over the next five years. The company had been hoping to follow in the footsteps of fellow energy giant Eon, which last year acquired a controlling stake in Russian electricity supplier OGK-4. RWE aims to boost its share of foreign-earned profits to as much as 50 per cent by 2012, from 36 per cent currently. Based in the north- west of Russia, TGK-2 owns 16 combined heat and power plants with an electricity capacity of 2,600MW, and would have given RWE access to 7m new customers. However, the TGK-2 deal, has been hindered by reports of difficulties with RWE's partner, Russian conglomerate Sintez. UES, a former-state holding company, in March said RWE wanted to buy a controlling stake in the power company for about Rbs19bn ($749m) as part of government efforts to liberalize the Russian energy industry. UES eventually sold a majority stake in TGK-2 to Sintez. The two companies planned to pool the shares in joint venture, with RWE taking a 51 cent stake. The structural risks posed by Gazprom's monopoly over supplies, its increasing participation in electricity generation, and possible delays in electricity price liberalization all present major risks for foreign energy conglomerates hoping to enter the market. RWE's decision was also influenced by the collapse of Russian investor confidence in recent months. Nearly $800bn has been wiped off the value of stocks traded on Russian bourses as a combination of the credit squeeze, political interference and the Georgian crisis sent foreign investors packing. Although Russian stock soared nearly 30 per cent yesterday as a government rescue plan to boost liquidity revived investor confidence the market turbulence remains a key source of concern for foreign buyers.

Oleg Deripaska Wants to Enter Oil & Gas Market

Олег Дерипаска22.09.2008 - [Neftegaz.RU] - The owner of BasEl Company has been dreaming for a long time to become one of the players on oil and gas market. His main asset must have been Russneft, but he is still waiting for Anti-Monopoly Regulation permission for this deal. As Russian newspaper Vedomosti reported, now Deripaska's En+ Group scans Alrosa Co.'s daughter enterprises - Geotransgas and Urengoi Gas Company. En+ Downstream Holdings Ltd. has submited an application for these companies buying to Russian Federal Antimonopoly Servise (FAS), announced FAS spokesman. Though En+ representatives do not comment on the news. It is difficult to measure whether the deal's worth a while, but to its expediency is concern of such companies as Eurotech and TNK-BP, which have connected FAS recently, too. However, no one knows whether talks on the deal are still in progress or not.

Russia vying for Oman's stake in CPC

RBC, 22.09.2008, Moscow 16:59:37.– Energy Minister Sergei Shmatko believes that the setbacks in Russia's plans to buy out Oman's 7-percent stake in the Caspian Pipeline Consortium (CPC) will be overcome within a month. Shmatko stressed that a large team of lawyers was now working to this effect. He added that Russia had reacted very promptly and professionally when it accepted Oman's irrevocable offer to acquire the stake. The Minister also pointed out that Russia expected to buy Oman's entire stake in the CPC.

Friday, September 19, 2008

Shell eyes Russian Kalmykia fields

19 September, 2008 - Upstream OnLine - Shell is planning a new exploration project in Russia and is considering three oil fields in Kalmykia in the Urals as possible sites, a source familiar with the plans said today. "The fields require deep drilling, over 6 kilometres," the source said on the sidelines of an investment forum in Russia's southern city of Sochi to Reuters. Shell's representative in Russia declined to comment. The source said Shell has yet to acquire licences for the fields. A number of Russian oil companies have drilled the fields but failed to reach productive layers due to poor technology. Shell and the Kalmykia regional government last month signed a co-operation agreement allowing Shell to explore and develop oil resources. Shell has been trying to improve its position in Russia, after it had to cede control in major offshore project Sakhalin 2 to state-controlled Gazprom last year. Shell now owns 27.5% of Sakhalin 2. Shell also owns half of West Siberia's Salym project and plans to develop heavy oil deposits in the Volga region of Tatarstan jointly with mid-sized oil company Tatneft.

Russia lined up for Opec meeting

19 September, 2008 - Upstream OnLine - Russia will send a high-level delegation to the Opec meeting in Algeria on 17 December, energy minister Sergei Shatko said today. "We are planning again to take part in the meeting by sending a high-level delegation," Reuters quoted Shmatko as telling reporters "The prospects of co-operation in a new format between Opec and the Russian Federation are very interesting." Russia, a major oil producer but not an Opec member, wants to hold a regular dialogue with the group of oil producing countries and has invited Opec representatives to Moscow for a meeting in October. The biggest non-Opec oil exporter, Russia has long attended Opec meetings as an observer, but made the West sit up and take notice by sending its highest level delegation, headed by influential Deputy Prime Minister Igor Sechin, to the September conference. Russia is not expected to join Opec, but has seized an opportunity to pursue its policy of closer ties with fellow producer countries, as well as to irritate the West, analysts told Reuters. Tension has risen between Russia and Western consumer nations, heavily reliant on Russian as well as Opec energy, following Moscow's conflict with Georgia in August. "I don't think they want to be bound by anyone else's rules," said Jonathan Stern of the Oxford Institute for Energy Studies to Reuters. "But...anything that makes the West irritated and nervous is no bad thing (for Russia)." Russia, which in the past has signed up to an agreement to cut its output in line with Opec restrictions, also has a need to keep revenues rising to make up for underinvestment in its oil sector. "Production in Russia is in bad shape," said Antoine Halff of Newedge brokerage to Reuters. "They are in no position to see prices and oil revenue falling further. I see this as a defensive rather than an offensive position."

Lundin Petroleum Spuds Lagansky Exploration Well in the Caspian Sea

September 19, 2008 – Oil Voice – Lundin Petroleum AB has started drilling the Laganskaya-1 exploration well in the Lagansky block, situated in the northern Caspian Sea in Russia. Lundin Petroleum has currently a 70 percent net interest in the Lagansky block. The well, with a planned depth of 2,000 m, is targeting Cretaceous and Jurassic Sandstone Reservoirs. The Laganskaya structure is situated towards the south-west of the recent Morskaya discovery but on a different structural trend associated with existing onshore fields. The Laganskaya-1 well is the second in a four well drilling program planned for 2008 and 2009. The gross unrisked prospective resources for the Laganskaya prospect are estimated at 106 million of barrels of oil equivalents (MMboe). Gazprom has a call option to acquire a 50 percent plus one share in the Lagansky block. Lundin Petroleum has a call option to acquire an additional 30 percent from minority shareholders. If both options are exercised Lundin Petroleum will retain 50 percent minus one share in the Lagansky block and Gazprom will hold a 50 percent plus one share in the Lagansky block. Ashley Heppenstall, President and CEO of Lundin Petroleum comments;" The Laganskaya well will further test the exploration prospectivity of the Nothern Caspian following on from our major discovery on Morskaya. We are positive regarding the resource potential of the area and expect to announce a range of potential resources from the Morskaya discovery during October.

Thursday, September 18, 2008

Russian oil companies want consortium in Latin America

CARACAS, September 17 (RIA Novosti) - Five of the largest Russian oil companies want to set up a consortium to boost operations in Latin American countries, a deputy prime minister said Wednesday. Rosneft, LUKoil, Gazprom Neft, Surgutneftegaz and TNK-BP came up with the proposal. Igor Sechin, who chairs the board of state-controlled Rosneft, Russia's largest oil company, said: "It would be strange for Russia, which shares first place in global oil production with the Saudis, not to interact, say, with Venezuela, which holds fifth or sixth place." "The idea of creating a consortium comprising almost all the large Russian oil companies came from the companies themselves, which would like to work in Venezuela, and not only here," he said at a briefing in Caracas summing up his working trip to Cuba and Venezuela. Sechin said Russia is increasing its cooperation with Latin American countries in several areas. He said a consortium would make it easier to build upgrading facilities to improve heavy Venezuelan oil. The construction of an upgrader would cost $6-6.5 billion, which would be hard for one company to finance, but a consortium could share the expenditure, he said. Venezuela has around 87 billion barrels of proven conventional oil reserves. In addition, it has vast non-conventional oil deposits (heavy oil). Most of these deposits are located in the Orinoco oil belt. Venezuelan oil company PDVSA signed a deal with Russian energy giant Gazprom this year to evaluate and certify the Ayacucho-3 oil fields in the Orinoco belt. LUKoil signed a memorandum of understanding and an agreement with the company on joint exploration in the Junin-3 area, also in the Orinoco belt.

Wednesday, September 17, 2008

EU looks for independence from Russian energy sources

17.09.2008 - [Neftegaz.RU] - Several steps have already been done in this direction. First of all, Greek agreement on direct deliveries of Azerbaijan gas to Europe. Secondly, Baku and Ashgabat supported the gas pipeline Nabucco omitting the Russian Federation. Finally, Hungary announced of forum on final signing of this project. In previous weekend presidents of Poland, Czech republic, Slovakia and Hungary visited a summit Slovakian city Piestany to discuss the main problem of the EU - dependency on Russian energy sources and necessity to diversify sources of deliveries. The major European alternative to pipelines, lying through Russian territory, as well as lobbied by Moscow projects Nord Stream and South Stream, is Nabucco project.

Monday, September 15, 2008

Europe Looks around Russia for Gas

// The war in Georgia hastens construction of Nabucco
Sep. 15, 2008 - Kommersant by Natalia Grib, Alexander Gabuev - Since the war in Georgia, the search has heated up for energy sources and routes to transport them on without passing through Russia. Last weekend, leaders of Eastern European countries called on Europe to end its dependency on Russian energy sources, and the European Union made an important step in that direction when Greece reached an agreement on the direct supply of Azerbaijani natural gas to Europe, Baku and Ashgabat gave their support to the Nabucco pipeline and Hungary announced a forum to finalize that project, which would deliver gas while bypassing Russia. Thus, after the war, even Russia’s South Stream partners, such as Greece and Hungary, are willing to work on competing projects. Greetings from Budapest – The main topic of the summit of presidents of Poland, the Czech Republic, Slovakia and Hungary that took place this weekend in the small town of Piestany, Slovakia, was the EU’s dependency on Russian energy sources and the need to diversify supply sources. “The EU must overcome its dependency on Russian hydrocarbons immediately,” Polish President Lech Kaczynski declared. “However, the situation in Georgia complicates that decision. The goal of Russia’s actions was to complicate it even more.” That is the same conclusion reached by heads of EU member states at an emergency summit on September 1 in Brussels devoted to the war in the Caucasus. In the resolution passed by the summit condemning the Russian military operation against Georgia is a clause about how Europe should about its excessive energy dependence on Russia and searching for a way to end it as soon as possible. Many see Nabucco as the main alternative for Europe to the pipelines that cross Russian territory and the Moscow-backed Nord Stream and South Stream. Nabucco proposes the construction of a natural gas pipeline to connect Transcaucasia, Central Asia and the Middle East by way of Turkey, Bulgaria, Romania and Hungary with the countries of Central and Western Europe. The pipeline would stretch 3300 km. from Turkey to the Austrian city of Baumgarten. It would have a capacity of 31 billion cu. m. and a launch date of 2012, at a cost of about €8 billion. The participants in the Piestany hotly supported Hungary’s initiative to speed up the project’s implementation and hold a conference in Budapest next month of representatives of the companies taking part in Nabucco (Austrian OMV, Hungarian MOL, Romanian Transgaz, Bulgarian Bulgargaz, Turkish Botas and German RWE). Hungarian Deputy Foreign Minister Marta Fekszi Horvath explained that the conference will be preparatory to a larger event. A summit of Nabucco participant states is planned in Budapest in January of next year, to which representatives of the gas supplying states in Transcaucasia and Central Asia, the U.S. administration and European leaders will be invited. “The goal of the summit is not the latest declaration of intentions, but the substantive decision making,” a Hungarian saig. Greetings from Baku - Things started looking up for Nabucco in the region last week. On September 9 and 10, an international business forum took place in Baku called “The Oil and Gas Potential of Turkmenistan and Azerbaijan: Energy, Economy, Ecology. Cooperation Strategy.” The participants did not hide the fact that they were most interested in Nabucco. As Mikhail Korchemkin of East European Gas Analysis told Kommersant, everyone consciously did not mention Russia and the preliminary agreements between Azerbaijan and Russia on the purchase of all free volumes of export gas by Gazprom at European prices. At the forum, First Deputy Prime Minister of Azerbaijan Yagub Eyubov stated that the country will produce 28 billion cu. m. of gas in 2008, will is clearly insufficient to fill Nabucco. He gave assurances, however, that Baku is prepared “to provide the appropriate infrastructure for the transportation of Turkmen energy resources to Europe.” The Transcaspian pipeline was being referred to, which will deliver Turkmen gas to Europe bypassing Russia. In a message to forum participants, Turkmen President Gurbanguly Berdymuhamedov noted that an audit of reserves in the Turkmen sector of the Caspian Sea is now being conducted and that gas can go to the EU. After that, Turkish Energy Minister Hilmi Guler said that Ankara has no doubts about the promise held by Nabucco. It was clearly by the end of the forum that Azerbaijan can begin exporting gas to the EU even before the completion of Nabucco. Greek Minister of Development Christos Folias stated yesterday after a meeting with Azerbaijani Minister of Industry and Energy Natik Aliyev that Athens and Baku have reached an agreement in principle on the annual delivery of 1 billion cu. m. of gas beginning in April of next year. “I want to emphasize that Azerbaijan will be selling gas directly to the EU for the first time,” Folias said. “That decision marks the beginning of closer cooperation between Azerbaijan and Europe.” The gas will be delivered through the Turkish gas transport system and then through a 295-km. pipeline in Greece that has already been built. The further route of that gas to Western Europe was also discussed in Baku. From Turkey, the gas is to travel on an existing line to Nea Mesimvria, Greece, which has a side branch to Athens. From there, a 305-km. pipeline will be built to the port of Stavrolimenas in western Greece, and the final 212-km. link will be built along the bottom of the Adriatic Sea to the port of Otranto in southeastern Italy. The estimated cost of the Greek-Italian section of the pipeline is €300 million. The Turkey-Greece-Italy line is expected to be launched in 2012. Judging from the Baku forum, there should be no problems with the resource base for Nabucco. Moreover, Tehran mentioned its interest in the project again last Friday. Iranian Oil Minister Gholam Hossein Nozari said in an interview with Wiener Zeitung newspaper that OMV should expedite the implementation of the project and sign a contract on gas supplies. “Clearly, Nabucco cannot be implemented without Iran. The country with 16 percent of the world’s gas reserves cannot be ignored,” he said. “But we cannot wait forever, so Austria needs to hurry. The EU needs Iran.” Obviously, none of this makes Russia happy as it strives to control the transport of gas from Central Asia. That is all the more so since Moscow seemed so close to realizing that hope until just recently. In July, Gazprom head Alexey Miller signed an agreement in Ashgabat on the purchase of Turkmen gas for $225-295 per 1000 cu. m. Then a similar agreement was reached with Uzbekistan during the visit there of Russian Prime Minister Vladimir Putin this month. Putin convinced Tashkent to agree to the construction of a new gas trunk line from Uzbekistan to Russia that would increase the capacity of the Central Asia – Center pipeline system from 45 billion to 80-90 billion cu. m. per year. The Baku forum shows that Russia was not able to close down the Nabucco project, however. The participation of Hungary and Greece, key partners with Russia in South Stream, in the competing project has to be an especially bitter surprise. Greetings from Washington - The jump start of Nabucco is far from the only unpleasantness in energy projects awaiting Moscow after the war. Pressure has been turned up on another Gazprom baby as well, the Nord Stream pipeline that leads to Germany across the Baltic Sea floor. Nord Stream AG, the project operating company, needs the permission of the countries the pipeline will pass through. But Sweden, Denmark and Finland have found various ways of slowing the project down by expressing ecological concerns. Since the August war, criticism of Nord Stream has increased. Washington is pushing the Scandinavians to oppose the project. On September 10, U.S. Ambassador to Finland Michael Wood published an article in Svenska Dagbladet newspaper urging the Swedes not to agree to the laying of the pipeline and reminding them that the project “is the result of a special agreement between Russia and Germany.” On Friday, German Foreign Minister Frank-Walter Steinmeier sent an official protest to the U.S. embassy in connection with the article. Nonetheless, Berlin is not able of expediting the project. Washington is stepping up activity in other areas to decrease Western energy dependence on Russia. On September 5, U.S. Secretary of State Condoleezza Rice visited Libya and held negotiations with Muamar Kaddafi. She was the highest-ranked U.S. guest in that country in the last 55 years. After the meeting, she stated that America does not have “eternal enemies” and Washington plans to sign an agreement on trade and invest with Libya in the near future. The United States was especially interested in Tripoli’s joint plans with Gazprom to build a pipeline from Libyan gas fields to Italy, as Putin discussed with the Libyan leader during his April visit. The U.S. State Department reported that Rice and Kaddafi discussed energy partnership. It is possible that Rice praised the Libyan leader’s intention to build a pipeline to Europe, but suggested finding a Western partner to do it with. At the end of last week, The Financial Times reported that British Prime Minister Gordon Brown intends to invite Kaddafi and Venezuelan President Hugo Chavez to an oil summit in London in December. The West, with its disagreement with Russia over Georgia and desire to find alternative sources of energy, seems ready to talk to those leaders. The British organizers have not yet said anything about Russian participants in the summit.

Italy's Enel to invest $3.1 bln in Russian energy by 2012

Italian electricity company EnelROME, September 13 (RIA Novosti) - Italian electricity company Enel is set to invest 2.2 billion euros ($3.1 billion) in various Russian energy projects by 2012, Italy's news agency Apcom reported on Saturday. "I am sure that the central government of Russia as well as local authorities will support us," the agency quoted Enel CEO Fulvio Conti, as saying. Enel, Europe's third largest listed utility by market capitalization has become the first foreign company to acquire generating assets in Russia in the recent process of power sector reform. In April 2007 Enel jointly with Italian oil and gas giant Eni 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.

Russia Boasts Enough Gas for Eastern and Western Consumers

RZD-Partner12.09.2008 - RZD News - Russia, the world's largest gas producer, has enough gas for consumers both from the west and the east, the Mayak radio cited Russia's President Dmitry Medvedev as saying during a session of the Valdai International Discussion Club in Moscow. If Russia sees that there is an increasing market for its gas in the east, it will put new fields in operation, Medvedev explained. The President stressed that Russia did not think the two export destinations, the eastern and the western, were in conflict. Asia is a very promising market for the country, Medvedev observed. Russia will be seeking to develop cooperation with Asian countries further, without any harm to its relations with its European partners. To diversify its energy flows with due regard to Europe's interest is one of the most important tasks facing Russia, the President stated, reports RBC.

Thursday, September 11, 2008

Russia Seeks 'Regular Dialogue' with OPEC

OPEC General Secretary Abdullah BadriSeptember 10, 2008 - AFX News - Russia wants to hold a regular dialogue with OPEC and has invited representatives from the producer group to Moscow for a meeting in October, Russia's energy ministry said on Wednesday. OPEC Secretary-General Abdullah al-Badri said in Vienna on Wednesday that he planned to visit Moscow in October. "Russia is proposing to hold a regular dialogue with OPEC. The Russian delegation has sent a draft memorandum (on cooperation) to OPEC's Secretary General," the energy ministry said in a statement. "Russia is proposing to hold another meeting with OPEC's representatives in October in Moscow." Russia regularly attends OPEC meetings as an observer.

Wednesday, September 10, 2008

Russia seeks closer ties with OPEC

VIENNA, September 10 (RIA Novosti) - Russia wants to work more closely with the Organization of the Petroleum Exporting Countries (OPEC), a deputy prime minister said ahead of an OPEC session on Wednesday. Igor Sechin, who chairs Russia's largest oil company Rosneft, is heading a Russian observer delegation at the 149th Meeting of the OPEC Conference. "OPEC is Russia's key partner on the global oil market," Sechin told reporters in Vienna. Russia has proposed establishing regular energy dialogue to improve global energy security and has drawn up a relevant memorandum, he said. "We are putting forward an initiative to establish regular energy dialogue between Russia and OPEC, the main goal of which will be to contribute to providing sustainable stability on the oil market in the interests of all participants." OPEC's 13 member states are Algeria, Angola, Venezuela, Indonesia, Iran, Iraq, Qatar, Kuwait, Libya, Nigeria, the UAE, Saudi Arabia and Ecuador. The countries account for around 67% of global proven oil reserves and 42% of global oil output. Russia also wants "a mechanism for regular coordination, information exchange, and market analysis and forecasting" with OPEC, Sechin said. Russia's daily oil output stands at around 10 million barrels, close to the level produced by Saudi Arabia. Sechin also said Russia was "interested in integrating deeper into the global market through cross ownership of assets of the world's leading energy companies," which could improve oil and gas transit. Algerian Energy Minister Chakib Khelil, who chairs today's conference, has said OPEC intends to cut real oil output by 520,000 barrels per day to 28.8 million bpd within the next 40 days.

TNK-BP to hold IPO after 2010 - Vekselberg

TNK-BP co-owner Viktor VekselbergMOSCOW, September 9 (RIA Novosti) - The Russian-British joint oil venture TNK-BP will hold an initial public offering after 2010, Viktor Vekselberg, one of the four major Russian shareholders in the company, said Tuesday. The British oil giant and the Alfa Access-Renova consortium of Russian billionaire shareholders signed last week a memorandum of understanding that should put an end to their protracted dispute over the joint oil venture's management. It includes an option to sell up to 20% of a TNK-BP subsidiary through an IPO on international financial markets. The deal is a concession by BP to a number of its Russian partners' demands, including the removal of BP-appointed chief executive Robert Dudley, whom they accused of acting in only BP's interests, and the appointment of three independent executives. The British oil major earlier accused the Russian shareholders of orchestrating a state harassment campaign against TNK-BP, Russia's third largest producer, and seeking to seize control of the venture.

CNPC presses for gas supply talks with Russia

IRKUTSK, September 9 (RIA Novosti) - CNPC has proposed speeding up talks with Russia on natural gas supplies, a senior official at China's national oil and gas company said at an East Siberian economic forum on Tuesday. "We propose speeding up Chinese-Russian commercial talks on natural gas cooperation," CNPC international relations director Zhang Xin told the Baikal forum. Gazprom and CNPC signed a protocol on Russian natural gas supplies to China in 2006. According to the Russian energy giant, feasibility studies for possible supply routes are currently being conducted, and a decision has been made to start discussing investment. Commercial talks have also started. Zhang said CNPC had also proposed signing an intergovernmental agreement to boost the construction of a 67-km (41 miles) leg to China of the East Siberia-Pacific Ocean (ESPO) oil pipeline. Under an agreement signed between CNPC and Russia's Transneft, the oil pipeline operator, the construction of the branch will be funded by China. The Chinese official said China had taken an active part in the construction of the first leg of the ESPO pipeline in Russia, and carried out engineering operations along a 150-km (93 miles) stretch of it. The ESPO pipeline is slated to pump up to 1.6 million barrels of crude per day from Siberia to Russia's Far East and then onto China and the Asia-Pacific region. The pipeline's first leg, estimated at $11 billion, was expected to be commissioned in December 2008. However, Transneft said in February that the commissioning of the project would be delayed from late 2008 to late 2009.

Tuesday, 09 September, 2008

Trutnev may step in over Kovykta row

09 September, 2008 - Upstream OnLine - Russia's Natural Resources Ministry will intervene if BP's venture TNK-BP fails to close a deal to hand control of the Kovykta gas field, in Siberia, to Russia's Gazprom by the end of the year, Natural Resources Minister Yuri Trutnev said. TNK-BP agreed to sell control in the giant deposit to gas export monopoly Gazprom last year but completion of the deal was delayed by the protracted conflict between the UK supermajor and its Russia-connected partners in TNK-BP. "If the situation is not solved in the near future, we will have to interfere in this story again," Trutnev told Reuters on the sidelines of the Baikal Economic Forum in Siberian town of Irkutsk. "Before the end of the year either the licence holder or we have to make a decision," he added. TNK-BP, Gazprom and BP are involved in talks over the creation of a joint venture on the basis of Kovykta. Gazprom agreed to buy control last summer after the Natural Resources Ministry accused TNK-BP of breaching licence agreements and threatened to withdraw the licence. TNK-BP has said it could not produce the 9 billion cubic metres of gas per year from the field as required by the licence. Gazprom's deputy chief executive Alexander Medvedev said in an interview at the Reuters Russia Investment Summit on Monday that his company hoped to complete the talks over Kovykta by the end of the year.

Serbia's parliament ratifies energy deal with Russia

BELGRADE, September 9, 2008 (RIA Novosti) - Serbia's parliament ratified on Tuesday an agreement on oil and gas cooperation with Russia, including in the South Stream gas pipeline project, signed in Moscow on January 25. The agreement was backed by 214 out of 250 lawmakers. The Serbian energy minister said on Friday that the agreement would make Belgrade both a strategic partner of Russia and the EU. The deal would see Serbia become a gas transit country, pumping gas from Russia onto the Balkans as part of South Stream, a joint project to build a 400-km section of a gas pipeline through the country. On January 25, Russia and Serbia signed a deal on South Stream and a protocol on the purchase of a 51% stake in Serbia's national oil company by Gazprom Neft, the oil arm of Russian energy giant Gazprom, and the construction of an underground storage facility. The South Stream project is expected to transport 10 billion cu m of Russian gas annually across the Black Sea to the Balkans and onto other European countries, with the first deliveries scheduled to start in 2013.

Sakhalin II marks 10 offshore years, 100MM bbls

Moliqpaq Sakhalin II Piltun-AstokhksoyeSept 5, 2008 - Scan Oil&Gas - Russia’s first offshore ice-class oil platform off Sakhalin Island has now logged 100 million barrels of seasonal oil production, Sakhalin Energy reported Friday. By year-end 2008, the seasonally producing oil platform Molikpaq — once a Beaufort Sea drill rig — becomes a year-round producer for Gazprom and Shell’s Sakhalin II Project. First light, sweet oil came in July 1999 from the Vityaz platform and shipments to Japan, Korea and the U.S. West Coast have continued since. This year marks 10 years since the rig was upgraded with skirts to become a production platform also known as Piltun-Astokhskoye A. Piltun-Astokhskoye B is a purpose-built gravity base platform in the same area of Sakhalin Island’s Piltun Bay.

Shares jump on TNK-BP agreement

Shares jump on TNK-BP agreement.4 Septermber 2008 - Russia Today - Shares of TNK-BP, a Russian joint venture of British Petroleum, jumped 13 percent on Thursday on the news that the company reached a deal, ending an ongoing dispute. The agreement between shareholders will see CEO Robert Dudley leave TNK-BP as 3 independent directors join the board. In the longer term an IPO of up to 20% of the company will follow. A long-awaited compromise. Russian and British shareholders of TNK-BP signed a memorandum of understanding, setting aside their differences. In a statement, TNK-BP's Chief Executive Robert Dudley said “Resolving the conflict will allow the company to reach a new level of independence and, eventually, open the way for the company to offer its shares to the public.” Under the agreement, Dudley will step down by the year's end. As for the IPO, experts say it will take place no sooner than late next year, if market conditions allow. Denis Borisov of Solid Investment says the settlement couldn't come at a better time as it could reassure foreign investors. “It clearly shows that shareholder conflicts in Russia, including those that involve foreign owners, can be resolved to mutual satisfaction. It's am important signal to the Western investment community.” Announcing the deal, BP chairman Peter Sutherland said it would also benefit the Russian state - through investment and technology. Analysts say it's not yet clear how TNK-BP will align its interests with the state - but its development strategy is likely to change according to Vitaly Ermakov, Director of Research at Cambridge Energy Research. “The Russian state, prefers to stay above the fray by and large, and the same thing happened to Gazprom. Gazprom basically decided to wait and see what is going to happen, and having said that, its quite clear that TNK-BP which faces the problem of mature assets and needs, desperately needs to move on to new acreage will try to find some ways of partnering with either Rosneft or Gazprom, basically to have access to new licences in Russia.” A Russian joint venture of British Petroleum, TNK-BP accounts for almost a quarter of BP's global output and reserves.

LUKoil, Gaz de France sign deal on 15% stake in Caspian project

MOSCOW, September 3 (RIA Novosti) - LUKoil and Gaz de France have signed a deal on the transfer of a 15% stake in an offshore prospecting project in Azerbaijan's Caspian Sea, the Russian oil company said on Wednesday. The deal, which is still to be approved by the State Oil Company of Azerbaijan (SOCAR), will see LUKoil hold 65%, SOCAR 20% and Gaz de France 15%. The exploration project on the D-222 block, part of a production sharing agreement, was signed in Moscow, July 1997, when Geidar Aliev, then Azeri President, was on an official visit to Russia. The Milli Majlis, Azerbaijan's parliament, ratified the contract in December the same year. The D-222 is part of the Yalama, the northeast Caspian's largest potential oil and gas field, 30 kilometers offshore. Its Azeri and Russian sectors are approximately the same size. Its petroleum reserves are estimated at 800 million barrels with gas reserves at 50 billion cubic meters.

'Politics will not derail Shtokman'

28 August, 2008 - Upstream OnLine - Strained politicial and military relations between Moscow and the West will not derail Russian gas giant Gazprom's Shtokman project in the Arctic, Yuri Komarov, the head of Shtokman Development said. Ties between Moscow and Nato members, including Norway and France whose StatoilHydro and Total are minority partners in Shtokman, have hit post-Cold War lows after Russia's military foray into Georgia this month. "Of course we would like to have quiet politics... (but) politics will not stop this project," Komarov told Reuters. "It's more a question whether we can do this complex project -- and I am certain we can," he said on the sidelines of the ONS conference. Komarov earlier told the conference that Shtokman would balance the interests of Kremlin-controlled Gazprom and its foreign partners, which are expected to provide much of the technology for the complex Barents Sea field development. Gazprom has a 51% stake in Shtokman development, with Total and StatoilHydro holding the remainder. Gazprom, StatoilHydro and Total are due to make a final investment decision on Shtokman in the second half of next year. Komarov said the main deals with Shtokman contractors should be signed in late 2009 or early 2010. The Shtokman field holds an estimated 3.8 trillion cubic metres of gas, enough to meet global demand for a year. The first phase of the project is seen costing at least $15 billion. To provide extra electricity for the onshore part of the project near Murmansk in northwest Russia, a gas-fired power plant will be built, Komarov told Reuters.

Russia will still deliver oil says Germany

29 August, 2008 - Upstream - Germany believes that Russia will stick to its contracts to deliver oil to Europe despite a threat of sanctions from EU nations, a government spokesman said today. "We firmly believe that the contracts will be fulfilled," Chancellor Angela Merkel's spokesman Ulrich Wilhelm told reporters at a regular government news conference wrote Reuters. Britain's Daily Telegraph newspaper had reported today that the Russian government had told at least one of its oil companies to prepare for a possible cut in shipments to Europe in response to threatened sanctions. French Foreign Minister Bernard Kouchner said yesterday that EU leaders were considering imposing sanctions on Russia, but a senior French diplomat said todday that in fact no sanctions were being planned. Wilhelm declined to comment on whether Germany would support sanctions against Russia, a subject European Union leaders had been expected to discuss at a summit on Monday in Brussels. "For the Chancellor, it is important that there is a clear signal of political unity from the EU meeting," said Wilhelm. He added that EU leaders agreed that Georgia's territorial integrity must be guaranteed and that Russia's recognition of South Ossetia and Abkhazia was unacceptable. Wilhelm also said the EU meeting would address the implementation so far of the 6-point peace plan. "Other than that, I do not want to anticipate Monday's meeting," he said.

GdF Suez eyes Shtokman gravy train

27 August, 2008 - Upstream OnLine - France's GdF Suez is interested in marketing gas from the Shtokman project in the remote Barents Sea when it comes onstream, a senior executive said today. "Shtokman is really important for EU, Europe and we are very interested in marketing of gas from Shtokman," Jean-Francios Cirelli, the vice chairman and president of GDF Suez told the ONS conference in Stavanger. He also said political support would be essential for new projects to come on stream. "We know all projects will not succeed without strong political support from our government and the EU," he said. Relations between the West and Russia have hit new lows after Moscow's military foray into Georgia, following a gradual cooling over years due in part to friction with foreign investors, seen by analysts as aimed at installing Russian control over energy projects, wrote Reuters. Gazprom has a 51% stake in Shtokman while Norway's StatoilHydro has 24% and France's Total 25%. The shareholders are drafting the field's development plan and are due to make a final investment decision in the second half of 2009. In the first phase due on stream in 2013, Shtokman is expected to produce 11 billion cubic metres of gas per year.

Slavneft's US GAAP net profit down 24.4% in 2007

MOSCOW, August 27 (RIA Novosti) - Oil company Slavneft said on Wednesday that its net profit calculated to US GAAP declined 24.4% year-on-year to $532.7 million in 2007. The crude producer said earlier its net profit calculated to Russian Accounting Standards (RAS) declined 94% in 2007 to 1.17 billion rubles ($47.6 million). Slavneft, ranked among Russia's top 10 crude producers, posted a net profit of 6.2 billion rubles ($264 million) in the second quarter of this year, up 19 times against the first quarter of 2008. The company did not give an explanation for the increase. The oil company is co-owned by Gazprom Neft, the oil arm of Russian energy giant Gazprom, and Russian-British joint oil venture TNK-BP.

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