Russia 090310 Basic Political Developments Russia, Hungary pms to discuss energy coop'n, gas issues
Activity in the Oil and Gas sector (including regulatory)
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- Bu səhifədəki naviqasiya:
- Nord Stream waits for Swedish decision on environment
- Chancellor Merkel Says Nein to Nabucco
- Gazprom
Activity in the Oil and Gas sector (including regulatory)Russian oil export duty to drop to $108-$112/tonne April 1 - MinFin(Part 2) http://www.interfax.com/3/477685/news.aspx MOSCOW. March 10 (Interfax) - The export duty on Russian oil will probably fall to $108-$112 from $115.3 a tonne on April 1, a Finance Ministry official told Interfax. "We're already pretty confident the duty will be lowered," said Alexander Sakovich, the ministry's deputy head of customs payments. Sakovich said the price of Russian crude averaged at $41.92 a barrel for the period February 15 and March 9. "It would have to exceed $48 a barrel for the next four trading days [before the one-month observation period is up] for the [new] duty to be level with or higher than the existing one," he said. Sakovich said market trends point to oil trading at $40-$45 in the next four days, in which case it would average $41.54-$42.54 a barrel for the whole observation period for February 15-March 14 and the duty will be $108-$112 a tonne. The duty on light petroleum products will likely fall from $90 to $85-$88 a tonne, and that on dark products from $48.5 to $46-$47.5 a tonne.
Sakhalin-1 Budget Refused http://www.themoscowtimes.com/article/1009/42/375165.htm The government refused to approve a budget proposal for the Sakhalin-1 oil and natural gas project led by Exxon Mobil and a Japanese venture, the Sankei newspaper reported, citing unnamed officials. The project partners were unable to start development work on two of three fields near Sakhalin Island that would be the main production sources for its natural gas, Sankei said in the report on its web site. Russia has called on Sakhalin-1 investors to sell all natural gas from the project to Gazprom at prices lower than domestic market levels, the report said.(Bloomberg) Nord Stream waits for Swedish decision on environmenthttp://www.russiatoday.ru/Business/2009-03-10/Nord_Stream_waits_for_Swedish_decision_on_environment.html/print 10 March, 2009, 10:20 Sweden is still blocking approval of the vast Nord Stream pipeline, claiming more ecological tests are necessary before it can allow construction through its economic zone. Sweden, which takes over the EU presidency in July of this year aims to highlight the ecology of the Baltic Sea and energy security. So it was no surprise those were the topics Victor Zubkov discussed with the deputy prime minister and Minister for Enterprise and Energy, Maud Olofsson. The Russian Deputy Prime Minister said the Swedish side seemed inclined to accomplish the Nord Stream project.
Sweden is the last country to say approve the Nord Stream project that will carry 55 billion cubic meters of gas to European consumers Alternative routes are essential for Russia to bypass Ukraine, as well as for European countries that want to ensure there are no disruptions to their supplies of fuel. The Nord Stream consortium has spent over 120 million dollars on environmental impact studies. Elena Gorokhova, Associate Professor at Stockholm University says the Swedes are looking for more detail.
Russia – with the largest gas reserves – awaits a united decision on the construction of the 1200km pipeline along the Baltic seabed. Although the planned pipeline route lies outside Sweden's territorial waters, it is within the country's exclusive economic zone for which the country bears responsibility for environmental damage. With the pipeline operator preparing environmental studies, it will take at least 3 month for Sweden to ensure all environmental threats has been addressed. This may lead to further delays in the project’s construction which is already expected to be delayed until 2010.
March 9, 2009 01:31 PM Age: 14 hrs Category: Eurasia Daily Monitor, Energy, Europe, Vlad’s Corner, Home Page By: Vladimir Socor Shifting gears from an ostensible equidistance between pipeline projects, German Chancellor Angela Merkel has come out against proposals to use European Union funds to kick-start the Nabucco pipeline project for bringing Caspian gas to Europe. Although Germany was never interested in this project in a national capacity and prioritized bilateral arrangements with Russia over the imperatives of EU common energy security, Berlin had not opposed Nabucco. Germany has, however, moved against EU financing of this project in the wake of the January 26 and 27 high-level meeting in Budapest, where the European Commission and EU-funded lending institutions for the first time announced serious plans to support Nabucco (see EDM, January 29, 30). Merkel announced her opposition to this plan during the European Union's informal summit of heads of state and governments on March 1 in Brussels. The summit discussed EU funding in 2009 and 2010 for a wide range of energy security projects and anti-crisis stimulus measures, in the context of a €5 billion ($6.3 billion) package soon to be finalized. Under the existing proposals, the EU's new member countries would end up badly short-changed. Although these countries face the most severe challenges to their energy security, and some (including Nabucco participant countries) are hardest hit by the financial crisis, the EU's Central-East European countries would only receive a disproportionately small portion of the package. Conversely, certain West European countries would receive disproportionately large portions, including funding for some projects that are not directly related to either EU energy security or anti-crisis stimulus. The EU Commission had managed in January (after difficult political bargaining in Brussels) to set aside € 250 million ($316 million) for construction of the Nabucco pipeline. Although paltry when compared with the project's estimated cost is €8 billion ($10 billion), this start-up credit could at least help kick-start the project and boost the confidence of other possible investors. Even this small amount would come from the EU's unspent agriculture-support funds, which would normally be returned to national governments. Thus, Nabucco funding to the extent proposed would not place additional burdens on the EU budget (New Europe, March 1-7). Following the January summit in Budapest, Nabucco participant countries sought to have that start-up credit (and any possible subsequent funding) separated from the overall €5 billion package, knowing that "new" member countries could hardly compete with the EU's "old" members' lobbying for funds from that package. The summit just held in Brussels, however, placed the Nabucco funds in the overall pot; and Merkel proceeded to block EU funding for the Nabucco project. Merkel offered the following arguments at the concluding press conference: 1) "There is no need whatsoever for this [EU financial support for Nabucco]. There are enough private [lending] offers for it." 2) "Nabucco's problem is where the gas would come from—not an insufficiency of investment funds." 3) Nabucco funding can not qualify for the 2009-2010 anti-crisis stimulus package because, in Merkel's view, Nabucco's construction would not fit within that time frame; 4) Germany already contributes a large share of EU budget funds (German Government press release: Chancellor Merkel Press Conference, March 1; EurActiv, March 3). These arguments are factually inaccurate, however, with regard to this project. Private lending offers for Nabucco are actually lacking, all the more during the present financial crisis and not least due to the absence of seed money from the EU to boost private-sector confidence in the project. Gas for the pipeline's first phase is actually ensured thanks to Azerbaijan; and there are also short-to-medium-term offers from Iraq and Egypt, as these countries pledged at the Budapest summit. (These prospects could disappear, however, if further delays on Nabucco would force Azerbaijan and, in the second phase, Turkmenistan to sell the available volumes to Germany's privileged partner, Russia). Nabucco's construction start would be pushed beyond 2010 (by Merkel's potentially self-fulfilling prophecy) only if the anti-crisis stimulus funding for Nabucco is denied now (at Merkel's suggestion). And while Germany, with the single largest economy, is indeed the single largest contributor to the EU budget (complaining about this plays well in the current election year), the EU has after all defined Nabucco as a top priority project within a top priority policy, that for EU energy security. Not for the first time, such arguments cast doubt on the quality of advice on a range of issues beyond energy that is available to the Chancellor with regard to policy on Europe's East. Merkel has shifted tactical gears with this nein to Nabucco. Barely five weeks before she had written to European Commission president Jose Manuel Barroso and the EU's incumbent Czech presidency, urging EU support for three projects simultaneously: Gazprom's Nord Stream, Gazprom's South Stream, and Nabucco. Merkel's toughly-worded confidential letter found its way to the press (Financial Times Deutschland, January 29; Le Monde, February 3; see EDM, February 4). Concerned at the EU's move to single out Nabucco for support, Merkel's letter sought to elevate Nord Stream (of interest to Germany) and South Stream (lobbied by Gazprom and Italy) to an equal footing with Nabucco in terms of EU support. The European Commission, however, takes the position that Nord Stream and South Stream are business projects whereas Nabucco is a strategic priority of the EU. Since Berlin could not elevate Nord Stream and South Stream to the same level as Nabucco in EU policy, Merkel's shift of gears seems designed to downgrade Nabucco to the same level as Gazprom's two projects, which do not qualify for EU support. TNK-BP Unit's Production http://www.themoscowtimes.com/article/1009/42/375165.htm TNK-BP's Ukrainian unit plans to maintain 2009 production volumes at last year's level, banking on falling imports to keep demand for its oil products stable despite an overall slowdown in consumption. TNK-BP commerce president Sergei Lizunov said the unit would not need to upgrade its Lysychansk refinery, Ukraine's largest by production, until the end of 2010 after completing upgrades. Ukraine's industrial output has dropped between 20 percent and 35 percent on a year-on-year basis in each of the last few months, while the economy shrank by up to 20 percent in January.(Reuters) CNPC, Rosneft likely to resume Tianjin refinery project http://www.ogj.com/display_article/355586/7/ONART/none/Prong/1/CNPC,-Rosneft-likely-to-resume-Tianjin-refinery-project/ Eric Watkins OGJ Oil Diplomacy Editor LOS ANGELES, Mar. 9 -- China National Petroleum Corp. (CNPC) and Russia's OAO Rosneft, following their respective governments' recent agreement on the construction of the East-Siberia Pacific Ocean pipeline spur, may soon begin construction of their long-planned 200,000 b/d oil refinery in the Chinese coastal city of Tianjin. The Sino-Russian refinery project has the firm support of the Tianjin city government. It has published a plan aimed at completing a feasibility study and an application report by June as well as winning approval by yearend from China's macroeconomy regulator, the National Development and Reform Commission. The Tianjin city government said construction of the 21 billion yuan ($3.07 billion) plant, to be located in its Binhai chemical area, could be completed by 2012. The idea for the refinery project received new life after Russia last month agreed to supply 300,000-bd of crude oil via a planned pipeline spur to China in return for $25 billion of Chinese loans (OGJ Online, Feb. 17, 2009). Russia is constructing Phase 1 of the ESPO line, which extends from Taishet to Skovorodino near the border with China. Under the agreement between the two countries, Russia will build a 60-km spur from Skovorodino to the border, while China will construct a 970-km link to Daqing. China then hopes to extend a pipeline from Daqing southward to Tianjin [See Map] to ensure feedstock supply to the new refinery. Plans for the construction of the oil refinery were laid in November 2007, when CNPC and Rosneft founded the joint venture Vostok Energy Petrochemical (Tianjin). The JV aims at establishing the oil refinery as well as related facilities within the Tianjin Lingang industrial area during 2010-12 and enables the companies to jointly work on upstream and downstream oil and gas projects. CNPC and Rosneft had planned to sign the contract last fall for the 51-49 joint venture, which is expected to refine as much as 15 million tonnes/year of oil at the rapidly developing Binhai New District, according to Liu Changbin, a spokesman for Tianjin Harbor industrial park. However the signing apparently was delayed by suspension of talks between Russia and China over the ESPO pipeline spur last autumn. Although the two sides had agreed on the basic outlines of the spur development, they disagreed on interest rates connected with $25 billion in loans offered by the Chinese. The project, to be developed in phases, would be one of the biggest investments in the oil and petrochemicals-oriented industrial park inside Binhai, Liu said. He said the oil refinery development would not only feed an energy-hungry nation, but also fuel the future growth of Binhai, an emerging economic, financial, and hi-tech zone in the Bohai region. Last April, anticipating the agreement, CNPC said that it would build 20 crude oil tanks and 20 oil products tanks in Tianjin, all to be located near the refinery planned with Rosneft. CNPC said the crude oil tanks would have a combined capacity of 2 million cu m, or 12.58 million bbl, and the oil products tanks will have a combined capacity of 1 million cu m. Earlier last April Shell Global Solutions said it also would join the CNPC-Rosneft joint venture refinery in Tianjin. "Shell, with its global experience of applying technologies in an integrated way will complement Rosneft's strengths and experience on the Russian market," said Shell CEO Jeroen van der Veer. In October of 2006, Vostok Energy won exploration licenses for two oil and gas blocks in eastern Siberia—both located near the route of the ESPO line. Mauled by the Russian Bear 
What happens to oil services firms in Russia now?
http://news.morningstar.com/articlenet/article.aspx?id=282826 By Stephen Ellis | 03-09-09 | 06:00 AM Over the last decade, the Russian oil services market has been red-hot. Russian oil and gas firms have eagerly adopted Western oil services technology, resulting in significant growth for many U.S. services firms. The substantial rise in commodity prices over the past few years had encouraged many Russian firms to invest heavily in new technology for their fields in order to boost production and reverse decades of field mismanagement. Due to the frozen credit markets, and the collapse in commodity prices, we think the Russian oil services market may take years to recover. We see a handful of outcomes for the firms we cover, such as  Schlumberger, as the Russian government struggles to fix its damaged economy. We also see a variety of geopolitical factors that could serve to complicate things for years to come. As always, it comes down to the ever-shifting balance of power between the oil and gas firms, services firms, and the Russian government.
Haven't We Been Here Before? In the early 1990s, the Russian government had essentially collapsed and capital was scarce. The state was so disorganized and capital-starved that there was no capital to support basic maintenance on oil wells. In 1993, 1.6 million barrels per day were offline that could have been fixed for a negligible cost per well. Using then-current oil prices, the cost would have been paid back within months. It was during this time period that oil firms and the state began to negotiate the first production-sharing agreements. Production-sharing agreements are generally used by oil and gas firms when they are dealing with a highly uncertain or challenging environment and want to lower their risk exposure. In typical deals, international oil and gas firms provide capital and technical expertise in exchange for reserve ownership. Both parties share any profits after the oil firm has recovered its costs. One of the first agreements was Shakhalin-II, which is one of the largest gas fields in the world, with about 18 trillion cubic feet in reserves. Given the poor shape Russia was in at the time, the production-sharing agreements for Shakhalin-II were extremely favorable to Reclaiming control over Shakhalin-II was a key event in the relationships between oil and gas firms and the Russian state. As oil prices marched upward over the past few years, the state's confidence and exchange reserves (which eventually topped $500 billion) grew even stronger. An example of this newfound muscle is the agreement to develop the Shtokman field in the Barents Sea. The field contains an estimated 3.8 trillion cubic feet of natural gas, and we expect it to cost well over $20 billion to develop. In 2007, Gazprom negotiated a deal with Contrast Russia's coolness with the international oil firms with its fondness for Schlumberger. Schlumberger has increased its Russian revenue from $50 million in 1999 to more than $1.5 billion today and retains about 10% market share in the region by our estimates. When Rosneft bought some exploration acreage in Algeria, the company had little operating experience in the country. Schlumberger, relying on its decades of experience in the region, found a drilling rig, drilled several wells, and found gas for Rosneft. In addition, the company has also built a training center in West Siberia at a cost of more than $100 million. The center will provide over 350 students a year with basic and advanced training in oilfield technology. However, more crucially, it will also establish a level of trust with the Russian universities and improve relations between the state and the services company. Similar scenarios have been taking place around the world where cash-rich but technically inexperienced national oil firms have placed their trust with service firms rather than international oil firms. As the countries have built up their own financial reserves, partnering with the international oil companies in exchange for giving up ownership of their reserves (which is perceived by some as a national right) began to seem rather undesirable. For these countries, the services firms became an attractive alternative. The countries have been able to outsource the drilling management and field production to Schlumberger and other services firms without having to give up ownership of the reserves. Services firms don't want to own oil and gas reserves, which pleases the countries. Services firms are content to take cold, hard, cash. For instance, Pemex has awarded over $2 billion in contracts to Schlumberger to drill hundreds of wells and handle tedious steps, such as obtaining permits from local authorities in an effort to get the Chicontepec field to 550,000 barrels of oil per day by 2021. This is up from today's levels of less than 40,000 barrels a day. Other services firms, such as Weatherford, have also won billions of dollars in awards for similar work.
The Russian government's position as the provider of last resort is quickly weakening. The country has spent $210 billion, or more than a third of its foreign currency reserves, since August to defend the ruble, which has declined by 33%. It also faces a near $200 billion shortfall on its 2009 annual budget, written when oil prices were at $95 versus the current $40-$50 range. Finally, the state is lending money to the Russian banks, which are then using the money to short the ruble, worsening the crisis. Not surprisingly, the Russian economy contracted at an 8.8% annual rate in January. Varying Outcomes for Oil Services in Russia In response to the frozen credit markets, overleveraged Russian oil and gas companies have slashed capital spending budgets. For example, Lukoil has taken its capital spending budget plan for 2009 down to $6.5 billion, versus $17 billion in 2008. Investment opportunities cannot compete with higher interest rates, which have doubled to 11%-13% for larger firms and as high as 18% for smaller firms. The lower capital spending plans will mean lower profits for the services firms in Russia. In addition, the collapse of the ruble will mean a further decline in near-term profits for the U.S. firms, which report in U.S. dollars. On a ruble-denominated basis, drilling pricing may only be down 10% in 2009 at 35 rubles per U.S. dollar, but in U.S. terms, the same services pricing could be down 36%. We believe that if things are to improve for services firms in the future, the Russian economy and the ruble must stabilize. Once the economy stabilizes (which could be a generous assumption in our part given that Russian credit default swaps were trading at distressed levels recently), there are several outcomes for the oil services sector that we think are worth considering. The first is that the Chinese/Russian relationship may be expanded to include oil services over time, as we think it is highly unlikely that credit will flow as easily as it did over the past few years for some time, if ever. China's ample liquidity would be quite useful to the capital-hungry Russian firms, who are seeking to develop fields in the Yamal Peninsula and Barents Sea. As a requirement for providing additional funds, we could see Chinese oil services firms move into Russia with potentially cheaper services and displace the incumbent in-house Russian services arms or independent U.S. oil services firms. A second outcome could be capital becoming much harder to obtain permanently. If oil and gas prices do not recover to their former highs for several years, cash-strapped countries such as Russia may be forced to cut deals with international oil firms to develop expensive oil and gas finds. The terms are likely to favor the international oil companies and include reserve ownership once again. Service firms do not have the capital resources of the larger international oil firms and may end up returning to a services provider role rather than remaining a partner with Russia and other countries. In our opinion, a major growth avenue may disappear for the services firms, which could hurt profitability and valuations. A third outcome, assuming that capital is much harder to obtain and that Russia is unlikely to give up its reserves ownership, would be the Russian oil services sector consolidating significantly. Currently, about 50% of the Russian oil services market is made up of the in-house services firms of major Russian oil firms, about 35% small and midsize independent Russian firms, and about 15% U.S. services firms. We believe this would be the most likely scenario, as strong services firms acquire struggling players and in-house services firms could be spun out to shareholders over time. Divesting the in-house services arms could make sense for the Russian firms (it certainly did for many U.S. oil and gas firms in the 1980s) who want to focus on developing their reserves and may not want the additional volatility and challenges of the services business. U.S. services firms would benefit under this scenario, as they have ample sources of cash from their U.S. and European operations to acquire competitors. By consolidating the Russian services market, the U.S. players would gain large enough capital cushions and additional technical expertise with the Russian reservoirs to be able to handle larger projects. If this outcome plays out over the next decade or two, the international oil firms' traditional advantages of technical expertise and capital could be largely diminished, and both services firms and oil firms could be competing on an equal footing. The oil services companies we cover have varying degrees of exposure to Russia currently. Schlumberger is currently the largest U.S. services firm in Russia, and while other services firms such as Weatherford, Baker Hughes, and Halliburton have smaller degrees of exposure, all are actively building their Russian businesses. Please see our Analyst Reports for more details on long-term investment opportunities in this space.
Gazprom expects to begin commercial production of oil in the Russian section of the Caspian Sea within two years. Gazprom and Stockholm-based Lundin Petroleum completed drilling of the first well at their Morskaya-1 development and plan to drill two more within 18 months, Ilya Kochevrin, executive director of Gazprom's export unit, said Friday.(Bloomberg) Gazprom to establish bank in Serbia  10 March 2009 | 03:28 | FOCUS News Agency
http://www.focus-fen.net/index.php?id=n173655
Sofia. Russia's Gazprom plans to set up its own bank in Serbia, under the name of Gazbrombanka, since the company intends to make investments of over EUR 700 mmillion in the country’s energy sector, The Novinar Daily reports, citing SEEbiz . One of the company’s projects is the construction of the South Stream gas pipeline. The Russian gas monopoly also plans to invest in new gas depots. According to representatives of Serbian business, the establishment of the Russian bank will improve the financial stability of the country. One Russian financial institution exists in Serbia already. Gazprom proposes PGNiG new gas contract http://www.wbj.pl/article-44666-gazprom-proposes-pgnig-new-gas-contract.html?typ=wbj 9th March 2009 The contract stipulates PGNiG resigns from $60 million claims against RosUkrEnergo
PGNiG is still considering whether to accept the offer. "Negotiations are under way and we expect they might be concluded by early April," said PGNiG CEO Michał Szubski. According to the daily’s sources, Gazprom is hoping that in exchange for the contract,
"Before PGNiG accepts the offer, it should first annul its contract with RUE. If this issue has no conciliatory solution, the Polish side will be forced to seek an answer to the issue of compensation through the arbitration court in Switzerland," said a source close to the negotiations. The problem is that PGNiG does not know who to contact in RUE, as the firm's shareholders are disputing ownership of the firm. Yüklə 405 Kb. Dostları ilə paylaş:
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