World's Energy

April 30, 2009 - Wall Street Journal by Isabel Ordonez, Angel Gonzalez - Exxon Mobil Corp. on Thursday said its first-quarter profit fell 58% as the global economic slowdown depressed oil prices and demand. The world's largest oil company by market value posted net income of $4.55 billion, or 92 cents a share, down from $10.89 billion, or $2.02, a share, a year earlier. Revenue dropped 45% to $64.03 billion. The earnings decline at ExxonMobil, which repeatedly broke profit records during the run-up in energy prices, underscores the reversal of fortunes for the oil-and-gas sector. Crude-oil prices have fallen to about $50 since reaching highs above $145 a barrel last summer, and oil companies are struggling to maintain the capital spending needed to shore up declining production while maintaining dividends to attract investors. ExxonMobil, of Irving, Texas, increased its quarterly capital spending by 5% to $5.8 billion compared with last year and on Wednesday said it would increase its second-quarter dividend 5% to 42 cents a share. ExxonMobil also said it would spend about $5 billion on share buybacks in the second quarter, a decrease from the $7 billion it spent in the first quarter. "Exxon is showing it's an extremely disciplined company that will continue its journey no matter what," said Fadel Gheit, an analyst at Oppenheimer & Co. ExxonMobil's first-quarter production averaged 4.2 million barrels of oil equivalent a day, the same as a year earlier. Production would have grown 2% were it not for the impact of production-sharing contracts, the effect of quotas imposed by the Organization of Petroleum Exporting Countries and divestments, the company said. Oil and gas output from new projects in Qatar, Nigeria and the Gulf of Mexico were offset by depletion in other fields, according to a research note by investment bank UBS.

04-27-2009 - Upstream OnLine - PetroChina's largest Daqing oilfield will add eight large crude oil storage tanks by 2010 after having installed two such tanks for offloading Russian oil. The 10 tanks alone, with planned capacity of 150,000 cubic metres each, will boost Daqing's crude oil storage capacity by nearly 10 million barrels, as China is set to ship in more Russian oil following the recent oil-for-loan deals between the two countries, Xinhua news agency said in a report over the weekend. China agreed this month to lend $10 billion to Russian oil pipeline monopoly Transneft and another $15 billion to state-run oil major Rosneft in exchange for supplies via pipeline shipment of 300 million tonnes of Russian oil over 20 years. The planned pipeline that will be used to transport Russian oil ends at the Daqing oilfield. China currently gets most of its Russian oil supplies via rail. Oil production at Daqing, China's top oilfield by output, has been on a decline after decades of extraction. CNPC, parent of PetroChina, hopes for steady production from Daqing while making it an important oil stockpiling base, the Xinhua report said.

//The President advised we'd better sign South Stream before general elections
04-26-2009 - Bulgaria Standart - Bulgaria's President, Georgi Parvanov warned Gazprom not to mess with Bulgaria's domestic affairs. The President's sharp reaction was provoked by the statement of Stanislav Tsygankov, Gazprom Head of International Business who said that the Russian company would sign contracts directly with consumers such as Overgaz and not via Bulgargaz. "If Gazprom has reasons to avoid working with Bulgargaz, let it voice them openly," Parvanov appealed. He pointed out he was in contact with Russia's Government and if it had certain pretensions, they would be discussed but he would not comment on the desires of any firm. "The South Stream pipeline construction contract should be signed as soon as possible," the President also said. It would be best if this happened within the term of the incumbent Cabinet, he added. President Parvanov also said that while previous Russia's President and current Prime Minister, Vladimir Putin was in Bulgaria last year it was negotiated that South Stream would be constructed with pipes running parallel to those of the Bulgarian national gas transport network and no change in stands had occurred since. "So, the ownership of our network will not change," Parvanov said. The diplomatic discord on the two key projects – South Stream and Nabucco – marked the second day of the forum. Romania, Egypt, Austria, the Czech Republic and some others stood up for Nabucco. The representatives of the Italian Eni and the countries whose territories would potentially “host” Nabucco’s pipelines stood behind Gazprom’s idea. The most serious defence of South Stream was spoken out by Italy’s Minister of Economic Development Claudio Scajola. “I don’t think anyone would ever imagine EU’s energy policy could exist without Russia. The Russian gas is at the backbone of all gas deliveries to the rest of Europe, and so shall it be in the future,” he stated.

04-24-2009 - EurasiaNet by Deirdre Tynan - The outcome of a two-day energy security conference, which concluded April 24 in the Turkmen capital of Ashgabat, has to be considered a disaster for Russia’s energy policy. The Kremlin-controlled conglomerate Gazprom currently enjoys a near-monopoly of Turkmen natural gas exports. But as a dispute between Ashgabat and Moscow over responsibility for an early April pipeline explosion continues to fester, Turkmen leader Gurbanguly Berdymukhamedov used the conference to proclaim Turkmenistan’s energy independence from Russia. In comments to conference participants, Berdymukhamedov let it be known that Turkmenistan would no longer be cowed into going along with the Kremlin’s energy agenda, and that he was intent on loosening Gazprom’s vice grip on Turkmen energy exports. "Today we are looking for conditions to diversify energy routes and the inclusion of new countries and regions," Berdymukhamedov said. "Turkmenistan must create a new system of relations with Europe. In the current situation, the diversification of energy routes could help to stabilize the global economy." To compound Russia’s woes, Berdymukhamedov indicated that if Gazprom wanted to keep doing business with Turkmenistan, then the conglomerate could not expect any discounts. "It’s logical that the country of production determines the price based on the cost of gas production," the Russian newspaper Vremya quoted the Turkmen leader as saying on April 24. Russia’s energy export agenda is largely predicated on its ability to obtain relatively low-cost gas from Turkmenistan. Without such access, the entire Russian economic edifice erected during the Vladimir Putin era is vulnerable to collapse. The Ashgabat energy conference seemed to bring Russia’s current vulnerabilities into sharp relief. A high-level Russian delegation in attendance - led by Deputy Prime Minister Igor Sechin, Energy Minister Sergei Shmatko and Gazprom boss Alexei Miller - could only sit in silence as Berdymukhamedov sought to remake the Caspian Basin’s energy order. According to a report distributed April 24 by the semi-official Turkmenistan.ru news website, Ashgabat will start pressing for a "fundamentally new, universal model for relations in the world energy market" that is based on the "multilateral balance of interests." In other words: Moscow will no longer be able to bully the countries of Central Asia into going along with the Kremlin’s wishes. Berdymukhamedov’s comments were just what US and European Union officials have long been waiting to hear. A bevy of Western officials and energy executives participated in the conference, mainly to reaffirm their interest in doing deals with Ashgabat. On April 24, US Deputy Assistant Secretary of State George Krol urged Turkmenistan to diversify its energy export routes. Washington is most interested in securing a Turkmen commitment to export via the long-planned trans-Caspian pipeline route. But in one of the more interesting tidbits to emerge from the conference, Krol indicated that the United States was open to the possibility of Turkmen gas being shipped westward via Iran. Although the Ashgabat conference was ostensibly designed to mull energy security issues, in practice the gathering turned into a deal-making scrum, in which Turkmen officials and Western energy company representatives explored the parameters of potential ventures. "The main task of the conference for Turkmenistan [was] to feel the ground for opportunities to supply gas to European partners and feel the readiness of western investors to be present in the Turkmen market," Valery Nesterov, an energy analyst at Moscow-based Troika Dialog, told EurasiaNet. The coming weeks and months could prove critical for energy cooperation between Turkmenistan and Western companies, suggested Andrei Hrienko, an analyst at the Vector International Institute for Strategic Studies in Moscow. Ashgabat, despite its current posturing, will not make a move until it feels assured that it won’t suffer economically. "A big part of Turkmenistan’s income depends on reliable relations with Gazprom, but if the United States, EU and other countries can significantly compensate any economic loss if Turkmenistan was to stop interacting with Russia, [then Turkmenistan’s] geopolitical direction could change," Hrienko said. If US and European entities can strike deals with Ashgabat, there may be little that Gazprom can do to stop them from going forward. Due to its recent economic difficulties, Gazprom is experiencing cash-flow problems, meaning the company may not have the financial flexibility to outbid the West for Ashgabat’s energy. While the situation may appear bleak for Russia at the moment, Nesterov suggested that the Caspian energy game could still take an unexpected turn. Less than a year ago, he noted, Russia’s energy position in Central Asia seemed unassailable. But the onset of the global economic crisis quickly sapped Russia of its economic might. A source of encouragement at this stage for the Kremlin is the fact that Turkmenistan’s alternative Europe-bound gas export options exist only on paper and could take years to construct. Thus, the Kremlin still has time to snatch victory from the jaws of defeat. But Nesterov and other experts agree that it is late in the game for Russia and the clock is ticking.

04-24-2009 - Upstream OnLine - Turkmenistan is keen on the European Union-backed Nabucco gas pipeline but needs Brussels to come up with concrete proposals on its implementation, a senior US official said today. In Turkmenistan to attend an energy conference, US Deputy Assistant Secretary of State George Krol said the gas-rich Caspian nation was serious about efforts to diversify gas exports and break into new markets. "The president of Turkmenistan has said that he is interested in Nabucco," Krol, who met top Turkmen officials during his visit this week, told Reuters in an interview. "It is now waiting for concrete proposals from companies and participant states," Krol added. Europe has long courted Central Asia's biggest gas producer whom it sees it as a potential big supplier for Nabucco, a project designed to reduce EU energy dependence on Russia. But analysts say the project may be headed for failure unless the EU commits to buying Caspian gas quickly. Relations between Turkmenistan, which sells most of its gas to Russia, and Moscow soured this month after a gas explosion on a key pipeline which Turkmenistan blamed on Russia, giving the West a chance to firm up its position and win Turkmen support. "This explosion is of course a technical matter but it is a good argument in favour of diversification," said Krol, who oversees South and Central Asian affairs. "There can be earthquakes and other disasters and that is why it is always good to have an alternative." Addressing officials at the conference, President Kurbanguly Berdymukhamedov said he wanted to work closer with Europe to diversify flows, a remark which could be upsetting for Russia which considers Turkmenistan as part of its sphere of interest.

04-24-2009 - Upstream OnLine - Victoria Oil & Gas has suffered a further blow in its legal battle over ownership of the Kemerkol oilfield in Kazakhstan, sending its shares down as much as 36% today. The AIM-listed oil and gas explorer said that a Kazakh lower court supervisory panel had decided not to refer a claim made against the company's Kazakh unit back to the court to be reconsidered. The claim disputes the transfer of the Kemerkol licence to Victoria's subsidiary in 2005. At 1219 GMT, Victoria Oil shares were down 20% at 3.75 pence on the London Stock Exchange, having touched a low of 3 pence earlier in the session. The supervisory panel made the decision despite a letter of protest last month from the Kazakh General Prosecutor supporting Victoria's appeal. Victoria said it was assessing the best course of action for a further appeal in Kazakhstan. "We will continue the fight until our rightful title to the Kemerkol field has been restored," chairman Kevin Foo said in a statement. Victoria had acquired the Kemerkol exploration and production licence in 2005. However, since 2008 production from the field has been suspended due to the legal challenge.

04-24-2009 - Upstream OnLine - First gas from the second production phase of Azerbaijan's Shah Deniz development, in the Caspian Sea, will be delayed until about 2016, field partner StatoilHydro said. Kristian Hausken, president StatoilHydro Azerbaijan, told Reuters on the sidelines of a gas conference in Sofia that problems in setting transit conditions were behind the expected delay. He said: "Shah-Deniz is mature to take decisions to be developed provided we see a commercial solution. And the longer it takes to get the commercial solution and by this I mean transit, the longer it is delayed in a way. "The challenge is to get the transit conditions that can enable Shah Deniz gas to get to Europe. When that is ready then we have a project and then we can see deliveries around 2016," he told the news agency. The second phase, estimated to cost around $10 billion, has been identified as a source of gas for the Nabucco pipeline project, aimed at diversifying Europe's supplies. Turkey and Azerbaijan are in talks regarding the transit of the gas, but these have been delayed by demands from Ankara for a share of the gas that will pass through Turkish territory. StatoilHydro and BP control Shah Deniz, which produces around 15 million cubic metres of gas per day and has reserves of 1.2 trillion cubic metres. A BP source said last month that the startup of the second output phase would be in 2014 at the earliest from a previous target of 2011 to 2012. "It will not be 2011 to 2012, it will also not be 2014. It will be later, around 2016 plus or minus," Hausken said. "We are at a stage where we cannot move strongly ahead without having more security in knowing which direction and how it is going to be commercialised," he added. Azeri state energy company Socar is also a partner in Shah Deniz, along with Russia's Lukoil , France's Total and Iranian and Turkish state companies.

04–24–2009 – (AP by Alexander Vershinin) – ASHGABAT, Turkmenistan — A recent crippling gas pipeline blast in Turkmenistan, which the government blamed on Russia's gas monopoly Gazprom, is proof that energy-rich Central Asian nations need to diversify their export routes, a senior U.S. diplomat said Friday. Russia currently controls most natural gas export routes out of the region, but that grip is coming under growing pressure from China and the West. "This explosion or accident with the pipeline makes the argument for the diversification of routes," George Krol, the U.S. deputy assistant secretary for South and Central Asian affairs, said at an international conference on energy transit security in Turkmenistan. Relations between Turkmenistan and Russia have soured over the past two weeks, with Turkmenistan accusing Gazprom of causing the April 8 pipeline blast on its border with Uzbekistan that shut off the Central Asian country's gas exports. Russian Foreign Minister Sergey Lavrov said the incident was "purely technical." The dispute threatens to further delay the start to construction work on a 1,100-mile (1,700-kilometer) pipeline along the Caspian Sea shore that would run from Turkmenistan through Kazakhstan and into Russia's network of pipelines to Europe. Krol denied the charge that U.S. backing for the diversification of export routes from Central Asia is part of a design aimed at undermining Russia. Europe and the United States are lobbying to build an energy route across the Caspian Sea to Central Asia that would bypass Russia. Gas transported via this route would then supply the EU-backed 2,050-mile (3,300 kilometer) Nabucco pipeline that cuts across Azerbaijan, Turkey and the Balkans to Central Europe. China also is close to completing a gas pipeline through Kazakhstan and Uzbekistan that will allow for annual natural gas exports of 1,059 billion cubic feet (30 billion cubic meters) within the next two years. Krol also said the U.S. government remains open to the prospect of Central Asian gas being exported to the West through Iran, which borders Turkmenistan to the south. Speaking about opportunities for U.S. energy companies in Turkmenistan, Krol said recently adopted legislation was making life easier for foreign investors. "But we have to see how the law is applied. That will take time" he said. He said Chevron Corp. has opened a representative office in Turkmenistan and is currently engaged in negotiations with government officials. International competition over access to Turkmenistan's vast oil and gas resources intensified following the death in 2007 of the country's long-ruling autocrat, Saparmurat Niyazov, who had blocked foreign access to the country's energy sector. Turkmenistan has the second-biggest gas reserves among all ex-Soviet republics after Russia, and its resources are playing an increasingly important role in regional geopolitics.

04-23-2009 - Upstream OnLine - Azerbaijan today raised fears that it may snub Western overtures for it to supply gas from the Shah Deniz development to the proposed Nabucco pipeline in retaliation over Turkey's moves to normalise its relations with Armenia. An Azeri official said that Turkey and Armenia risked raising tensions in the region if they went ahead with plans to normalise relations before a dispute over the Armenian-backed enclave of Nagorno-Karabakh in Azerbaijan was solved. "The opening of the Armenian-Turkish border cannot take place without a process to resolve the conflict over Nagorno-Karabakh," Reuters quoted Azeri Foreign Ministry spokesman Elkhan Polukhov as saying. "Opening the border could lead to tensions in the region and would be contradictory to the interests of Azerbaijan." Polukhov said it was "too early" to discuss what steps Azerbaijan might take in retaliation. Turkey shut its frontier with Armenia in 1993, in solidarity with fellow Muslim nation Azerbaijan after ethnic Armenian separatist forces took control of the enclave of Nagorno-Karabakh in a war that followed the collapse of the Soviet Union. Turkey and Armenia announced late last night they had agreed a framework for normalising their relations. Azerbaijan, a supplier of oil and gas to the West, fears losing leverage over Christian Armenia in the dispute if Turkey reopens the border with Armenia and restores full diplomatic relations. Azerbaijan is Europe's key hope for supplying gas for the proposed Nabucco pipeline that would run through Turkey and reduce Europe's energy dependence on Russia. Diplomats fear Baku could reject European overtures and instead sell the gas from phase two of the Shah Deniz field - due to come on stream by 2014 - to Russia for re-export. Polukhov earlier told Azeri news website Day.az that Armenian troops should be withdrawn from Nagorno-Karabakh "in parallel" with the normalisation of relations between Ankara and Yerevan. Since Armenia is landlocked and its border with Azerbaijan is also closed, the Turkish frontier is of key importance for trade routes to the West. "If Azerbaijan feels that Turkey is betraying them, then why would Azerbaijan not move in a Russian direction? And the Russians are offering to buy all their gas at European prices," Svante Cornell, research director at the Central Asia-Caucasus Institute, told Reuters. A senior Western diplomat, speaking to Reuters on condition of anonymity, said he did not expect Azerbaijan to renege on its existing energy contracts. However, he added: "But in terms of ongoing negotiations on Shaz Deniz II for example, then there I think the Azeris will have a very different perspective and keep doors open that were not very likely or not very attractive to the Azeris previously." Last month, Azeri state energy company Socar signed a memorandum with Russian gas export monopoly Gazprom on starting talks on Russia buying Azeri gas from 2010 for export to Europe.

04-23-2009 - Upstream OnLine - Turkmenistan told the West today it is actively looking for new ways of diversifying its gas exports, in a snub to Russia which wants to keep the energy-rich former Soviet republic on a tight leash. Relations between Turkmenistan, which sells most of its natural gas to Russia, and Moscow deteriorated sharply this month following a gas explosion on a key pipeline which Turkmenistan blamed on Russia. The accident reinforced the West's resolve to convince Turkmenistan to work more closely with Europe. Today, Turkmen President Kurbanguly Berdymukhamedov told foreign energy chiefs who have gathered in Ashgabat to attend an energy conference, that he wanted more co-operation. "Turkmenistan needs to create a new system of ties with Europe," Reuters quoted him telling a packed hall of US, European and Russian officials. "In the current environment diversification of energy flows and inclusion of new countries into the geography of export routes can help the global economy gain stability." Worried that Turkmenistan may roll out of its traditional sphere of interest, Moscow has sent Prime Minister Vladimir Putin's powerful Deputy Prime Minister Igor Sechin to counter Western efforts on the sidelines of the two-day conference. Europe has courted Central Asia's biggest gas producer because it sees it as a potential supplier for the planned Nabucco gas pipeline, at the centre of its plans to reduce its energy dependence on Russia. US Deputy Assistant Secretary of State George Krol, a senior United Nations official, general secretary of the Organisation for Security & Co-operation in Europe and heads of global energy companies were also present, Reuters said. "We have to make sure that there are no disruptions in energy supplies," Sha Zukang, UN Under Secretary General for Economic & Social Affairs, said through an interpreter. "We have to reduce uncertainty surrounding energy supplies." Turkmenistan said an explosion on a gas link on 9 April was caused by Russia's abrupt reduction of imports. It fully halted imports from Turkmenistan after the blast. Russian gas giant Gazprom has not commented on the Turkmen allegations. The accident happened at a time when Russia, hit hard by falling gas demand in Europe, was forced to cut gas output by a quarter. Turkmenistan produces about 75 billion cubic metres of gas a year and sells about 50 Bcm of that to Gazprom. As part of its diversification, it is building a separate pipeline to China. The European Union-backed Nabucco pipeline will also be at the centre of talks in Ashgabat this week but analysts said the project may be headed for failure unless the EU commits to buying Caspian gas quickly.

04-21-2009 - Upstream OnLine - Turkmenistan hosts a high-profile energy conference this week which is likely to turn into a diplomatic battlefield between Russia and Europe, both seeking control over gas flows from the gas-rich Central Asian nation. Europe has courted Turkmenistan as it seeks to diversify supplies and reduce its gas dependence on Russia. Moscow is irritated by these overtures because it sees the former Soviet state as part of its traditional sphere of interest. Turkmenistan sells most of its gas through Russian gas monopoly Gazprom but it has shown growing willingness to open new lines to Europe as it develops untapped fields. Diplomacy intensified this month after a gas explosion on a key Turkmenistan-Russia pipeline highlighted the vulnerability of gas flows and reinforced the West's determination to end Turkmenistan's dependence on Russia. "This explosion has given Turkmenistan an additional excuse to seriously think about alternative supplies to Europe," Valery Nesterov, an analysts with Troika Dialog in Moscow, told Reuters. "It's a growing trend in Turkmenistan and it's understandable." Russia's energy minister, US State Department officials and executives from global multinationals will gather in Turkmenistan for the conference on Thursday and Friday. The official agenda is transportation of energy - a hot topic since the 9 April explosion which Turkmenistan says was caused by Russia's abrupt reduction of imports. Gazprom has not commented on Turkmen allegations. Analysts told Reuters Russia could benefit from reduced flows at a time when demand in Europe is falling, a worrisome assertion for Turkmenistan whose economy relies on Russian purchases. "The age of monopolies is coming to an end," a Turkmen government source told the news agency, adding that the Turkmen government saw diversification as key to preventing any further disruptions. Turkmenistan produces about 75 billion cubic metres of gas per year and sells about 50 Bcm to Gazprom. As part of its diversification, it is building a separate pipeline to China. The Nabucco pipeline, designed to ease Europe's reliance on Russia, will be at the centre of talks in Ashgabat this week but analysts said the project may be headed for failure unless the EU commits to buying Caspian gas quickly. There are also concerns that Turkmenistan, which has yet to confirm its reserves, has enough gas for everyone. As closed-door negotiations heat up ahead of the conference, the United States sent a senior State Department official to Turkmenistan last week, closely followed by a separate visit by a Russian Deputy Prime Minister. "The new administration in Washington is putting a lot of emphasis on Central Asia, and looking how we can develop our involvement here," US Assistant Secretary of State Richard Boucher said during that visit. "If you have problems with any particular line, whether the problems are technical or something else, you need to have other alternatives," he said. "The basic principle though that I think we all agree upon ...is that of diversification"

04-21-2009 - Upstream OnLine - European Union Energy Commissioner Andris Piebalgs said today he was convinced that Russia and Ukraine will work towards avoiding any future gas supply disruptions to Europe. "If there is another crisis, their credibility will be ruined. I think it is important for them that it (the transit system) functions in future," Piebalgs told Reuters at the Hanover industry fair. Europe was shocked by delivery shortfalls in January after a bilateral row over transit and pay. Their biggest customer, the EU, has been urging the two countries to bridge differences to ensure the bloc safeguards its energy security. Piebalgs was in Hanover to promote the focus on energy efficiency placed in Germany at its industrial showcase event, where technologies to cut raw materials use, avoid environmental burdens and raise efficiencies are on display. Turning to carbon capture and storage (CCS) technologies for the coal-to-power generating industries which Brussels has agreed to help fund in its pre-market stages, Piebalgs said that he was only ready to propagate public funding until the technology was mature enough to be economically feasible. "We are in a transition phase, we must close a gap until the technology is mature," he said.

21 April 2009 - Zawya - Moscow - Iran, Russia and Qatar will be the sole major gas producing countries in the world by 2030, said deputy head of Russia's Gazprom Company. Talking to reporters on Tuesday, Alexander Medvedev added that other gas-producing countries will not be able to export the product. Gas consumption in Europe will surge in future to reach 100 billion cubic meters per annum. According to the Russian official, the increase in gas demand by the European countries will make implementation of major gas projects such as North Europe Gas Pipeline Plan essential. Based on the statistics released by International Energy Agency, Iran ranks first in terms of gas reserves after Russia.

ALMATY, April 21, 2009 (Reuters by Maria Golovnina) - Turkmenistan hosts a high-profile energy conference this week which is likely to turn into a diplomatic battlefield between Russia and Europe, both seeking control over gas flows from the energy-rich nation. Europe has courted the remote Caspian country as it seeks to diversify supplies and reduce its gas dependence on Russia. Moscow is irritated by these overtures because it sees ex-Soviet Turkmenistan as part of its traditional sphere of interest. On April 23, officials from the opposing camps will come directly head to head when delegations from Russia, the United States and Europe descend on Turkmenistan to attend an energy security conference organised by the government. Turkmenistan -- Central Asia's biggest gas exporter -- sells most of its gas through Russian gas monopoly Gazprom (GAZP.MM) but it has shown growing willingness to open new lines to Europe as it develops untapped fields. Diplomacy intensified this month after a gas explosion on a key Turkmenistan-Russia pipeline highlighted the vulnerability of gas flows and reinforced the West's determination to end Turkmenistan's dependence on Russia. "This explosion has given Turkmenistan an additional excuse to seriously think about alternative supplies to Europe," said Valery Nesterov, an analysts with Troika Dialog in Moscow. "It's a growing trend in Turkmenistan and it's understandable." Russia's energy minister, U.S. state department officials and executives from global multinationals will gather in Turkmenistan for the conference on Thursday and Friday. The official agenda is transportation of energy -- a hot topic since the April 9 explosion which Turkmenistan says was caused by Russia's abrupt reduction of imports. Gazprom has not commented on Turkmen allegations. Analysts say Russia could benefit from reduced flows at a time when demand in Europe is falling, a worrisome assertion for Turkmenistan whose economy relies on Russian purchases. "The age of monopolies is coming to an end," said a Turkmen government source, adding that the Turkmen government saw diversification as key to preventing any further disruptions.
WEST VS RUSSIA: Turkmenistan produces about 75 billion cubic metres of gas a year and sells about 50 bcm to Gazprom. As part of its diversification, it is building a separate pipeline to China. The Nabucco pipeline, designed to ease Europe's reliance on Russia, will be at the centre of talks in Ashgabat this week but analysts say the project may be headed for failure unless the EU commits to buying Caspian gas quickly. [ID:nLG112121] There are also concerns that Turkmenistan, which has yet to confirm its reserves, has enough gas for everyone. Its position was reinforced however last year when Gaffney, Cline & Associates classified a Turkmen gas field as one of the world's biggest. As closed-door negotiations heat up ahead of the conference, the United States sent a senior State Department official to Turkmenistan last week, closely followed by a separate visit by a Russian Deputy Prime Minister. "The new administration in Washington is putting a lot of emphasis on Central Asia, and looking how we can develop our involvement here," U.S. Assistant Secretary of State Richard Boucher said during that visit. "If you have problems with any particular line, whether the problems are technical or something else, you need to have other alternatives," he said. "The basic principal though that I think we all agree upon ...is that of diversification.

April 17, 2009 (UPI) - BAKU, Azerbaijan is interested in all natural gas projects that will improve energy security with potential European partners, its top oil chief said Friday. Rovnag Abdullayev, president of the State Oil Co. of Azerbaijan Republic, said during a meeting Friday with Swiss officials in Baku that interest in the natural gas potential in his country is growing, the Today.Az news agency reports. "There were made a lot of proposals for purchase of Azerbaijani gas from the (offshore) Shah Deniz field," Abdullayev said. "We are considering the best and economically beneficial proposal." Production at the offshore Shah Deniz gas field in the Caspian Sea started in December 2006. It is one of the largest gas-field discoveries in decades with more than 15 trillion cubic feet in estimated reserves. Shah Deniz gas travels currently through a Caspian pipeline network to Turkey and Georgia. Europe sees Azerbaijan as the answer to its energy-security needs in the wake of a disruptive gas row between Kiev and Moscow. Azerbaijan is seen as a major potential supplier to the Nabucco gas pipeline to Europe through Turkey. Turkish officials, who expect to sign off on the deal by June, say the project cannot go forward without Azerbaijan.

4/14/09 - EurasiaNet - A Turkmen delegation has arrived in Iran to fix the price of their gas exports in the second half of 2009. The team, headed by the chairman of the state-owned Turkmengaz, Baymyrat Hojamuhammedov, will stay in Iran until April 18, the Russian newspaper Vremya reported April 14. Turkmenistan has been supplying gas to Iran since 1997, but exports have never hit the Korpeje-Kurt Kui pipeline’s full capacity of 8 billion cubic meters (bcm) per year, the report claims, adding that exports have not exceeded 6.5 bcm. Turkmenistan is contracted to send an additional 10 bcm to Iran in 2009. In mid-March, Iran and Russia signed a gas swap deal that would see Gazprom assume responsibility for the delivery of Turkmen gas to Iran. Ashgabat would benefit from this arrangement since Russia would purchase Turkmen gas at a premium price. Iran currently pays $140 per thousand cubic meters (tcm); Gazprom is willing to buy the same gas for re-export from Ashgabat for $240/tcm. The sweetener for Russia is access to natural gas supplies in Iran’s South Pars field, which holds an estimated 8 percent of the world’s natural gas reserves.

Apr. 14, 2009 - (Dow Jones Newswires) - PARIS, Iraqi Vice President Adel Abdel Mahdi said Tuesday he will meet executives from the French energy giant Total SA (TOT) to discuss a multi-billion dollar oil deal during a working visit to France. Briefing journalists in Paris on the first day of a three-day visit, Abdel Mahdi and senior Iraqi officials said they hoped to attract French investment in the key oil production sector, devastated by war and neglect. "Total has shown a keen interest to work in Iraq, particularly in upstream development of oil and gas fields," said senior Iraqi government adviser and former oil minister Thamer al-Ghadhban, sitting alongside Abdel Mahdi. Contacted by AFP, Total preferred not to comment on its plans. Ghadhban confirmed that Total, France's largest and most profitable firm, had forged a partnership with U.S. giant Chevron Corp. (CVX), which has been asked to bid for a contract to exploit one of southern Iraq's most promising fields. "Total, partnered with Chevron, has been asked to bid directly on the Nahr Bin Umar oil field on a different arrangement from the first stage round which has been staged last year by the ministry of oil," he said. Although the Nahr Bin Umar field auction is to be held separately from the main auction process for Iraqi fields, the Franco-U.S. consortium will still face rival bids, including from Norway's StatoilHydro, he said. The field was one of two fields that Total was already negotiating to take over under the former regime of ousted Iraqi dictator Saddam Hussein, he said. "So Total is in a really advantageous position," he said. Abdel Mahdi, an opponent of the former regime who speaks fluent French and English after spending 25 years in exile in France, added: "I've talked to them many times, and they're definitely interested." The officials said the amount of money that Total's consortium would need to invest to develop the fields wasn't yet decided, but that a figure in the region of $15 billion or EUR15 billion had been discussed. Iraq's ambassador in Paris, Mowaffak Abboud, said the two fields in which Total was most interested had the potential to produce more than one million barrels of crude a day between them over a 14-year period.

April 13, 2009 - Dow Jones Newswires by Suan Daker - HOUSTON, The laws of supply and demand signal some U.S. oil refineries may be forced to shut down soon. Analysts are beginning to ponder how many could close - and which will be first to fall. Most believe U.S. gasoline demand peaked in 2007, but many expansion projects at U.S. refineries are still underway. This may leave the country with more refining capacity than it needs. "The sentiment (among refiners) is how to start to think about how to close, who is going to close," said Alan Gelder, the head of Americas refining research for Wood Mackenzie, an Edinburgh-based consultancy. Chris Barber, an oil market analyst for Energy Security Analysis Inc. in Wakefield, Mass., said he's recently taken up the task of figuring out which facilities will be shuttered. "We haven't nailed down any specific refineries yet," Barber said. Analysts scrutinize several factors to determine a refinery's health. Can a plant run on high-sulfur, cheaper crude and can it meet new environmental regulations without a costly upgrade? Size and location are very important, too. Many are looking at small refineries, which are typically less complex. However, just because a refinery is petite doesn't necessarily make it a more likely candidate for closure, Barber said. A few tiny plants have very niche markets, either for geographical reasons or because they process a specific crude no one else can run, he said. Currently, U.S. refiners are running at low utilization rates due to low profitability levels. So any closures aren't expected to have an immediate impact on gasoline and diesel prices, as idled units could be ramped back up relatively quickly. However, if fuel demand rises over the next several years, prices may follow. Refiners were caught short-handed earlier in this decade, as demand surged following a wave of refinery closures in the 1980s and 1990s. There are now half as many refineries - less than 150 - than there were in 1980. The gasoline and diesel price spike that accompanied the surge in demand raised the ire of politicians and their constituents. The sensitivity of the issue had made talk of refinery closures taboo, although it's recently become less so due to lower fuel prices and refiners' well-publicized financial woes. Two plants potentially stand out as ripe for permanent closure, according to some analysts. Sunoco Inc. (SUN) has said it will turn its Tulsa, Okla., refinery into an oil products terminal if it can't sell the plant this year. The company wants to get rid of the refinery because new environmental regulations require upgrades that are too expensive. Also, given the tightness of credit markets, a buyer is unlikely to surface. Flying J.'s refinery in Bakersfield, Calif., was idled last year shortly after the truck-stop and refining company filed for bankruptcy.
Taking Refineries' Pulse: If another wave of refinery closures comes, analysts say East Coast plants are especially at risk. They are mainly geared toward gasoline production - which analysts see waning - instead of diesel, and they're vulnerable to European imports, according to a study released by Wood Mackenzie last month. Most analysts refuse to speculate on what plants may go down first. But Neil Earnest, an industry consultant and vice president of Muse Stancil in Dallas, Texas, picked out three East Coast refineries he claims could close in a worst-case scenario: Sunoco's Eagle Point refinery in Westville, N.J.; ConocoPhillips's (COP) in Trainer, Pa.; and Western Refining Inc.'s (WNR) in Yorktown, Va. All three companies said they have no plans to mothball the plants Earnest named. Western, saddled with debt, could find itself in a bind if the economy doesn't improve. The plant was put up for sale in 2008 to reduce its debt, but Western is now considering keeping it, said Western spokesman Gary Hanson. The plant is becoming "more and more valuable" due to recent capital improvements. It would make sense for Sunoco to shut one of its three Pennsylvania and New Jersey plants because it would improve margins for the other two, Earnest said. In January of this year, Sunoco was utilizing about 76% of its refining capacity, according to its fourth-quarter earnings report. Utilization rates around the country have been low but the country's average was 82% in January, according to the Energy Information Agency. The Wood Mackenzie study specifically pin-points refineries located in Philadelphia, New Jersey and Maryland as having trouble competing on the East Coast. Earnest said ConocoPhillips could close its Trainer, Pa., plant on the Delaware River, because it runs expensive, low-sulfur and low-viscosity crude. But major oil companies' refineries are generally the most efficient - and therefore, the least likely to close, said George Pilko, of Pilko & Associates, a Houston consulting firm that does mergers and acquisition deals. "ConocoPhillips regularly reviews the performance of all of its assets, including refineries," ConocoPhillips spokesman Bill Stephens said in a statement. "We currently have no plans to idle any of the refineries we operate, which includes 12 refineries in the U.S., plus others overseas."
No Small Matter: Closing a refinery also comes with its own set of hurdles. Environmental remediation could be in the tens of millions of dollars, said Larry Nettles, an environmental lawyer and partner at law firm Vinson & Elkins in Houston. "If it's an older refinery it may well sit on top of a large pool of contamination," Nettles said. Those refineries with the fewest environmental liabilities will be easier to close, he said. But perhaps a company's biggest fear in closing a plant is that it will help the competition. "The refiner's nightmare is you close (and) the rest of the industry benefits. Margins are great. And you're the one who has paid the money to help everyone else. They don't tend to be that altruistic," Wood Mackenzie's Gelder said.

04-08-2009 - Upstream OnLine - Petronas has signed an agreement with Uzbekistan’s national oil and gas company Uzbekneftegaz and South Africa’s Sasol to progress the proposed Uzbek gas-to-liquids project. The heads of agreement follows the positive outcome of a joint pre-feasibility study carried out by the three parties on the proposed project, based on Sasol’s proprietary technology, to produce high-quality transportation fuels from Uzbekistan’s abundant gas reserves. The partners are currently in negotiations with the Uzbekistan government for the detailed requirements of the proposed project and plan to proceeed to the next phase of project implementation, including the establishment of a joint-venture company. Petronas is already actively involved in a number of upstream ventures in the country through the Urga production sharing agreement for the production and development of Urga, Kuanish and Ackhalak group of fields and several exploration blocks, including the Surkhansi investment Block and the Baisun investment Block.

April 07, 2009 - Dow Jones Newswires by Christine Buurma - A reversal of fortune may be ahead for Cheniere Energy Inc. (LNG). The Houston-based owner of liquefied natural gas terminals saw its market value plummet last year as high prices in Asia and Europe lured cargoes of the super-cooled, condensed fuel away from the U.S. A severe drought in Spain sharply reduced the country's hydroelectric power generation, boosting the demand for gas-fired electricity, and LNG imports to Japan skyrocketed after an earthquake damaged a massive nuclear power plant there. But Cheniere stands to gain from an expected rise in LNG flows to the U.S. later this year as new overseas export facilities come online, and as a severe economic contraction in Asia and normalizing weather in Europe curb demand for shipments. Cheniere owns the Sabine Pass LNG receiving terminal in Louisiana and owns a 30% in the Freeport LNG terminal in Texas. After U.S. LNG imports fell 56% last year from 2007 to about 350 billion cubic feet, imports are expected to rise 9% in 2009, to about 380 bcf, according to the U.S. Energy Information Administration. Shares of Cheniere were recently trading at $4.78, about 77% below the 52-week intraday high of $21.22 hit last April. "The LNG environment is changing, and that's going to result in some fairly attractive opportunities for us," said Charif Souki, Cheniere's chairman and chief executive. Cheniere is unique because it is a small company that focuses primarily on LNG terminals. Other U.S. companies with LNG terminals are large, diversified energy businesses - Sempra Energy (SE) and ConocoPhillips (COP), for example. These companies haven't struggled as much amid the decline in U.S. LNG imports because their earnings don't depend primarily on the LNG business. Cheniere, which is covered by a small number of analysts, gets a "hold" or "equal-weight" rating, on average. Some analysts think a recovery in gas demand later this year and early next year will benefit Cheniere, while others see the company continuing to struggle. Global economic downturn has put a serious dent in natural gas demand from industrial consumers in Asia - typically the largest importer of LNG. A dramatic decline in coal prices has also pressured gas demand lower as some power generators switch from gas to coal. Meanwhile, several large LNG exporting facilities are scheduled to launch this year, bring more gas into the market at a time when demand is slumping. On Monday, Qatargas inaugurated its Qatargas 2 LNG project, which will liquefy natural gas and transport it from Qatar to the U.K. Although gas demand has also declined in the U.S., the country has extensive underground gas storage facilities, so gas can be purchased now for use at a later date. "I think anyone with regasification capacity in the U.S. ought to benefit," said Ray Deacon, an energy analyst with Pritchard Capital Partners in New York. "Those volumes have to find a home somewhere." Cheniere, which has long-term LNG contracts with ConocoPhillips, Chevron Corp. (CVX) and others, has enough liquidity to sustain the company for the next three years, analysts said. But unless Cheniere is acquired or secures additional long-term contracts by 2012, the company is likely to file for bankruptcy protection, said Justin Perucki, an analyst with Morningstar Inc. Asked about Perucki's comment on the potential for bankruptcy protection, Christina Cavarretta, Cheniere's manager of investor relations, said: "Given our financial structure, we have sufficient liquidity to manage our operations over the next several years." Obtaining a long-term contract may be tricky while natural gas demand remains low in the U.S., Morningstar's Perucki said. "Cheniere is up a creek and is in tough financial footing," he said. "Their bargaining position isn't great." But prospects for natural gas should brighten considerably once the economy recovers, leaving Cheniere poised to take advantage of climbing demand. "The long-term demand picture is still really bright," Perucki said. "Gas-fired power generation is one of the easier and quicker things to build."