RusEnergy

July 06, 2009 - Bloomberg by William Mauldin - Russian shares fell for a third day as oil retreated below $65 a barrel and a report showed the country’s economic slump deepened. OAO Gazprom, the world’s biggest natural-gas producer, and OAO Tatneft, the oil company in Russia’s republic of Tatarstan, dropped more than 4 percent. The 30-stock Micex Index retreated 3.7 percent to 938.38 at 1:59 p.m. in Moscow as all 28 members declined. The ruble weakened to the lowest against the dollar in a month. Crude fell to a five-week low in New York as a stronger dollar limited investor appetite as an inflation hedge and concern deepened the global economic recovery will falter. Russia is the world’s largest energy supplier, and oil and gas producers make up 57 percent of the Micex Index. “The downtick in oil prices will doubtlessly put pressure on stocks,” said Ron Smith, head of research at Alfa Bank in Moscow. Russian stocks entered a bear market last month after the Micex fell more than 20 percent in three weeks from this year’s high on June 1. The index is up 51 percent this year. The equity market “downside” is protected since oil and gas stocks are currently trading as if oil had fallen to about $50 a barrel, Smith said. The Russian economy contracted at an annual 6.4 percent in the second quarter after a 5.4 percent drop in the first quarter, according to VTB Capital’s gross domestic product indicator released today.
Ruble Weakens: Russia’s gross domestic product will probably shrink 7.3 percent this year, according to Bank of America Corp., which earlier forecast a contraction of 4.9 percent. The ruble dropped 0.6 percent to 31.4686 to the dollar, the weakest since May 21. It was little changed at 43.8289 against the euro. Gazprom, the country’s biggest publicly traded company, dropped 4.3 percent to 148.10 rubles on the Micex Stock Exchange. Tatneft slipped as much as 4.7 percent to 112.51 rubles. OAO Novolipetsk Steel, the steelmaker controlled by billionaire Vladimir Lisin, fell 5.3 percent to 65.27 rubles, breaking a six-day streak of gains. KIT Finance cut its recommendation on the shares to “hold” from “buy,” citing the stock’s advance. “It’s a good opportunity to switch from Novolipetsk” to OAO Magnitogorsk Iron & Steel, Moscow-based KIT Finance analyst Kirill Chuiko said by telephone. “Given the potential raw- materials weakness, which we don’t believe will disappear, the profit of Magnitogorsk will be more stable.” Magnitogorsk, Russia’s third-biggest steelmaker, dropped 3.2 percent to 15.013 rubles. OAO GMK Norilsk Nickel, Russia’s biggest mining company, slumped 5.3 percent to 2,663.03 rubles. Nickel for three-month delivery dropped 3.7 percent to $15,605 a metric ton on the London Metal Exchange.
London Debut: OAO RusHydro, Russia’s state-controlled hydropower producer, traded at $4 upon listing global depositary receipts on the London Stock Exchange today. The company’s shares in Moscow rose 1.6 percent to 1.256 rubles (3.99 cents). Each RusHydro GDR represents 100 ordinary shares of RusHydro. OAO Sberbank, Russia’s biggest bank and the largest holder of ruble deposits, sank 3.8 percent to 37.05 rubles. A weaker local currency can lead to Russians withdrawing or converting ruble deposits, the bank’s primary means of funding.

3 July 2009 - Power Engineering Int. - E.ON said it welcomes the Russian government's announcement that it will systematically continue the envisaged liberalization of the Russian electricity market. Another 20 per cent of the market have been opened up to trading since 1 July. As a result, 50 per cent of electricity prices for wholesalers and industrial clients in Russia are determined by market mechanisms. "With this step the Russian government has shown great reliability in fulfilling its assurances. This is an important positive signal for foreign investors and another milestone on the road to complete liberalisation of the Russian electricity industry. "Confidence in Russia as a business location is strengthened by the fact that, even in times of a global economic crisis, the Russian government is adhering to the path taken towards a market economy. This also leads to greater planning certainty for our investments," said Wulf Bernotat, CEO of E.ON AG. Vyacheslav Sinyugin, Russia's Deputy Energy Minister, said: "The latest phase in liberalization of the power market is an extremely important signal for our economy and above all for investors who invested in the electricity market during its restructuring." E.ON, which has been cultivating economic relations with Russia for over 35 years, has been the largest foreign investor in the Russian energy sector since it took over the OGK4 electricity company. E.ON is also the biggest customer for Russian gas and is involved in gas production in Russia through its participation in the Yuzhno Russkoye gas field. The company operates five power stations in Russia (currently with a capacity of approx. 8 GW) and has launched an ambitious new-build programme. As a result, it will be one of the leading power suppliers in Russia with an installed capacity of approximately 11 GW. The Russian power market has been liberalized in stages since 2007, but retail business is exempted from liberalization. This market liberalization is to be completed by early 2011.

06-29-2009 - Upstream OnLine - Russian Prime Minister Vladimir Putin moved again to ease his government's clasp over the energy sector at the week-end, capping off a week of foreign energy deals with a surprise offer for Anglo-Dutch supermajor Shell. Weaker oil prices, now half of what they were a year ago, have persuaded Russia to scale back its resource nationalism. Moscow now looks to be balancing the dogged protection of its energy wealth with the need to have foreigners invest in it. The offer to Shell, which comes days after Russia struck major deals with France's Total, is emblematic of the renewed openness, because Shell was the victim of Russia's most aggressive drive to re-take control of its natural resources. In 2006, under intense government pressure, it ceded control of the vast Sakhalin-2 project to Russia's Gazprom. But on Saturday, Putin invited Shell to help develop the giant Sakhalin-3 and Sakhalin-4 projects off Russia's Pacific coast. "These require offshore production in difficult deep sea areas where your experience will be very valuable," Reuters quoted Putin telling Shell chief executive Jeroen van der Veer at a meeting in his summer residence outside of Moscow. Van der Veer accepted the invitation and said it was an ideal time to move ahead with these projects, as the financial crisis has brought down the price of construction. "We are ready to work quickly," he said. "It is a good signal that investments start to flow again, a good signal for Russia and, of course, a good signal for Shell." In February, gas export monopoly Gazprom inaugurated Sakhalin-2, a $22 billion liquefied natural gas project, in which Shell has 27.5% after giving up control to Gazprom. Sakhalin-3 and Sakhalin-4, also based on the Pacific island of the same name, are at far earlier stages and big money is still needed even to nail down how much oil and gas they hold. The informal agreement with Shell on Saturday did not lay out the Anglo-Dutch major's future role in these projects. When asked by Reuters whether it would have a direct stake in either one, Shell chief financial Peter Voser said: "I think it's a natural progress now, having built Sakhalin-2." A key aim of Van der Veer's visit to Moscow, the final one of his career as Shell's chief executive, was to introduce Voser as his successor. Voser will take his place as of Wednesday. Over the past decade, Putin has built close ties with the heads of many foreign energy giants and has a habit of meeting them face to face before allowing any major deal to go forward. Because the two of them share fluency in German, Van der Veer said it would be easy for them to get along. "I can assure you that this Swiss-accented German is not easy to understand," said Putin, who learned to speak the language during his early career as a KGB spy in Dresden. Putin said that Shell has met all of its contractual obligations in Russia and was a welcome partner, despite the public controversy with Gazprom over Sakhalin-2. "We have a dialogue that has not been easy, but we have reached an agreement to meet each other half way and come to an agreement that has allowed us to build a firm foundation for future cooperation," Putin said. Van der Veer added: "Co-operation with Gazprom has been very smooth." At the Saturday meeting, Shell also signed a cooperation deal with Russian shipping company Sovcomflot to develop shipping infrastructure for the transport of liquefied natural gas.

June 24, 2009 - Baker Botts L.L.P. - A US $15 billion loan agreement between Russian oil and gas company Rosneft and the Chinese government is the first step in the development of a major oil supply contract between the two countries. The agreement, which closed in April of 2009, is one of the largest private loans booked in Russia this year. The Chinese Development Bank (CDB) will fund the loan that will allow Rosneft and the China National United Oil Company (CNUOC) to enter in a 20-year oil supply contract. This agreement, coupled with a US $10 billion loan to Transnet for pipeline construction between the two countries, will significantly contribute to moving energy resources to the east from Russia. "These two transactions, totaling more than US $25 billion is seen as advancing cooperation between Russia and China in the energy industry," said Steven Wardlaw, Partner In Charge of the Moscow office of Baker Botts and a lead lawyer in the negotiations. "The agreement that was reached between Rosneft and Chinese representatives presented a number of complex international financial and legal issues that required detailed discussions about how the agreement needed to be structured in order to benefit both countries." Officials expect product covered by this agreement to start flowing from Russia on a spur of the East Siberian Pacific Ocean Pipeline that runs into the northwest corner of the People's Republic of China early in 2011. Baker Botts L.L.P., dating from 1840, is a leading international law firm with offices in Austin, Beijing, Dallas, Dubai, Hong Kong, Houston, London, Moscow, New York, Palo Alto (California), Riyadh and Washington. With approximately 800 lawyers, Baker Botts provides a full range of legal services to international, national and regional clients.

06-26-2009 - (AFP) — WINDHOEK Russian energy giant Gazprom said Friday its banking unit had struck a one-billion-dollar (711-million-euro) deal with Namibian energy company Namcor to build a new power plant in Namibia. Under the deal, Russia would build a power plant generating energy for both Namibia and South Africa, getting a foothold in the lucrative Kudu gas field, Namibia's only commercial field to date. The deal was reached during a visit to Windhoek by Russian President Dmitry Medvedev, who left Namibia for Angola on Friday as he wraps up a four-nation African tour that has focused on tapping the continent's energy wealth. "Our Namibian partners have offered us to organise a financing scheme to monetise gas resources," the head of Gazprom International Boris Ivanov told reporters in Luanda. "The cost of the project is around 1.0 to 1.2 billion dollars," he said, adding that the price tag includes the power station, a pipeline and other infrastructure, with construction taking up to four years. "It's not a large deposit but has enough reserves," he said about the Kudu field. "It's a pilot project in Namibia but its economic efficiency is very high." Gazprombank said in a statement that much of the power generated would be exported to South Africa, which is struggling to meet its growing energy needs. "There are plans to use gas from the Kudu field for the power plant. A considerable part of the electricity to be generated will be supplied to South Africa," the company said. The Kudu field, located about 140 kilometres (85 miles) offshore, is estimated to contain 3.3 trillion cubic feet of proven reserves, but years of negotiations over the reserves have yet to yield concrete projects. Medvedev and his counterpart President Hifikepunye Pohamba witnessed the signing of the agreement during his visit to Windhoek. Windhoek and Moscow pledged closer cooperation, a joint communique said on Friday after the first visit by a Kremlin chief to the uranium-rich southern African nation. "Agreement was also reached on the expansion of Russian investments to develop and introduce new large-scale projects in the Namibian economy, in particular in mining, oil exploration and energy," it said.

June 26 2009 Financial Times by Matthew Green – Gazprom, the Russian gas group, has signed a deal to invest at least $2.5bn in a joint venture with Nigeria's state-owned oil company to explore and to develop the country's vast gas reserves. Dmitry Medvedev, Russia's president, said during a visit to Abuja, Nigeria's capital, that he hoped the nations would become "major energy partners". "If we carry out all our plans, Russian investment in Nigeria can reach -billions of dollars," Mr Medvedev said late on Wednesday. The formation of the 50-50 joint venture between Gazprom and the Nigerian National Petroleum Corporation (NNPC), named Nigaz, follows a prolonged courtship by Russia which began under Vladimir Putin, the previous president and current prime minister. Gazprom's action to secure a foothold in a country where western groups have led the development of the oil industry for the past half century has given rise to concerns in Europe that Moscow is seeking to gain control of Nigerian reserves to tighten its grip on the the European Union's gas supplies. European governments see Nigeria's gas reserves - the seventh-largest in the world - as a potential route to diluting their reliance on Russia, which supplies up to half the gas consumed by the EU. Nigeria has struggled to develop its gas industry to anything like its full potential, due in part to its failure to come up with the viable regulatory framework and pricing mechanism needed to spur commercial investment. The government of Umaru Yar'Adua, Nigeria's president, has designed a "gas masterplan" which intends to prioritise gas for domestic use to supply industries and tackle Nigeria's chronic power crisis. Implementation has been slow and some experts question whether the regulatory approach envisaged in the plan is viable. Gazprom has nevertheless signalled its intention to help Nigeria realise its ambitions to develop domestic gas infrastructure. The Nigaz joint-venture intends to explore for gas and build refineries, gas pipelines and gas-fired power stations throughout Nigeria, including a section of pipeline that could form part of a proposed trans-Sahara pipeline to export gas directly to Europe. "We will take part in building the first segment of gas pipeline from southwestern Nigeria northwards," said Boris Ivanov, head of Gazprom International. "If [the] trans-Sahara pipeline is realised, it will be its first segment." Capital costs are estimated at $10bn (€7.2bn, £6.1bn) for the trans-Sahara pipeline and $3bn for gas gathering centres. The proposed 4,128km pipeline from Nigeria via Niger and Algeria would send up to 30bn cubic metres of gas a year to Europe. The EU has pledged political and economic backing for the trans-Sahara pipeline. But a consortium has yet to emerge to fund and build the project. Total, the French energy group, this year said it would be willing to participate in the project .

MOSCOW, June 25 (Reuters by Simon Shuster) - The European Union is discriminating against Russian-backed gas pipelines in favour of Nabucco, the head of Gazprom's foreign department, Stanislav Tsygankov, said on Thursday. "When you look at the regulatory treatment of Russian-linked projects compared to European ones, one is reminded of the famous book by George Orwell that says all animals are equal but some are more equal than others," Tsygankov told a news conference. "Nabucco is getting the green light everywhere ... while our gas transport projects, South and North Stream, are constantly facing regulatory barriers."

25 June 2009 - The Moscow Times by Anatoly Medetsky, Ira Iosebashvili – French energy major Total and Novatek, Russia's largest independent gas producer, ended a two-year quest to join forces Wednesday, sealing a $900 million project to develop a Siberian gas field, Prime Minister Vladimir Putin said after meeting the companies' chiefs. The agreement -- in which the companies will jointly develop the Termokarstovoye gas field on the Yamal Peninsula after Total takes a 49 percent stake in Novatek unit Terneftgaz -- is the largest foreign investment in Russia since the country was caught in the grips of the global economic crisis last September. Putin called Termokarstovoye a "very promising field," which along with adjacent sections could eventually expand and be designated as a deposit of national importance. He also opened the door for the French company to participate in other Russian energy projects, including the second phase of the $25 billion Shtokman gas field. No foreign partners have been selected, but Total is helping develop the first stage. "I know you have offered to expand our cooperation and participate not only in the current stage of the project but in future stages," Putin said, referring to Shtokman. "This is entirely possible." The Yamal Peninsula is strategically vital for Russia's gas industry. The remote province is expected to produce 250 billion cubic meters of gas per year by 2020, require $60 billion in investment and supply a majority of the gas that Russia will sell to Europe in the coming decades. By comparison, Russia exported 158.8 bcm of gas to Europe last year. Total also said it had spoken with Gazprom about participating in liquefied natural gas projects on the Yamal Peninsula. The deal comes just days after Total announced the sale of a major stake in a Dutch refinery to LUKoil, Russia's largest private oil producer, for $725 million. The purchase was announced during President Dmitry Medvedev's visit to the Netherlands on Friday. Putin said Wednesday's agreement illustrated that the country's strategic gas fields were open to investment from foreign corporations. "For this, of course, you need the approval of a special government commission, but if you are going to be involved in this level ... investing money, then of course, we will take this into consideration," he said. Foreign investors were spooked after Gazprom took control of the Sakhalin-2 project from Shell in 2007, following heavy pressure from the government. Further limiting the options for foreign investors, the government drafted a law that requires them to get approval from a special government commission if they want to take part in developing strategic oil and gas fields. Fields are considered strategic if they hold at least 50 bcm of gas or 70 million tons of oil. Gazprom also holds a monopoly on Russian gas exports, meaning that other companies must either sell their output to Gazprom or Russian consumers. "I don't think it's difficult to work in Russia," Total CEO Christophe de Margerie said after the signing. "One only needs to learn to work efficiently with Gazprom, Novatek and Rosneft. "We're prepared to invest more into the Russian economy," he added. Neither of the companies identified the price for the 49 percent stake. Gazprom owns about 19 percent of Novatek, and Russian businessman Gennady Timchenko, co-founder of commodities trader Gunvor and an acquaintance of Putin, recently raised his stake to 18 percent, from about 5 percent. Management controls about 48 percent. Leonid Mikhelson, Novatek's founder and chief executive, agreed to let Timchenko increase his stake in exchange for allowing Novatek to gain control over the Yuzhno-Tambeiskoye field, Kommersant reported Wednesday. Another condition was that Novatek would be allowed to bring Total in as a partner to develop the massive deposit, the newspaper said. A spokesman for Timchenko declined to comment on the report. Calls to Novatek went unanswered. Analysts said the deal could have positive implications for Novatek and Total. The deal will provide Total with a foothold in an important gas-producing region and give Novatek cash to pay for the acquisition of Yuzhno-Tambeiskoye, said Alexander Nazarov, an analyst at Metropol. Novatek's board approved a deal last month to buy 51 percent of Yamal-LNG, which holds the license for the 1.2-trillion-cubic-meter field, from Timchenko's Volga Resources holding for $650 million. As for the Termokarstovoye field, Novatek could have potentially developed the small deposit itself, Nazarov said. The small field may be a trial balloon for the two companies, said Svetlana Grizan, an analyst at VTB Capital. They could later join forces on Yuzhno-Tambeiskoye, she said. "This may be the beginning of broader cooperation," she said. Total and Novatek signed a cooperation agreement in May 2007 and have been trying to partner up on projects for the last two years without success. Total even tried to buy a blocking stake, but the deal did not win anti-monopoly approval. Novatek's founding shareholders sold 19 percent to Gazprom instead. During the three-way meeting, Total's de Margerie described past attempts to negotiate with Mikhelson. "We tried to establish cooperation with Mikhelson several years ago," de Margerie said, Interfax reported. "He's a scary person in negotiations." Putin didn't miss the chance to offer a rejoinder. "That was a compliment," he said.

25 June 2009 - The Moscow Times by Maria Antonova - Members of President Dmitry Medvedev's entourage said Wednesday that he would oversee the signing of major gas and nuclear deals, as well as a sweeping agreement on space cooperation during his visit to Nigeria. Medvedev left Egypt on Wednesday afternoon for Nigeria, the second destination on his four-country African tour aiming to establish a bigger business presence in the resource-rich continent. Federal Space Agency chief Anatoly Perminov said the expected agreement with Nigeria covered space cooperation in seven areas, including telecoms, navigation and geological research. "Everything but sending up pilots," he said, RIA-Novosti reported. He said Egypt had agreed to cooperate on Glonass, Russia's struggling answer to the U.S.-led GPS satellite system, and that the document would be signed soon. Perminov also said Russia was launching a satellite for South Africa within a month from the Baikonur Cosmodrome, which it leases from Kazakhstan. Medvedev called Kazakh President Nursultan Nazarbayev on Wednesday, according to the Kremlin web site, although it was not immediately clear what they discussed. A telecoms satellite is also ready to launch for Angola, Perminov said. "We hope to resolve all the financial aspects of this project on this visit," he added. The delegation will go to Angola on Friday. Medvedev and his delegation of officials and businessmen landed in the Nigerian capital, Abuja, on Wednesday evening for the first-ever visit there by a Russian president. Sergei Prikhodko, Medvedev's top foreign policy aide, told reporters that Gazprom and the Nigerian National Petroleum Corporation would sign a record gas deal, with the Russian company investing up to $2.5 billion into a Nigerian joint venture. The companies will have equal stakes in the venture, which will engage in research, extraction and transporting gas, he said. Gazprom had previously discussed the possibility of participating in the construction of a pipeline across the Sahara Desert, as well as pipeline infrastructure in Nigeria. The trans-Sahara link would connect Nigeria with Algeria's export system, making it possible to send Nigerian gas to Europe. Rosatom chief Sergei Kiriyenko said he also expected a series of nuclear energy cooperation agreements in Nigeria, including Russia's possible participation in construction of a nuclear power plant and uranium exploration. "It's a chance for us to stake out a claim for the territory," he said, regarding uranium exploration on lands that have not yet been explored, Interfax reported. Medvedev is scheduled to visit Namibia and Angola next, the first time a Russian leader will have traveled to either country. The Russian delegation includes Natural Resources and Environment Minister Yury Trutnev, Federal Fisheries Agency head Andrei Krainy, Vneshekonombank chief Vladimir Dmitriyev and executives from major companies including Alrosa, Gazprom Neft and Intourist. Russia is especially well-positioned to "cooperate with Namibia in sectors related to energy" and is interested in projects on hydro, heat and nuclear power as well as Namibia's mining industry, Prikhodko said. Alrosa, VEB, Sintezneftegaz, Technopromexport, Stroitransgaz and units of Gazprom are interested in increasing their business in Namibia, Prikhodko said.

June 24, 2009 (Reuters by Katya Golubkova) - MOSCOW, Total (TOTF.PA) emerged as Russia's favoured energy partner on Wednesday, with Prime Minister Vladimir Putin inviting the French major to take part in some of its largest gas projects after meeting its chief executive. Putin welcomed Total's participation in future stages of the giant Shtokman field, which is being led by Russia's Gazprom (GAZP.MM), and said the French company could invest $1 billion in the Yamal development with another Russian gas firm, Novatek (NVTK.MM). Total Chief Executive Christophe de Margerie, on a visit to Moscow, expressed his gratitude to Putin. "I don't think it's difficult to work in Russia," he said. "One only needs to learn, one needs to learn to work effectively with Gazprom." Britain's BP (BP.L) had a bumpy ride during its 15 years in Russia, marked by multiple disagreements with a quartet of Soviet-born oligarchs who share ownership of its TNK-BP joint venture. [ID:nLQ109843] A government source later told Reuters that Total would sign a deal with Novatek later on Wednesday to develop a gas field on the Yamal peninsula in northern Russia. De Margerie also said he had already held talks with Gazprom on participating in liquified natural gas projects on Yamal. Russia is counting on Yamal -- which needs investments of up to $60 billion and should produce 250 billion cubic metres (bcm) of gas per year by 2020 -- for the bulk of its gas supply to Europe in decades to come. Total is already Gazprom's partner in the first stage of the $25 billion Barents Sea Shtokman gas project, but partners for the second stage of the development have not been selected. "I know that you have offered to expand our cooperation and take part not only in the current stage of the project, but in future stages. This is totally possible," Putin said of the off-shore Shtokman project. (Reporting by Katya Golubkova,

06-19-2009 - Upstream OnLine - There are no plans to merge Russia's largest oil producer, state-controlled Rosneft , with its privately controlled peer Surgutneftegaz, Rosneft chairman and Russia's top energy official, Igor Sechin, said today. Speaking at Rosneft's annual shareholders' meeting, Sechin was addressing years of speculation that the Surgut could be merged with one of Russia's state energy majors, Reuters said. Separately, Sechin said the Russian government will support Surgut in its discussions with Hungarian player MOL. Surgut bought a 21% stake in MOL from Austria's OMV for €1.4 billion ($1.9 billion) in a surprise move earlier this year, earning the ire of MOL and Hungary's government. The company has said its intentions were friendly.

06-19-2009 - Upstream OnLine - Russian state-run oil producer Rosneft is planning to cut costs by 18 billion roubles ($579 million) as part of its anti-crisis programme, according to reports. Russian news agency RIA news agency quoted company boss Sergei Bogdanchikov as announcing the move, but did not say whether he was referring to 2009 or the programme that would stretch beyond this year. A Reuters report added that Rosneft had repaid $7 billion in debts in the first half of this year.

June 20, 2009 (Bloomberg by Lyubov Pronina and Torrey Clark) -- Russia and the Netherlands have “serious plans” to extend energy projects and “enhance” European fuel security as Royal Dutch Shell Plc seeks a role in the gas-rich Yamal region, President Dmitry Medvedev said. “We can advance on Yamal projects,” Medvedev told reporters today in Amsterdam, after meeting with Dutch Prime Minister Jan Peter Balkenende. Medvedev also met with Shell Chief Executive Officer Jeroen van der Veer, praising the company’s Sakhalin-2 project with OAO Gazprom for producing Russia’s first liquefied natural gas this year. Russia expects 20 percent of its natural-gas output to come from the Arctic Yamal Peninsula and the surrounding Kara Sea by 2020, Russia’s First Deputy Prime Minister Viktor Zubkov said after meeting Van der Veer yesterday. Gazprom may work with Shell to build an LNG plant in Yamal, Chief Executive Alexei Miller said earlier this year. LNG is natural gas cooled to a liquid for shipment by tanker to markets unreachable by pipeline. Medvedev called Dutch support for Gazprom’s Nord Stream gas pipeline, which will link Russia link directly to Germany, “a positive example” of cooperation with European partners “without any fear.” Nord Stream: Gasunie, the Dutch state-owned gas distribution company, holds 9 percent in the Nord Stream AG venture that aims to bring the pipeline online in 2011. Gazprom, the world’s biggest natural gas supplier, has said Nord Stream will boost European energy security after price disputes with transit country Ukraine disrupted deliveries three times since the start of 2006. European leaders have argued for diversifying supplies away from Russia. “We can do more,” Balkenende said today. Dutch companies want to extend cooperation with Russia in biotechnology, IT and telecommunications, as well as energy projects. The Netherlands was Russia’s second-largest trading partner last year, with a total volume of about $62 billion, while Dutch investment in Russia reached $45.2 billion, or 18 percent of total foreign investment, the Kremlin said yesterday. During the first day of Medvedev’s visit to Amsterdam yesterday, OAO Lukoil, the Russian oil producer with the most international assets, announced an agreement to buy 45 percent of Dutch refinery TRN from France’s Total SA for about $725 million.

19 June 2009 - Dow Jones - Wall Street Journal by Jacob Gronholt-Pedersen and Geraldine Amiel - MOSCOW/PARIS, Russian oil major OAO Lukoil Holdings (LKOH.RS) Friday said it agreed to buy a major stake a Dutch refinery, the latest in a series of deals signaling Russian energy companies' push to strengthen their positions in the European market. Lukoil, 20%-owned by U.S. oil major ConocoPhillips (COP), said it will pay France's Total SA (TOT) $725 million for a 45% stake in Total Raffinaderij Nederland, or TRN, refinery and that it plans to close the deal by the end of the year. The deal was announced on the first day of Russian President Dimitry Medvedev's state visit to the Netherlands and reflects the energy giant's open advocacy of foreign expansion by energy companies such as Gazprom OAO (GAZP.RS), which can boost the country's international influence. Last month, U.S. peer Valero Energy Corp (VLO) said it agreed to buy the same stake from U.S.-based Dow Chemical Co. (DOW), which co-owned the refinery with Total. But the French company exercised its preemptive rights to purchase the stake and simultaneously agreed to sell the stake to Lukoil. The 153,000 barrels-per-day refinery located in Vlissingen is mainly run on Russian crude oil, and the deal "contributes to the development of a broader strategic partnership between Lukoil and Total," a statement said. The deal is the latest example Russian oil and gas producers expanding abroad. In November last year, Lukoil, the most active Russian oil company outside the country, took a 49% stake in ERG SpA's (ERG.MI) Isab refinery in Priolo, Sicily. In April, Russia's Surgutneftegaz purchased a 20% stake in Hungary's national energy company MOL Nyrt. And last year, state-controlled gas giant OAO Gazprom (GAZP.RS) bought Serbia's national oil company NIS, and has formed alliances with European energy firms to build two new pipelines that will pump Russian gas to Northern and Central Europe. Lukoil, Russia's second-largest oil producer, is striving to fulfill a vow to boost its refining capacity by more than 70% by 2016. Chief Executive Vagit Alekperov said the acquisition "organically fits in our company's strategy aimed at increasing oil refining capacities located in the immediate proximity to the markets where products with higher added value are sold." Total has also been trying building relations with Russian energy companies. It holds a stake in Gazprom's Shtokman gas project in the Barents Sea, and has a stake in Russia's northern Kharyaga field. But analysts at UBS, who rate Lukoil's stock a neutral, were cautious on the company's European expansion. "We don't see any significant value creation in this deal for the shareholders," said analyst Maria Radina, noting currently low European refining margins. Lukoil's shares closed up 1.5% at $48.1 each in Moscow. The company had $3.2 billion of cash on its balance sheet on March 31 and is expected to finance the deal from cash-flow or existing debt facilities, Radina said. Lukoil already owns refineries in Bulgaria and Romania and runs gas stations in the U.S., Hungary, Finland, Poland, Serbia, Romania, Macedonia, Cyprus and Turkey. But a number of its recent attempts to buy assets abroad failed, either because the acquisitions were too expensive or due to what the firm described as the unwillingness of the European Union to allow cash-rich Russian firms to buy lucrative assets there. Last year, Lukoil scaled back its ambition of acquiring a 30% holding in Spanish oil company Repsol-YPF SA (REP), partly due to political unease in Spain over the deal.

MOSCOW, June 19, 2009 - (UPI) -- Chinese President Hu Jintao concluded his visit to Russia Thursday, which included a $100 billion agreement covering deliveries of Russian oil to China. Trud newspaper reported Friday that Russian President Dmitry Medvedev praised the agreement, telling reporters, "The deal worth about $100 billion is the largest ever concluded between Russia and China." Under the terms of the agreement, over the next two decades China will receive 300 million tons of Russian oil. Transneft's Head of Public Relations Igor Demin remarked that agreement formalized discussions earlier this year during which the two parties agreed in principle on long-term supplies of Russian oil, with China providing loans to Transneft and Rosneft to construct the East Siberia-Pacific Ocean pipeline to ship the oil. Among the factors influencing Moscow's decision are the fact that Europe has ceased to be an attractive growth market, the increasing depletion of Western Russia's oil resources and Moscow's interest in developing its eastern regions' economy through massive infrastructure projects.