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Thursday, April 30, 2009

Yukos Capital Wins Dutch Court Ruling

30 April 2009 - Bloomberg - Yukos Capital won a ruling in a Dutch court for a Rosneft unit to repay 13 billion rubles ($390 million) of loans that were granted before Russia seized and sold off Yukos Oil. The court ruled on Tuesday that four Russian court decisions in Yukos Capital's favor may be enforced in the Netherlands, the Amsterdam Court of Appeal said in a statement on its web site. Rosneft "disagrees" with the decision and plans to issue a statement Wednesday, said Nikolai Manvelov, a spokesman for the oil producer. Yukos Capital made the loans in 2004 to Yuganskneftegaz, Yukos Oil's largest production unit, the court said. Rosneft bought Yugansk in December of that year after it was auctioned off by the government to recover part of more than $30 billion in tax claims. Yukos Capital in September 2006 won Russian arbitration decisions to recover the debt from Yuganskneftegaz the month before the unit was merged into Rosneft, the court said.

'Russian gas transit still at risk'

04-30-2009 - Upstream OnLine - Russian Deputy Prime Minister Igor Sechin said today that transit risks remain for Russian gas deliveries to Europe, according to reports. "From our point of view, risks remain. We have not yet reached guaranteed stability and we are prepared to clarify our position on this issue," Russian news agency Interfax quoted Sechin, who oversees Russia's energy sector, as saying. The comments were made during a meeting with EU Energy Commissioner Andris Piebalgs, Interfax reported. Meanwhile, Reuters quoted Sechin as saying that Russia is prepared to contibute toward the cost of delivering the required amounts of gas to allow transit to European consumers through Ukraine. "When we say there's a problem, we also propose a solution. We have even agreed to co-financing," Sechin said. Meanwhile, Piebalgs said an EU-backed plan to overhaul Ukraine's gas pipeline network was not an attempt to isolate Russia. "There was no attempt to isolate Russia," Piebalgs told reporters after meeting Russian Energy Minister Sergei Shmatko. The intention was to modernise the Ukrainian gas pipeline system, he said. Piebalgs, in Moscow to discuss energy security, said a new energy pact proposed by Russia this month would not replace the current European Energy Charter, but was a more ambitious overall plan.

Russia’s Surgut almost triples profit

04-30-2009 - Upstream OnLine - Russia's fourth-largest oil company Surgut said its net profit almost tripled in the first quarter from the fourth quarter of 2008. The company said today that its net profit to Russian Accounting Standards stood at 68.79 billion roubles ($2.07 billion), up from 23.79 billion in the previous three months. The company did not give a reason for the profit increase. Many Russian oil companies say their profits have recovered following a loss-making fourth quarter after oil prices stabilised and the Russian government cut oil export duties. Unlike many other Russian oil companies, Surgut does not report to international accounting standards, reported Reuters.

Tuesday, April 28, 2009

Tatneft oil firm posts 21.7% net profit drop in 2008

MOSCOW, April 27 (RIA Novosti) - Tatneft, one of Russia's top ten crude producers, said on Monday its net profit under Russian Accounting Standards declined 21.7%, year-on-year, in 2008 to 34.29 billion rubles ($1.03 billion). Tatneft, which accounts for 80% of oil output in Russia's Volga Republic of Tatarstan, said its losses in the fourth quarter amounted to 4.4 billion rubles ($132 million) while net profit in the first three quarters stood at 38.7 billion rubles ($1.2 billion). Tatneft attributed its net profit decrease in the fourth quarter to a slump in world oil prices. Tatneft earlier announced its crude output in 2009 could shrink by 1.5% to 25.4 million metric tons (186 million barrels). In 2008, the Volga-based company increased oil output 0.1% to 25.77 million metric tons (189 million barrels).

Friday, April 24, 2009

Rosneft triumphs in Russneft battle

04-24-2009 - Upstream OnLine - The Moscow Arbitration court ruled in favour of state-run producer Rosneft in a 5 billion rouble claim (US$148 million) against rival Russneft, over the latter's purchase of a former Yukos unit. "There was a ruling to satisfy the plaintiff's claim of five billion roubles against Russneft," Reuters quoted a court spokesman as saying. A Rosneft spokesman said the company was satisfied with the ruling. Russneft bought the disputed Zapadno-Malobalykskoye (ZMB) production unit from Yukos just before the latter was bankrupted for tax debts and its production units sold off. Another former Yukos unit Samaraneftegaz, now owned by Rosneft, filed a 5 billion rouble claim in court, demanding the court award it a stake in ZMB. Samaraneftegaz said in its claim that Yukos assets were frozen at the time it sold ZMB and the sale was illegal. ZMB produces over a fifth of Russneft's output of 14 million tonnes per annum. The other half of the disputed production unit is owned by Hungarian player MOL, in which Rosneft rival Surgutneftegaz recently bought 21%. MOL is also suing Russneft. A source familiar with MOL's claim told Reuters earlier that MOL is demanding 5 billion roubles' compensation for oil sold by ZMB. Indebted billionaire Oleg Deripaska acquired Russneft from its founder Mikhail Gutseriyev, who was also charged with tax evasion and fled to London after his son died after a car crash. The deal has not closed because Russia's anti-trust agency has not approved it. Gazprom Neft, the oil arm of the gas giant, was in talks to acquire Russneft but the talks were suspended over price, sources familiar with the talks said.

Thursday, April 23, 2009

Court orders Russneft to pay $148 mln to state giant Rosneft

 Court orders Russneft to pay $148 mln to state giant RosneftMOSCOW, April 23, 2009 (RIA Novosti) - The Moscow Arbitration Court upheld on Thursday a claim lodged by a subsidiary of state-owned Rosneft for 5.036 billion rubles ($148 million) against Russneft over the illegal purchase of a Yukos asset. Samaraneftegaz, a Volga-based subsidiary of the state oil giant, told the court it was owed 18 billion rubles ($0.53 bln) by the defunct oil company Yukos, of which it received 12 billion rubles during the company's liquidation. The company accused Russneft of illegally buying a 50% stake in the Zapadno-Malobalykskoye production unit, based in the Khanty-Mansi autonomous district, from Yukos. Samaraneftegaz asked the court to recover from Russneft either the cash sum or the asset. The Moscow Arbitration Court had seized the interest in the production unit last November. Russneft was bought by tycoon Oleg Deripaska in 2007 for around $3 bln from businessman Mikhail Gutseriyev. However, Gutseriyev fled the country amid tax claims, and the purchase has yet to be officially approved by the anti-monopoly authorities. The previous hearing on the Samaraneftegaz case, which took place on March 23, was adjourned at the Zapadno-Malobalykskoye company's request. The Zapadno-Malobalykskoye deposit has an estimated 25 million tons in recoverable oil reserves. Rosneft became the country's largest oil company after buying up most of Yukos's assets during the company's liquidation. The company bought Samaraneftegaz at an auction in May 2007.

Russia, China sign oil deal, start new pipeline branch

BEIJING, April 21 (RIA Novosti) - Russia and China signed an intergovernmental agreement on oil cooperation in Beijing on Tuesday, under which a new branch from the East Siberia-Pacific Ocean (ESPO) pipeline will be built toward China. The agreement sets out terms for oil cooperation between the countries, in particular on the laying of a pipeline from the Skovorodino refinery in Russia's Far East to Mohe County in China's Heilongjiang province. Under the deal, the pipeline must be completed by the end of next year. After signing the deal, Russian Deputy Prime Minister Igor Sechin, who chairs the state oil company Rosneft, said the agreement "creates a new foundation for developing our energy cooperation." "This is a unique agreement of a long-term nature, which is accompanied by financial agreements, and to implement it we have already begun building a branch from the main pipeline toward China," he said. Vice Premier Wang Qishan, who signed the deal on behalf of China, said the deal brings into force "a packet of agreements and contracts on building the pipeline, buying and selling crude, and providing of credit between the companies of our two countries, which represents a significant breakthrough in bilateral energy relations." The Skovorodino-Mohe pipeline will pass under the Amur River, and will have throughput capacity of 15 million metric tons of oil per year. The pipeline is part of Russian efforts to diversify export routes from Western and East Siberia. The deal was signed after the fourth round of Russian Chinese energy dialogue meetings. Under the intergovernmental deal, China agreed to provide $25 billion in loans to Rosneft and pipeline operator Transneft.

Wednesday, April 22, 2009

Khodorkovsky pleads not guilty

04-22-2009 - Moscow Times/AP by Mansur Mirovalev - Imprisoned former Yukos CEO Mikhail Khodorkovsky pleaded not guilty Tuesday to new embezzlement and laundering charges that are widely seen as politically motivated. He and imprisoned business partner Platon Lebedev are accused of embezzling more than $25 billion worth of oil from subsidiaries of his Yukos oil company and laundering most of the proceeds. "No, I do not admit my guilt," Khodorkovsky said calmly, standing in a steel-and-glass cage. "If I stole the oil ... and profits while the state got 40 billion rubles in taxes, what were the taxes paid for?" he added. Lebedev, who also pleaded not guilty, called the charges "schizophrenic" and "blatantly falsified." The defendants, who face up to 22 years in prison if convicted, describe the new charges as nonsense, saying they amount to an accusation that Khodorkovsky stole all the oil produced by Yukos from 1998 through 2003. "The claim that 350,000 tons of liquid [oil] have been stolen or hidden makes no sense," Khodorkovsky said. "It's no bucket of paint stolen from a store." Khodorkovsky, once the country's richest man, has been imprisoned since his arrest in 2003. In 2005, he was sentenced to eight years in prison on fraud and tax evasion charges. The accusations were seen as part of a Kremlin-driven campaign to punish him for challenging then-President Vladimir Putin and to increase state control over oil revenues. The pair's supporters claim that the second trial is just a new phase of a reprisal campaign driven by political calculations, commercial interests and personal motives. "The main problem of state prosecutors and the small-time corrupt vermin who profited on dismantling Yukos and who tried to stage this process is the need to cover their petty, greedy interests with lofty political goals," Khodorkovsky said. The trial is being watched for signs of more judicial independence under Putin's successor, President Dmitry Medvedev, a former lawyer who has stressed the importance of the rule of law. Khodorkovsky, however, remained skeptical about Medvedev's pledges. "As president's words are one thing and [his] practical steps are the other, the new Yukos trial is very significant, almost symbolic," he said while prosecutors tried to shout him down. Defense lawyers argue that Khodorkovsky and Lebedev are being tried a second time for the same actions.

Sechin seals $25bn China loan-for-oil deal

04-21-2009 - Upstream OnLine - Moscow and Beijing today finalised a $25 billion deal under which Russia will supply China with oil for 20 years in exchange for loans to Russian state companies. A Russian Energy Ministry official told Reuters that an intergovernmental deal was signed this morning in Beijing by Russian Deputy Prime Minister Igor Sechin, who oversees the energy sector. China agreed last year to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run producer Rosneft in exchange for supplies of 300 million tonnes (1.1 billion barrels) of Russian oil over 20 years. Beijing has abundant cash that Moscow needs to access as it heads into its first recession in a decade. Some Russian companies are finding it difficult to repay loans and to borrow project finance on commercial markets. China, which has been working hard to win oil supplies from Africa and elsewhere to run its industries, will secure flows from its neighbour. Russia is seeking to diversify its exports away from the West and is targeting China as the main market for oil that will be extracted from a new generation of fields in East Siberia. Transneft and China National Petroleum Corporation agreed in October to build a spur to carry 15 million tonnes a year, or 300,000 barrels per day, between the countries' trunk pipelines. Over 20 years, this adds up to 300 million tonnes - enough to meet around 4% of China's current oil needs. Russian news agencies today quoted Sechin as saying the spur would be built next year. He added Chinese companies could get access to Russian oil fields, while Russian players would increase their presence in Chinese refining. He did not elaborate. "The experience we obtained when preparing this agreement can be used to boost co-operation in other energy spheres," Russian agencies quoted Sechin as saying. "We will boost co-operation in the natural gas, nuclear, power and coal industries," he added.

Monday, April 20, 2009

Rosneft keeps mum over Sibir talk

04-20-2009 - Upstream OnLine - Russian state-run producer Rosneft has refused to comment on reports that it is considering bidding for AIM-listed Sibir Energy. A report in yesterday's Sunday Times said Rosneft was understood to have contacted Sibir regarding a possible bid for the company. The London-based newspaper, which did not cite its sources for the report, also wrote that Merrill Lynch had carried out a valuation of Sibir in anticipation of forthcoming offers. Last week, the Sunday Times reported that German Khan, a large shareholder and key executive at TNK-BP had canvassed Sibir investors to accept a £6 ($8.88) per share bid. Sibir then said it had not received any direct offers from rivals. The company's shares were suspended in February after it was discovered it was owed $325 million by its 23.5% shareholder Shalva Chigirinsky. The Sunday Times also reported Chigirinsky had agreed to sell $350 million worth of his personal assets, including a French villa, in order to repay debt. The newspaper did not say where it obtained this information.

Azerbaijan and Russia edge closer to gas deal

20 April 2009 - EurActiv - Europe's hopes of securing natural gas from Azerbaijan via the Nabucco pipeline were further dampened on Saturday (18 April) when Azerbaijan's President Ilham Aliev said he wanted Russia to serve as a transit route for selling gas to Europe. During a visit to Moscow, the president of Azerbaijan Ilham Aliev also confirmed his country's interest in selling gas directly to Gazprom.
Until 2007, Russian state-owned company Gazprom was virtually the sole supplier of natural gas to Azerbaijan, as Azeri production remained marginal. However, this privileged relationship ended in 2007, when Gazprom signalled its intention to cut supplies to Azerbaijan from 4.5 billion cubic metres to 1.5 billion, and increase gas prices to $235 per 1,000 cubic metres.
Now, Azerbaijan meets its gas needs from its own production, including from the Shah Deniz field. In addition, since 2007 Azerbaijan has been supplying gas to Georgia. Natural gas consumption in Azerbaijan totals 10-11 billion cubic metres a year. The 200km Baku–Novo Filya gas pipeline, via which Azeri gas will be supplied to Russia, requires an upgrade, but specialists say this is not a problem. Nabucco and the Russian 'South Stream' project's capacities are almost the same (30 billion cubic metres a year). Both bypass Ukraine and use approximately the same sources (Central Asian and Caspian gas). 'South Stream' runs directly through the Black Sea from the Northern Caucasus shore, while Nabucco runs through Turkey from the borders of the Southern Caucasus. Their commissioning terms are nearly identical too.
The meeting between President Aliyev and his Russian counterpart Dmitry Medvedev was expected to improve the chances of a gas deal under which Azerbaijan would sell 16 billion cubic metres of gas annually to Gazprom from its Shakh Deniz gas field. Baku, which currently exports gas to Georgia and Turkey, says it is looking to new markets – including Russia – and the Azeri president expressed enthusiasm for a deal with Moscow. "There are no transit countries between us, and this means that quite an effective transport infrastructure is already in place. There is no need for additional investment in building a gas pipeline. All the conditions therefore look very advantageous," said Aliev at the joint press conference, quoted by the Kremlin website. His Russian host also expressed optimism that a deal could be hammered out soon. "I think that we have excellent prospects for reaching a full-fledged agreement that takes into account our countries' interests and the companies' commercial interests. This could open a new chapter in our energy cooperation," Medvedev stated. The talks appeared to strike another blow to the EU-favoured Nabucco pipeline project, which aims to decrease the Union's dependence on Russian gas. Anticipating wary EU reactions, the Russian press gloated that Brussels had better not complain. "The European Union would likely welcome the emergence of a new supplier from the East, albeit one dependent on Russian pipelines, especially since the completion of Nabucco remains in doubt," the Moscow Times wrote today.
US policy shift? - At the same time, analysts said the US had started shifting from the policies of previous administrations, which focused on promoting alternative energy corridors Europe, in order to improve its relations with Moscow. Alexander Rar, director of Russia and CIS Programmes for the Foreign Policy Council of Germany, a think-tank, said "Americans offered to unite 'South Stream', Nabucco and other pipes into a general project under the code name 'Southern Corridor' in order not to create geopolitical contradiction at the moment when we need Russia to solve Iranian problem and other matters". The EU also recently attempted to rebrand Nabucco under the wider 'Southern Corridor' expression (EurActiv 17/03/09). The term 'Southern gas corridor' also includes an offshore pipeline, ITGI, to be built between the Greek Ionian coast and Italy, and other projects in the south. Positions: Christian Dolezal, a spokesman for Nabucco GmbH, told EurActiv it was "understandable" for a gas-producing country such as Azerbaijan to look for business opportunities. "It is understandable that gas producers are looking forward to selling their gas. We are optimistic that Nabucco will be used as outlet to Europe by gas producers in Azerbaijan, Iraq, Turkmenistan and Egypt," Dolezal said.

Aliyev Proposes Selling Gas to Europe

20 April 2009 - The Moscow Times by Anatoly Medetsky - Azeri President Ilham Aliyev said Saturday that he wanted Russia to serve as a transit route for his country to begin selling gas to Europe, a proposal that could please Western policymakers who have been looking to diversify their energy supplies. The possibility surfaced a day after Aliyev met with President Dmitry Medvedev, who said there was a good chance for the countries to strike a gas accord. Last month, Gazprom and the State Oil Company of Azerbaijan, or Socar, agreed to start talks on Russia buying Azeri gas with "delivery at the border" as soon as next year. The meeting came as Moscow has been trying to shore up support from other Caspian Sea gas suppliers to buck the Nabucco pipeline, which would bypass Russia but faces a number of obstacles to construction. "It's very disappointing to have no opportunity to produce the gas that we have because transit issues haven't been resolved," Aliyev said in an interview with the Vesti state-television channel. "The main thing is to come to an agreement about the possible transit and sale of gas between Russia and Azerbaijan and move forward." A Gazprom spokesman said Sunday that he could not immediately comment on the transit option. The European Union would likely welcome the emergence of a new supplier from the east, albeit one dependent on Russian pipelines, especially since the completion of Nabucco remains in doubt. The backers of Nabucco, a number of EU energy companies, plan to fill the pipeline with gas from Turkmenistan -- across the Caspian Sea from Azerbaijan -- or Iran. But the project has faced numerous problems, including disagreement over how to divide the energy-rich sea and suspicion in the West of Iran's nuclear program. Transiting foreign gas would not be unusual for Gazprom, which until the end of last year carried Turkmen gas for sale to Ukraine. Those supplies were handled by RosUkrEnergo, a trader half owned by Gazprom. Alexander Nazarov, an analyst at investment company Metropol, said it was not immediately clear what Azerbaijan would gain from a transit deal for European exports, since it would not make much more money than it would from direct sales to Gazprom. During the talks in Moscow, Aliyev signaled that he had no objections to contributing to Nabucco as well -- if it's ever built. "Provided the terms are good, we would be able to supply a portion of our gas in that direction," Aliyev said. "But it's difficult to say when this project will move from a standstill." Initial supplies from Azerbaijan to Russia would be far smaller than the flow from Turkmenistan, with flows capped by the pipeline's current capacity of 5 billion cubic meters per year. Gazprom and Socar agreed last month to inspect the link, which Gazprom used to export gas to Azerbaijan before 2007, to determine the amount of investment required for any repairs. Turkey buys and transits a total of 7 bcm of Azeri gas per year. Azerbaijan has the potential to raise output by another 12 bcm to 14 bcm per year from the second phase of the Shah Deniz field, which is led by Norway's StatoilHydro, Aliyev said. The field will produce that much more once the company finds a market and a transit route for the gas, he said. StatoilHydro's chief of exploration and production, Peter Mellbye, said earlier this month that the company was considering exports through Russia and Iran. Azerbaijan has not been able to agree with Turkey on expanding the current transit to Greece. Recent frictions over relations with Armenia have dimmed any hope for a future deal with Turkey. Alarmed that Turkey may lift an economic embargo against Armenia, Aliyev punctuated his displeasure by ignoring a summit in Ankara earlier this month attended by U.S. President Barack Obama. Turkey imposed the embargo in the 1990s as a show of support for Azerbaijan in its efforts to win back possession of the pro-Armenian separatist enclave of Nagorno-Karabakh. Aliyev also said any gas agreement should not be subject to revisions, apparently wary of Russia's ongoing dispute with Turkmenistan over a cut in purchases. Turkmenistan has said a Gazprom unit failed to give it adequate warning before cutting the amount of gas it would accept, leading to a pipeline rupture earlier this month. Prime Minister Vladimir Putin met with his top energy deputy, Igor Sechin, and Gazprom chief Alexei Miller on Thursday and told them to step up talks with Central Asian suppliers after Turkmenistan signed a tentative supply deal with Germany's RWE, a member of the Nabucco project. "The agreement must be such that it isn't subject to revisions by any of the parties later," Aliyev said.

Russia, Azerbaijan leaders see progress towards gas deal

April 17, 2009 - AFP News by Alexander Osipovich - Russian President Dmitry Medvedev met his Azerbaijani counterpart Ilham Aliyev on Friday to discuss a deal on natural gas sales which could undermine the EU-backed Nabucco pipeline. "In my opinion we have a very high chance of entering a full-blown agreement," Medvedev told reporters after meeting Aliyev at the Russian leader's residence outside Moscow. The meeting came after Russia and Azerbaijan's state-run energy companies last month signed a preliminary deal on natural gas sales from 2010, which could remove a potential source of gas for Nabucco. Aliyev said that Azerbaijan -- a former Soviet republic in the energy-rich Caspian Sea region -- hoped to diversify its gas exports. The country currently exports gas westwards through Turkey. "For us... diversification of deliveries and the opportunity to enter new markets is of significant interest... because today Azerbaijani gas is transported in the Western direction," Aliyev said. He said Russia was a natural partner for Azerbaijan because the countries were neighbours and gas export infrastracture was already in place. "There are no transit countries between our countries. There is no need for additional investment to build a gas pipeline," Aliyev said. But both presidents stressed that it would be up to the two state companies involved, Russian gas giant Gazprom and Azerbaijani national energy firm Socar, to make the final agreement. "I am hoping that the talks being conducted between our companies will be successfully completed," Aliyev said. "There are no, and cannot be, any limits to cooperation in the gas sphere on our part." If the Gazprom-Socar deal is finalized, that would cast doubt on Nabucco, a project that the European Union has supported in a bid to lessen its dependency on Russian gas. Nabucco would pipe gas from the energy-rich Caspian Sea region via Turkey and Austria to western Europe, bypassing Russia. The Kremlin has regularly criticized Nabucco and instead backed the rival South Stream pipeline. Azerbaijan, along with Turkmenistan, would be a possible supplier of gas for Nabucco. Aliyev and Medvedev also touted progress in Russian-mediated talks on the longstanding conflict over Nagorny Karabakh, an enclave at the centre of a fierce war between Azerbaijan and Armenia in the early 1990s. "It is this progress that keeps alive our hope that the conflict will be settled rather soon," Aliyev said. "The positions of the sides recently became closer to a certain degree. Some questions that previously seemed hard to solve have been agreed," Aliyev said, though he added that the lack of results so far was "disappointing." Moscow in recent months has stepped up its efforts to reconcile Armenia and Azerbaijan in what analysts say is a bid to increase its influence in the Caucasus region. Last November, Russia hosted rare peace talks between the two bitter ex-Soviet foes. The Kommersant daily reported Friday that Russia had convinced Armenian President Serzh Sarkisian to take part in another summit with Azerbaijan's Aliyev mediated by Medvedev in the Russian city of Saint Petersburg in June. The newspaper, not citing any sources, said that Russia was offering hefty financial support to Armenia and weapons sales to Azerbaijan as rewards for taking part in the Russian-led peace talks. Nagorny Karabakh, an enclave of Azerbaijan with a largely ethnic Armenian population, broke free of Baku's control in the early 1990s in a war that killed nearly 30,000 people and forced two million to flee their homes. Shootings between Armenian and Azerbaijani forces in the region remain common despite a 1994 ceasefire

Friday, April 17, 2009

Russia, Azerbaijan seek broader gas ties

04-17-2009 - Associated Press by Catrina Stewart - Talks between Russia and Azerbaijan on Friday paved the way for a gas supply agreement that may undermine Western Europe's efforts to reduce their energy dependence on Russia. "We have a very high chance of entering a full-blown agreement" on gas supplies, Russian President Dmitry Medvedev told reporters after a meeting with his Azeri counterpart, Ilham Aliyev. Last month, the head of Azerbaijan's national energy company met with officials of Russia's state gas monopoly Gazprom and gave a preliminary pledge to supply gas to Russia from 2010. But details of a potential supply deal remain scant, as both sides have yet to agree on the terms. There has been no indication of the volumes being considered, prompting some analysts to suggest that a deal between the two countries may be little more than a gesture. "Volumes from 2010 can only be tiny. We are talking about very small, symbolic volumes," said Jonathan Stern, a gas expert at the Oxford Institute for Energy Studies. "It lays down a marker, which says, we, Gazprom, are interested in importing Azeri gas." However, any broadening of the deal could yet undermine Western Europe's efforts to reduce its dependency on Russian gas supplies by throwing into doubt the viability of the U.S.- and the EU-backed Nabucco project - a pipeline that would run from the Caspian Sea region to Europe, bypassing Russia. But Azerbaijan has so far given only lukewarm backing to Nabucco, which would source gas from the second phase of Azerbaijan's Shah Deniz field initially - scheduled to produce gas in 2014-15 - with hopes that Turkmenistan will join later. The EU depends on Russia for about one quarter of its gas needs, and has sought to diversify its sources. Concerns over Russian imports intensified after a Russian-Ukrainian gas dispute in January left Europe without gas for nearly two weeks. The Nabucco project, however, has stalled amid concerns over its financial viability and whether there is enough gas to fill the pipe. "Medvedev's goal here is to prevent Azerbaijan from taking part in any trans-Caspian project," said Alexander Nazarov, an energy analyst at Moscow-based Trust Bank. Aliyev noted that a deal with Russia would entail little additional investment, because there are no transit countries to traverse, and the pipelines are already in place. Russia's overtures to Azerbaijan follow a recent souring of relations between gas-rich Turkmenistan and Russia. Russia, which has a virtual monopoly over Turkmen gas exports, angered Ashgabat recently when it announced it was reducing its intake of Turkmen gas because of a downturn in global demand. Turkmenistan then accused Gazprom of causing a pipeline blast last week on its border with Uzbekistan that shut off the Central Asian country's gas exports. Earlier this week, Turkmenistan signed an agreement with Germany's RWE, a member of the Nabucco consortium, inviting the European company into the country to explore gas fields and ship gas to Europe. "It's a shot across the bows," Stern said of the RWE deal. "It's a shot that says 'we are interested in other markets. And if you don't take the gas you said you were going to take from us, we are going to become increasingly interested.'"

Russia-Azerbaijan gas deal would boost energy security - Medvedev

Aliev BARVIKHA, April 17 (RIA Novosti) - A potential gas deal between Russia and Azerbaijan will help diversify energy supplies and ensure energy security, Russian President Dmitry Medvedev said on Friday. Russian energy giant Gazprom agreed with Azerbaijan in March to launch talks on a long-term agreement for Azerbaijani gas supplies from January 2010. Azerbaijani President Ilkham Aliyev made the proposal to Gazprom CEO Alexei Miller back last June. "This could open up a new page in energy cooperation. And if such an agreement is drafted - and the chances are high, I'll stress once again... this would be a significant event in relations between our countries," Medvedev said at a meeting with Aliyev. "This would make it possible to speak about energy diversification and offer a solution to the problem of energy security, which is a priority today," the Russian president added. Azerbaijan has proven natural gas reserves of some 1.5 trillion cubic meters. The South Caucasus country annually consumes 14 billion cubic meters of gas. Gazprom and the state oil company of Azerbaijan will soon hold a technical inspection of the Baku-Novo-Filya gas pipeline sector ahead of its modernization. Azerbaijan will pump its gas to Russia via the leg that runs some 200 km along the Caspian Sea coast. According to the Azerbaijani president, Baku sees no obstacles to the gas deal. "For Azerbaijan, cooperation in this sphere is also an element of the diversification of gas supplies, with Azerbaijani gas currently transited only westwards. Certainly, diversifying supplies means entering new markets," Aliyev said. He expressed the hope that the negotiations underway between the two countries' companies would be a success. Aliyev also said his country expected the amount of Azerbaijani oil pumped through the Baku-Novorossiysk pipeline would increase in the future.

Russia's Sakhalin-1 2009 budget totals $2 bln

April 16, 2009 - (Reuters by Vladimir Soldatkin) - MOSCOW, A group led by U.S. energy giant ExxonMobil (XOM.N) will invest about $2 billion into Russia's Sakhalin-1 oil and gas project this year, the Sakhalin regional government said on Thursday. Russia approved the Sakhalin-1 budget last week after a prolonged delay which analysts linked to disagreements between Exxon and Russian state gas monopoly Gazprom (GAZP.MM) over the sale of Sakhalin gas. Gazprom has long said it needs the gas produced at Sakahlin-1 to cover domestic needs, while Exxon plans to export the fuel to China. The Sakhalin regional government announced the approved budget figure in a statement on Thursday. "The governor... has pointed out several important details: additional spending for 2008 was approved at $480 million and 2009 spending at about $2 billion," it said. A source close to the commission made up of government and company officials that had reviewed the budget told Reuters the exact figure for 2009 was $1.978 billion. Extra spending for 2008 was approved at $404 million, lower than the $627 million Exxon had asked for, the source said. Exxon operates the $12 billion project along with Russian state oil firm Rosneft (ROSN.MM), Japan's Itochu (8001.T), Marubeni (8002.T), Japan National Oil and India's ONGC. Exxon had threatened to suspend the future phases of Sakhalin-1 during the bitter budget standoff. But analysts say the financial crisis and a fall in global gas demand might have made the issue less acute. Sakhalin-1 works under a production sharing agreement (PSA), which gives investors tax stability but makes it subject to special regulations. Any increase in spending delays and reduces the government's income from the project. The project has been producing oil for several years and reached peak production of 11.2 million tonnes in 2007. It has been producing gas since 2005 and shipping small volumes to continental Russia. It signed a separate deal to supply China with 8 billion cubic metres of gas a year and hoped to start supplies next decade. Gazprom, the world's largest gas producer, itself has a rival plan to supply China from East Siberia via two links. It wants to buy gas from Sakhalin-1 at market prices but talks have been stalled for over a year due to a price disagreement. Gazprom co-leads Sakhalin-2, a neighbouring project from Sakhalin-1, and liquefies all of the gas produced there.

Monday, April 13, 2009

Iraqi PM welcomes Russian business

04–12–2009 – MOSCOW (AP) — Iraqi Prime Minister Nouri al-Maliki met Saturday with Russian business leaders to encourage them to take an active part in rebuilding Iraq's economy. He told the businessmen that his government would welcome their broader involvement in his country. "You will find all the necessary conditions for your work to help restore the Iraqi economy with the support of my government," al-Maliki said at a round table. On Friday, he met with Russian President Dmitry Medvedev and Prime Minister Vladimir Putin. Al-Maliki told Medvedev in the Kremlin that Iraq is interested in Russian investment, and Putin said at a joint news conference that talks focussed on oil and gas cooperation. Putin strongly opposed the U.S.-led invasion of Iraq in 2003 when he was president, but Russia is now eager to ensure it is not shut out of development activity. In the past year, Iraq has given Russian oil companies, including Lukoil, state-owned Rosneft and Tatneft, the green light to bid against others worldwide for contracts to develop several promising fields. Russia would like Iraq to honor deals clinched during Saddam Hussein's rule, including Lukoil's 1997 contract to develop the large West Qurna-2 field. Lukoil chief Vagit Alekperov said Saturday his company was ready to bring that contract in line with the current Iraqi legislation. "Iraq now has all the necessary laws allowing to work in oil and gas sphere," he told Vesti 24 television. Russian Deputy Foreign Minister Alexander Saltanov said Moscow and Baghdad had agreed to set up an intergovernmental panel to review the old contracts, the ITAR-Tass news agency reported. "There is a political will to give a new start to our relations," it quoted Saltanov as saying. Iraqi Foreign Minister Hoshyar Zebari said Saturday that his country may also buy Russian weapons. Russia was a key weapons supplier to Iraq under Saddam. "Cooperation in the military area is possible in terms of holding training seminars and (purchases of) military equipment," Zebari said, according to the Interfax news agency. "Purchase of weapons is also possible. I believe military-technological cooperation with Russia has very good prospects." Putin also said Friday that the two countries are discussing the resumption of military-technical ties.

Thursday, April 09, 2009

Russneft 2008 Oil Production Near-Flat At 14.2 Million Tons

April 9th, 2009 - LONDON -(Dow Jones by Alexander Kolyandr) - Russian oil company Russneft, a part of billionaire Oleg Deripaska's holding company Basic Element, or Bazel said Thursday it produced 14.2 million metric tons, or 106.5 million barrels, of oil in 2008, marginally higher than in 2007. The privately-owned company said its revenue for 2008 was $8.09 billion, up 20% from 2007, due to higher oil prices for the most part of the year. The company didn't provide its profit for the year. Russneft said that in 2008 it paid $3.6 billion of taxes and tax arrears. The company also said that in December 2008 it paid off $208 million of debt to its bond holders. For 2009 the company said it aims at reducing its lifting costs by 30%. As Dow Jones Newswire reported, talks between Bazel and OAO Gazprom Neft (SIBN.RS) to sell Russneft have stalled over the valuation of the company. Bazel, which is struggling now to pay off its debts to Russian and foreign banks, paid $3 billion in 2007 for Russneft and assumed the company's debt of about $2.8 billion. The deal has yet to be cleared by Russia's authorities. Russneft's previous owner, billionaire Mikhail Gutseriyev, fled to the U.K. last year amid tax-evasion charges.

Wednesday, April 08, 2009

Exxon/Russia: Approving Sakhalin Budget

April 8, 2009 - 247 Wall Street by Paul Ausick - Exxon Mobil Corporation has reportedly received approval from the Russian government for its proposed budget for the Sakhalin-I project. Exxon owns 30% of the joint venture that is developing the oil and gas project, and is the project’s operator. No figures were released, nor is there any information on the single largest dispute between the Russian government and Exxon. It looks like the Russian government wants Exxon to sell the project’s natural gas to Gazprom, the state-owned gas monopoly, at lower than market prices. Gazprom would then resell some of the gas domestically. Exxon has been arguing for a new natural gas pipeline to China. The company reached a tentative agreement to ship 8 billion cubic meters of gas annually to China in late 2006. The government and Gazprom have refused approval for the pipeline to transport the gas because Gazprom wants to build the pipeline and export the gas itself — after buying it from the Exxon-led venture at lower than market price. At this point, it looks like Russia blinked today. The country’s economy is in the doldrums and it cannot afford to leave any money on the table. But Gazprom’s leverage (as well as that of the Russian government’s) is enormous. We would be very surprised if the dispute is anywhere close to being over. After all, what is a signed iron-clad contract in most emerging economies? A new starting point for the next dispute.

First Sakhalin-2 LNG Shipment Reaches Japan

04-06-2009 - Downstream OnLine - A tanker carrying about 67,000 tons of liquefied natural gas docked Monday at an LNG receiving terminal in Sodegaura, Chiba Prefecture, marking the arrival of the first shipment of LNG from Russia's Sakhalin-2 project. Tokyo Gas Co. and Tokyo Electric Power Co., which jointly operate the LNG storage facility southeast of Tokyo, will share in shipments equally, with the gas company supplying the LNG as town gas and the electricity firm using it as fuel for its thermal power plants. With Russia's LNG project, Tokyo is hoping to reduce its energy dependence on the Middle East while Moscow is aiming to boost natural gas sales in the Asia-Pacific region in addition to Europe. Some 60 percent of LNG output from the Sakhalin-2 project is earmarked for export to Japan and the remainder will go to South Korea and the United States. LNG from Sakhalin is estimated to account for about 7 percent of Japan's annual natural gas imports. LNG from Sakhalin is an attractive source of energy for Japan as it takes only three days at the earliest for the shipments to arrive in Tokyo's metropolitan area, compared with those from Southeast Asia or the Middle East regions that take more than a week to arrive. "There are large potential reserves (of LNG) in Sakhalin. We can expect our transactions will expand in the future," a Tokyo Gas official said. In addition to Tokyo Gas and Tokyo Electric Power, utility firms in the Tohoku, Chubu and Kyushu regions as well as four key regional gas companies also have contracts with the Sakhalin-2 project for LNG purchases.

France ready to boost investments, economic presence in Russia

France ready to boost investments, economic presence in RussiaPARIS, April 8 (RIA Novosti) - France is ready to increase investments and its economic presence in Russia to strengthen the two countries' partnership during the world financial crisis, the speaker of France's parliament said on Wednesday. National Assembly President Bernard Accoyer flew to Moscow on Wednesday evening to participate in the 14th Russian-French Inter-parliamentary Committee and hold talks with State Duma Speaker Boris Gryzlov. "In hard times it is even more necessary to strengthen our economic ties and develop new specifics of partnership," Accoyer told RIA Novosti during an interview. "France is also ready to use new investment opportunities and increase its presence in Russia." He noted that France's Alstom Transport just recently acquired shares in the capital of Russia's Transmashholding. According to French authorities, there are more than 400 French companies operating in Russia. France is the ninth largest exporter of goods to Russia and the seventh in investment into the Russian economy. In 2008, France exported 7 billion euros ($9.26 billion) of goods to Russia and imported 13.7 billion euros of Russian goods, 90% of which was oil products.

Sakhalin I, II projects yield 27.5 mln bbls of oil in Q1

YUZHNO-SAKHALINSK, April 8 (RIA Novosti) - The operators of the Sakhalin I and II oil and gas projects off Russia's Pacific Coast produced 3.75 million metric tons (27.5 million barrels) of oil in the first quarter, the regional administration said on Wednesday. Of this volume, 3.39 million metric tons (24.9 million) of oil were exported, 30% more than the same period of last year, the statement said. The Sakhalin I project is operated by Exxon Neftegas Limited, a subsidiary of U.S. oil major Exxon, and has recoverable reserves estimated at 315 million metric tons (2.3 billion barrels) of oil and 485 billion cubic meters of natural gas. The Sakhalin II project, in which Russian gas monopoly Gazprom holds a controlling stake, has estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas. Sakhalin is located around 10,000 km (6,200 miles) east of Moscow. "The suppliers of Sakhalin oil are the operators of the Sakhalin-I and Sakhalin-II projects. Oil is delivered by Exxon Neftegas Limited and Sakhalin Energy to Asia and Pacific countries," the administration said.

Russia's oil firm LUKoil posts 3.9% net profit decline in 2008

MOSCOW, April 7 (RIA Novosti) - Russia's largest independent oil producer LUKoil said on Tuesday its US GAAP unaudited net profit fell 3.9%, year-on-year, in 2008 to $9.14 billion. LUKoil, which accounts for about 1.3% of global oil reserves and 2.3% of world crude output, said its revenues in 2008 increased 31.5% to $107.68 billion. "The Company's operating cash flow increased by 31.5% to $14.312 billion in 2008, despite the global economic crisis and oil price fall. At the same time, LUKoil's free cash flow increased to a record of $3.775 billion, which is more than twice as much as in 2007," LUKoil said in a statement. The company's oil output declined 1.5%, year-on-year, in 2008 to 95.24 million metric tons (1.9 million barrels per day) while gas production rose 22% in the reporting period to 17.02 billion cubic meters, the statement said. LUKoil earlier announced plans to boost its oil output 1-1.5% in 2009.

Monday, April 06, 2009

Berlusconi Postpones Visit After Earthquake

06 April 2009 - Moscow Times - Italian Prime Minister Silvio Berlusconi has postponed a visit to Moscow after an earthquake of 6.3 magnitude shook central Italy early Monday morning, leaving more than 20 dead and thousands injured. Berlusconi declared a state of emergency and has not announced a new date for the visit, the Italian Embassy in Moscow said. A group of businessmen were to accompany him for an Italian-Russian economic forum. The visit was expected to be capped with a signing ceremony Tuesday between Gazprom and Eni, Italy's biggest oil and gas group. The two companies agreed last month that Gazprom would buy a 20 percent stake in its oil arm that Eni won in an auction in April 2007. Eni could become the outright owner of the Gazprom Neft shares if Thursday's deadline for the buyback passes. Gazprom may also acquire from Eni and its partner Enel a 51 percent stake in Siberian gas assets won at the same auction.

Friday, April 03, 2009

Russneft resale talks on hold due price - sources

April 3, 2009 - Reuters by Katya Golubkova - MOSCOW,Russia's Gazprom (GAZP.MM) has suspended talks with indebted aluminium tycoon Oleg Deripaska about the purchase of his oil firm Russneft due to disagreement over the price, sources familiar with the talks said. Deripaska, who is in talks to restructure $7.4 billion of debt at his main asset, the world's largest aluminium producer, UC RUSAL, agreed to buy Russneft from businessman Mikhail Gutseriyev in 2007. Gutseriyev fled Russia as police pursued him for tax debts and Deripaska has been waiting for over a year and a half to get clearance from anti-monopoly authorities to complete the Russneft purchase, which cost $3 billion according to estimates by industry sources. The deal was financed with the help of state-run bank Sberbank (SBER03.MM), which holds Russneft shares as collateral and is insisting on the change of ownership of Russneft, sources said. The bank had wanted Russneft to be taken over by Gazprom's oil arm, Gazprom Neft (SIBN.MM). "Gazprom Neft wants to buy Russneft for nothing and take on its debts," one source close to talks said on condition of anonymity, because he is not allowed to comment publicly on the deal. "Russneft's new management is seeking a buyer but if Gazprom Neft agrees it would be a miracle," he added. Russneft has recently changed its management and is now run by former managers of Deripaska's investment vehicle Basel. Gazprom Neft has offered to buy Russneft by assuming its debt, estimated at $5.6 billion, while Deripaska believes the mid-sized producer is worth $7.5-$8.0 billion, Vedomosti business daily said on Friday. Gazprom Neft, Sberbank and Basel declined to comment. Russneft produces around 300,000 barrels per day from fragmented fields spread all over Russia and its main refining asset is the 130,000 barrels per day Orsk refinery. Deripaska's Basel total debt is estimated at $25-$30 billion amassed to fuel growth in the past years. Apart from RUSAL, Basel's car maker GAZ (GAZA.RTS) is also involved in restructuring talks with Russian and foreign lenders.

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