Russia 110602 Basic Political Developments

Ust-Luga PPP completed

http://www.portstrategy.com/news101/europe/ust-luga-ppp-completed
02 Jun 2011

The Russian Baltic port of Ust-Luga has completed construction of the last two of five berths at the multipurpose transhipment terminal. This is the first time such a development has taken place using a public-private partnership involving the Russian Investment Fund, which contributed almost $72m towards the $305m total cost.

Activity in the Oil and Gas sector (including regulatory)

UPDATE 1-Russia oil output at post-Soviet record high in May

http://af.reuters.com/article/energyOilNews/idAFLDE75102I20110602
Thu Jun 2, 2011 6:16am GMT

* Tied-up with post-Soviet high last seen in October 2010

* Gas production fell 2.7 percent (Adds details)

MOSCOW, June 2 (Reuters) - Russia's oil output edged up 0.2 percent to 10.26 million barrels per day (bpd) in May, matching a post-Soviet record seen in October as companies ramp up production on the back of high crude prices.

According to the International Energy Agency, Russia's oil production peaked at 11.41 million barrels per day in 1988, when it was still part of the Soviet Union. Russia accounted for 90 per cent of total Soviet oil output.

Russia remains the world's top crude producer, ahead of quota-bound Saudi Arabia, which pumped 8.95 million bpd in May, according to a Reuters survey. [ID:nLDE74Q1RE]

The Organization of the Petroleum Exporting Countries meets on June 8 in Vienna to review its output policy, which it has not changed since it agreed to a record cut in production in December 2008 in the aftermath of economic crisis.

Overall gas production in Russia declined 2.7 percent to 1.86 billion cubic metres (bcm) per day last month from 1.91 bcm in April due to seasonal fluctuations.

Daily output at Gazprom , the world's largest natural gas producer, fell 2.7 percent from April to 1.43 bcm.

(Reporting by Olesya Astakhova; writing by Vladimir Soldatkin; Editing by Michael Urquhart)

Natural Gas Exporters Won’t Emulate OPEC, Russia’s Yonovsky Says

http://www.businessweek.com/news/2011-06-01/natural-gas-exporters-won-t-emulate-opec-russia-s-yonovsky-says.html

June 01, 2011, 5:42 PM EDT

By Robert Tuttle and Ben Farey

June 1 (Bloomberg) -- Russia, holder of the world’s biggest gas reserves and the largest exporter to Europe, said the Gas Exporting Countries Forum won’t emulate OPEC by imposing production quotas on members.

The forum “is not OPEC,” Anatoly Yonovsky, Russia’s deputy oil minister, told reporters in Cairo before the 11- member group meets tomorrow. “I think it won’t ever be.”

Gas and oil markets are “quite different” and no members have attempted to impose production quotas in the same manner as the Organization of Petroleum Exporting Countries, he said.

The Gas Forum, which brings together some of the world’s biggest exporters in the same way OPEC groups oil producers, can’t control global production or prices for the next five or 10 years because most supply contracts are long-term, Secretary- General Leonid Bokhanovsky said in December.

The forum’s members are Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad & Tobago and Venezuela. Kazakhstan, the Netherlands and Norway have observer status. Malaysia, Indonesia and Brunei may join as members, and the group may talk with Australia, Turkmenistan and Canada about becoming observers, Bokhanovsky said.

--Editors: Dan Stets, Bill Banker

To contact the reporter on this story: Robert Tuttle in Doha at [e-mail]; Ben Farey in London at [e-mail]

To contact the editor responsible for this story: Dan Stets at [e-mail]

Turkmenistan still keen to boost gas exports to Russia

http://www.bne.eu/dispatch_text15689

bne
June 2, 2011

Turkmenistan is still looking to boost its gas exports to Russia after the sharp reduction seen over the past few years, reports AP, suggesting the Central Asian state envisages little likelihood that other customers will be ready to buy from it soon.

Turkmen oil and gas minister Bayramgeldy Nedirov offered again on Tuesday to boost shipments to Russia, which re-exports Central Asian gas imports to Europe at a significant profit. However, with the economic crisis hitting European demand and disrupting infrastructure projects, relations between the two states have suffered alongside the volumes of gas traded.

Russia bought just 10 bcm of Turkmen gas in 2010, compared with 50 bcm imported in 2008. Ties between the two cooled significantly in 2009 after an explosion on a Turkmen gas pipeline provoked a nasty argument between them about who was to blame. Since the accident, Turkmen exports to Russia have remained depressed, with a gas glut still capping prices in Europe. However, Ashgabat has been suggesting expanding the export route once more since early last year.

Whilst Turkmenistan has been developing exports to China and talked extensively with the EU about supplying the Nabucco pipeline, the latter project is looking ever-further away, and - evidently missing the revenue - Turkmenistan has few other customers to whom it can ship its gas right now.

Transneft asks for a further tariff increase

http://www.bne.eu/dispatch_text15689

Troika Dialog

June 2, 2011

Transneft has asked the Federal Tariff Service to increase the price it can charge oil producers by 6% from July 1 or 8% from August 1, the company said yesterday. Transneft's tariffs were last raised in December, by 9.9%.

Troika's view: The tariffs can be regarded as an additional tax burden on oil companies. The increase being lobbied for by Transneft would translate into average tariff growth of 14.5% this year, versus 11.1% if no further hike was to take place - and would lift Transneft's EBITDA by about 6%, or $450 mln, compared with the current projections.

However, we believe that investors will continue to pay more attention to the company's capex and any signs of improvement in corporate governance than to the always•strong P&L. A meeting between sell•side analysts and Transneft Vice President Maxim Grishanin, scheduled for Friday, can be seen as an important development in that area.

Oleg Maximov

Surgutneftegas Said to Sell Two Urals Crude Cargoes to Repsol

http://www.bloomberg.com/news/2011-06-02/surgutneftegas-said-to-sell-two-urals-crude-cargoes-to-repsol.html
By Sherry Su - Jun 2, 2011 10:14 AM GMT+0200

OAO Surgutneftegas, a Russian oil producer, sold two cargoes of Urals crude for loading from the Baltic Sea port Primorsk to Repsol YPF SA, said two traders who participate in the market.

The two shipments are for loading in two-day periods starting from June 16 and June 22, said the people, who declined to be identified because they aren’t authorized to speak on the matter.

Details of the sales are as follows:

-------------------------------------------------------------

Crude: Urals crude

Quantity: two 100,000 metric ton cargoes

Buyer: Repsol

Loading: June 16 to June 17, June 22 to June 23

Port: Primorsk, Baltic Sea

Price: Not confirmed

-------------------------------------------------------------

To contact the reporter on this story: Sherry Su in London at [e-mail]

To contact the editor responsible for this story: Stephen Voss at [e-mail]

09:25 02/06/2011ALL NEWS

Drilling-rig platform for Caspian to be ready before yearend.

http://www.itar-tass.com/en/c154/156013.html

2/6 Tass 39

VOLGOGRAD, June 2 (Itar-Tass) — A platform with a drilling rig for the offshore production of hydrocarbons in the Caspian Sea will be put into operation before the end of this year by the shipbuilders of the Krasnyye Barrikady (red barricades) shipbuilding plant .

The first phase of the construction of the drilling rig of the Super M2-100 series has been completed at the plant, an official in the press service of the Astrakhan Region Governor has told Itar-Tass.

"In the coming days the platform with the drilling rig will be put onto a floating barge and transported to the Turkmen shelf of the Caspian Sea where the construction of the platform will be finalized. The facility will be ready in December," the press service official specified.

The self-elevating drilling rig with a displacement of about 9,000 tonnes, the hull 62.8 metres long, 55.78 metres wide, and platform depth of 7.62 metres is designed to bore offshore wells down to a depth of about ten kilometres.

The installation can operate even in heavy storm conditions -- when wind velocity is up to 100 knots and wave height is up to 15 metres. A four-storey housing module for a 100-member crew and a helistop have been designed to be positioned above the main deck. International environmental requirements have been taken into consideration during construction. The drilling rig will operate according to the zero-discharge technology.

The project customers -- the Singaporean-Chinese company Yantai CIMC Raffles and the Dragon Oil (United Arab Emirates) -- are satisfied with the quality of the work done. They intend to continue to place orders with Astrakhan Region. In particular, negotiations are already under way for the construction of a second drilling rig of the series.

Yantai executive Brian Chang said, "The professionalism of Astrakhan workers is high and, although Singapore is the world's leading country in the manufacture of drilling platforms, the Astrakhan shipbuilders will soon be able to put up competition to it".

Astrakhan Region Governor Alexander Zhilkin, said, "Due to the well-concerted work of the specialists of the Krasnyye Barrikady enterprise, a most elaborate technical facility has been created to prospect for and extract hydrocarbon fuel on the sea shelf". He believes that this is the basis due to which the plant can seek new orders from the world's leading companies.

Gazprom

Russia Seeks $18 Billion More Tax From Gazprom, Kommersant Says

http://www.bloomberg.com/news/2011-06-02/russia-seeks-18-billion-more-tax-from-gazprom-kommersant-says.html
By Ilya Khrennikov - Jun 2, 2011 6:20 AM GMT+0200

OAO Gazprom may have to pay an additional $18 billion in tax in 2012 through 2014 as Russia plans to increase the mineral extraction tax on natural gas as it seeks to cut its budget deficit, Kommersant reported.

Gazprom may have to pay 150 billion rubles ($5.35 billion) of additional taxes next year, 170 billion rubles in 2013 and 185 billion rubles in 2014, the Moscow-based newspaper said, citing documents from a government meeting yesterday.

To contact the reporter on this story: Ilya Khrennikov in Moscow at [e-mail]

To contact the editor responsible for this story: Amanda Jordan at [e-mail]

Gazprom: To Reach Pre-Crisis Output 2013, Sees Increase In 2014

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201106010726dowjonesdjonline000314&title=gazpromto-reach-pre-crisis-output-2013sees-increase-in-2014
Jun 1, 2011

MOSCOW -(Dow Jones)- Russian state-controlled natural gas monopoly OAO Gazprom (GAZP.RS) expects to reach its "pre-crisis production level" in 2013, for which it needs to put the Yamal field on-line in 2012, the company's Deputy Chief Executive Alexander Ananenkov said Wednesday.

Speaking at a televised press conference, he said the company is aiming to reach a production level of about 550 billion cubic meters (BCM) of gas, first reached in 2006, in 2013.

He said Gazprom is currently producing gas ahead of the planned level of 505.6 BCM and may reach production of 519 BCM in 2011.

By 2014 there will be a significant production growth and the company may increase production to 570 BCM.

Gazprom said late 2010 it expects gas production to be between 570 billion cubic meters and 580 billion cubic meters by 2015.

Ananenkov said to enable this production growth the company needs to start full production on Yamal gas field.

He said the company is not planning to start any production on Kovykta gas field before 2017.

Ananenkov said Russia's total gas production may reach 1 trillion cubic meters by 2030.

-By Alexander Kolyandr, Dow Jones Newswires; [e-mail]

Gazprom might increase its 2011 investment programme to USD 41bn - 45% more than the current plan

http://www.bne.eu/dispatch_text15689

VTB Capital
June 2, 2011

News: According to Interfax, Deputy Chairman of Gazprom's Board Aleksandr Ananenkov said that the company might increase its 2011 investment programme 45% from the current plan to USD 40.7bn. He added that in 2012-13, the company's investment programme might be around USD 41.4-44.8bn. The decision to increase the 2011 investment programme is to be taken in August-September.

Our View: In our model we assume Gazprom's 2011F investment programme at USD 33bn and FCF at USD 9bn. Should the company increase its investment programme to USD 41bn, its 2011 FCF might be zero. This would be negative for Gazprom both fundamentally and sentiment-wise. We believe low FCF generation and high capex is one of the main reasons why the company is trading at low multiples compared with its Russian and international peers.

Gazprom to spend $179m on energy efficiency

http://www.rbcnews.com/free/20110602105518.shtml

      RBC, 02.06.2011, Moscow 10:55:18.Gazprom intends to spend some RUB 5bn (approx. USD 179m) on energy efficiency in 2011-2013, RBC Daily reported today, citing the natural gas giant's energy conservation program.The bulk of this amount, about RUB 4bn (approx. USD 143m), will be invested in energy efficiency of gas transportation via trunk pipelines.

      The company expects its energy-saving efforts to help it to save as much as RUB 12bn (approx. USD 429m). Gazprom set itself the goal to save 5.4 bcm of gas, 456m kilowatt-hours of electric power and 510,900 gigacalories of thermal power over the three years thanks to the implementation of the program.

RPT-CORRECTED-Gazprom to ship new gas to India from 2016-18-srce

http://af.reuters.com/article/energyOilNews/idAFLDE7510AH20110602
Thu Jun 2, 2011 7:45am GMT

(Repeats to additional Reuters clients) (Corrects in first paragraph to "2016-2018" from "2016-2016"; also removes superfluous editing credit in signoff)

MOSCOW, June 2 (Reuters) - Gazprom (GAZP.MM) is set to start increasing deliveries of liquefied natural gas to India under new memorandums starting from 2016-2018, a source close to the Russian gas export monopoly told Reuters on Thursday.

Earlier Gazprom said it signed a memorandum of understanding to supply three Indian customers with an additional 7.5 million tonnes of liquefied natural gas per year.

The source said the LNG will come from Gazprom's new projects, including Shtokman in the Barents Sea, as well as from increased capacity planned at its existing plant on the Pacific island of Sakhalin and volumes bought from third parties.

The sources also said that Gazprom will soon secure similar memorandums with clients in Europe and North America. (Reporting by Vladimir Soldatkin)

Kulibayev to join Gazprom board

http://www.bne.eu/dispatch_text15689

bne
June 2, 2011

A list of approved candidates to join the board at Gazprom includes Timur Kulibayev, the Russian company said in a statement on Wednesday, reports Prime Tass.

Kulibayev is Kazakh President Nursultan Nazarbayev's son-in-law, chairman of the powerful state oil and gas company KazMunaiGas and head of the KazEnergy Association. His candidacy, along with that of 10 others, was approved at a board meeting yesterday.

Among the other candidates are government proposed candidates Andrei Akimov, Vladimir Mau, who have been put forward to step into the seats to be vacated by Energy Minister Sergei Shmatko and Economy Minister Elvira Nabiullina as part of the drive to remove top officials from company boardrooms.

The remaining eight candidates are existing members of Gazprom's board of directors. Shareholders are expected to elect 11 members to the board of directors at an EGM on June 30.

Kulibayev's candidacy is intriguing, suggesting closer cooperation between Russia and Kazahstan's energy sectors and casting doubt on alternative export routes for gas out of the Central Asian country. At the same time, recent reports suggest Lukoil is a candidate to buy into the giant Kashagan field, in which US and European partners are coming under increasing pressure from the Kazakh government.

Minister Surfaces on Gazprom List

http://www.themoscowtimes.com/business/article/minister-surfaces-on-gazprom-list/438052.html
02 June 2011

By Irina Filatova

Gazprom listed First Deputy Prime Minister Viktor Zubkov on Wednesday as a candidate for its board of directors to be elected later this month, despite the Oct. 1 deadline set by President Dmitry Medvedev for government ministers to vacate seats on the boards of state companies.

The gas monopoly will hold an extraordinary shareholders meeting on June 30, which will decide the makeup of the board of directors, the company said on its web site.

The extraordinary shareholders meeting is a necessary step to fulfill the president's order and bring in independent directors, the gas giant said.

The details of Medvedev's order, which he issued at the end of March, require government ministers to leave the boards of state companies operating in sectors they oversee by July 1. For companies not operating in the realm of their portfolio, senior state officials have to be replaced by Oct. 1.

The move is part of the Kremlin's effort to facilitate competitiveness and improve the country's investment climate.

However, Zubkov's name is on the list of 12 candidates to be elected to the 11 seats of Gazprom's board of directors.

Among other names published on the company's web site are Gazprom chairman Alexei Miller, Gazprombank chairman Andrei Akimov and Kazakhstan President Nursultan Nazarbayev's son-in-law Timur Kulibayev, who chairs Kazakhstan's oil and gas giant KazMunaiGaz.

Gazprom's extraordinary shareholders meeting will follow the general shareholders meeting also scheduled for June 30.

If Zubkov, who currently chairs the board, is re-elected, Gazprom apparently will have to hold another extraordinary shareholders meeting before the October deadline in order to fulfill Medvedev's order.

Analysts said Zubkov was likely to remain on the company's board of directors after the Oct. 1 deadline because it would be hard to find a person to replace him.

"There's a chance that he'll stay," said Tatyana Stanovaya, a France-based political scientist with the Center for Political Technologies.

Replacing Zubkov with an independent director poses certain risks for Gazprom, which not only fulfills economic functions but also participates in important political projects, she said by telephone.

According to Stanovaya, Zubkov as board chairman plays a purely political role, having replaced Dmitry Medvedev, who ran for president in 2008.

Zubkov is acceptable to both Prime Minister Vladimir Putin and Medvedev, and at the same time not too close to either of them, Stanovaya said.

Alexei Mukhin, head of the Center for Political Information think tank, said he wouldn't be surprised if Zubkov were re-elected to the Gazprom board, following the example of First Deputy Prime Minister Igor Shuvalov, who was elected board chairman of the All-Russia Exhibition Center last month.

The Kremlin could have reconsidered its position on withdrawing officials from the boards of directors because the measure is likely to affect the companies' financial performance negatively, Mukhin said.

"Senior officials on the board of directors help lobby the companies' interests and increase the company's stability. So the president's proposal, which initially seemed market-oriented, apparently results in certain financial losses for the companies now," he told The Moscow Times.

Gazprom declined to comment on the issue Wednesday, as did Kremlin spokesman Alexei Pavlov.

Putin's spokesman Dmitry Peskov confirmed that Zubkov must leave the board by Oct. 1 but declined to comment on the fact that his name is on the list of board candidates.

The initial list of candidates for Gazprom's board of directors was approved in February — before Medvedev's order was issued — and included Economic Development Minister Elvira Nabiullina and Energy Minister Sergei Shmatko.

Former German Chancellor Gerhard Schröder was a possible candidate for the Gazprom board, Vedomosti reported late last month.

According to the Kremlin, Zubkov, who oversees agriculture, will also have to leave the boards of Rosselkhozbank, alcohol producer Rosspirtprom and Rosagrolizing, which leases out agricultural equipment.

Meanwhile, United Russia proposed its party members as candidacies to chair the boards at four state-owned companies, including the Federal Grid Company, MRSK Holding, Inter RAO and RusHydro, instead of Shmatko and Deputy Prime Minister Igor Sechin.

United Russia said Tuesday that the head of its State Duma faction, Speaker Boris Gryzlov, had sent a letter with the proposal to party leader Putin.