RusEnergy

30 October 2008 - Upstream OnLine - The Russian government has disbursed around $3 billion to billionaire Mikhail Fridman's Alfa Group and state oil producer Rosneft to help refinance their foreign debts, government and industry sources said. Fridman and Rosneft joined Oleg Deripaska, Russia's richest man, who this week became the first billionaire to get state support in refinancing his massive foreign debts. The source told Reuters the board of state agent, bank VEB, agreed to disburse $2 billion to Alfa to help it pay back a loan to Deutsche Bank. Rosneft, Russia's most indebted oil producer, which owes $22 billion to creditors, will received around $800 million, sources said. Rosneft drastically reduced its debt earlier this year and has a modest portion of short-term debt.

RBC, 23.10.2008, Moscow 14:21:41.– Russia's Energy Ministry expects Rosneft and the China National Petroleum Corporation (CNPC) to sign a long-term contract for oil supplies to China soon, the ministry's head Sergei Shmatko told journalists today. The Russian company will sign preliminary documents with China in the near future, he said, while the final details of the deal may be agreed upon within four to six weeks. While the exact date of contract signing still has yet to be determined, Shmatko noted, the negotiations are drawing to a close. The current oil supply contract between Rosneft and CNPC expires in 2010. Shmatko pointed out that the new contract would also be a long-term agreement, effective for at least 15 years. The document is expected to include a pricing formula as well. The minister added that the Russian authorities would never exert political pressure on businesses. He also stressed that the contract, being only a framework document, would not specify particular supply routes.

RBC, 24.10.2008, Minsk 19:28:37. – Russia's Energy Minister Sergei Shmatko believes it would be expedient to switch to long-term oil delivery contracts to stabilize oil prices, the minister stated in Minsk today. The market reacted to OPEC's decision to cut daily oil output by 1.5m barrels of oil with a 7 percent drop in oil price, which he interpreted as a sign of a systemic crisis. He noted that market behavior was inconsistent, and the uncertainty could lead to a downward revision of investment programs by oil companies. And this, Shmatko noted, has to be dealt with. In the long term, he added, oil importing countries should take part in investment programs in oil exporting countries, while at the moment, oil producers are raising funds on financial markets on their own.

MOSCOW, October 23 (RIA Novosti) - Tatneft, one of Russia's top ten crude producers, said on Thursday its US GAAP net income after adjustments grew 27%, year-on-year, in January-June 2008 to 21.01 billion rubles ($807 million). Sales and other operating revenues climbed 57% in the reporting period to 246.49 billion rubles ($9.5 billion) largely due to the growth in crude oil prices, Tatneft said. Crude output in the reporting period grew 1.2%, year-on-year, in January-June to 13.2 million metric tons or 94.2 million barrels. Gas production declined 0.3% to 408.5 million cubic meters, Tatneft said. Tatneft, which is based in Russia's Volga Republic of Tatarstan, produced 25.9 million metric tons (189 million bbl) of oil in 2007 or around 5% of Russia's total output.

MOSCOW, October 23 (RIA Novosti) - Russia's state-controlled oil producer Rosneft and China National Petroleum Corporation will sign a contract in the next six weeks on crude deliveries to China, the Russian energy minister said on Thursday. Sergei Shmatko said the two companies reached the agreement on Thursday at a meeting of the energy sub-commission of the Russia-China intergovernmental commission. The minister said the contract would be signed for a term of no less than 15 years and the fuel supplies did not concern the construction of a pipeline spur to China as part of the East Siberia - Pacific Ocean (ESPO) oil pipeline. 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 energy-hungry China and the Asia-Pacific region. A 1,100 km leg of the pipeline was opened in early October in Russia's Far Eastern republic of Yakutia. Shmatko said the Chinese side had carried out significant work on the design of the ESPO pipeline spur and has started construction on its territory. At the same time, he said the spur to China would not go into service next year.

22 October 2008 - Upstream OnLine - Russia may create an oil reserve to influence global prices, Deputy Prime Minister Igor Sechin said as Opec secretary-general Abdullah al-Badri was due to hold a first meeting with President Dmitry Medvedev. "The Ministry of Energy is considering creating an oil production reserve, which would allow it to work more efficiently with prices on the market," Sechin told Reuters. When asked how big the reserve should be, he said: "Enough to reach efficient pricing parameters." Al-Badri, who came to Moscow on Tuesday, said he would meet Medvedev to discuss the exchange of market data and will not raise the issue of oil production cuts. "I will meet the president this afternoon. I will not ask Russia for a cut ... But I will ask for data on markets," al-Badri said ahead of the first ever meeting between Opec and the head of the Russian state. Other Opec officials have called on Russia this week to join opec in cutting production. The organisation will hold an extraordinary meeting on Friday and is widely expected to reduce its deliveries to global markets. Moscow agreed to reduce exports several times earlier this decade in tandem with Opec, but market watchers then said the pledge never materialised as private companies raised shipments instead. Russia has long toyed with the idea of an oil reserve, which could allow it to become a swing producer. But the expensive and logistically difficult plan was never implemented as the government and private companies failed to reach a compromise. The current oil production scheme in Russia does not allow the country to change its flows significantly. International Energy Agency (IEA) boss Nobuo Tanaka, attending the same industry conference as Badri, said he was worried by Russia's production outlook as the country heads this year for its first annual output decline in a decade. "We see worrying signs in some producing countries, including Russia, in the ability to invest enough to meet demand," Tanaka said. "We see Russian supply growth slowing, with all projects declining in production over the next decade. Further government incentives would be welcome to increase production," he said. Russian oil producers have called on the government to ease taxes and slash export duties in November, one month earlier than planned, because of a steep price decline this month. Sechin said the idea was being discussed but no decision had yet been taken.

RBC, 20.10.2008, Kazan 13:59:35.Tatneft has signed a memorandum of understanding with the National Iranian Oil Company (NIOC) and the Mostazafan foundation, the Tatarstan government's press office reported, citing a document signed at a meeting between the republic's Prime Minister Rustam Minnikhanov and Iranian Deputy Petroleum Minister and NIOC Managing Director Seifollah Jashnsaz. The memorandum is expected to enable Tatneft to expand its operations to Iran's oil market. As reported earlier, Russia and Iran announced in late 2007 that they were stepping up cooperation in fuel and energy. Following the fourth meeting of the permanent Russian-Iranian trade and economic cooperation commission's working group for energy, the sides welcomed the participation of Russian oil and gas companies Gazprom, Gazprom Neft, LUKoil, and Tatneft, among others, in the exploration, production, and processing of hydrocarbons, as well as the gas- and petrochemicals industry and construction of natural gas storage facilities on Iranian territory.

RBC, 20.10.2008, Moscow 12:12:07 – TNK-BP is ready to sell $1bn-$2bn to obtain the status of operator of Libya's Sarir project, the RBC Daily newspaper reported today. After the conflict between the oil company's Russian and British shareholders was settled, TNK-BP received the right to compete with BP in international projects. The Russian-British oil producer is now in talks with Libya's National Oil Corporation (NOC) regarding the development of the Sarir field, one of the largest oil fields in Libya. In September, a delegation of TNK-BP top executives visited the country to hold cooperation talks. However, investment in the Libyan oil project, which may total between $1bn and $7bn, has yet to be approved by the company's new CEO, as well as its board of directors.

RBC, 17.10.2008, Moscow 09:33:46 – The Federal Anti-Monopoly Service has issued a warning to seven of Russia's largest oil companies - LUKoil, Gazprom Neft, Rosneft, TNK-BP Holding, Surgutneftegas, Tatneft and Alliance Oil Company - demanding that they cut prices for oil products to fit market conditions. According to the open letter the watchdog posted on its official website, there is nothing to prevent vertically integrated oil companies from lowering prices, which would in turn eventually bring down retail prices, under current economic or technological conditions. According to the federal service's data, vertically integrated oil companies are responsible for around 70 percent of total sales of oil products manufactured in Russia.

15.10.2008 - [Neftegaz.RU] - The biggest amount of money will go to state-owned Rosneft. The money will be used to refinance foreign debts. Gazprom was allocated $1 billion, TNK-BP can take $1.8 billion, and LUKOIL $2 billion. LUKOIL has the highest debt of the four companies ($4.2 billion at the end of June). All of those figures are subject to approval by the VEB supervisory board. As Russian business paper Kommersant reports, analysts note that oil companies are not in the worst shape in the Russian economy. In spite of falling profits in the third quarter due to falling oil prices, the first half of the year was quite prosperous for them. In addition, changes in export duties saved them about $5.5 billion.

Oct 13, 2008 - Scan Oil&Gas - West Siberian Resources Ltd says that an exploration well encountered oil at the Kolvinskoye field in the Timano-Pechora region in Russia. The company also provides updated information on upstream and downstream production volumes and prices for the third quarter. At the Kolvinskoye oil field, drilling of exploration well 100 was completed to a depth of 3,780 meters. Oil was discovered in the Devonian formation. Openhole logging confirmed 18 meters of net oil pay with another 15 meters of net pay indications. The initial open flow rate amounted to 245 barrels per day. Currently, acid treatment is being performed on the well. In coming weeks, down-hole samples of reservoir fluids will be analyzed and six production tests on separate intervals will be made. The Kolvinskoye field has 154 million barrels of proved and probable oil reserves. 15 wells are planned to be drilled until production start, scheduled for the third quarter of 2010. "Our Timano-Pechora outlook continues to improve. The Kolvinskoye field is already our largest field and we now expect reserves to be upgraded. The production from the field will start in 2010 and will benefit from the tax holidays that Russian lawmakers recently introduced” Maxim Barski, CEO of West Siberian Resources Ltd said and also commented on the third quarter operating performance: “In the third quarter, the downstream economic environment improved as wholesale product prices increased while crude costs per barrel went down and we continued to increase refining volumes. Downstream performance is the most significant driver of our financial results.” For refined oil products, the average net domestic wholesale prices increased by 4 per cent to USD 112.74 per barrel (USD 107.91 per barrel) and average domestic retail prices decreased by 3% to USD 135.45 per barrel (USD 139.50 per barrel) compared to the second quarter 2008. Net export prices were slightly lower at USD 77.33 per barrel (USD 78.30). Refining volumes at the Khabarovsk refinery amounted to 6,670,000 barrels of oil in the third quarter 2008. This represents a 6 percent increase in volumes compared to 6,293,000 barrels refined in the second quarter 2008. The average gross crude oil prices received in the third quarter 2008 decreased to approximately USD 76 per barrel from USD 83 received in the second quarter 2008. The netbacks decreased to USD 47.25 per barrel from USD 53.50 per barrel in the second quarter 2008. The average daily crude oil production increased by 61% to 49,466 barrels per day from 30,703 barrels per day for the third quarter 2007. Currently, daily production exceeds 51,000 barrels per day.

Oct 13, 2008 - Scan Oil&Gas - West Siberian Resources Ltd says that an exploration well encountered oil at the Kolvinskoye field in the Timano-Pechora region in Russia. The company also provides updated information on upstream and downstream production volumes and prices for the third quarter. At the Kolvinskoye oil field, drilling of exploration well 100 was completed to a depth of 3,780 meters. Oil was discovered in the Devonian formation. Openhole logging confirmed 18 meters of net oil pay with another 15 meters of net pay indications. The initial open flow rate amounted to 245 barrels per day. Currently, acid treatment is being performed on the well. In coming weeks, down-hole samples of reservoir fluids will be analyzed and six production tests on separate intervals will be made. The Kolvinskoye field has 154 million barrels of proved and probable oil reserves. 15 wells are planned to be drilled until production start, scheduled for the third quarter of 2010. "Our Timano-Pechora outlook continues to improve. The Kolvinskoye field is already our largest field and we now expect reserves to be upgraded. The production from the field will start in 2010 and will benefit from the tax holidays that Russian lawmakers recently introduced” Maxim Barski, CEO of West Siberian Resources Ltd said and also commented on the third quarter operating performance: “In the third quarter, the downstream economic environment improved as wholesale product prices increased while crude costs per barrel went down and we continued to increase refining volumes. Downstream performance is the most significant driver of our financial results.” For refined oil products, the average net domestic wholesale prices increased by 4 per cent to USD 112.74 per barrel (USD 107.91 per barrel) and average domestic retail prices decreased by 3% to USD 135.45 per barrel (USD 139.50 per barrel) compared to the second quarter 2008. Net export prices were slightly lower at USD 77.33 per barrel (USD 78.30). Refining volumes at the Khabarovsk refinery amounted to 6,670,000 barrels of oil in the third quarter 2008. This represents a 6 percent increase in volumes compared to 6,293,000 barrels refined in the second quarter 2008. The average gross crude oil prices received in the third quarter 2008 decreased to approximately USD 76 per barrel from USD 83 received in the second quarter 2008. The netbacks decreased to USD 47.25 per barrel from USD 53.50 per barrel in the second quarter 2008. The average daily crude oil production increased by 61% to 49,466 barrels per day from 30,703 barrels per day for the third quarter 2007. Currently, daily production exceeds 51,000 barrels per day.

Oct 8, 2008 - Scan Oil&Gas - Swedish oil company Lundin Petroleum has estimated its oil discovery in its Russian Lagansky block contains up to 450 million barrels of recoverable resources, “a major discovery,” company chief exec Ashley Heppenstall said Wednesday. The Morskaya structure in the Lagansky block north of the Caspian Sea was pierced by the Morskaya-1 exploration well in July 2008. Lundin said its mid-case estimate for the find is 230 MM bbls. “Approximately 50 percent of the Morskaya structure is in the Lagansky block and therefore the mid-case estimate of the size of the discovery is close to half a billion barrels of oil,” a Lundin statement explained. Morskaya is “a large four-way dip closure and the areal extent of the discovery is approximately 130 square kilometres”, the company continued. “Further appraisal drilling will be needed to assess the full extent of the hydrocarbon reservoirs across such a large structure,” and a first appraisal is due in 2009. A 3D survey has already started. The Block contains yet more prospectivity and the Marine Drilling Complex is drilling the Laganskaya-1 well southwest of Morskaya. A Petrovskaya-1 exploration well will be drilled in 2009. Lundin holds 70 percent of Lagansky, although Gazprom has “a call option” to acquire a 50 percent plus one share. Lundin, for its part, can can ask minority shareholders for an extra 30 percent share. The excercising of both options will give Lundin Petroleum 50 percent minus one share Gazprom 50 percent plus one share in the new discoveries. “We are continuing to explore the Lagansky block with two exploration wells in the next 12 months targeting two accumulations containing 400 million barrels of resource potential,” Heppenstall said, adding, “The Russian sector of the Northern Caspian Sea will become a significant hydrocarbon producing region over the next few years and Lundin Petroleum, through its strategic alliance with Gazprom is strongly placed to take full advantage.”

Oct. 06, 2008 - Kommerant - Russian natural gas monopoly Gazprom has been rated Russia’s biggest company in the Expert 400 rating this year. LUKOIL is in second place. The companies occupied the same places in last year’s rating. Gazprom’s volume of sales in 2007 was 2.39 trillion rubles, and LUKOIL’s was 1.71 trillion rubles. Russian Railways (total sales 975.59 billion rubles in 2007) moved up from fourth place last year to third. Rosneft (total sales 903.56 billion rubles) moved up to fourth place from sixth. RAO UES of Russia (total sales 821.69 billion rubles) was in fifth place, down from third place last year after its reorganization on July 1, 2008. TNK-BP, Surgutneftegaz, Sberbank, Norilsk Nickel and Severstal rounded out the Russian top ten. At the other end of the rating were Arkada, Renaissance Insurance Group, Ashinsky Metals Plant and Russian Textiles (total sales 9.44 billion rubles). Gazprom also rated highest in the country for capitalization, with a market value of 5.4 trillion rubles. Rosneft (2.28 trillion rubles) ranks second on this list, with LUKOIL (1.58 trillion) coming in third. In 400th place was Sverdlovenergosbyt with capitalization of 523 billion rubles. Vedomosti newspaper observed that the growth rate of the receipts of the companies on the list were at a five-year low, with an average of 24.4 percent. Between 2003 and 21006, that average was 29 percent per annum. The reduction is due to world financial instability.

RBC, 03.10.2008, Moscow 12:49:10 – The Russian-British oil company TNK-BP shareholders have settled all differences regarding the company's further development and hold the same view on its prospects, the oil producer's press office said in a statement today. It also reported that major TNK-BP shareholders had met with its executives on Tuesday. The shareholders informed these top managers on agreements they had reached regarding TNK-BP's further development and outlined the key strategic goals, particularly increasing the company's business efficiency and market value and developing large projects. The shareholders do not intend to change the share capital structure of TNK-BP or sell their stakes in the company, the statement reads.

ASTRAKHAN, October 3 (RIA Novosti) - Russia backs the idea of establishing a Caspian economic cooperation organization to oversee the littoral states' joint projects in energy, transportation and trade, a Russian first deputy prime minister said on Friday. "Russia supports this initiative," Viktor Zubkov said, speaking at an economic conference of the Caspian states - Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan - in the Russian city of Astrakhan, where the initiative was put forward. "Such an organization would promote unity among the five Caspian states and help reach a new level of economic development on the basis of multilateral projects." Zubkov said the organization, which would also conduct bio research in the landlocked sea, could be similar to the Baltic Sea Forum and the Organization of the Black Sea Economic Cooperation. Earlier reports said the Caspian states would make a final decision on the new organization at a summit in the Azerbaijani capital of Baku in early 2009. The economic conference in Astrakhan is seen as a preparation for the Baku summit. The oil and gas-rich region has been a source of rivalry between Russia and the West, with both pursuing their pipeline projects. Energy-hungry China has also shown interest in Caspian projects. "I believe it is equally important to consider creating an organization or a bank to finance joint projects in the future," Zubkov said.

02.10.2008 - [Neftegaz.RU] - Russian business news agency "Prime Tass" reported today that Mr. Shmatko expressed his hope that the economic forum can transform into an organization "because now (the natural gas) business faces serious challenges", he said. Shmatko said Russia was interested in "profound dialogue" and cooperation with other gas producers. He added that this might include synchronizing investment programs. He said partnership between gas producers would offset cooperation between E.U. gas importers. Shmatko said, however, that Russia did not intend an "energy war." It's necessary to poimt out that Mr. Shmatko doesn't want the new organization to resemble OPEC in any way. At the same time, he didn't clarify what the difference would be.

01 October 2008 - Moscow Times by Anatoly Medetsky - In the fallout from the global financial crisis, rising lending rates and a liquidity crunch are forcing some of the country's energy companies to reduce their projected investment spending. Rates grew for corporate borrowers across the board. For oil and gas companies, the rates reached 11 percent to 13 percent, depending on the company, up from 7 percent to 8 percent. Financing problems could hit even some of the largest companies in the industry. A spokesman for Gazprom Neft, the fifth-largest oil producer, on Tuesday confirmed a statement to Kommersant by the head of the company's investment department, Sergei Papenko, that its investment this year and next might drop by 10 percent to 20 percent. Smaller companies also complained about a lack of funds. A spokesman for Itera confirmed comments by the company's deputy chief, Sergei Vorobyov, to Kommersant, who said the company would have to cut spending and "control investment plans" in 2009 and the first half of 2010 because of the crisis. Sergei Stepanov, acting director of Trans Nafta, said a partner bank refused to loan money to develop two fields, Kommersant said. Chances to sell bonds evaporated as the crisis hit, he said. A secretary at the company said no one could confirm his quotes. The country's biggest energy giants, Rosneft and Gazprom, have insisted that their spending plans would not be affected by the financial crisis. Rosneft spokesman Nikolai Manvelov said Tuesday that the company's plans to increase investment remained unchanged despite a statement by a company source to Kommersant that the country's largest oil producer might put them under review. Gazprom has indicated that it will remain invulnerable, promising more money for its development projects in the coming two years. On Friday, Gazprom announced that its investment spending would reach new records because of the need to build pipelines in Yamal. Gazprom deputy chief executive Alexander Ananenkov said the spending would reach 1 trillion rubles ($39 billion) next year from this year's 850 billion. In 2010, the figure will grow to 1.3 trillion, he said. Investments will decline in 2011 but will still stay above 1 trillion rubles, he said. A $4.2 billion loan that Gazprom has sought in order to buy a 20 percent stake in Gazprom Neft from Eni is on hold because of current market conditions, a banking source familiar with the deal said, Reuters reported Tuesday. Gazprom, which controls 75 percent of Gazprom Neft, wants to wait until conditions improve before raising the money, Reuters cited the source as saying. Gazprom has the option to buy the stake under a deal with Eni struck at the time of a state auction for Yukos assets in April 2007. Vladimir Vedeneyev, an analyst at the Bank of Moscow, said it was mostly smaller companies at risk, especially if they are not transparent or are at an early stage of development, where investment exceeds returns. Prospects for some other industries remained bleak Tuesday, with Fitch Ratings Agency predicting possible failures of midtier property developers if financing conditions continue to worsen. The largest property developers are more likely to survive because they have strong ties with the country's top three banks, Sberbank, VTB and Gazprombank. But refinancing their existing short-term debt would come at a much higher cost, Fitch said. A source in a property developer said rates almost doubled to at least 20 percent per year from 12 percent in August. In another apparent effect of the liquidity crunch, petrochemical company Sibur halted talks to merge its tire assets with Russian-Dutch tire maker Amtel-Vredestein, Reuters reported Tuesday, citing a source close to the talks. A Sibur spokesman declined to comment.