dextera 8

Turkmenistan lauds Caspian reserves

2009-07-07T07:51:00.001-07:00

ASHGABAT, Turkmenistan, July 6, 2009 - (UPI) - Turkmenistan announced developments in draft measures for exploration licenses to explore the hydrocarbon potential in the Caspian Sea. The government in Turkmenistan issued a report highlighting the challenges envisioned for the development of new oil and gas fields on the Turkmen continental shelf in the Caspian Sea. Lawmakers issued reports on developing a draft for exploration licenses. Turkmen reserves in the Caspian are estimated at 80 billion barrels of oil and some 194 trillion cubic feet of natural gas. Turkmen government officials say the continental shelf holds about half of all national oil reserves and roughly 25 percent of the total gas potential, the Trend news agency reports. The government report says about 80 percent of the offshore reserves are located in deepwater fields that are largely underexplored, suggesting greater potential is possible. The government has offered 32 units for international bidders, including BP, Total, Chevron and Russian oil giant LUKoil. Those bids are in line with new Turkmen laws considering national hydrocarbon resources.

China moves into Russian gas turf

2009-06-29T13:21:00.001-07:00

ASHGABAT, Turkmenistan, June 26, 2009 (UPI) -- A 30-year natural gas deal between China and Turkmenistan may be a huge blow to Russian efforts to increase its dominance in the regional energy sector. The deal means Turkmenistan increases its gas sales to Beijing by 30 percent to 1.4 trillion cubic feet each year while work begins on a 4,000-mile pipeline between the two countries. "This agreement is very important for ensuring a stable, long-term and adequate supply of gas for this pipeline," said China's vice-premier, Li Keqiang. Moscow, previously a major purchaser of Turkmen gas, could be losing out to cash-rich China in the race to secure energy commitments in Central Asia. Turkmenistan lashed out against Russia following an explosion in April at a gas pipeline linking both countries, and it appears Moscow underestimated the fallout from that event, notes U.K. newspaper The Guardian. Meanwhile, China appears ready to invest some $3 billion to develop the South Yolotan gas field, one of the world's largest as Russian gas monopoly Gazprom announces a 30 percent cut in capital investments. Turkmenistan holds more than 700 trillion cubic feet of estimated natural gas reserves.

Relative optimism for Iraqi oil contracts

2009-06-29T13:13:00.001-07:00

WASHINGTON, June 26, 2009 (UPI) - Iraq plans to award 20-year service contracts to international oil companies next week for six oil fields in a sign the country is advancing, analysts say. The announcement coincides with the Tuesday deadline for U.S. combat forces to pull out of Iraqi cities and villages as the country recovers from years of political and sectarian conflict in the post-invasion era. Iraq holds an estimated 115 billion barrels of known oil reserves, or slightly more than 9 percent of the global reserves. In terms of natural gas, though the country lacks the infrastructure to develop its full potential, Iraq ranks 10th in the world. More than 30 companies, including supermajors Royal Dutch Shell, Chevron and Total, are bidding on the service contracts to rehabilitate major oil fields in Iraq. The state-owned South Oil Co. of Iraq called on the Iraqi oil minister to abandon plans for the end of June to open the country to foreign investors. Fayad al-Nema, the director of the company, said in a memo that some of the terms of the pending 20-year service contracts were identical to the work conducted currently by SOC. But despite political infighting and a tumultuous contractual relationship with Baghdad and domestic concerns over Washington's motives in Iraq, Simon Henderson, a fellow at The Washington Institute for Near East Policy, said the service contracts were positive for Iraq. "At current volumes, Iraq has more than a hundred years of both oil and gas production," he writes. "Despite the talk of the eventual emergence of a post-oil world, Iraq is looking for an increased role in the present one."

BRIC format needs to be expanded to include Indonesia - analysts

2009-06-16T09:04:00.001-07:00

MOSCOW, June 15, 2009 (RIA Novosti) - The BRIC format of the world's four leading emerging economies - Brazil, Russia, India and China - should be expanded to include Indonesia, Morgan Stanley analysts said in a report on Monday. Morgan Stanley has drawn up a report on the four countries ahead of the first BRIC summit, opening on Monday in the Russian Urals city of Yekaterinburg. The rates of economic growth in Indonesia, the world's fourth most populous country, are expected to accelerate to 7% from 2011, which corresponds to the BRIC format criteria, Chetan Ahya, a Singapore-based economist at Morgan Stanley, said in an interview with Bloomberg. According to the analyst, political stability and improved public finance management, and "a natural advantage from demography and commodity resources" are "likely to unleash Indonesia's growth potential." The $433 billion economy, the largest in Southeast Asia, may grow 60% in the next five years to $800 billion "due to a stable administration, lower capital costs and a government plan to spend as much as $34 billion to build roads, ports and power plants by 2017," the report said. Indonesia showed 4% growth in the first quarter of 2009, the highest in Southeast Asia, compared with a slump of over 6% registered in neighboring Malaysia, Singapore and Thailand.

BRIC summit to open new stage of cooperation - Brazil president

2009-06-16T09:00:00.001-07:00

RIO DE JANEIRO, June 15, 2009 (RIA Novosti) - A meeting of BRIC (Brazil, Russia, India, China) leaders in Yekaterinburg should lay the groundwork for a new level of cooperation between the countries, the Brazilian president said. "The BRIC summit in Yekaterinburg opens a new stage in political dialogue and diplomatic interaction between our four countries," Luiz Inacio Lula da Silva said in an interview with RIA Novosti ahead of the summit, which opens on Tuesday. He said the countries were playing an increasingly prominent role in international affairs, and showing readiness to assume responsibilities in proportion to their standing in the modern world. "In the case of Brazil, we reaffirmed this readiness by granting a $10 billion loan to the International Monetary Fund," the president said. He said Brazil's economic cooperation with other three countries has been steadily rising. "Brazil's total trade with the other three countries of the bloc in 2008 was $49 billion, almost 500% more than in 2003," Lula da Silva said. He added that there was also strong potential for cooperation in investment, technology, and culture.

Oil, security and politics in Baghdad

2009-06-10T13:44:00.001-07:00

BAGHDAD, June 9 (UPI) -- The crude oil market has political ramifications for the Iraqi government that prompt concern from U.S. advisers over development, official say. A U.S. Defense Department report in March says economic development of Iraq is linked to oil prices as Baghdad receives the majority of its funding from its energy sector. "Iraq's near-term economic development depends largely on its success in managing the oil and gas sector," the report states. Iraq earlier this year imposed a federal hiring freeze, slashed its budget and faced a backlash from government-funded paramilitary forces due to economic setbacks from declining oil prices. Meanwhile, Iraqi Oil Minister Hussain al-Shahristani faces criticism for his performance despite a modest opening of the Iraqi energy sector with Kurdish oil exports earlier this month. Despite recovery in oil prices following a $100 decline in 2008, U.S. commanders said the oil-linked budget crunch was troubling, the Pentagon said. "The reduced Iraqi budget has caused us to address some tough choices with our (Iraqi Interior Ministry) colleagues," said U.S. Army Maj. Gen. James Milano, a deputy commander working on transition issues. The hiring freeze inhibits national security as Baghdad cannot afford to hire additional police. Meanwhile, Washington has worked with Baghdad on a three-year plan to manage the current global recession and stagnant oil prices. "But again, it's the effective application of their available budget, their discretionary budget, and ours that we want to implement to get the biggest bang for the buck, if you will," Milano added.

Iran courts Russia, Kazakhstan for oil

2009-06-10T13:42:00.001-07:00

TEHRAN, June 9, 2009 (UPI) -- Kazakhstan and Russia could emerge as partners to Iran in the 970-mile Neka-Jask oil pipeline, Iranian officials said Tuesday. Neka-Jask would travel from the Caspian port of Neka to Jask in the Gulf of Oman, linking several regional suppliers, including Russia and Turkmenistan. If approved, the $2 billion project would carry around 1 million barrels of oil per day. "Iran's northern neighbors are willing to take part in the project but Kazakhstan and Russia are more probable to cooperate," Noghrekar Shirazi, the Iranian Deputy oil minister, told the Iranian Students' News Agency. Shirazi said supply commitments were needed for the pipeline, noting Kazakhstan holds the greatest potential because of its lucrative resource fields. Oil production from Kazakhstan is expected to grow in the next decade as its offshore Tengiz and Kashagan fields as foreign investments increase. Iran intends to open bids to contractors for the pipeline soon, with the hopes of launching the project by as early as 2012.

Gazprom and Western Companies Compete in Iran

2009-06-04T13:07:00.001-07:00

June 3, 2009 - Eurasia Daily Monitor by Vladimir Socor - On May 24 in Tehran, Iran's President Mahmoud Ahmadinejad and his counterpart in Pakistan Asif Ali Zardari signed an intergovernmental framework declaration on gas pipeline construction and gas deliveries from Iran to Pakistan. The declaration pledges support for the agreements of intent, signed by the two countries' oil ministries and national oil and gas companies. Ahmadinejad and Zardari signed the framework document during the tripartite summit in Tehran, in which Afghan President Hamid Karzai also participated. Iran holds the second-largest natural gas reserves worldwide, with the largest export potential. The U.S.-instituted, decade-old sanctions have forced a halt to development of gas fields, export pipelines, and LNG terminals in Iran. The unintended but pernicious effect has been to shield Russian Gazprom from a strong competitor in European markets. At least five major European companies, as well as Gazprom, have signed memoranda of understanding (MOU's) in the last few years with Iran on natural gas development and exports. The Europeans are eager to proceed with the development of South Pars gas fields in Iran as soon as the risk of incurring U.S. sanctions recedes. Gazprom, more boldly, seems prepared to join the Iran-Pakistan deal as a third party, irrespective of U.S. sanctions. From a U.S. policy perspective, the signing event in Tehran illustrates the obsolescence and, increasingly, the futility of an "isolation" policy that tries to keep Iranian gas locked in the ground. Zardari and Karzai count as U.S. allies of necessity, spawned by a war of choice turned awry. They went to Tehran in the context of promoting a "regional solution" -one with Iran's cooperation- that the United States has decided to seek with some urgency in Afghanistan (as it does in the parallel case of Iraq). Their visit almost certainly gave Ahmadinejad's re-election campaign a boost, without significant objections from the United States. Under the framework agreement, Iran will supply 11 billion cubic meters (bcm) of gas from South Pars to Pakistan annually from 2015 onward, in the first stage of the project. The pipeline route totals approximately 2,000 kilometers in both countries. Each country will be responsible for financing the construction on its own territory. Construction work is due to start in September 2009 and to be completed by mid-2014. Iranian officials claim that the first gas might flow by 2013. The volume of deliveries will then double to 22 bcm in the project's second stage. In a separate preliminary agreement, the National Iranian Oil Company (NIOC) and Pakistan's Inter State Gas Systems (ISGS) laid the basis of a pricing formula for Iranian gas, pegged to the price of oil. The companies expect to draft a gas sale-purchase agreement (GSPA) within several weeks and finalize it in several months (IRNA, May 25 - 27; Business Recorder [Pakistan], May 26, 29). However, judging from past experience these negotiations might take longer. The Iran-Pakistan gas pipeline project stems from the even more ambitious Iran-Pakistan-India (IPI) project, under discussion for more than a decade. The Indian government was uneasy about entrusting its supply security to Pakistan. India withdrew (perhaps temporarily) from the negotiations in 2008 amid disputes over prices and transit fees. However, at the signing event in Tehran and afterward, Ahmadinejad and the Iranian ministry of foreign affairs declared that the project remains open to India and that Iran is also willing to export gas to other Asian countries (IRNA, May 25). Responding to media queries, the governing Pakistan People's Party Information Secretary Fauzia Wahab stated that the government is "unconcerned about U.S. pressure" over the gas agreements with Iran. The government regards this project as a bilateral matter between Pakistan and Iran (Business Recorder [Pakistan], May 27). Concurrently, Iran has announced the start of construction to a gas export pipeline to Turkey from a section of the South Pars fields. Turkey plans to develop that section to a production level of up to 20 bcm per year eventually, awaiting a relaxation of U.S. sanctions. The Iranian announcement, specially issued by the embassy in Ankara, also declares Iran's readiness to supply gas for the Nabucco pipeline project (Reuters, May 28). Nabucco had been planned specifically to transport Iranian gas to Europe. The U.S. sanctions, however, held Nabucco back for years by forcing the consortium into a totally lopsided contest with Russia for Central Asian gas. Moscow is eager to join the Iran-Pakistan project in a potentially dominant role. "We are ready to join the project as soon as we receive an offer," Deputy Energy Minister Anatoly Yanovsky and Gazprom spokesman Sergei Kupryanov announced in parallel statements. Gazprom is offering to act as contractor for the pipeline construction work and as operator of this pipeline after its completion. In addition, Gazprom declares its willingness to undertake the rehabilitation of old pipelines in Iran and build new ones, in return for gas volumes from South Pars that Gazprom would then sell to India (Kommersant, Interfax, May 27). Russia will hail any project that diverts Iranian gas eastward, leaving Gazprom in a dominant position on European markets. This is Moscow's minimal objective regarding Iranian gas. Beyond the Iran-Pakistan project, Gazprom's wider agenda envisages inserting itself as an intermediary between Iran and European gas consumer countries. It pursues this goal in two ways: bilaterally, by offering to purchase Iranian gas at European netback prices and resell it in Europe; or multilaterally, by involving Iran in a Russia-led cartel of gas exporting countries. The Russian government and Gazprom anticipate that gas demand will continue to grow strongly in Europe and Asia soon, when the recession is over. With demand growth resuming, Moscow planners (and probably also planners elsewhere) must reckon with an erosion of U.S. sanctions or their enforceability. Gazprom apparently wants to rush through that opening ahead of Western companies. Thus far, the U.S. sanctions have indirectly reinforced Gazprom's position on European markets, also driving up the gas prices and contributing to the Kremlin's enrichment for years before the current recession. For its part, Iran like any gas producing country is interested in direct commercial relations with consumer countries. Iran will not willingly accept Russian control over its gas exports, unless the U.S. sanctions continue to discourage Western companies from investing in, and operating, Iranian gas development and gas transport projects.

U.S. still wants Azeri energy flowing westwards

2009-06-03T14:51:00.001-07:00

June 2, 2009 – (UPI) – WASHINGTON, A century ago Baku was the world's first oil "boom town," with myriad foreign entrepreneurs producing more than half the world's output. A century later foreign interest in Azerbaijan remains intense, but Washington is increasingly concerned that the country may be drifting from its influence as Russia reasserts its presence not only in the Caspian, but over other former Soviet regions where Russian President Dmitry Medvedev claimed that Moscow has "privileged interests." Some have begun labeling his comments the "Medvedev Doctrine," in deference to Washington's historic claim of influence in the Americas, the "Monroe Doctrine." During an address on June 1 to the U.S. Chamber of Commerce in Baku, Richard Morningstar, special adviser to the U.S. secretary of state for Caspian Basin energy diplomacy, attending the "Caspian Oil and Gas" international exhibition and conference, called on the Azeri leadership to continue its policy of exporting its own energy resources and energy resources of other countries to the West. Morningstar told his audience that the United States supports construction of the ambitious $5.8 billion, 56-inch diameter, 2,050-mile Nabucco and Turkey-Greece-Italy pipeline projects even as he reiterated that Washington remains opposed to the possibility of Iran's participation in either project at the present time. Morningstar's remarks echoed a consistent theme of Washington's since the 1991 collapse of the Soviet Union and the subsequent development of the Caspian's hydrocarbon resources: that oil should move westwards along a Western-built and dominated energy corridor, bypassing both Russia and Iran. But for Baku, which lives in a volatile neighborhood, U.S. ambitions are but one element of a broader strategic export picture, which by necessity involves consideration of both Moscow's and Tehran's concerns. Furthermore, U.S. policies have done much to raise concerns in Baku that unquestioning adherence to U.S. unilateral dictats can in fact be inimical to Azeri interests. As if to emphasize the divergence of Washington's views from those of Baku, from May 21 to June 1 NATO staged its Cooperative Lancer 2009 exercise at Georgia's Vaziani military base. About 700 soldiers from 13 NATO countries participated in the exercise alongside Georgian troops. Moscow remains implacably opposed to Georgian membership in NATO, a policy strongly promoted by the previous administration at the April 2008 NATO summit in Bucharest. Azerbaijan, which along with Russia has been a member of NATO's Partnership for Peace program since 1994, has never sought entry into the alliance. While Georgia is key to Azerbaijan's prosperity, as the $3.6 billion, 1,092-mile, 1 million-barrel-per-day Baku-Tbilisi-Ceyhan pipeline remains the country's main export route, Baku is profoundly aware of Russia's continuing "privileged interests" in the Caucasus, and, unlike Georgia, adjusts its foreign policy to avoid provoking its giant northern neighbor. The Western-financed and operated BTC pipeline, opened in May 2006, carries high-quality Azeri crude from Azerbaijan's Caspian offshore Azeri-Chirag-Guneshli fields to Turkey's deepwater Mediterranean terminus at Ceyhan. For Azerbaijan, BTC's operation is conditional on decent relations with Russia, and Baku is well aware of Moscow's ongoing concerns over Georgia's persistent overtures to join NATO, which were a major factor in the five-day war between Georgia and Russia that erupted on Aug. 7, 2008. Even though Azerbaijan was not involved in the conflict, it nevertheless suffered from significant "collateral damage." Two days before hostilities broke out, BTC's flow in eastern Turkey was disrupted by an explosion of unknown origin on the segment at Yurtbasi village. BTC operator BP shut Valves 29 and 31 and waited for the oil contained in the 4-mile segment to burn out. BP subsequently declared force majeure, and the pipeline only resumed operations on Aug. 25. After the Georgian-Russian fighting began, BP attempted to diversify its export options by switching to the recently reopened 550-mile, 140,000-bpd Western Route Export Pipeline, better known as the Baku-Supsa line, which had originally opened in 1999 and was running at about 90,000 bpd. The fighting subsequently forced BP to announce that it was suspending WREP shipments. Completing the lock-in of Azeri westward oil exports, the fighting caused authorities to suspend seaborne shipments from Georgia's Batumi (200,000 bpd) and Poti (100,000 bpd) ports, both supplied by rail. In desperation, BP resumed sending Azeri crude northwards through Russia's Transneft's Baku-Novorossiysk pipeline. Azerbaijan's first export line when it was opened in 1997, Azerbaijan had downgraded its use of Baku-Novorossiysk to 20,000 bpd following the BTC becoming operational in May 2006. Even worse from Washington's viewpoint, during the conflict Azerbaijan also delivered its first oil cargo of 100,000 tons to the National Iranian Oil Terminals Co.'s Caspian Neka port facilities for an oil swap. When the dust finally settled, Azerbaijan had been blocked from shipping approximately 17 million barrels of crude, and the U.S. Department of Energy estimated that Azerbaijan's final cost for the lost shipments was more than $1 billion. In the aftermath of the conflict, two lessons were clearly brought home to Baku. First was that Moscow retained its options, including military force, in areas where it deemed it had "privileged interests." The second is that war is bad for business. If Morningstar's remarks and the recent NATO exercise are anything to go by, they are lessons that have yet to be learned in Washington, Brussels and the alliance.

EU Rivals Must Unite to Counter Gazprom Bid, Azerbaijan Says

2009-06-02T16:10:00.001-07:00

June 2,2009 - (Bloomberg by Lucian Kim) - European energy companies must set aside rivalries if they wish to prevent OAO Gazprom from buying up excess natural-gas volumes from the western Caspian basin, a vice president of the State Oil Co. of Azerbaijan said. Three European pipeline projects vying for Caspian Sea gas should first agree on transit via Turkey to give Azerbaijan an alternative offer to the Russian gas exporter’s, Elshad Nassirov said today in an interview in the Azeri capital Baku. Gazprom, which supplies about 25 percent of Europe’s gas, is seeking all the fuel produced in the second phase of Azerbaijan’s Shah Deniz development in an effort to remove the supply base for one of the projects, OMV AG’s Nabucco link. “The three projects should join us and Turkey in uniting efforts to make a transparent, reliable transit regime, which could be competitive to the Russian proposals,” Nassirov said. Azerbaijan, which became a gas exporter in 2007, is a key link in a U.S.-backed “southern energy corridor” that breaks Russian control over pipelines out of the Caspian region. Some European nations renewed calls to diversify energy imports away from Russia after gas supplies were halted in January during a Gazprom dispute with Ukraine. Nabucco would link Turkey to Austria via the Balkans. The Trans-Adriatic-Pipeline, backed by Swiss power company Elektrizitaets-Gesellschaft Laufenburg AG and Norway’s StatoilHydro ASA, would run from Greece to Italy via Albania, while Italian power company Edison SpA and state-owned Greek gas company Depa SA plan an alternative subsea link connecting the two countries. “As soon as this transit issue is completed, there will be enough gas for everyone,” Nassirov said, referring to volumes supplied by producers including Azerbaijan, Iraq, Iran or Turkmenistan.

Arctic Holds One-Third of World's Undiscovered Natural Gas Reserves

2009-06-02T16:05:00.001-07:00

May 29, 2009 - Xinhua News Agency-Rigzone - The Arctic region may be home to 30 percent of the planet's undiscovered natural gas reserves and most of them are in Russian territory, an international team lead by the U.S. Geological Survey (USGS) said Thursday. This is the first-ever comprehensive assessment of undiscovered oil and gas reserves within the Arctic Circle. Report about the findings will appear in Friday's edition of the journal Science. According to the report, two-thirds of the undiscovered gas is in just four areas -- South Kara Sea, North Barents Basin, South Barents Basin and the Alaska Platform. In fact, the South Kara Sea off Siberia contains 39 percent of the Arctic's undiscovered gas. The report also estimated that the Arctic also contains 3 percent to 4 percent of the world's oil resources remaining to be discovered. "It would not mean that there would be any kind of a significant shift in global oil balance," said Donald L. Gautier, lead author of the report. "But this is especially significant for the Arctic nations." Nations whose borders lie within the Arctic Circle are Canada, Greenland/Denmark, Norway, Russia and the United States. Although it's closer to North America, Greenland is considered part of the Kingdom of Denmark. Using geological analysis and probability modeling, researchers mapped out sedimentary rock deposits to estimate the amount of undiscovered oil and gas beneath undersea continental shelves. Researchers say that deep ocean basins have relatively low petroleum potential, but the Arctic is one of the world's largest remaining areas where oil and gas are accessible. Most of the reserves are projected to be in less than 500 meters of water -- roughly a third of a mile deep. "Based on our study, there are 40 (billion) to 160 billion barrels of oil north of the Arctic Circle," said Gautier, of the Geological Survey's office in Menlo Park, California. The USGS had previously estimated the Arctic is home to 90 billion barrels of oil. The Energy Information Administration, a division of the Department of Energy, estimates that the world currently uses 30 billion barrels of oil a year.

Turkmen may sue Russia for "vacuum-bomb" pipe blast

2009-06-02T14:15:00.001-07:00

May 29, 2009 (Reuters by Simon Shuster and Marat Gurt) - MOSCOW/ASHGABAT, Turkmenistan threatened to take Russia to court over last month's gas pipeline explosion, RIA news agency reported, escalating a dispute that has severed a vital energy link through Russia to Europe. Turkmenistan blames Russia for blowing up the pipeline, which carries more than half of its most valuable export, by cutting the gas flows without enough warning. "When you shut off the flows, you get what is called a vacuum-bomb effect," Odek Odekov, head of Turkmen state geological institute Turkmengeologia, told reporters during an energy conference in Paris, RIA reported. "The system has to be prepared for a shut-off three days in advance, and Russia did it in the course of one day," he said. Russia's gas export monopoly Gazprom denies any wrongdoing and it has said it hopes to resolve the issue through talks. The company has avoided making detailed public statements on the matter. The two sides are now discussing the payment of damages for the incident and may take the case to international courts of arbitration if they cannot settle it on their own, the news agency reported Odekov as saying, without giving a direct quote. Gazprom, which controls the trunk pipelines, declined to comment on Odekov's remarks. Turkmen government officials in Ashgabat declined to elaborate. Odekov said Turkmenistan has been forced to shut off 195 gas production fields as 92 percent of its exports to Russia remained suspended, Platts news agency reported. The rest is flowing through another link via Kazakhstan to Russia. Every month, Turkmenistan is therefore losing between $800 million and $1 billion per month in export revenues, said Mikhail Korchemkin, director of East European Gas Analysis. "Turkmenistan has every right to demand this money," he said. U.S. PUSHES FOR BYPASSING RUSSIA Due a sharp drop in demand for gas in Europe, Russia no longer needs to buy Turkmen gas, because it can meet European demand more profitably by selling its own. For the short term, therefore, analysts said the explosion played into Russia's hands by halting imports from Turkmenistan. Korchemkin estimated that Gazprom is getting an additional $330-450 million per month in net profits out of this situation, while the Russian budget is getting an extra $300-400 million in customs duties. In the longer term, however, Moscow will have to deal with the anger of an important energy partner, which has begun looking to the West for other consumers and pipeline routes. In Ashgabat on Thursday, a top U.S. trade official voiced renewed support for two pipeline projects that would bypass Russia to bring Turkmen gas directly to Europe. "Alternate export routes such as Nabucco or the trans-Caspian pipeline will enhance Turkmenistan's independence and sovereignty by strengthening the country's ability to reach consumers," the U.S. Secretary of State's Special Envoy for Eurasian Energy Richard Morningstar told Reuters ahead of a meeting with Turkmen President Kurbanguly Berdymukhamedov. After the row with Russia, Berdymukhamedov has spoken out about the need to diversify gas exports. Russia, keen to maintain control over the region's gas flows, is ploughing ahead with its own pipeline project in the region, South Stream. "But South Stream does not open any new markets for Turkmenistan, because Russia would remain its only consumer. Nabucco, however, opens up all of Europe," Korchemkin said.

EU cool on Russian appeal to help Ukraine on gas

2009-06-02T13:54:00.001-07:00

BRUSSELS, May 29, 2009 (Reuters by Mark John) - The European Union is unlikely to meet a Russian request to help Ukraine with payments for billions of dollars worth of Russian gas, European Commission President Jose Manuel Barroso said on Friday. Barely four months after a pricing dispute between the two ex-Soviet states in January that disrupted supplies to Europe, Russia last week rejected a Ukrainian proposal to defer payment on up to $5 billion in gas storage fees. Moscow, backed by Italy, has urged the EU to help Ukraine. Russia has urged the EU to help Ukraine pay the bills and Barroso said he discussed the matter with Prime Minister Vladimir Putin by telephone on Friday. "Prime Minister Putin called me to tell me about the difficulties he anticipates in payments coming from Ukraine (and) to say that Ukraine has asked for some support for financing of these payments," Barroso told reporters. "It is difficult with our budget, if not impossible, to have some support from the Community budget for Ukraine," he noted, adding that he had promised Putin he would raise the matter with EU leaders who are due to hold a June 18-19 summit in Brussels. But he stressed it was mainly a problem between Ukraine and Russia. Europe receives about a fifth of its gas from Russia via Ukraine, with some eastern and southern European countries almost completely dependent on that gas. Russian gas export monopoly Gazprom (GAZP.MM) this week said it was concerned Ukraine would not pay for this month's gas supplies in full. It said it would have to move to 100 percent advance payments if there were any disruptions. Gazprom wants to store extra gas in Ukraine during winter to be able to respond more quickly to the needs of its customers in Europe. Italian Prime Minister Silvio Berlusconi, whose country is one of Europe's biggest consumers of Russian gas, has pledged to present to the EU summit a Russian proposal that Europe bear some of the costs that Ukraine is unable to meet. The temporary cut of Russian gas supplies via Ukraine to Europe in January undermined European confidence in Russia as an energy supplier and has given extra urgency to the bloc's attempts to seek alternative fuel sources. At a summit in Prague this month, EU leaders offered to provide more trade and stronger transport links to gas transit countries such aas Turkey and Azerbaijan in return for them supplying gas through an alternative "southern corridor" route.

Russia lobbies for energy ties with Baku

2009-06-02T13:26:00.001-07:00

BAKU, Azerbaijan, May 29 (UPI) -- Parallel work in the energy sectors in Russia and Azerbaijan is important not only for southern Russian but for the region, the Russian energy minister said. Russian Energy Minister Sergei Shmatko spoke at a regular electrical power meeting in Baku on the importance of bilateral cooperation in the energy sector, the Trend news agency reports. "We believe there are good opportunities for parallel operation of our energy resources," the Russian minister said. Shmatko said complimentary technologies in the region created an environment for increased energy production and power networks between the two countries. He noted at the meeting Friday that he would discuss with energy partners in Baku the possibility of constructing power networks between Azerbaijan and Dagestan, the southeastern most federal subject in Russia. Additional plans include the construction of hydroelectric dams. Azeri Energy Minister Natik Aliyev, for his part, said movement in the electrical sector in a regional project linking Russia, Azeri and Iranian networks could move Azerbaijan from an electrical importer to an exporter.

Shah Deniz output set to rise

2009-05-29T15:06:00.001-07:00

05-26-2009 - Upstream OnLine - Production from the Shah Deniz gas field, in Azerbaijan's sector of Caspian Sea, is set to rise as officials plan for the second phase of development, Azeri ministers said. Azeri Energy Minister Natig Aliyev said production from Shah Deniz could rise roughly 15 billion cubic feet annually to about 318 billion cubic feet annually, the Trend news agency reports. Aliyev said that production level would be maintained until operations at the second phase of Shah Deniz begin, said a United Press International report. Gas from the offshore field goes to Azeri, Georgian and Turkish customers. Energy officials, however, blame Turkey for a series of setbacks from production at the second phase. The offshore Shah Deniz field began gas production in 2006. Gas production could reach 706 billion cubic feet once Phase 2 comes online in 2012. In February Turkey stated its intention to buy more natural gas from Azerbaijan through the Phase 2 development. Russia and Iran have eyed developments there as well. StatoilHydro is the majority operator of the field.

Baku ratifies deal with Total

2009-05-26T09:26:00.001-07:00

May 22, 2009 (UPI) - BAKU, Azerbaijan, The Azeri Parliament ratified on Friday an exploration and development contract for the offshore Absheron field in the Caspian Sea with French company Total. Total takes a 60 percent stake in a joint venture with the State Oil Co. of Azerbaijan Republic from a contract signed between both parties in February. Estimated gas reserves at Absheron are believed to be on par with the massive Shah Deniz field, which holds estimated potential recoverable resources of roughly 15 trillion cubic feet of natural gas. Total reserves the option to sell its shares to Gaz de France Suez in the future while financing SOCAR's shares during the exploratory period at the Absheron field, the Trend news agency reports. Total and SOCAR will drill three wells at the site within the next three years. Azerbaijan boasts some of the largest gas fields in the world, with Baku expecting to produce as much as 1.1 trillion cubic feet of natural gas by 2011.

Eni denies Iranian deal

2009-05-26T09:20:00.001-07:00

May 22, 2009 (UPI) - TEHRAN, Italian energy company Eni denied reports it was interested in a deal with Iran to develop the third phase of the Darkhovin gas field near the border with Iraq. Eni and Iran's Arvadan Oil and Gas Co., a division of National Iranian Oil Co., signed in 2001 a $550 million deal to develop the initial phase of Darkhovin. The first phase began operation in 2005, and second-phase development is under way. Iran's Press TV reported Eni officials told the Petroenergy Information Network, the official news agency of the Iranian Oil Ministry, the Italian company had submitted a feasibility study for the third-phase development. Press TV also reported earlier this week Eni was expected to sign a $1.5 billion deal to develop a third phase of the Darkhovin field. "Eni is currently active in the first two phases of Darkhovin and has voiced interest in developing the oil field's third phase with an investment of $1.5 billion," Press TV quoted the ministry's news agency as saying. Paolo Scaroni, the chief executive at Eni, denied it was moving forward with the investment, however. "That report is false," he said.

Eni moves deeper into Iranian oil fields

2009-05-26T09:17:00.001-07:00

May 21, 2009 (UPI) - TEHRAN, Italian energy company Eni is expected to sign a $1.5 billion deal to develop a third phase of the Darkhovin oil field near the Iraqi border. Iran's Arvandan Oil and Gas Co., a division of National Iranian Oil Co., signed a $550 million deal with Eni in 2001 to develop the initial phase of the Darkhovin field. The first phase began operation in 2005, and second-phase development is under way. Eni announced it was interested in third-phase development with a $1.5 billion investment, submitting feasibility plans to their Iranian counterparts, Iran's Press TV boasts. Iran has pushed hard for foreign investments in its energy sector amid harsh Western-backed economic incentives. Several European countries have expressed reservations over dealings in the Iranian energy sector in part due to Iran's controversial nuclear program. Iran, however, sits on some of the largest natural resource reserves in the world, ranking third in terms of global oil reserves and second in terms of gas.

KazMunaiGaz E&P pumps up profit

2009-05-26T08:20:00.001-07:00

05-21-2009 - Upstream OnLine - Kazakhstan oil producer KazMunaiGaz Exploration & Production saw its net profit increase 70% year-on-year in the first quarter on foreign exchange gains while core earnings declined. It said net profit for the first three months of 2009 was 108.0 billion tenge ($777.9 million), up from 63.5 billion a year earlier. "The net income increase is mainly attributable to foreign exchange gain of 101.6 billion tenge (pre-tax) following tenge devaluation in February 2009," the company said in a statement. Kazakhstan devalued the tenge by 18% against the dollar in February to prop up its economic competitiveness and save reserves following a similar devaluation in Russia. "Excluding the foreign exchange gain, net income declined 57% year-on-year, mainly reflecting significantly lower crude oil prices in 2009," KazMunaiGaz E&P said. It said first quarter revenues fell 42% to 83.2 billion tenge while operating expenses rose 28% due to the introduction of the rent tax and the mineral extraction tax that replaced royalties this year. KazMunaiGaz E&P said it had entered hedging agreements in February for 36% of its planned monthly output throughout this year. The hedging will protect it in case benchmark Brent crude prices fall below $40 per barrel, but the company will have to give up some of its profit if the price goes above agreed ceilings of $75 to $77 per barrel. Kazakh state energy player KazMunaiGaz owns a controlling stake in London-listed KazMunaiGaz E&P.

Iraq in Arab gas pipe talk for Euro supply

2009-05-21T11:06:00.001-07:00

20 May, 2009 – Upstream OnLine – Iraq is in talks to possibly export surplus natural gas through the Arab Gas Pipeline to the Middle East and Europe, Oil Minister Hussain al-Shahristani said today. "We are in talks to connect the Iraqi (gas) surplus to this pipeline in order to export it to Arab states and then to Europe," Oil Minister Hussain al-Shahristani said, referring to a gas pipeline originating in Egypt. Shahristani spoke during a press conference with Egyptian Oil Minister Sameh Fahmy, who was making a visit to Baghdad.

Kuwait May Re-tender $8B Refinery

2009-05-19T11:37:00.001-07:00

May 18, 2009 - Dow Jones by Maria Abi-Habib - Kuwait National Petroleum Co., or KNPC, may re-tender a delayed $8.3 billion project to build a refinery after the election of a new parliament could clear political objections to the plant, a senior executive told Zawya Dow Jones. "This is a strategic project and it has to go through," said Asaad Al Saad, deputy chairman of KNPC, in a recent interview. "The problem is, will we continue with the same people or re-tender? It looks more like we will re-tender it, unfortunately, because of the politics involved." Al Saad expects that the stalled Al Zour refinery will be given the "go ahead" with the new government. Kuwait elected a new parliament over the weekend. But the Supreme Petroleum Council, which oversees Kuwait's oil interests, will also have to reconsider the project. The election of a new moderate parliament in Kuwait, which for the first time includes four women lawmakers, could clear the way for progress on key energy projects in Kuwait that had previously been blocked by Islamists. Kuwait holds the world's fifth-largest oil reserves and is a member of the Organization of Petroleum Exporting Countries. The Al Zour refinery project came under intense scrutiny last year after opposition members of parliament alleged that contract awarded by KNPC didn't comply with the tender procedures set out by Kuwait's Central Tenders Committee, which handles all public sector contracts. The project was referred to the State Audit Bureau. The company signed four letters of intent for the project work worth $8.3 billion, one with a Japanese-South Korean consortium and three with South Korean firms, to build the 615,000 barrel-a-day refinery. A separate contract, worth an estimated $2 billion, was awarded to U.S. engineering firm Fluor Corp. (FLR). Al Saad said the companies haven't taken KNPC to court over the canceled letters of intent and that KNPC is showing that its interest in buidling the plant "is still there." CLEAN FUELS Progress is also expected on KNPC's estimated $5 billion Clean Fuels Project. The cost of the project, which involves significant upgrades to existing refineries, could drop by up to 20% and KNPC will invite international companies to bid for construction work this year, Al Saad said. "The cost will slip by between 15% to 20%," he said, adding that this could reduce capital expenditure on the project by about $1 billion. Bidding is expected to start this year for each of the two refineries that will be upgraded to produce "high yield" products like kerosene and diesel as part of the Clean Fuels Project, he said. The project aims to make Kuwait's aging refineries more competitive and compliant with international environmental standards. Kuwait's refining industry has been plagued by shutdowns and accidents at its major facilities due to the age of the plants. After the completion of the clean fuels project, the capacity of Mina Abdulla and Mina Al Ahmadi refineries will be boosted to 800,000 barrels a day, Al Saad said. Mina Abdulla currently has a production of 270,000 barrels per day while Mina Al Ahmadi produces 460,000 barrels daily, he added. KNPC will also build new storage for liquid gas and a plant to treat sour or acid gas, Al Saad said. The company expects the gas project to cost 120 million Kuwaiti dinar ($414 million) and the tanker will be up to KWD50 million, he said, adding that bidding for both projects will start in the next three months. "The gas treatment plant will treat 230 million cubic feet daily," Al Saad said.

Duo make Kashagan splash

2009-05-19T09:32:00.001-07:00

05-18-2009 - Upstream OnLine - Italian services giant Saipem and Norway's Aker Solutions have bagged work on the Kashagan development in the Kazakh sector of the Caspian Sea. In a release, Saipem said the contract is part of the development's experimental programme which will see crude oil and associated gas produced via an artificial offshore facilities system, called Block D and Block A. The job was awarded to Saipem in partnership with Norway's Aker Solutions. Saipem's portion of the contract is worth about $1 billion. The company said the Saipem-Aker Solutions partnership was chosen by Agip KCO to carry out the hook-up and commissioning of the offshore facilities, as well as the inshore completion and pre-fabrication work, which will be executed in the Kuryk yard in Kazakhstan. The marine activities will be carried out using five barges converted into temporary living quarters and offices, as well as temporary barges, which Saipem refurbished and prepared according to the preliminary contract signed with Agip KCO in 2007. Saipem said the work will be completed by 2012. The company added that the very shallow water at the project site, coupled with the severe weather and the stringent environmental restrictions the project must meet alongside the lack of infrastructure for the offshore industry make the project particularly complex and challenging. In a separate release, Aker Solutions said its portion of the contract is worth about $1.6 billion.

Oil Demand Seen Plummeting in '09

2009-05-18T15:42:00.001-07:00

15 May 2009 - Reuters - LONDON - World oil demand this year will post the sharpest annual decline since 1981 as the economy struggles to bounce back, the International Energy Agency said Thursday. Demand will contract by 2.56 million barrels per day in 2009, the IEA, which advises 28 industrialized countries, said in a monthly report. It previously forecast that demand would fall by 2.4 million bpd this year. Oil market fundamentals remained weak, and a rise in oil prices, which hit $60 a barrel for the first time in six months on Tuesday, was because of sentiment rather than evidence of higher consumption, the agency said. "The oil price seems to have moved a bit higher in the past month largely on the basis of equity markets and sentiment about potential economic recovery," said David Fyfe, head of the IEA's Oil Industry and Markets Division. "But we're not seeing it in terms of the preliminary demand data for early 2009." The IEA's forecast follows a lower demand projection from exporter group OPEC on Wednesday. The IEA also said OPEC was pumping more oil, a sign that higher prices are prompting members to relax adherence to agreed output curbs. Oil fell after the report was released, with U.S. crude down $1.00 at $57.02 on Thursday. The lower demand forecast was a surprise, as IEA executive director Nobuo Tanaka said Wednesday that the forecast would not change much. Maintaining its bearish tone, the IEA also said oil stocks in the industrialized world ballooned to a fresh 16-year high in March, and supply from outside OPEC would not fall as far as previously thought in 2009. "The report is commensurate with the depth of economic contraction we are currently experiencing," said Harry Tchilinguirian, senior oil analyst at BNP Paribas. "Our view is that positive growth will emerge for the major economies in mid-2010, and on that basis, the IEA's bearish report is not surprising." The IEA's previous prediction for the decline in 2009 world oil demand was already the largest among analysts tracked by Reuters. The agency now expects demand to average 83.2 million bpd -- lower than the 84.03 million bpd expected by the Organization of the Petroleum Exporting Countries, which issued its Monthly Oil Market Report on Wednesday. OPEC has promised to cut oil supply by 4.2 million bpd, equal to about 5 percent of daily world demand, from its output levels since September to try to support prices. The IEA's report, like that of OPEC on Wednesday, said the group reduced its level of adherence to supply targets in April after several months of lowering supplies. OPEC's 11 members with output targets in April raised output by 230,000 bpd to 25.8 million bpd, according to the IEA. That reduced its compliance with the cutbacks to 78 percent from 83 percent in March. The group meets on May 28 in Vienna to set supply policy, and the IEA said waning compliance, plus Angola's request for an exemption from output limits, could make any further cut in the overall supply target difficult. While seeing higher OPEC supply, the IEA also raised its forecast for production outside OPEC by 50,000 bpd because of stable North Sea output and higher-than-expected data from Russia. Total non-OPEC supply was forecast to fall to 50.3 million bpd, from 50.6 million bpd in 2008.

Shah Deniz lacking production agreements

2009-05-15T07:56:00.001-07:00

May 14, 2009 - (UPI) - BAKU, Azerbaijan. Production at Phase 2 of the offshore Shah Deniz gas field in the Caspian Sea requires purchase and transit agreements, Azeri officials said. Azerbaijan President Ilham Aliyev met with Turkish Prime Minister Recep Tayyip Erdogan in the Azeri capital, Baku, to discuss bilateral energy measures. Officials with StatoilHydro-Azerbaijan, an owner at Shah Deniz, blamed Turkey in April for holding up development of Phase 2 of Shah Deniz. "The time frame of the development is not discussed at the moment," said Olav Skalmeras, the vice president of StatoilHydro-Azerbaijan. "It can be discussed only after the issue of gas transit via Turkey is solved." Aliyev said during the meeting with Erdogan that his country needs gas purchase agreements and transit provisions in order to launch Phase 2, the Trend Capital news agency reports. Gas volumes from Phase 1 of Shah Deniz are sold to customers in Azerbaijan, Georgia and Turkey. Aliyev said his country would remain present in the European energy market. "Azerbaijan makes its contribution to energy security of Europe and will continue to do so," he said. He added, however, that a diverse customer base was a policy that "meets our interests." Europe is looking at Azerbaijan as a potential supplier to the planned Nabucco gas pipeline. Turkey would host a major leg of that project.

Kazakhstan commits to Russian-led Europe gas link

2009-05-14T15:23:00.001-07:00

ALMATY, May 13 (Reuters by Maria Golovnina) - Kazakhstan approved its participation in a Moscow-led gas pipeline, which could divert potential supplies away from Europe's Nabucco project, days after refusing to commit to the EU-backed plan to cut reliance on Russia. President Nursultan Nazarbayev signed Kazakhstan's agreement with Russia and Turkmenistan into law on Wednesday, according to the presidential website akorda.kz. Diplomats who attended a summit in Prague last week said Almaty, Turkmenistan and Uzbekistan had refused to sign a final declaration to speed up work on the European Union-backed Nabucco project to bring Caspian gas to Europe. Russia agreed with Central Asian producers in 2007 to carry more of their gas to Russia by increasing the capacity of the Central Asia-Center pipeline system, which would allow Moscow to keep regional gas flows under its control. But talks have stalled and analysts have said Central Asian states could opt to work more closely with European plans to import gas via the Trans-Caspian Gas Pipeline under the inland sea, rather than sending it around the northern coast to Russia. The Russian pipeline plan is expected to transport up to an extra 10 billion cubic metres of Turkmen gas a year and the same volume of additional Kazakh supplies, according to the original deal. Officials say it would come on stream by March 2010, a year before construction work on Nabucco is scheduled to start, but its cost and precise construction plan remain unclear. Russia's Gazprom said last month it may double the capacity of the pipeline in which Uzbekistan is also due to take part. Gazprom currently buys about 50 bcm of gas a year from Turkmenistan, about 15 bcm from Uzbekistan and less than 10 bcm from Kazakhstan using a Soviet-era pipeline. All countries in the region plan to boost output in the future but the West hopes that these additional volumes would be exported through new routes bypassing Russia. A source close to the Nabucco project told Reuters the three countries wanted guarantees and tangible incentives to supply the pipeline. Turkmenistan, the region's biggest gas exporter, which also plans to begin shipments to China through a new link later this year, has said it could fill all the planned pipelines.

ExxonMobil Attends Inauguration of World's Largest LNG Receiving Terminal

2009-05-12T09:17:00.001-07:00

May 12, 2009 - RigZone News - May 12 marks the official inauguration of the South Hook Liquefied Natural Gas (LNG) receiving terminal at Milford Haven, Pembrokeshire, Wales. The ceremony takes place today in the presence of HM The Queen of the United Kingdom and His Highness Sheikh Hamad bin Khalifa Al Thani, Amir of the State of Qatar, as well as other members of both royal families. The South Hook terminal represents a technological milestone as a part of the Qatargas 2 LNG value chain project that will make additional supplies of cleaner-burning natural gas available to the UK and the rest of Europe. South Hook LNG Terminal Company Ltd. is owned by Qatar Petroleum (67.5%), ExxonMobil (24.15%) and Total (8.35%). It is part of the larger Qatargas 2 joint venture which supplies gas to the UK from Qatar's North Field. The natural gas comes from the North Field off the coast of Qatar, and is brought ashore to be processed and liquefied at Ras Laffan Industrial City in Qatar. It is then loaded onto a fleet of world-class Q-Max and Q-Flex LNG ships and transported to the UK. The terminal adds to the UK's LNG import capacity and energy diversity with the ability to deliver up to 2 billion cubic feet of gas daily into the natural gas grid when it reaches full operational capacity by the end of 2009. The terminal, which is being completed in two phases, includes five LNG storage tanks, a regasification plant, ship unloading systems and a jetty to allow berthing of the world's largest LNG vessels. "The inauguration of the terminal is a significant milestone in the Qatargas 2 project," said His Excellency Abdulla bin Hamad Al-Attiyah, Deputy Premier and Minister of Energy & Industry. "ExxonMobil has been a strong partner with Qatar Petroleum, offering innovative technologies and expertise that have helped transform our regional gas resource into a global supply of clean-burning energy." Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil Corporation, said, "In the years ahead, the world will continue to face many energy challenges as we meet the growing energy needs of the global economy in a safe, efficient, and environmentally responsible way. South Hook, as a vital part of the Qatargas 2 project, stands as a shining example of how this can be achieved. Working together with Qatar Petroleum in open markets and under stable policies, South Hook is a striking example that international teamwork and technology can provide the energy needed to fuel economic growth, improve environmental performance, and build a brighter future for all." Liquefied Natural Gas (LNG) is one of the fastest growing sources of energy supplies. Global LNG demand is expected to reach approximately 470 million tons per annum (MTA) by 2030, an increase of over 200 percent since 2005.

Who is really behind RosGas?

2009-05-12T09:09:00.001-07:00

11 May 2009 - New Europe by Kostis Geropoulos - Hungary’s largest gas distribution company, EMFESZ, has been “fraudulently” sold to the mysterious Swiss-based firm RosGas AG without the consent of its owner, Ukrainian gas billionaire Dmitry Firtash, Robert Shetler-Jones, chief executive of Group DF that holds Firtash’s business assets, told New Europe telephonically on May 8, adding that DF would fight to get EMFESZ back. “We at Group DF and Mr. Firtash have sold nothing. What has happened is that our Managing Director, Mr (Istvan) Goczi has fraudulently transferred the shares in EMFESZ to RosGas without our approval and without our consent,” Shetler-Jones claimed. He said that the sale raises new concerns about Europe’s gas security since the future EMFESZ, Hungary’s largest independent supplier of gas, remains uncertain. “We do not know who is behind RosGas and therefore we don’t know who is looking to supply EMFESZ with gas,” Shetler-Jones said, adding that he doesn’t understand how RosGas can secure supplies of gas to provide to EMFESZ. Little is known about RosGas, the Swiss company which was recently created in Zug. Shetler-Jones claimed that RosGas has a few directors, one of whom is an officer who is directly responsible to Goczi, the managing director of EMFESZ. “We do not know who owns RosGas, we do not know on what basis they have persuaded Mr. Goczi to carry out this fraudulent operation,” he said. Shetler-Jones stressed that there has not been a decision of the board of directors to sell EMFESZ to RosGas. “Mr Goczi, what he seems to be saying is that he is using a power of attorney for this so-called ‘sale.’ The power of attorney he is supposedly using is one dating from 2004 that was issued to him to initially buy the shares in EMFESZ on behalf of Mr. Firtash. He somehow managed to persuade the Hungarian authorities that this power of attorney gives him the authority also to sell the shares onto a third party,” Shetler-Jones claimed. “However, this does not, in our view, give him the right; it is certainly not done with our approval and therefore we will be pursuing all legal means in our path to get this asset back to our control,” he told New Europe, adding that Group DF will “most certainly” seek criminal charges against Goczi and his associates. The dispute over the ownership of EMFESZ comes weeks after Firtash was muscled out of the Ukrainian gas trade under the terms of a new Russian-Ukrainian contract agreed by his nemesis Ukrainian Prime Minister Yulia Tymoshenko and Russian counterpart Vladimir Putin after the January gas supply crisis. Under the new contract, Russian gas monopoly Gazprom will supply Ukraine directly, cutting out the middleman – RosUkrEnergo. Firtash owns 45 percent of Swiss-registered RosUkrEnergo, where he is a partner with Gazprom, which holds another 50 percent of the trader. EMFESZ announced two weeks it was switching its gas purchases from Rosukrenergo to RosGas. Asked about the switch, Shetler-Jones said, “As far as I’m aware RosGas is not supplying gas to EMFESZ. One of the issues that concerned us was the very statement that EMFESZ made about securing supplies of gas from RosGas ... Group DF was not aware of those negotiations and, of course, we do not know what Rosgas is, so I’m assuming that is all part of the process that we now seeing unwinding, the transfer of shares, the sourcing of different supplies of gas and who is behind it is fundamental to understanding what has happened.” In a statement, EMFESZ said that RosGas is part of Gazprom’s network of business interests. This claim was dismissed by Gazprom Press Secretary Sergei Kupriyanov. “RosGas has nothing to do with Gazprom and does not belong to the Gazprom group,” Kupriyanov said. Shetler-Jones told New Europe that there is no evidence that there is any connection between RosGas and Gazprom. “If it is Gazprom and again we have no proof if it is Gazprom, of course this would be extremely important commercially but also politically, but I do reiterate that we have no evidence to that effect at the moment.”

President of Finland calls to end EU's gas dependency on Russia

2009-05-08T13:54:00.001-07:00

8 May 2009 - MosNews - Europe should try to overcome its energy dependency on Russia through developing domestic resources, Finland’s President Tarja Halonen has said. “Finland and all the other European countries, we are too dependent on imported energy,” Halonen was quoted by Bloomberg as saying Thursday. “We should be using a broader variety of energy resources.” Russia’s reliability as an energy supplier came into question again in January, when the world’s biggest energy exporter halted gas supplies to Ukraine for two weeks due to a pricing dispute, disrupting transit shipments to at least 20 European countries. In 2006, Russia turned off all gas exports to Ukraine for three days and cut shipments by 50 percent in March 2008 during a spat between the two countries. Europe depends on Russia for a third of its oil and more than 40 percent of its gas, most of which is carried through Ukraine, Bloomberg adds. European Union countries in total import more than half of all energy they consume. Finland relies on Russia for two- thirds of its energy imports by value, including all of the natural gas it uses, according to Statistics Finland. “I hope, we all in Europe hope, that we get a good, reliable system with Russia, because Russia is a very big energy deliverer,” Halonen said during the interview at the presidential palace in downtown Helsinki. “We also need more domestic energy resources” such as sun, wind and bio-thermal.

Exxon denies deal to sell Sakhalin-1 gas to Gazprom

2009-05-07T14:16:00.001-07:00

May 6, 2009 - MOSCOW (Reuters) - U.S. energy giant Exxon Mobil said on Wednesday it has not yet agreed to sell gas from its Sakhalin-1 project to Russia's Gazprom, denying earlier media reports about the deal. Japanese daily Nikkei reported earlier this week that Sakhalin-1 would sell 20 percent of its gas to Gazprom, citing unnamed sources. The price of sales -- the main sticking point in the talks -- had yet to be agreed, it said. "Exxon Mobil has confirmed that Sakhalin-1 consortium is still in discussions with Gazprom on potential sales of gas from Sakhalin-1 project, but no sales and purchase agreement has been signed yet," Exxon Mobil spokeswoman Dilyara Sydykova said. Exxon Mobil operates Sakhalin-1, on the Russian Pacific coast island of the same name, in cooperation with Russian state oil firm Rosneft, Japan's Itochu, Marubeni and India's ONGC. Gazprom has long said it needs the gas produced at Sakahlin-1 to cover domestic needs, while Exxon says it is looking for the best price and has eyed major importer China for some time. The project has been producing oil for several years and reached peak production of 11.2 million tonnes in 2007. It has been producing gas since 2005 and shipping small volumes to continental Russia. It has signed a deal to supply China with 8 billion cubic metres (bcm) of gas a year and hopes to start the supplies next decade.

Eon chief to step down in 2010

2009-05-07T14:10:00.001-07:00

May 6 2009 - Financial Times by Chris Bryant - Wulf Bernotat, the chief executive of Eon, announced on Wednesday that he would quit Germany’s biggest utility in 2010. Mr Bernotat, 61, one of the country’s best known businessmen, told Eon’s annual general meeting in Essen that he would not seek the renewal of his contract next year in order to pursue “new professional challenges beyond the operational business”. He pledged to work with his “full energy” during the next 12 months and would leave behind an “integrated, internationally-positioned and competitive company”. The company’s shares traded 2.4 per cent lower at €25.69 following the news. Speculation had mounted about Mr Bernotat’s future after Eon recorded an inauspicious start to 2009. The Düsseldorf-based company has not been left untouched by the economic crisis, forcing the company to lower its earnings forecasts, announce cost-cuts and take charges on recent acquisitions. Eon’s shares have tumbled by around 40 per cent since last year — more than some of its rivals — which has come as a painful blow to shareholders accustomed to bumper profits and the company outperforming RWE, its German rival. A period of consolidation began in February when Mr Bernotat announced a €1.5bn ($2bn) cost-cutting programme and €3.3bn in writedowns related to acquisitions in Italy and the US. A month later, Mr Bernotat said net income would fall by 10 per cent this year and announced that Eon would divest at least €10bn of assets by the end of next year, an about-turn after a period of rapid expansion. Mr Bernotat, who became chief executive in 2003, launched a whirlwind acquisition spree in 2006 which maintained Eon’s dominant position in the European market but left it nursing an enlarged debt pile. Although he failed in 2007 to acquire Spain’s Endesa for €43bn, he struck a deal with Italian utility Enel and Acciona, the Spanish construction group, to buy €11.8bn of assets in Spain, Italy and France. Eon also spent around $6bn to acquire OGK-4, a Russian power company. Ulrich Hartmann, Mr Bernotat’s predecessor and the head of Eon’s supervisory board, said a successor had not yet been identified. However, people close to the company said Johannes Teyssen, who last year was promoted to vice-chairman of the management board of management, was the clear favourite.

Sakhalin-1 to sell 20pct of gas to Gazprom

2009-05-06T07:34:00.001-07:00

May 5, 2009 – (Reuters by Simon Shuster) - MOSCOW, The Sakhalin-1 consortium has agreed to sell 20 percent of the natural gas extracted from the large oil and gas project to Russian gas export monopoly Gazprom, Nikkei reported on Tuesday citing unnamed sources. The price of the gas, which has been the main sticking point in talks over the sale, is still being negotiated, the Japanese business daily said in its issue due for publication Wednesday. U.S. energy major Exxon Mobil (XOM.N) operates Sakhalin-1, on the Russian Pacific coast island of the same name, in cooperation with Russian state oil firm Rosneft, Japan's Itochu, Marubeni and India's ONGC. Gazprom spokesman Sergei Kupriyanov said he could not immediately comment on the report, as did a spokesman for state-controlled Rosneft. A spokeswoman for Exxon Mobil also declined to comment. Gazprom has long said it needs the gas produced at Sakahlin-1 to cover domestic needs, while Exxon has long-stated it is looking for the best price, though has eyed major importer China for some time. The project has been producing oil for several years and reached peak production of 11.2 million tonnes in 2007. It has been producing gas since 2005 and shipping small volumes to continental Russia. It has signed a deal to supply China with 8 billion cubic metres (bcm) of gas a year and hopes to start the supplies next decade.

EU sets sights on 'new Silk Road'

2009-05-05T11:59:00.001-07:00

04 May, 2009 - Upstream OnLine - Europe is hoping to boost ties with Iraq and sign a deal with Turkey in its quest to develop a new southern corridor for gas imports - dubbed "the new Silk Road". The European Union's Czech presidency will host a summit of European and Central Asian countries in Prague on 8 May, seeking to smooth the path for eventual gas imports from central Asia to help reduce Europe's heavy dependence on Russia. The 27-nation EU has become increasingly uneasy over energy security since a row in January between Moscow and transit country Ukraine led to a cut in supplies to Europe in the depths of winter, a Reuters report said. Tensions have risen further since NATO expelled two Russian diplomats last month, and announced military exercises in Georgia, which fought a brief war with Russia last August. The "new Silk Road" talks in Prague will aim to convince leaders from Central Asian supplier countries such as Azerbaijan and Turkmenistan that the EU is a serious gas customer. "For those countries, the EU has for 15 years just been talking and not being serious," an official of the Czech EU presidency told Reuters. "We are trying to persuade people in the EU to put their money where their mouths are." An early draft of a declaration prepared for leaders on Friday said: "We agree ... for the EU and Iraq to sign a memorandum of understanding on energy as soon as possible." Iraq is seen as a promising new source of gas for the proposed Nabucco pipeline, which has so far been focused on carrying Azeri gas but has only sourced one fifth of that needed to justify its construction. Haggling over the transit of gas to Europe could delay the development of some Azeri gas for Nabucco until 2016, two years beyond its initial launch date, Azeri suppliers said last month. The draft called on EU member states involved in Nabucco to end that wrangling and to sign an intergovernmental accord with transit country and EU candidate Turkey by June. That step would clear one of the main obstacles potential investors face in planning for Nabucco and would also improve clarity for the rival ITGI project, which would bring gas from Turkey to Europe via Greece and then Italy. An intergovernmental agreement for ITGI should also be signed this year, said the draft, which could yet change as the meeting approaches. The meeting on Friday will come a day after a summit to launch the European's Union's Eastern Partnership project with Ukraine, Moldova, Belarus and other energy transit states. The Czech EU official said that after years of wavering, Europe had no time to lose in securing alternatives to Russian gas. "The risk is simple - that Azerbaijan will sell its gas to Russia, and Turkmenistan will be pushed to sell to Russia or Iran," he said. "How can you create a gas market, or any market, if you have one or two inputs," the official added. "The only thing that will happen is that prices will skyrocket."

Exxon's Earnings, Revenue Decline

2009-04-30T12:26:00.001-07:00

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.

PetroChina to boost storage for Russian oil

2009-04-28T08:25:00.001-07:00

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.

Parvanov: Gazprom should not command us!

2009-04-28T07:29:00.001-07:00

//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.

Turkmenistan: the bell tolls for Gazprom’s dominance of Caspian energy market

2009-04-28T07:25:00.001-07:00

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.

'EU needs to move on Nabucco'

2009-04-24T08:34:00.001-07:00

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.

New Kermerkol blow for Victoria

2009-04-24T08:31:00.001-07:00

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.

Shah Deniz II start-up 'pushed back'

2009-04-24T08:30:00.001-07:00

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.

US urges Central Asia to boost gas export routes

2009-04-24T07:54:00.001-07:00

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.

Turkey's Armenia move sparks Baku ire

2009-04-23T08:21:00.001-07:00

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.

Turkmen energy summit snub for Russia

2009-04-23T08:09:00.001-07:00

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.

Ashgabat stage set for energy battle

2009-04-22T11:24:00.001-07:00

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"

Piebalgs keeps faith in Russia gas transit

2009-04-22T11:22:00.001-07:00

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.

Iran, Russia, Qatar to become sole gas-producers by 2030

2009-04-22T08:52:00.001-07:00

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.

Gas diplomacy heats up over Turkmen supplies

2009-04-22T08:00:00.001-07:00

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.

Azeri gas for European energy security

2009-04-20T07:49:00.001-07:00

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.

TURKMENISTAN: GAS DEAL NEGOTIATIONS UNDERWAY IN IRAN

2009-04-15T07:19:00.001-07:00

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.

Iraqi VP to Discuss Total Oil Field Deal in Paris

2009-04-14T08:20:00.001-07:00

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.

Falling Fuel Demand Prompts Talk Of Refinery Closures

2009-04-14T08:09:00.001-07:00

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.

Petronas signs Uzbek GTL pact

2009-04-08T12:48:00.001-07:00

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.

LNG Flows Brighten Outlook for Cheniere

2009-04-08T12:15:00.001-07:00

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."

Total eyes Sabine Pass LNG date

2009-03-25T14:00:00.001-07:00

03-24-2009 - Upstream OnLine - French player Total expects to send its first cargo of liquefied natural gas to the Sabine Pass terminal in Louisiana from Nigeria in the middle of next month, according to reports. Philippe Sauquet, vice president for trading and marketing at Total Gas & Power told Reuters that Total is optimistic about Indian LNG demand this year and expects to see the Hazira terminal fully used for the first half of the year.

Shell investigated by SEC over bribery claims

2009-03-17T12:11:00.001-07:00

17 March 2009 - Times Online by Elizabeth Judge and Robin Pagnamenta - Shell is under investigation by authorities in the US for potential breaches of overseas bribery rules. The Anglo-Dutch oil giant revealed today that it is being probed by the Securities and Exchange Commission and the US Department of Justice for alleged violations of the US Foreign Corrupt Practices Act. The probe relates to alleged payments made on its behalf by a company called Panalpina to customs officials in Nigeria. Shell said it is co-operating with the US authorities and also conducting its own internal investigation. A spokesman for the group said it had first notified investors about the case in 2007. The revelation came as Shell confirmed a 5 per cent dividend increase and pledged to invest $32 billion in a string of oil and gas projects. In a statement, ahead of its annual briefing to investors, the group also said it was planning cost cuts. Jeroen van der Veer, the Anglo-Dutch group's chief executive, said the recession had "created opportunities for Shell to reduce supply-chain costs." Analysts say that staff cuts are likely. Plunging oil prices have led to a mounting sense of crisis in the industry, which has reacted by axeing projects and shedding thousands of employees. The problems resulted in BP last month reporting its first quarterly loss in more than seven years. The falling oil price has also fuelled concerns about the ability of oil companies to pay increased dividends while meeting their investment needs. But Shell, Europe's largest oil company, pledged to pay $10 billion in dividends this year — a 5 per cent increase in the first quarter of this year compared with a year ago. It would also invest $31-$32 billion in major projects around the world, it said. The group expects annual production growth of between 2 and 3 per cent in the next decade Its oil reserves remain unchanged from a year ago, making this the first year the group has not pumped more oil than it has added to its reserves since 2004. Mr van der Veer said: "These are testing times in the oil and gas industry. While short-term measures are important, we keep our long-term perspective and continue to believe that energy needs over the long term provide a positive context for Shell's investment programmes today." The group was planning "on the basis that the downturn could last more than a year," he said. Shell's crude output has been under pressure because about 20 per cent of its oil production is from Opec member countries, where quotas have been slashed by about 14 per cent. Shell's net reserves were 11.9 billion barrels of oil or equivalents at year-end — enough to last about ten years if it stopped developing projects. In January, Shell reported full-year 2008 earnings of $26.3 billion, down from $31.3 billion in 2007. Shares in Shell were down this morning 2.44 per cent, or 40p, to £16.

E.ON annual sales up 26%

2009-03-13T09:18:00.001-07:00

//Adjusted earnings before interest and taxes increase 7.3% to E9.9 billion
03-12-2009 - Energy Business Review - German power and natural gas utility E.ON has reported sales of E86.8 billion for the year 2008, a 26% increase compared to the sales for the year 2007. The company has reported adjusted earnings before interest and taxes of E9.9 billion for the year 2008, a 7.3% increase compared to the same period of 2007. E.ON has invested E26.2 billion in 2008, more than twice as much as in 2007. The company has invested about E16 billion in the acquisition of operations under E.ON's agreement with Enel and Acciona and its agreement with Statkraft. E.ON had earlier announced €63 billion in investments for the period 2007-2010. By 2010, E.ON will have invested €60 billion of this figure. For the current planning period (2009-2011), the company’s earnings stability will enable it to largely continue its investment program. However, in view of the difficult economic environment, E.ON has again reviewed all projects in the current planning period and reduced the original figure by about €6 billion. After this reduction, E.ON will invest an average of €10 billion in each of the next three years (2009-11). About one third of investments will go towards updating and replacing networks and power plants in Germany and the United Kingdom. Two thirds are earmarked for growth. E.ON has hired 13,000 new employees group wide in 2008, approximately 5,000 of them in Germany. E.ON has 2,700 apprentices in Germany.

Oil Rich Nations Seek Majors Expertise

2009-03-13T09:01:00.001-07:00

03-12-2009 - The Financial Times by Sheila McNulty – Dave O'Reilly, chief executive of Chevron, said the oil-rich countries that erected barriers to international oil companies amid the run-up in commodity prices were now seeking their expertise in managing the drastic fall. "They're back now looking for [our] investment,' Mr. O'Reilly told Chevron's annual analysts' meeting. The high prices had led countries such as Venezuela and Russia to raise barriers to the international oil companies, which have gone from control of 85 per cent of the world's oil reserves in 1970 to less than 10 per cent now. With prices on the rise, these countries did not feel they had to be as careful with their resources; some began managing their own oil and gas and failed to reinvest adequate profits to maintain production. Indeed, in 2007, Venezuela nationalized the energy sector and expropriated the assets of ExxonMobil and ConocoPhillips, which disagreed with the new terms offered. But oil prices have dropped from $147 a barrel last year to $48 a barrel, and US natural gas prices have fallen from more than $13 per million British thermal units to below $4. The oil-rich nations now require the expertise of the international oil companies to get costs down and grow production to maintain their economies. "This is a time they need companies like ours more than ever,' Mr. O'Reilly said. "That threat [to further nationalize] has receded quite a bit.' Rex Tillerson, Exxon's chief executive, agreed, noting Exxon had been around for more than 100 years and had vast experience with the rise and fall in commodity prices. The jury was still out, he said, on how the Russians would handle it: "They did not see this coming; they are dealing with it in real time.' He said Exxon was still embroiled in arbitration negotiations with Venezuela over the expropriation of its assets there. However, he said the delays on the Sakhalin 1 project were not due to the crisis but rather to changes on the Russian side of the board regulating the project, which meant new people did not understand the project and, therefore, did not approve processes as quickly. Mr. O'Reilly said Chevron was in a strong position, never having been "caught up in $140 oil'. It had a long queue of future projects and did not need to find opportunities in the downturn, although it would keep its eyes open. "We have a tremendous suite of opportunities and are not dependent on these opportunities to grow our portfolios,' Mr. O'Reilly said. Chevron would focus on reducing the cost of doing business, which had grown inflated with the rise in prices. It recognized it must not press vendors too hard, however, so they were healthy enough to help Chevron when demand rebounded.

Qatar Bundles Fields to Lure Explorers

2009-03-13T08:50:00.001-07:00

03-12-2009 -Bloomberg by Dinakar Sethuraman - Qatar, the world’s biggest producer of liquefied natural gas, may combine two gas areas into a single block to draw foreign explorers, the International Oil Daily said without citing anybody. Explorers didn’t show interest in Qatar’s offer of a deep water gas area called Block A last year, prompting Qatar Petroleum to merge Block B and Block C, the report said. The areas lie near shallow water fields Bul Hanine and Maydan Mazhan. Companies interested in Qatar including Total SA, AP Moeller Maersk A/S, Wintershall AG, Eni SpA and GDF Suez SA didn’t bid for Block A, the energy news daily said. The companies found investing risky because Qatar offered a low price for the gas discovered and there were fewer possibilities for finding associated liquids, sales of which typically enable gas explorers to make profits, the newsletter said. Bids for Block B and Block C are due by April 20 and Block A may be awarded within weeks, the report said. The country has stopped awarding new areas in the North Field, part of the world’s biggest gas area it shares with Iran, to assess reserves by 2012. The new deep water areas are outside the North Field.

Saudis - Enforce Existing Supply Curbs

2009-03-13T08:47:00.001-07:00

03-10-2009 - (Arabian Business News) - Saudi Arabia wants OPEC to discuss stricter compliance with existing supply curbs and not debate another production cut, a Saudi-owned newspaper reported on Monday, citing sources. OPEC ministers meet to discuss oil supply policy on Sunday in Vienna. The group has agreed to cut 4.2 million barrels per day - around five percent of global supply - since September to shore up prices. "There is no need to speak of a new production cut as it would be enough to enhance compliance with the previous decisions," daily newpaper al-Hayat reported, citing unnamed sources. "Saudi has informed the presidency of the organisation, which is Angola, that there must be... serious compliance with the latest reduction decision taken in December, which has prevented oil prices from falling further," the newspaper reported, citing a senior source.

PetroChina to Buy Exxon Mobil LNG

2009-03-13T08:45:00.001-07:00

03-05-2009 - Bloomberg by Wang Ying - PetroChina Co., the country’s biggest oil producer, may sign an accord with Exxon Mobil Corp. in the first half of this year to buy liquefied natural gas from the Gorgon project in Australia under a term contract. “We are in discussions,” PetroChina Chairman Jiang Jiemin said in an interview in Beijing today. “There should be no problem in signing it in the first half.” Chevron Corp. has a 50 percent stake in the Western Australian project, while Exxon and Royal Dutch Shell Plc each have 25 percent. PetroChina is signing LNG supply accords as terminals to receive cargoes of the fuel are built on the country’s eastern coast. The government plans to double the use of cleaner-burning fuels by 2010 to cut reliance on coal and oil. The agreement is unlikely to be signed this month, Jiang said today. Exxon, the world’s largest oil company, agreed to sell 2 million metric tons of LNG a year from the Gorgon project to the Beijing-based company under a term contract, two PetroChina officials and one official from an Asian unit of Gorgon operator Chevron said on Feb. 24. The purchase will be in addition to the 2 million-ton-a- year accord signed in 2008 between Shell and PetroChina. Under the agreement with Shell, the LNG will come from the Gorgon project and Shell’s global portfolio, said the China unit of Europe’s largest oil company in November. In an initial accord signed in September 2007, PetroChina agreed to buy 1 million tons from Shell.

Norway Reviews Arctic Fields for Exp. & Prod.

2009-03-13T08:42:00.001-07:00

03-04-2009 - (Reuters) - The Norwegian industry has listed three areas off the scenic Lofoten and Vesteraalen islands as the most interesting oil and gas exploration areas off Norway's Arctic coast in a new report to the government. The oil industry has long hungered for the areas of Nordland VI, Nordland VII and Troms II, and the Norwegian Oil Industry Federation (OLF) and its partners in the KonKraft group said opening them to drilling could contribute significantly to slowing a long-term decline in Norwegian petroleum production. Nordland VII and Troms II have never been open to petroleum activity. Parts of Nordland VI have earlier been explored, but the area is now out of bounds to drilling under a 2006 government management plan for the Barents Sea and Lofoten. The Labour-led government says it will not decide whether to open the areas until 2010, after September 2009 elections. The Socialist Left Party, a junior partner in the government, is bitterly opposed to opening more of the Arctic to drilling. Environmental protection campaigners say the Arctic areas should stay off limits and are vulnerable to oil spills because of rich fish stocks and bird populations. "Forecasts indicate that Norwegian petroleum production will fall markedly over the next decade," OLF chief Per Terje Vold said in a statement with the new report entitled "Oil Activity in the North." Non-OPEC Norway is the world's fourth biggest oil exporter and Western Europe's biggest gas producer. "Access to new and attractive exploration acreage would slow this decline, sustain government revenues to the benefit of the community, keep 250,000 people in work and open opportunities for 1,000-2,000 new jobs," Vold said. KonKraft -- linking the OLF, the Federation of Norwegian Industries, the Norwegian Association of Shipowners and Trade Union Federation LO -- has earlier estimated that Nordland VI, VII and Troms II may contain 3.4 billion barrels of oil equivalent (boe). That would be about five times the size of a field like Norne in the Norwegian Sea. In 2003, the Norwegian Petroleum Directorate (NPD) estimated the areas' resources at around 1.5 billion boe, but in more recent resources reports the NPD has not given estimates for Nordland VI, Nordland VII and Troms II due to uncertainties. "StatoilHydro has in various fora given an estimate for this area of 2 billion barrels of oil equivalents," the new KonKraft report said. The KonKraft group said its resource figure was based on average estimates obtained in interviews "with a number of companies that are assumed to have reasonably good knowledge of the Norwegian shelf." The group said its estimate of the economic spinoff effects of developing the offshore areas, including its job estimates, was based on fields with just over 2 billion boe of resources.

Sakhalin Energy Inks New Deal with Osaka Gas

2009-03-13T08:39:00.001-07:00

03-04-2009 -(RBC News) - Sakhalin Energy, a consortium operating the Sakhalin-2 oil and gas project, and Japan's second largest natural gas company Osaka Gas signed another liquefied natural gas (LNG) sale and purchase agreement today. As reported by the consortium's press office, some 200,000 tons of LNG per year will be supplied within a 20-year period under the new deal. As announced earlier, an LNG sale and purchase agreement was already signed with Osaka Gas in 2007. This will be the last agreement on LNG sales signed by Sakhalin Energy as part of its marketing campaign for the output of its two LNG processing lines estimated at 9.6m tons of LNG per year. All of the future LNG output has been contracted for over 20 years to come. Around two thirds of the total production will be shipped to nine customers in Japan, the world's largest LNG consumer. The remainder will be supplied to South Korea and North America.

Avenue pools Israeli licences

2009-03-13T08:30:00.001-07:00

03-03-2009 - Upstream OnLine - Avenue Energy Israel has agreed to pool its licences in the Heletz Field in southern Israel with Lapidoth-Heletz. Under the agreement, Avenue will contribute its 100% interest in the Heletz-Kokhav licence and its 50% interest in the Iris license and Lapidoth-Heletz will contribute its 50% interest in the Iris License into a pooling arrangement whereby Avenue will retain a 75% interest and Lapidoth a 25% interest in the combined licenses. Avenue will operate the field ``The pooling agreement is a win-win situation for AEI and L-H because it affords us the ability to focus on the optimal technical approach for the exploitation and development of the Heletz field,' Avenue head Levi Mochkin said. The Heletz field, discovered in 1955, is Israel's only producing oilfield.

Tethys Petroleum Signs Uzbekistan Oil Production Project Agreement

2009-03-02T11:05:00.001-08:00

March 01, 2009 - Oil Voice - Tethys Petroleum Limited announces that its 100% subsidiary, Tethyda Limited, has signed an agreement, which is subject to certain regulatory requirements, corporate approvals and additional conditions, to acquire from the British company, Rosehill Energy plc ("Rosehill"), its wholly-owned subsidiary ("the Contractor") which holds Rosehill's entire interest in the Production Enhancement Contract ("PEC") for the North Urtabulak Oil Field in Uzbekistan. The consideration for the purchase of this project is 15,000,000 (fifteen million) ordinary shares of Tethys. These shares will be restricted for resale for a period of up to one year. The value of the transaction (based on a Tethys share price of US$0.42 calculated as the 5 day volume weighted average ending on February 25, 2009) is approximately US$6.5 million. The revenue realised under the PEC for 2008 attributable to the Contractor was US$13.67 Million in 2008. Average daily production attributed to the Contractor from the North Urtabulak Oil Field for January 2009 was 913 barrels of oil per day. Tethys believes there is considerable scope to increase this production through relatively modest capital investment by working over existing wells and introducing a dedicated gas lift system with modern equipment that has not as yet been utilised at the field. The PEC also gives certain rights over various other fields in the area around North Urtabulak. Dr. David Robson, CEO of Tethys Petroleum Limited, commented, "We believe this acquisition adds significant shareholder value to the company at an attractive purchase price and brings immediate revenue through existing oil production. We also believe there is significant scope to increase this production through relatively low cost techniques using our own drilling and workover equipment and also by purchasing or leasing some new equipment to introduce gas lift. This also gives us a country entry into Uzbekistan through the purchase of a project that has an existing experienced in-country operations team with a good working knowledge of the field and surrounding area. We will build on this position to evaluate other projects in Uzbekistan, which is internationally known as having substantial oil and gas potential. Furthermore this oil project provides an excellent complement to our existing gas assets and offers shareholders leverage for any increase in the oil price from current levels." North Urtabulak Oil Field: The North Urtabulak Oil Field is located in southern Uzbekistan in the northern portion of the Amu-Darya basin. The nearest city is Bukhara which is about 120 kms north-west of the Field. Under the PEC the Contractor receives a share of incremental production from individual wells it works on. The North Urtabulak Field produces from a Jurassic age reef structure at a depth of about 2,500 metres (8,125 feet). Surface elevation is approximately 320 metres (1,040 feet). Under the PEC, the Contractor partners with the Uzbek State Oil Company and a local refinery (collective "the Uzbek Partners"). The Contractor under the PEC receives 50% of all incremental production of each individual well it works on for the first three years of production, and the Uzbek Partners receive 50%. After three years of production from the well, the Contractor receives 20%, and the Uzbek Partners 80%. If at any time certain defined work is carried out on the well then the three year initial period starts again. Under the PEC the Contractor is responsible for all capital investment and carrying out all operations on the North Urtabulak Field. The work program and budget under the PEC is approved by an Operating Committee which is jointly run by the Contractor and the Uzbek State Oil Company. The oil produced under the PEC is refined at a local refinery and the Contractor uses its own marketing agents to sell its share of the refined products at market prices. As a guide to pricing the Contactor received a net oil price (at the field) of approximately US$20.50 per barrel of oil in January 2009. The PEC terminates eight years after the date of the first incremental production from the final Contractor Well. It is expected to begin work on additional wells in 2009 which resets this period each time a well is completed and production obtained.

BP Exits Indonesian Field

2009-03-02T11:00:00.001-08:00

02.03.2009 - Reuters-Neftegaz.RU - The Offshore North West Java (ONWJ) block produces 24,000 barrels of oil per day (bpd) and around 220 billion British thermal unit of gas a day, according to an industry source. "BP plans to complete the divestment by the end of 2009. ONWJ PSC (production sharing contract) has been an important part of our portfolio for many years. However, it does not fit with the company's long term strategy," BP said in its statement. The firm declined to give a selling price, saying the information was commercially confidential. But it said the sale would not affect BP's other interests in Indonesia, which include the $5 billion Tangguh liquefied natural gas project in Papua. Other major shareholders in ONWJ include China's CNOOC with 36.72 percent and Japan's Inpex with 7.25 percent, BP said. The Tangguh project is scheduled to see first commercial shipments of LNG in the second quarter of 2009, the company said.

Total in No. 2 Azeri pact with SOCAR

2009-03-02T09:22:00.001-08:00

02-27-2009 - Scandinavian Oil & Gas - Total announces today that it has signed an agreement with Azerbaijan’s state-owned SOCAR. The exploration, development and production sharing agreement (EDPSA) covers a license on the Absheron offshore block. This block is located in the Caspian Sea, 100 kilometers from Baku, in a water depth of around 500 meters. Total will be the operator of the Absheron Block during the exploration phase. For the development phase, Total and SOCAR will jointly form an operating company for the management of operations. Total will hold a 60% interest and SOCAR will hold a 40% interest. “Total is pleased to continue developing its presence in the Republic of Azerbaijan and to extend in the Caspian Sea. This agreement enters into the framework of the group’s global exploration strategy” said Yves-Louis Darricarrère, President Exploration and Production. This latest exploration contract will strengthen Total’s ties with the Republic of Azerbaijan. The company will continue to support the development of Azerbaijan’s oil and gas industry over the long term. Total also has a 10% stake in South Caucasus Pipeline Company (SCPC), which owns the pipeline that carries Shah Deniz gas to Turkey and Georgia. In addition, the Group has a 5% interest in the Baku-Tblisi-Ceyhan (BTC) oil pipeline from Baku to the Mediterranean Sea. In 2007, the pipeline was used in particular to export condensate from Shah Deniz. The Group also directly participates in health, education and solidarity programs that are in line with its policies of sustainable development and investment in local communities.

Chevron Confirms Commitment to Develop Niger Delta

2009-03-02T09:21:00.001-08:00

25.02.2009 - [Neftegaz.RU] - Fawthrop stated this in Abuja when he visited Nigeria's Minister of Niger Delta Affairs Obong Ufot Ekaette, adding that the company's activities had spanned a period of 50 years, manifesting in commercial oil exploration and community development successes. He said Chevron better understands the terrain of the region with 50 years of its existence and knows where its services are needed. "We cannot do this outside now that there is a ministry on ground and thus the essence of this visit, so that we can rub minds to partner in this vein," he added. In his response, the minister said some host communities had complained of the ill treatment by some oil companies that had kept the region at the present state. He said although the government had recognized some good works done by some oil companies, they still needed to intensify their efforts. He explained that the struggle for development of the region has been on and several attempts by oil companies to tackle the problems have yielded little or no results. "The ministry will continue to interface with stakeholders, so that there would be synergy in order to avoid duplications of efforts and waste of resources," the minister said. Ekaette noted that it would be better to understand the causes of militancy in a bid to achieve the desired results. The Niger Delta is an unstable area of Nigeria ,and inter ethnic clashes are common practice, often access to oil revenue is the trigger for the violence.

MPC puts $400m price on Iraq drill deal

2009-02-27T08:28:00.001-08:00

02-27-2009 - Upstream OnLine - A new joint venture between Iraq and UK outfit Mesopotamia Petroleum Company (MPC), which aims to boost production within a year, will be worth $400 million, the company said today. MPC and state-run Iraq Drilling Company "intend to invest a total of $400 million to enable (the Iraqi Oil Services Company) to purchase and operate 12 new drilling rigs and for provision of logistical support and working capital," MPC said in a statement. The UK company signed the joint venture deal, which created the Iraqi Oil Service Company, on Thursday as part of Iraq's bid to expand oil production in the short term. The venture, which will be 51% owned by Iraq, would drill 60 new oil wells per year and is expected to increase Iraqi oil output by 120,000 barrels per day within a year, focusing initially on southern oilfields. The deal came as Iraq, which has the world's third largest proven oil reserves, moves ahead with plans to award contracts to major oil firms to develop massive oil and gas fields. But the country, hoping to capitalise on a sharp reduction in violence six years after the US-led invasion to oust Saddam Hussein, wants to modernise its outdated oil industry and boost production before those contracts can come on line. Iraqi oil output has hovered between 2.3 million and 2.4 million bpd in recent months, far short of its potential and below pre-2003 output levels. Iraq, which relies on oil exports for virtually all government revenues, also needs to boost production in order to make up for the collapse in oil prices since their all-time high of around $147 last summer. MPC's chairman, Stephen Remp, is also chairman of Ramco Energy, which has a 32.66% interest in MPC. Another 31.7% is owned by privately held Midmar Energy.

Brits, Baghdad mark first $400M deal

2009-02-27T08:26:00.001-08:00

02-27-2009 - Scandinavian Oil & Gas - Ramco Energy of Aberdeen explained Friday that the deal it agreed this week to form a joint venture with the state-owned Iraqi Drilling Co. is worth $400 million in joint investments in new drilling rigs and other capital. The deal is the Iraqi Ministry of Oil's first joint venture agreement of its type with a foreign company since the fall of the regime of Saddam Hussein in 2003. Signatures on Friday in Baghdad created the joint venture Iraqi Oil Services Co. ,or IOSCO, a 51-49-percent deal between Ramco’s Iraqi entity Mesopotamia Petroleum Co. and IDC. Ramco, which owns about a third of Mesopotamia, saw its shares up over eight percent early Friday. The deal was deemed significant in London, and Foreign Secretary David Miliband was compelled to issue comment: “This is an important signal of the long-term commitment the United Kingdom has to Iraq in terms of trade, commerce and economic co-operation,” he stated, adding, “It is also an important message to British business that Iraq is open for business." The joint venture sees “a large number of new wells” significantly increasing oil and gas production in the Republic of Iraq. Some 12 drill rigs are intially sought. Judging by a communique to shareholders, state-owned oil companies are seen as first clients of the new company. Mesopotamia will, it said, focus on management and training. Meanwhile, “major equity fundraising”is planned for which London-based investment bank JPMorgan Cazenove has been appointed.

Azerbaijan, Total sign Caspian deal

2009-02-27T08:22:00.001-08:00

February 27, 2009 - The Associated Press - BAKU: Azerbaijan's state-owned oil company and France's Total SA on Friday signed a production-sharing agreement for the Absheron Block offshore gas field in the Caspian. Executives of the State Oil Company of Azerbaijan Republic (SOCAR) and Total signed the 30-year deal in Baku. Total is to own 60 percent of the enterprise and SOCAR will have the remaining share. SOCAR president Rovnag Abdullaev said the joint company would foot the bill for the 3-year exploration period. Drilling of the first test well is expected to cost $100 million. But two extra wells may be required, said Total vice-president Yves-Louis Darricarrere. Under a previous deal for the gas field, Absheron's reserves were estimated to reach 1 to 3 trillion cubic meters of gas, 160 million tons of condensate and 120 million tons of oil.

Duo see legal solution to Arctic row

2009-02-27T08:19:00.001-08:00

02-26-2009 - Upstream OnLine - The battle for the Arctic's vast reserves of oil and gas can only be decided by international law, Russia and Denmark declared after talks today. Five countries with an Arctic coastline - Russia, the US, Canada, Norway and Denmark through its control of Greenland - have competing claims to the region. Russia said this week it would respond to any moves to militarise the Arctic. It has stepped up its own patrols there. Arguing that the subsea Lomonsov ridge links Siberia with the Arctic, Russia plans to claim a vast section of the seabed - with a estimated total of 13% of the world's undiscovered oil and 30% of undiscovered gas. "All problems in the Arctic, including climate change and reducing ice cover, can successfully be considered and resolved within specially created international organisations such as the Arctic Council," Reuters quoted Russian Foreign Minister Sergei Lavrov sayin at a news briefing after meeting his Danish counterpart in Moscow. The Arctic Council, set up in 1996, includes the five countries with an Arctic coastline plus the Faroe Islands and Iceland, which both lie just outside the Arctic Circle. Last May the council met in Greenland and agreed to follow the United Nations convention on the Arctic. International law states the five countries with territory inside the Arctic Circle are allowed a 320 kilometre economic zone north of their shores. But there is a tangle of claims beyond the economic zones, as the icecap that once made the Arctic Ocean impenetrable year round shrinks. Scientists claim that it will only take just decades for oil and gas exploration in the region to be possible during the summer months. Danish Foreign Minister Per Stig Moller said at the news briefing his government agreed cooperation was the best way to solve disputes. "International law should be used if there are contradicting claims from different states," he said.

Bolivian president gives ultimatum to France's Total

2009-02-26T08:01:00.001-08:00

20 Feb. 2009 - Oil & Gas Journal by Eric Watkins – LOS ANGELES, -- Bolivian President Evo Morales, armed with new backing from Russia's OAO Gazprom, has given France's Total SA an ultimatum to fulfill its investment obligations in his nation's natural gas industry or face punitive action by the state. "We've demanded the investments be made immediately," Morales said, adding that if the company is not willing to do so, then his country "has all the right to take decisions to invest." Morales said he met with high-ranking Total executives on his recent trip to Europe, asking them to expedite their investments in Bolivia and comply with the contracts they have signed with the government. The pressure on Total SA followed Morales' Feb. 16 visit to Moscow, where he and Russian President Dmitry Medvedev signed agreements for the development of Bolivia's hydrocarbons, its natural gas in particular. "Russia and Bolivia agreed to cooperate in extraction of hydrocarbons and development of the gas infrastructure," said Medvedev, adding: "A memorandum with Gazprom has been signed, and it paves the way for practical action." Morales' administration has often demanded that international oil companies carry out new projects to boost natural gas output in an effort to meet growing demand. Bolivia exports most of its gas to neighboring Brazil and Argentina, but a small amount—which Morales wants to increase—remains for domestic consumption. In addition to Total SA, Brazil's Petrobras and Repsol YPF of Spain also operate in Bolivia's gas fields. The companies say they face the uncertainty that their contracts will be adversely affected by Bolivia's new constitution. The contracts went into force in 2007 after Morales nationalized the industry in 2006. The new constitution, enacted earlier this month, grants greater rights to indigenous Bolivians, limits the size of landholdings, and establishes that the state controls all mineral and oil and gas reserves. However, Morales said the current oil contracts in Bolivia will not be modified under the new constitution. Instead, he said, the constitution refers to future contracts, which will not differ substantially from the current ones.

Azerbaijan says has gas to fill Nabucco pipeline

2009-02-26T07:54:00.007-08:00

02-19-2009 - International Herald Tribune-AP - BAKU, Azerbaijan: Azerbaijan's state oil monopoly said Thursday that the Caspian country has enough natural gas to fill a pipeline meant to help Europe reduce its dependence on Russian supplies. The feasibility of the Nabucco pipeline — which would run from the Caspian via Turkey, Bulgaria, Romania, Hungary and end in Austria — has been questioned by some experts who say there is not enough gas around the Caspian to fill it. But Khoshbakht Yusifzade, president of Azerbaijan's SOCAR oil monopoly, said the country's gas reserves will make the project a reality. "Azerbaijan has sufficient reserves to fill the Nabucco pipeline," Yusifzade said. He added that Azerbaijan's gas reserves stand at more than 2 trillion cubic meters. Azerbaijan produced 23 billion cubic meters of gas in 2008, and Azerbaijani President Ilham Aliyev said last month that the country would double the gas production in the next few years. Last year, Azerbaijan also exported 78 million tons of oil to Russia, Georgia, and Europe. European Union officials and businessmen gathered in Budapest last month to kickstart construction of Nabucco, which the EU and the United States back as a viable alternative to Russian gas supplies to the continent. Russia supplies Europe with about a quarter of its oil and gas needs. Industry experts repeatedly noted that the project is economically unsound. Even its backers acknowledged that it will be extremely difficult to find enough gas to fill the pipeline to its annual capacity of 31 billion cubic meters. Even that amounts to only a small fraction of the gas consumed annually by the European Union. Nabucco's supporters hope that Central Asian countries — like Turkmenistan — will join the project at a later stage. However, Russia's gas monopoly Gazprom currently buys out most of the gas Turkmenistan produces.

Dudley To Join BP Board

2009-02-26T07:54:00.005-08:00

February 18, 2009 - Downstream Online - The board of BP p.l.c. on Wednesday announced that it has appointed Robert Dudley as a director with effect from April 6, 2009. As a managing director of the BP Group he will assume responsibility for broad oversight of the company's activities in the Americas and Asia. Dudley was most recently president and chief executive officer of TNK-BP, Russia's third largest oil and gas company. Prior to taking up the post in 2003, he had worked extensively in commercial, operating and corporate roles across the international oil and gas industry for BP and, previously, Amoco. Commenting on the appointment, BP chairman Peter Sutherland said: "I am pleased to welcome Bob Dudley to the board and back to BP. He is a talented executive, experienced in all aspects of our business, who helped build TNK-BP into one of Russia's premier companies." Tony Hayward, BP group chief executive, said: "All of us in BP will benefit from Bob's extensive experience. During his time at TNK-BP he improved the company's governance and its safety and environmental performance while greatly increasing reserves and production." Dudley and his wife of 29 years, Mary, have two children and will reside in London. He has a BA in chemical engineering from the University of Illinois. He received his MIM from the Thunderbird School of Global Management and also holds an MBA from Southern Methodist University.

Slovakia diversifies gas supply

2009-02-26T07:54:00.003-08:00

19 February, 2009 – Upstream onLine – Slovak gas distributor Slovensky Plynarensky Priemysel (SPP) signed agreements today with German companies E.ON Ruhrgas and Verbudnetz Gas (VNG) on future gas supplies contracts, an SPP spokesman said. The contracts will provide alternative gas sources after the disruption that occurred earlier this year when Russian monopoly Gazprom cut gas piped through Ukraine, according to spokesman Lubomir Tuchscher. The exact supply conditions have not been finalized, according to reports from Slovak state news outfit TASR. "Gazprom is to remain the main natural gas supplier for SPP," SPP chairman Bernd Wagner said. Wagner characterized the agreements as the first step to increase the energy security of Slovakia. Negotiations with other partners, including SPP supplier GDF Suez, will take place soon, Wagner said.

Iran seals new Turkmen gas deal

2009-02-26T07:54:00.001-08:00

02-16-2009 - Upstream OnLine - Turkmenistan will export 10 billion cubic metres of gas per year from the Bolutun field to Iran, which in turn will help develop the field, under the terms of a new deal struck by the pair. The two energy powers, whose ties were strained last winter after Turkmenistan halted gas sales to Iran, agreed to boost co-operation during an official visit by Turkmen leader Kurbanguly Berdymukhamedov to Tehran over the weekend. Under the deal, Iranian companies would develop the Bolutun gas field in Turkmenistan and in exchange gas from the field would be exported to the Islamic Republic, Iran's official IRNA news agency said. "According to this agreement 10 billion cubic metres of gas will be exported to Iran per year from the Bolutun gas field," Iran's Oil Minister Gholamhossein Nozari told the news agency. He told IRNA the two sides had yet to reach a final agreement on the price of the exported gas, giving no details on when the accord would take effect and gas exports start. Iranian radio earlier quoted Berdymukhamedov as saying Turkmenistan wanted Iran to help in developing new gas resources in his country and in building a new gas pipeline. Last winter, Iran suffered natural gas shortages when Turkmenistan halted gas exports of up to 23 MMcmd to the Islamic Republic, citing technical problems. Turkmen exports to Iran resumed in April. Turkmenistan "would like to take advantage of Iran's co-operation in the exploitation of new gas resources, estimated at 14 trillion cubic metres, as well as the construction of a new gas pipeline," the radio quoted Berdymukhamedov as saying. He was speaking at a joint news conference with Iranian President Mahmoud Ahmadinejad. Nozari and Turkmen Deputy Prime Minister Tachberdy Tagiyev signed a pact on gas co-operation, Reuters quoted IRNA as saying. In January, a senior Iranian official said the two sides had agreed on the price Tehran would pay for natural gas it imports from its north-eastern neighbour for the next six months.

'EU must wean itself off Russian supply'

2009-02-13T08:49:00.001-08:00

02-12-2009 - Upstream OnLine - The European Union has failed to deliver a policy of diversified energy supplies to avoid over-reliance on Russian oil and gas, a British parliamentary committee said, calling on the bloc to take urgent steps to resolve the issue. In a report examining the aftermath of the Russian-Georgian conflict in 2008, the House of Lords European Union committee said the EU had made "little progress" on safeguarding the flow of fuel to member states in eastern, southern and central Europe and should act to settle the issue now. "This policy failure needs to be remedied urgently. This issue will become a major test of whether solidarity between member states can be made a reality," the committee, comprised of members of parliament's upper chamber, said in a report quoted by Reuters. It called on EU leaders to agree a unified energy strategy, particularly a liberalised and interconnected gas market, at their next council meeting in March and also urged them to approve construction of the Nabucco gas project. The EU and Russia agreed last week it was vital to avoid a repeat of a price dispute between Russia and Ukraine in January that shut the transit route via which Europe receives a fifth of its gas, and led to the most serious supply disruption for years. The EU, Russia's biggest trading partner, cooled ties with Moscow in protest at its behaviour during and after the war with Georgia. Russia drove Georgian forces from the pro-Moscow area of South Ossetia in August, repelling a Georgian assault to retake the region which threw off Tbilisi's rule in the early 1990s. Moscow has since recognised South Ossetia and Abkhazia as independent states, secured by thousands of Russian troops. Europe's trust in Moscow was further undermined by the January row, which underlined EU dependence on supplies from Russia's state-controlled gas behemoth, Gazprom. The EU is holding an energy security summit on 7 May, where it could announce a decision on the Nabucco project allowing construction to start. The 3300 kilometres, €7.9 billion ($10.2 billion) pipeline would carry Caspian gas across Turkey, Bulgaria, Romania and Hungary to an Austrian distribution hub from 2013 and cut reliance on Russian

British Gas, Petronas, Edison to Invest $2.1B in Egypt

2009-02-09T07:36:00.001-08:00

09.02.2009 [Neftegaz.RU] – The companies are British Gas, Malaysia's Petronas, and Italy's Edison, the Cairo-based Al Ahram daily reported citing Sameh Fahmy, Egyptian Petroleum Minister. The funds will be used to drill new production wells and to implement projects for the development of natural gas fields in West Delta, Rosetta, Rashid and Edko in the Mediterranean deep water, Fahmy said according to the daily. These fields currently cover 40% of Egypt's overall output, he added, Al Ahram reports.

LNG shapes as gas for future diversified supply

2009-02-05T08:37:00.001-08:00

02-03-2009 - Russia Today - The United Nations has called a meeting of the world's top energy companies to drive production of compressed natural gas and liquefied natural gas, which can be transported by road and sea. Experts predict a rapid rise in their use after Ukraine's gas blockade showed Europe's vulnerability to gas pipelines. Compressed natural gas is reduced to 1% of its volume to allow transport in small cylinders. 7,000 filling stations and 3 million drivers across the world are already converts, with one driver summing up its clear advantage. “It's a lot cheaper and cleaner than petrol.” Ater Ukraine showed it could hold the continent hostage by shutting its pipelines, the UN has brought together global energy leaders to ramp up use of compressed (CNG) and low-volume liquid natural gas (LNG), which can also be transported by ship or truck. Frederic Romig, Director of the sustainable Energy Division, at the United Nations Economic Commission for Europe believes it could provide much needed flexibility. “The discussions today will be on the LNG industry and its prospects for the future. This is an important part of the energy policy of hydrocarbons for any member state, and it is a possible counterbalancing form of natural gas that can be provided versus natural gas from pipelines.” Francisco P. de la Flor Garcia, Director of Storage, at Spain's Enagas, which owns 50 per cent of Europe's LNG storage also touts LNG as an important part of diversification. “Of all current and future energy sources, LNG is important to diversification of supply. Japan already relies 100% for its gas on LNG.” The Houston Chronicle estimates seven new LNG terminals this year will ramp up world capacity 20%. Gazprom opens Russia's first LNG plant on Sakhalin Island on February 18. Entry costs to the industry are still high - an LNG import terminal costs around a $1 million each. But with 60 such terminals in Euope alone, it has become an increasingly serious alternative to pipeline gas.

Occidental Petroleum reports slump in Q4 net income

2009-02-02T12:37:00.001-08:00

02-02-2009 - Energy Business Review - Despite down, the oil company claims to have grown the production by 5.4 percent. Occidental Petroleum has reported a net income of $443 million, or $0.55 per diluted share, for the fourth quarter of 2008, compared to $1.45 billion, or $1.74 per diluted share, for the same quarter of 2007. The company has reported net sales of $4.02 billion for the fourth quarter of 2008, compared to $5.52 billion for the same period of 2007. Occidental Petroleum said that it has reported a net income of $6.86 billion, or $8.35 per diluted share, in 2008, compared to $5.4 billion, or $6.44 per diluted share, in 2007. For the year 20008, Occidental has reported net sales of $24.22 billion, compared to $18.78 billion in 2007. Oil and gas segment earnings were $339 million for the fourth quarter of 2008, compared with $2.461 billion for the same period in 2007. The fourth quarter of 2008 core results were $996 million after excluding pre-tax losses of $599 million relating to the impairment of assets and $58 million for rig termination costs, said the company. Ray Irani, chairman and CEO of Occidental Petroleum, said: “The current oil and gas industry cost structure is higher than what the current product prices can support. In order to protect our returns, we are announcing a 2009 capital program of $3.5 billion. “We believe that with this level of capital, we will achieve our targeted returns in the current price environment as well as grow our production volumes in the coming days.” Occidental Petroleum is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America regions.

Davos ends with hope for recovery – but little else

2009-02-02T12:17:00.000-08:00

02-02-2009 - Russia Today - The World Economic Forum in Davos concluded, with the rountables and sessions filled with talk about recovery from the current financial crisis. If there is one outcome of Davos 2009, it's that everyone seems to know now how the world got into this mess, but not how to get out of it. Or, according Josh Lerner, Professor of Investment Banking, Harvard Business School, where it's going next. "For instance when it comes to the question of investment - should we be pulling back waiting for things to get worse or is it instead the time to jump forward and take advantage of the opportunities.” In his opening speech Russia's Prime Minister Vladimir Putin reassured everyone that Russia will stay open to foreign investors. But Anatoly Chubais, Director General of the Russian Nanotechnology Corporation, says conditions in Russia are far from the biggest concern of most international investors. “Investment doesn’t care about Russia. They care about themselves. They are in too complicated a situation to try to discuss, now, Russia’s European relations, to try to discuss the investment conditions in Russia for foreign investors. Its absolutely untimely, it’s 100% untimely! I myself made this mistake in the forum in trying to explain. They don’t care, it’s the wrong situation, they feel catastrophe." And in this case, says Professor Josh Lerner, it’s politicians who are expected to provide re-regulation as well as capital. “This is not the kind of thing that the private sector, by itself, can really resolve. I think, even thinking back to a year ago, that proposition would have been highly controversial." Many still hope the crisis will play out to a V scenario - sharply down and then sharply up again. But realists suggest preparing for the worst - deflation or even stagflation. With so much uncertainty the most sensible idea that has come out of this meeting for the Davos Man seems to be keeping your head while all around are losing theirs. Perhaps a little bit more was expected from those who were going to “Shape the post crisis world” - But in order to shape one needs to be in control - and that is certainly something that the 2009 Davos men don’t seem to be.

Bulgaria ties up Azeri gas deal

2009-02-02T08:33:00.001-08:00

01-26-2009 - Upstream OnLine - Bulgarian Prime Minister Sergei Stanishev reached an agreement with Azeri President Ilham Aliyev to import 1 billion cubic metres of Azeri gas a year from 2010, the government in Sofia said. Today's deal follows last year's memorandum of understanding between Bulgaria and Azerbaijan on the exports of 1 Bcm of gas to the Balkan country, which is trying to ease its dependence on Russian gas. "Next week, (Bulgaria's state gas monopoly) Bulgargaz and the Azeri gas company will start technical talks on the concrete parameters of the future agreement," the Bulgarian government said in a statement. Stanishev and Aliyev met in Budapest, where both will attend a conference on the European Union-backed Nabucco pipeline project tomorrow, which aims to bring Caspian and Middle Eastern gas to Europe to reduce the continent's reliance on Russian energy. But to import Caspian gas, Bulgaria will need to build a €250 million ($328.6 million) 80-kilometre stretch to link its gas network to an existing Turkey-Greece pipeline, which is already carrying Azeri gas to Europe. Sofia is yet to raise money for the plan and receive Athens' and Ankara's consent, which could take well over a year, industry officials have said. Bulgaria, which is almost fully dependent on Russian oil and gas, was one of the worst hit in a Moscow-Kiev gas row which cut Russian supplies to Europe via Ukraine for two weeks earlier this month.

ONGC nears Satpayev deal

2009-01-26T08:25:00.001-08:00

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

2009-01-26T08:09:00.001-08:00

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.

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

2009-01-22T09:41:00.001-08:00

ESSEN, 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.

UN looks to minimize impact of gas cutoffs

2009-01-21T08:44:00.001-08:00

20 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.

German Energy Regulator Seeks Gas Market Progress

2009-01-20T16:32:00.001-08:00

January 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

2009-01-20T16:21:00.001-08:00

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

2009-01-20T16:04:00.001-08:00

January 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

2009-01-20T14:02:00.001-08:00

12 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

2009-01-20T13:58:00.001-08:00

8 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

2009-01-20T13:55:00.001-08:00

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.

OPEC slashes production with Russia joining in

2008-12-18T13:29:00.001-08:00

18 December 2008 - Russia Today - OPEC has slashed crude production by a larger than expected amount in response to falling global demand. Russia and other non-members have joined in, with a promise of more to come if prices stay flat next year. At its extraordinary meeting, in the Algerian city of Oran, OPEC decided on Wednesday to cut crude production by a further 2.2 million barrels per day, to add to the 2 million barrel per day which has been trimmed since September. The latest cut, a record, and more than was even being talked about the day prior to the meeting by Saudi Oil Minister Ali al Naimi, is aimed at preventing a further collapse in crude prices. Julian Lee, Senior Energy Analyst, at the Centre for Global Energy Studies says the widespread expectation of a 2 million barrel per day cut, wasn’t having much effect on prices. “A cut of 2 million barrels per day was widely publicised ahead of the meeting. It didn’t really have much impact on prices, normally you expect to see prices react to the anticipation of what the meeting will bring, particularly there seems to be such unanimity as there was before this meeting. And that really didn’t happen very much. “ The OPEC move was backed by some non-member countries, boosting OPEC's ability to prop up the market. Azerbaijan announced a 300 thousand barrel a day cut, and Kazakhstan is also reducing output. Russia’s Deputy Prime Minister, Igor Sechin, says it has already cut output 350 thousand barrels a day in November and is ready to cut up to 320,000 a day more next year if current low prices persist, as they are hitting the capacity of oil companies to invest in new production. “The fair price should include investment for oil output. Almost all Russian companies are working on new oilfields. So a part of this investment is direct operating expenses for any oil company. Cuts in investment for these projects will lead to huge cuts in supply.” Deputy Prime Minister Sechin also proposed holding an OPEC meeting in Russia and said that the organisation is considering a new status for Russia, as a permanent observer. Opec has taken another set of measures to bring oil market to some state of balance, and closer to what producers are calling a fair price, of $70-80 per barrel .The danger for the producers is that if the cut is too big, and prices spike in response, that could tip the world economy into an even deeper recession than it’s already in.

BP to sell stake in Caspian Pipe JV to Kazakhstan's KazMunaiGaz

2008-12-18T13:24:00.001-08:00

MOSCOW, December 17, 2008 (RIA Novosti) - British oil major BP has agreed with Kazakhstan's KazMunaiGaz to sell its stake in a joint venture that holds 1.75% of the Caspian Pipeline Consortium (CPC), a source in Russian pipeline monopoly Transneft said on Wednesday. BP holds 6% in the Caspian Pipeline Consortium, designed to carry Kazakh and Russian crude to a terminal on the Black Sea. The company owns the stake through two joint ventures, one with national oil and gas company KazMunaiGaz (Kazakhstan Pipeline Venture, a stake of 19%), and the other with Russia's largest independent crude producer LUKoil (Lucarco B.V. a 49% stake). Transneft operates Russia's 31% stake in the CPC on behalf of the state. The CPC was originally established in 1992 by the governments of Russia, Kazakhstan and Oman to build an oil pipeline from Kazakhstan to export routes through the Black Sea, and was later joined by international private companies. In October, Oman sold its entire 7% stake in the CPC to Russia and withdrew from the project. The CPC, which was commissioned in October 2001, currently has capacity of around 30 million metric tons of oil per year and is expected to double it by 2012. Meanwhile, a BP spokesman said the company was also holding talks with LUKoil on selling its stake in the CPC and the joint venture with the Russian crude producer. The Transneft source said none of the CPC shareholders would object to BP's withdrawal from the project.

Big cut in Opec oil production fails to stop prices falling to 4?-year low

2008-12-18T13:21:00.001-08:00

Dec 18, 2008 - Your Oil and Gas News - Oil prices slipped to a four-and-half-year low last night even as Opec announced its largest production cut, totalling nearly 5 per cent of global output, in the cartel's latest effort to bolster prices. At a meeting in Oran, Algeria, the organisation of oil exporters said that it would slash supplies by a further 2.2 million barrels a day to 24.84 million barrels from January 1. The cut exceeded Opec's previous record cut in 1999 of 1.7 million barrels. Chakib Khelil, the Opec president and Algerian Energy Minister, said that the latest cuts had brought the total reductions announced by the cartel since August to 4.2 million barrels a day - or just under 5 per cent of global production, which averaged 86.3million barrels a day during the third quarter of this year. “The impact of the grave global economic downturn has led to a destruction of demand, resulting in unprecedented downward pressure being exerted on prices,” Opec said in a statement justifying the action. Nevertheless, oil traders remained unimpressed, with some questioning whether all Opec members would comply with the steep cuts - a continuing problem for the organisation. After the announcement, the price of a barrel of benchmark US crude quickly dropped to a low of $40.20, its weakest level in four and a half years. With demand collapsing, as some of the world's biggest economies enter recession and growing signs that Chinese oil consumption is also weakening, crude prices have slipped by more than $100 since July, when they briefly touched a record of $147 a barrel. Andrew Horstead, energy analyst for Utilyx, predicted further price falls below $40 unless other countries joined forces with Opec with production cuts of their own. He said: “The demand numbers coming out of the US are incredibly weak, so I doubt if this will be enough to push prices higher on its own.” Earlier, there had been speculation that Russia and Azerbaijan, which are not Opec members, would join in with the co-ordinated action and make cuts amounting to 600,000 barrels per day.John Hall, an independent oil analyst, said that these represented a “token gesture” because both countries were already reducing production for reasons such as a lack of investment and were dressing these up as collaborative market action with Opec. “The real problem Opec has is one of compliance,” Mr Hall said. “The market just doesn't believe it can demonstrate its members are going to follow through in full.” Mr Khelil rejected claims that some members might choose to produce more than their quotas. “I can tell you it's going to be implemented and it's going to be implemented very well because we do not have a choice,” he said. “If not, the situation is going to get worse.” Opec, which was formed in 1960 and whose 12 members include Saudi Arabia, Iran, Iraq, Nigeria and Venezuela, produces about 40percent of the world's oil supplies. The cartel's production cuts were condemned by the White House. Tony Fratto, a spokesman, said that the cuts risked further undermining an already fragile global economy. “Opec has an obligation to keep the market well supplied and to consider the health of the global economy, so efforts to limit the benefits of lower energy prices are short-sighted,” Mr Fratto said. Oil exporting governments are struggling to deal with the rapid collapse of oil prices, which is undermining their public finances. Saudi Arabia, Opec's biggest producer and de facto leader, said last month that it was targeting $75 a barrel, which it considered a fair price for oil. Other members, including Venezuela and Iran, have been pushing for higher prices. The AA said this week that UK average petrol prices have fallen to their lowest level for more than 21 months. The price of petrol fell 5.4p between mid-November and mid-December, from 94.9p to 89.5p a litre, a level last seen in March 2007. Diesel costs, helped by hefty cuts by supermarkets, dropped 6.89p, from 108.82p to 101.93p a litre. A family with two petrol cars is spending £64.77 less per month than it was in the summer.
Demand in US tails off: Opec's efforts to turn round the oil market have traditionally been like steering a supertanker. It is a lengthy process. Historically, the price of oil has been closely correlated with economic performance. High energy prices have fuelled inflation, hit demand and crimped output. The record price of oil only five months ago undoubtedly played a part in the present slowdown. Yesterday's production cuts were dramatic, but until the extent of the economic downturn becomes clearer, the recent slump in oil prices will be difficult to arrest and harder to reverse. Opec knows that the issue of price is one of supply and also demand. The US Government predicted yesterday that demand for oil in the US, the world's largest consuming country, is set to level off and is unlikely to grow at all between now and 2030. Growing use of alternative fuels, increased energy efficiency and a decline in the use of gas-guzzling cars and SUVs is shifting US oil use, according to the Energy Information Administration. In a report yesterday the agency predicted that the use of renewable energy, including solar, wind, biofuels and tidal power, would grow by 3 per cent per year. Overall energy use is expected to increase gradually but at a significantly slower pace than expected a year ago. The EIA, the arm of the US Government that produces official statistics on energy, also concluded that US reliance on imported oil will fall. It said that imported liquid fuels, mainly oil, would meet 40 per cent of US needs by 2025, down from 58per cent. US oil demand is weakening rapidly as the country slips into recession. Figures from the International Energy Agency this month showed November demand in the 50 continental states was about 18.5 million barrels per day, down nearly 10 per cent on a year ago. That still represents some 21 per cent of global demand of about 86 million barrels. But US reliance on imported oil from countries such as Saudi Arabia and Venezuela has become a major political issue. President-elect Barack Obama has pledged to reduce America's dependence on the fuel and this week appointed Stephen Chu as his energy secretary. Mr Chu, a Nobel prize-winning physicist from the Lawrence Berkeley Laboratory in California, is a proponent of alternative fuels and a developer of scientific solutions to climate change. T. Boone Pickens, the Texan oil billionaire, has started a campaign to shift America away from its dependence on imported oil by building huge windfarms across a central belt of the US. Without incentives to further reduce US reliance on fossil fuel, the EIA forecast American CO2 emissions would continue to rise by 0.3 per cent a year, compared with an annual average increase of 1.1 per cent since 1990.

Azerbaijan, Not Russia to Cut Output

2008-12-18T13:20:00.001-08:00

Reuters by Dmitry Zhdannikov - Ex-Soviet Azerbaijan became the only non-OPEC producer on Wednesday to offer a real output cut to support oil prices, while Russia refrained from making firm commitments despite previous declarations that it would. Azeri Energy Minister Natik Aliyev told reporters on the sidelines of an OPEC meeting in the Algerian town of Oran the country was ready to cut output by 300,000 barrels per day to 540,000 bpd, which will be its lowest output level in two years. "We have production capacity of 1 million bpd, but currently output is reduced to 840,000 bpd and we are ready to cut further to 540,000 bpd and sustain this production for several months," Aliyev said. Most of Azeri oil output is controlled by a BP-led consortium, which reduced production in the past months due to technical problems at an offshore platform in the Caspian Sea. Saudi Arabia's Oil Minister Ali al-Naimi told Reuters on Tuesday producers outside OPEC could cut 500,000-600,000 bpd along with any curbs agreed by OPEC at its meeting on Wednesday. Top non-OPEC producers Russia, Mexico and Norway signed up to production curbs with OPEC in 2002 to help shore up oil prices after they fell below $20. But after Norway and Mexico said they had no plans to join production cuts this time, oil markets focused on Russia, which like many OPEC members badly needs a price of above $70 per barrel to protect its economy, currency and social stability. Russia's President Dmitry Medvedev said last week Moscow was not ruling out joining production cuts and even the Organisation of the Petroleum Exporting Nations. Moscow also sent the highest-ranked delegation ever to an OPEC meeting this week, chaired by Russia's top energy official Igor Sechin and the heads of all five top national oil firms. Sechin told OPEC delegates on Wednesday Russian oil firms could extend oil export cuts in 2009 after having already cut deliveries by 350,000 bpd in November.
RUSSIAN EXPORT ALREADY DOWN: Russian exports fell to 3.7 million bpd, the lowest level since 2004, after the government kept a very high oil export duty which made exports loss-making and encouraged companies to refine more at home and focus on exports of refined products. But Sechin said nothing about immediate oil output cuts, only warning an extended period of oil price weakness would reduce capex. "If current prices on the global oil market prevail, Russian oil firms will be forced to cut the volumes of supplies next year by 16 million tonnes (320,000 bpd)...," he said in a speech to delegates, the text of which was obtained by Reuters. "(They may) also cut investments which may in the near future lead to a much sharper decline in production." Russian oil output is poised to decline by around 1 percent this year, the first time in a decade during which output of the world's second largest oil exporter rose by more than 60 percent to approach the landmark 10 million bpd level. Many analysts and industry insiders say production may decline by a further 2-3 percent next year and have been predicting that Moscow could try to repackage a natural decline in production as a coordinated cut with OPEC. Sechin also said Moscow was not seeking OPEC membership status but wanted to become a permanent observer. "There are different kinds of cooperation with OPEC and we have already made such proposals to OPEC," he told Reuters. "We are ready for close cooperation, coordination but all must progress step by step," he added.

Global LNG Supply to Surge to 2012, Crunch Later

2008-12-10T07:18:00.001-08:00

December 10, 2008 - AFX News Limited - A 50% surge in global liquefied natural gas production capacity over the next three years, at a time of shaky demand, may make for a buyers market in LNG for a few years but the supply crunch will return later, an executive from BG Group plc said on Wednesday. "We are about to see a supply surge ... It is really unprecedented," Elizabeth Spomer, BG North America's senior vice president told the CWC World LNG Summit in Barcelona. "One of the repercussions of this financial crisis will be what happens to the pace of new projects going forward." Spomer said new projects due to come online over the next three years would make much more LNG available to the market but warned of a supply crunch from 2012-2015 as developers slow plans for new production facilities. BG, one of the world's leading LNG companies, estimates that about 14 million tonnes of the super-chilled gas will be sent from the Atlantic basin to Asia in 2008, double the amount sent to Asian buyers in 2007. But Asian demand has begun to wane and how much LNG consumers around the world will need is unclear, making it difficult to commit to new projects. "Markets don't know how much gas they need," Spomer said. "With that kind of uncertainty it's very difficult to do business."

Partners pay $100m Kazakh signing bonus

2008-12-08T07:59:00.001-08:00

5 December 2008 - Upstream OnLine - US ConocoPhillips and the United Arab Emirate's Mubadala will pay Kazakhstan a $100 million signing bonus as part of a deal to buy a stake in a Kazakh offshore oil block, officials said today. ConocoPhillips and Mubadala agreed in October to buy 24.5% each in a Caspian block known as "N" from Kazakh state energy compnay KazMunaiGaz, have not given details of the deal. "According to the agreement, our foreign partners will pay a signing bonus of $100 million," Reuters quoted KazMunaiGaz chief executive Kairgeldy Kabyldin as telling reporters after the three companies signed another provisional agreement in Almaty. He declined to say how much the two would pay in total. The final deal will be signed early next year after the contract is changed from a production sharing agreement to a concession, Kabyldin said. The change means companies will be subject to higher taxes and all future tax law changes. The "N" block, previously known as Nursultan, is estimated to hold 2.1 billion barrels of recoverable oil reserves, Kabyldin said. "We plan to launch commercial production in 2016 if all current hydrocarbon reserve estimates are confirmed," he said. Kabyldin said foreign partners would finance all exploration costs and pay a discovery bonus if drilling is successful.

Caspian thaw raises Nabucco hopes

2008-12-08T07:43:00.001-08:00

04 December 2008 - Upstream OnLine - The European Union sees an improvement in relations between Caspian producers Turkmenistan and Azerbaijan as a step towards implementing the Nabucco gas pipeline project, a senior official said. The two gas-rich nations, eyed by Brussels as a key source of energy for the $10 billion Nabucco pipeline, took steps to overcome past disagreements this year by forging closer energy ties and agreeing to diversify energy shipments. EU representative for Central Asia, Pierre Morel, on a visit to the Turkmen capital Ashgabat, said that would help speed the implementation of Europe's broader Southern Corridor project which includes Nabucco. "I think this prepares the ground for the Southern Corridor," Morel told Reuters. "I am convinced the EU should step up its efforts to build Nabucco. The next steps might be taken in the coming months and in early 2009." Turkmenistan pledged to seek better ties with Azerbaijan after Saparmurat Niyazov, who showed little interest in regional co-operation, died in 2006. His successor, Kurbanguly Berdymukhamedov, visited Baku this year to settle old disputes over the ownership of borderline offshore Caspian oil and gas fields and mutual debts. Most recently, he met with his Azeri counterpart Ilham Aliyev last week. "President Berdymukhamedov's serious efforts with regards to Azerbaijan look promising," Morel said after talks with the Turkmen leader. Turkmen gas could reach Nabucco either through Azerbaijan, via a planned pipeline across the Caspian, or through Iran, but the latter option faces political challenges due to Iran's complicated relations with the West. EU officials have been frequent visitors to Ashgabat this year and Berdymukhamedov last month visited Germany and Austria to discuss energy and investment. "All these visits are like pieces of a puzzle coming together," Morel told Reuters. Turkmenistan currently produces about 70 billion cubic metres of gas a year, most of which goes to Russia. But analysts said the country, which has already promised to sell 10 Bcm of gas per year to Europe, needs foreign investment to ramp up gas production and meet its supply commitments. "Our companies are waiting for Turkmenistan to create the environment needed for investment," Morel said.

OPEC Seeks for Help from Non-Members

2008-12-01T07:39:00.001-08:00

01.12.2008 - [Neftegaz.RU] - "All non-OPEC should come and help; it is a big burden for OPEC," El-Badri told reporters in Cairo after the meeting, adding that Russia's energy minister is expected to attend their next summit on Dec. 17 in Algeria. "We always ask Russia to join us, starting today and starting yesterday," said El-Badri, who was previously an oil minister for Libya. Mexico, Norway and Russia were among non-OPEC producers that cooperated with OPEC in trimming production to help raise oil prices a decade ago, which sank to almost $10 a barrel in December 1998. The group warned in a statement that demand would be "much lower" than was expected a month ago. The cost of crude has continued to slide even after the group agreed last month to lower production by 1.5 million barrels a day. Oil ministers from OPEC members Saudi Arabia, Venezuela, Algeria, Nigeria and Iraq said Saturday that an oil price of $75 a barrel would be a "fair" level that supports investment in new capacity. New York prices rallied to a record near $150 in July then fell below $50 this month.

Caspian pair look at export options

2008-12-01T07:37:00.003-08:00

28 November 2008 - Upstream OnLine - Turkmenistan and Azerbaijan - both major Caspian Sea producers - have agreed to diversify their energy shipments out of the region as par of a wider energy co-operation agreement. Speaking after talks with Azeri President Ilham Aliyev, Turkmen leader Kurbanguly Berdymukhamedov said the two nations would develop closer relations for energy exploration, development and shipments. "Our countries have abundant energy resources. We do agree that we should have open doors. We stand for diversification," Reuters quoted Berdymukhamedov as saying. Europe wants to pump Central Asian gas along the Nabucco route via Turkey through a 3300 kilometre network of pipelines - a plan that has irritated Russia which sees the energy-rich region as part of its sphere of interest. Turkish President Abdullah Gul is due to visit Turkmenistan on Saturday to meet Berdymukhamedov and Aliyev to discuss energy. Turkmenistan has long said it is seeking to diversify energy shipments and work closer with Europe while maintaining good relations with Russia, which controls its gas exports through gas monopoly Gazprom . Adding weight to Turkmen ambitions to start shipments to the West without cutting back on Russian exports, UK outfit Gaffney, Cline & Associates (GCA) this year classified the South Iolotan-Osman gas field as one of the world's biggest. Speaking alongside the Turkmen leader, Aliyev, on his first visit to Turkmenistan, also urged more co-operation. "Turkmenistan and Azerbaijan play a key role in ensuring the energy security of other countries," said Aliyev. "There is no doubt that this role will only increase in the future."