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Monday, January 26, 2009

ONGC nears Satpayev deal

01-26-2009 - Upstream OnLine - India's state-run Oil and Natural Gas Corporation said it has signed a deal to explore for oil and gas in the Satpayev Block in Kazakhstan. The company said ONGC Mittal Energy - a joint venture company between its overseas arm and Mittal Investments - had signed an initial agreement with Kazakhstan-based KazMunaiGas. "The heads of agrement signed today is in pursuance to the memorandum of understanding that was signed between the two sides in February, 2005, for co-operation in the oil and gas sector of Kazakhstan," the company said in a statement reported Reuters. The Kazakh government signed a memorandum of understanding with ONGC in 2005 for the offshore block Satpayev with estimated reserves of 1.85 billion barrels, but did not reach a firm agreement. "The two companies are now actively pursuing together with the Government of Kazakhstan for finalization of the exploration and production contract," the statement added.

Kanfa to Build LNG Production Topside for World's First FLNG Vessel

January 22, 2009 - Rigzone News - Kanfa Aragon AS, a subsidiary of Sevan Marine ASA, has signed a contract with Samsung Heavy Industries Co., LTD in Korea for the development of a liquefied natural gas production topside to the world's first Floating Liquefied Natural Gas (FLNG) Production Vessel. The contract confirms a letter of intent previously entered into between the parties. The FLNG topside will be based on Kanfa Aragon's liquefaction technology. Kanfa Aragon's scope of work includes the design and engineering of the liquefaction plant as well as procurement of major equipment items. The contract value is approximately US $200 million. The vessel will be owned and operated by FLEXLNG. The vessel will have a gas processing and liquefaction topside with an LNG capacity of approximately 1.7 mtpa (million metric tons per annum) LNG. "This is a very important contract for us, and it is confirming our position as a leading world wide technology provider for floating LNG production. In spite of the unstable worldwide financial situation, floating LNG production is a growing market, and this contract puts us in an excellent position to take a major share of this market," said Jan Erik Tveteraas, CEO Sevan Marine ASA. Kanfa Aragon is focusing on gas technologies and applications with a range of skills, competencies and experience. Together with the Kanfa group, Kanfa Aragon, delivers advanced gas treatment solutions for FPSO projects worldwide.

Thursday, January 22, 2009

E.ON says to invest 4 bln eur in gas grid

E.ONESSEN, Germany Jan 22 (Reuters by Annelie Palmen) - Germany's E.ON (EONGn.DE), Europe's second-largest utility, said it plans to invest 4 billion euros ($5.19 billion) in its gas grid, detailing for the first time which part of its 63 billion euros investment program is earmarked for gas. Gas unit Ruhrgas's head Bernhard Reutersberg specified the investments at a press briefing on Thursday. The company has been receiving gas again via the pipeline that runs through the Ukraine from Wednesday, Reutersberg said. E.ON might claim damages from Gazprom (GAZP.MM) for the gas it did not receive after Gazprom shut down deliveries through the Ukraine, Reutersberg said.

Wednesday, January 21, 2009

UN looks to minimize impact of gas cutoffs

UN looks to minimize impact of gas cutoffs20 January 2009 - Russia Today - The United Nations has been discussing ways to offset the power of Gazprom after the conflict with Ukraine, which left millions of European families out in the cold. The world’s leading energy experts have recommended rapidly building new underground storage. A lack of gas storage facilities, particularly in Southern and Eastern Europe, has left many homes without heating. France stored enough to survive without Gazprom. Its utility GDF Suez’s now consulting states like Romania on new facilities according to Senior Asset Officer, Gilles-Henri Joffre. “Two weeks ago, when Russian gas was already cut off, it was very cold all over Europe. On the coldest days we’ve withdrawn 60% of our consumption from storage. On these days, if we didn’t have some storage tools we could not have been able to supply our customers.” Dutch producer Gasterra offset the crisis by releasing an extra 10% from its reserves. Its analyst, Dr Gerard Martinus, forecasts a storage building spree. “If you look at the European situation there’s something like 60 Billion cubic meters of gas storage at present. That will have to increase by about half in 10 years time.” The UN is now creating an international legal framework, to allow private firms like Gasterra to build new facilities across borders. Formally this UN meeting was not called in response to Ukraine’s gas blockade, but time and time again delegates here brought up 'Gazprom' to justify urgent expansion of capacity. The UN’s recommendations now pass to national governments for implementation.

Tuesday, January 20, 2009

German Energy Regulator Seeks Gas Market Progress

Johannes Kindler VizepraesidentJanuary 20, 2009 - AFX News Limited - Germany's energy regulator aims to achieve a further concentration of gas market zones into eight units by October 2009, further easing market conditions for traders, the authority's vice president said on Tuesday. "I assume that we will be down to eight zones from the start of the (winter) 2009 gas season," Johannes Kindler, the second in command at the Bundesnetzagentur in Bonn, told reporters during an energy conference in Berlin. The agency started reforming operational modalities and prices charged to users on the country's gas and power networks in 2005 to ease access and cut overall energy costs. Last October, it had forced the number of delivery zones down to 12 from over 700 four years ago, creating bigger geographic units and creating more transparency for users. But it started proceedings last August against five gas transport companies over their failure to combine five market areas for low-calorific (L) gas into two from Oct. 1, 2008. The companies are E.ON Gastransport, RWE Transportnetz Gas, Gasunie Deutschland Transport Services, EWE Netz GmbH, and Erdgas Muenster Transport. The operators said they found it too hard to deal with capacity bottlenecks and technical restrictions in time. Kindler said the agency would work with operators to resolve the issues blocking progress before the next winter season. Too many zones mean that traders cannot reliably put a cost on the transport charges they will levy on their customers, which means they cannot make competitive alternative offers. The concentration of bigger H-gas zones, a highly calorific type piped from Russia and the North Sea, is more advanced. The H-gas transport area of market leader E.ON's Ruhrgas for example has become a flourishing gas trading hub and since last October has encompassed a transport corridor allowing traders to book flows from the North Sea to the Alps. But a significant zone merger involving the H-gas zones of Gasversorgung Sueddeutschland (GVS), Italy's Eni's and French Gaz de France's is still on hold.

Turkmen energy minister gets the sack

16 January 2009 - Upstream OnLine - Turkmenistan's President Kurbanguly Berdymukhamedov sacked two Cabinet ministers, the heads of the state oil and cotton companies and several other key government officials today, accusing them of "unforgivable mistakes" in carrying out reforms in the gas-producing Caspian nation. Berdymukhamedov, who came to power in late 2006 promising wide-ranging reform, fired more than a dozen officials including Energy & Industry Minister Kurbannur Annaveliyev and Communications Minister Resulberdy Hojagurbanov, a Reuters report said. "Unforgivable mistakes and miscalculations have been allowed in their work which hindered efforts to implement our possibilities," Berdymukhamedov said in remarks broadcast on state television. "Incompetence, lack of responsibility and negligence are all to blame here as well as direct violations by some of the managers who were driven by vested interest," he said. Berdymukhamedov promoted Yarmukhammed Orazgulyyev, a deputy energy and industry minister, to the minister's post, one of the most influential jobs in Central Asia's biggest natural gas exporter. Orazdurdy Khajimuradov, a mid-ranking energy sector official, was appointed head of the state oil company Turkmenneft, replacing Karyagdy Tashliyev. Also sacked were the head of the state cotton company and several regional leaders. Investors watch the emergence of new senior figures in the government closely as Russia and the West compete for opportunities in Turkmenistan's vast energy sector. The ex-Soviet nation, which has been slowly opening up to the outside world since the 2006 death of absolutist President Saparmurat Niyazov, is keen to demonstrate its willingness to conduct reforms and improve the investment climate. "The world community is changing," said the Turkmen leader. "We have to put more effort into our work, we have to work productively, and we have to raise ourselves again to the level of top members of the global community." Turkmenistan held parliamentary elections last month in which 90% of the candidates were members of the president's Democratic Party - the only registered party - and a few independent candidates represented state-controlled groups.

StatoilHydro Sees Shtokman Development Decision in 2009/10

StatoilHydroJanuary 14, 2009 - Rigzone - Norwegian oil major StatoilHydro said it expects to make a final decision on whether to invest in the development of the Shtokman gas field offshore Russia this year or in 2010. "The plan so far has been to mature the project towards an FID (final investment decision) either towards the end of this year or next year," Chief Executive Helge Lund said. "The key focus for all three participants in the (Shtokman) development company is to mature the project technically, and that is exactly what we will do," Lund said. Russia's Gazprom has 51 percent of Shtokman Development AG, while France's Total has 25 percent and StatoilHydro 24 percent.

Oil price collapse wreaks havoc on forecasts and budgeting

Gas dispute casts shadow over Europe's energy future12 January 2009 - Russia Today - Russia still insists Ukraine should pay market price for its supplies in 2009. Even if the two sides settle their differences in the coming days, the conflict is likely to leave Gazprom and the European Union with a sense of insecurity. An unpaid debt and a disagreement on pricing for 2009. That’s what led Gazprom to, first shut off gas supplies to Ukraine and then cut gas transit though Ukrainian territory, leaving more than a dozen European countries suffering severe gas shortages. Gazprom accused Ukraine of stealing gas from export pipelines, and insisted on having a multilateral group of independent observers keeping a close eye on transit gas destined for Europe as a pre-requisite for resuming supplies. Tatyana Mitrova, from the Centre for Energy Market Studies, says the circumstances mean that the European union needs to become involved. “There is a special contract for gas supplies to Ukraine, and a special contract for gas transit through Ukraine. In this case it is Ukraine which is completely responsible for all reliable transit, and in this case it is the European Union which somehow should affect the situation as well.” Until recently, a Soviet legacy meant Russia was selling gas to its neighbours at below the market. In 2006, Gazprom briefly shut off supplies when Ukraine refused to go from just US$ 50 per 1,000 cubic metrers of gas to US$ 230. The US$ 95 price tag was a good compromise. This time, though, Ukraine’s economic chaos means it could not even accept Gazprom’s initial offer of US$ 250, not to mention the European market price of more than US$ 400. But regardless of what the two sides will settle on, the damage is done. Going forward, the European consumers are likely to try to diversify suppliers, while Russia will speed up the construction of pipelines that bypass Ukraine. Gazprom’s hopes lie with two projects: the South Stream via the Black Sea and the Nord Stream -running under the Baltic Sea, with the latter being closer to completion. Ronald Smith, Head of Research at Alfa Bank says, many EU countries fear that, although the new pipelines will allow Russian gas to bypass Ukraine, they will give Russia even greater control over supplies to Europe. “Some in Europe are going to be hesitant because they don’t want to be more dependent on Russia for gas. In reality, in the end they don’t have much choice. There’s only a few limited sources of meaningful amounts of gas for Europe. It's Europe itself, it's Norway, it's North Africa and Russia." Gazprom says it will build the biggest gas storage in Western Europe. To be located in northern Germany, it will make sure future conflicts with Ukraine don’t leave Gazprom’s European consumers out in the cold.

Tough talk from Merkel and Sarkozy

Angela Merkel and Nicolas Sarkozy8 January 20098 - Upstream OnLine - France and Germany today told Russia it had to honour its gas contracts with Europe regardless of its dispute with Ukraine, but also reminded Kiev not to forget its own obligations towards the European Union. French President Nicolas Sarkozy and German Chancellor Angela Merkel told reporters they would encourage Russia and Ukraine to continue talks to try to end their row that has hit gas supplies to many European countries. "We expect the talks between Ukraine and Russia to yield quick results," Merkel said following her meeting with Sarkozy. Russia cut off gas for Ukraine's domestic consumption on New Year's Day after disagreements over gas prices and debts owed by Ukraine. It later suspended supplies of transit gas towards Ukraine, disrupting distribution across Europe. Russia's Gazprom said there was no point delivering the gas because Kiev had shut down the lines. Ukraine said Russia was deliberately starving Europe of gas. "The Russians have to respect their contractual obligations to Europe," Sarkozy said, while Merkel warned that it was in Russia's "interest in being seen as a reliable partner". However, both leaders indicated that Europe also held Ukraine responsible for the situation. "As for Ukraine, I think I am well placed to say that Europe has done a lot for Ukraine," he said, explaining that France had helped obtain a privileged status for Ukraine in its dealings with the European Union "No one should hold anyone hostage," Reuters quoted him as saying. South-eastern Europe has borne the brunt of the disruption, but it has affected supplies as far west as France and Germany as Europe faced freezing mid-winter temperatures. "Searching for the causes is not the first priority. The first priority is for gas to reach Bulgaria, Serbia and Bosnia again," Merkel said. "Germany is relatively well-equipped with storage facility but other countries aren't. That will certainly also have consequences for European policy. We will think about how to get more storage capacity," she added.

Iran seals Turkmen gas deal

2 January 20098 - Upstream OnLine - Iran and Turkmenistan have agreed on the price the Islamic Republic will pay for natural gas it imports from its north-eastern neighbour for the next six months, a senior official said. The Oil Ministry website Shana quoted the head of the National Iranian Gas Export Company, Reza Kasaizadeh, as saying the price would stay "fixed" during the first half of 2009. But Iranian media did not give details about the price and make clear whether it represented an increase or not from 2008. The announcement came as Russian gas export monopoly Gazprom said it had completely cut off gas supplies to Ukraine but was maintaining deliveries in full to customers in the European Union. Iran sits on the world's second-largest gas reserves after Russia, but it has been slow to develop its resources, and faced a gas shortage last winter when Turkmenistan stopped supplies of up to 23 million cubic metres per day citing technical issues. Gas imports from Turkmenistan resumed in April. Iran has previously said Ashghabat wanted to be paid more for its gas. "It was agreed that Turkmenistan's gas would be imported to the country (Iran) with a fixed price in the first six months of 2009," Kasaizadeh was quoted as saying by Shana. The Hamshari newspaper quoted him as saying: "In view of the goodwill by the Turkmen side and in view of the current market conditions, the two parties agreed the price of (exporting) gas from this country to Iran would remain unchanged for the next six months." Another senior Iranian energy official told Reuters he had heard the two sides had signed a contract but he did not yet know its content. Iran uses the Turkmen gas to supply a northern region of the country that is difficult to reach from Iran's national gas grid and its huge reserves in the south. Iranian Oil Minister Gholamhossein Nozari last week said Iran could produce enough gas to meet domestic demand even without Turkmen imports and that Tehran had brought extra supplies onstream to prevent a repeat of last winter's shortage. The Islamic state has long sought to promote itself as a transit route for oil and gas from central Asian states but the US, which has not had diplomatic ties with Tehran since 1980, has been pushing for alternative export channels.

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