RUSENERGY

Natural Gas

Virtual Virtues:
Are Huge Gas Reserves of Gazprom Commercially Accessible?
Gazprom announced its proved and probable gas reserves have reached 33 trillion cubic meters. The 2008 growth was 11%. This is about 60% of Russia’s total and 20% of global gas reserves. It is still unclear however what portion of this enormous volume is actually commercial to develop.

Mikhail Kroutikhin
© RusEnergy

Investment Rating

The Putin Plan:
Crisis Encourages Exchange of Assets between Russian and International Companies
Vladimir Putin’s strategy of dealing with foreign companies is gradually proving to be practical. Western investors are buying stakes in Russian producers and Russian petroleum companies acquire equity interests in downstream facilities in Europe. The summary index of oil and gas companies’ long-term investment credibility rating (LICRA) increased by 0.05% during the week to reach 285,68.

Konstantin Repin, Victoria Sadykova
© RusEnergy

Caspian Area

Useful Ustyurt:
Exploration Investments in Uzbekistan’s Prolific Plateau to Reach $700 Million
The bottom of the Aral Sea and the adjoining territory has become a new, and promising, hunting ground for international oil and gas companies. Earlier projects are a success and new deals are on the agenda. The Ustyurt region has a chance to make it to another producing area of global importance.

Sergei Gavrichev, Yulduz Shark
© RusEnergy

Companies

Emergency Exit:
Ukraine Helps TNK-BP Bypass Gazprom’s Export Monopoly
Acquisition of a Ukrainian gas company may become a European market toehold for TNK-BP. Such competitor is unlikely to make Gazprom angry. On the contrary, the gas monopoly may even benefit from the presence of a Russian company on the borders of the EU.

Marina Sysoyeva, Natalya Timakova
© RusEnergy

Natural Gas

The Baltic Balance:
Resistance to Nord Stream Seems Too Strong to Disregard
Sweden assumes the presidency of the EU in July, and this is bad news for Gazprom. Stockholm does not belong to the group of sympathizers of the Nord Stream project, and the Russian monopoly lack political and economic leverage in this country to make the pipeline acceptable for the Swedes. The situation in other Baltic nations is hardly better.

Mikhail Kroutikhin
© RusEnergy

Projects

Total Recall:
Investors in Kazakhstan Again Face Old Claims of Host Government
It is an old tactic: resuscitating old disputes to make the opponent less stubborn at the negotiations. The Kazaks want the North Caspian project’s consortium to cut down the costs of developing the offshore Kashagan field and begin the talks with a list of allegedly exaggerated expenses for past years.

Sergei Gavrichev, Kulpash Konyrova
© RusEnergy

Investment Rating

Mixed Signals:
Oil Companies Increase Investments, Gazprom Downsizes
As oil prices have recovered, the industry feels much better today. Pre-crisis investment programs are on the agenda again, and only Gazprom goes against the current. The summary index of oil and gas companies’ long-term investment credibility rating (LICRA) increased by 0.02% during the week to reach 285.35

Konstantin Repin, Victoria Sadykova
© RusEnergy

Projects

Yakutian rebus
Gazprom fails to organize gas exports to Asia without help of Asian companies
Gazprom sells East Siberian and the Far Eastern gas futures to Asian-Pacific Region actively. At the same time, the company acknowledges it has no resources for supplies in this direction. It is barely possible to prepare them without collaboration of Asian companies. Technologies of methane liquation, as well as extraction and processing of valuable components of East Siberian gas turn to be a “key” to fulfillment of the Eastern export projects.

Natalia Timakova
© RusEnergy

Transportation

The Call of the Pipe:
Russia Keeps Launching Redundant Pipeline Projects
Even as Russian oil exports are sliding and pipeline capacity is in abundance, Transneft has launched a new project to reroute oil flows from Belarus, Poland and Germany to domestic terminals and refineries. Neither the current credit crunch nor the dubious commercial value of the new pipeline could change the determination of the projects’ initiators.

Mikhail Kroutikhin
© RusEnergy

Projects

A Novel Approach:
Kazakhstan Abandons PSA in Nursultan Project
An agreement to develop one of the most promising offshore blocks in the Kazakh sector of the Caspian Sea was signed a week ago—and it was Kazakhstan’s first contract with a foreign partner not based on production sharing terms. First Vice President of KazMunaiGaz Maksat Idenov describes the deal in an exclusive interview.

Kulpash Konyrova, Igor Ivakghnenko
© RusEnergy

Investment Rating

Light in the End of the Tunnel:
Gazprom’s European Expectations and Ukrainian Perils
Gazprom hopes that demand of natural gas will grow in Europe although the prospect might be dimmed by another crisis in its relations with Ukraine. Nevertheless, the summary index of oil and gas companies’ long-term investment credibility rating (LICRA) increased by 0.04% during the week to reach 285.29

Konstantin Repin, Victoria Sadykova
© RusEnergy

Exports

A Standard Issue:
Russia Hopes to Get a Benchmark Crude Sort of Its Own
Deputy Prime Minister Igor Sechin insists that quoting just two benchmark sorts of crude oil is unfair. Experts share his views but believe that there is no way for Russian oil to become a yardstick for European prices. Asian and Pacific markets are a promising arena for it, they suggest.

Natalya Timakova
© RusEnergy

Companies

Treacherous Arithmetic:
Gazprom’s Investment Plans Exceed Its Finance Potential
The Russian government, which holds a controlling interest in Gazprom, is preparing an updated version of the company’s investment program for the approaching annual shareholders’ meeting. Some of the expenses will be trimmed down, but Gazprom managers’ statements about new projects—as well as new borrowing efforts—do not fit the idea of economy during the current financial crisis.

Mikhail Kroutikhin
© RusEnergy

Caspian Area

Money Does Matter:
China Replaces Gazprom in Turkmen Gas Exports
Gazprom and Ashgabat cannot come to terms of natural gas trade in the environment of the global economic recession. The Russian giant is losing foothold in Turkmenistan, both as an importer of its gas and as a potential investor. The events may be the beginning of dramatic changes in the pattern of Central Asian gas export.

Igor Ivakhnenko
© RusEnergy

Investment Rating

In Free Fall:
Gazprom Looses Production and Export
The January-May statistical data on Russian oil and gas production became the event of the week. While the oil figures failed to inspire either awe or regret, the gas industry nose-dived—although analysts are predicting a recovery in the second half of the year. The summary index of oil and gas companies’ long-term investment credibility rating (LICRA) edged up 0.02% during the week to 285,17.

Konstantin Repin, Victoria Sadykova
© RusEnergy

Transportation

In Small Doses:
Export of Liquids from Southern Russia Encourages Minuscule Terminal Projects
The shores of the Black and Azov Seas are attractive places for both summer vacationers and exporters of liquid hydrocarbons. Almost a dozen of new terminal projects have been initiated in Russia. All of them boast a full set of investors, partners, willing contractors—and significant risks.

Sergei Gavrichev
© RusEnergy

Politics

Tightening the Grip:
Russia’s Government Makes Energy Ministry Stronger
Structural changes in the Ministry of Energy show that the government wants to enhance control of the oil and gas industry. And the appointment of former Rosneft VP Sergei Kudryashov to the status of deputy minister may usher in new personnel reshuffles.

LNG

Good Intentions:
Gazprom Says It May Be Planning New LNG Ventures, Some Day
Gazprom again stated a plan to launch new LNG projects, and European nations seem to be eager to replace a significant portion of piped gas with imported LNG. Both intentions require a closer look to prove their viability.

Caspian Area

Export Mix:
Ex-USSR Oil Export Channels Are Remodeled
Since the beginning of the year oil export schemes have been undergoing remarkable changes. Routes that were fed from one source are beginning to handle oil of other suppliers, and peripheral infrastructure suddenly comes to limelight.

Investment Rating

Consolidation in Crisis:
Russia’s Petroleum Industry Adjusts in Favor of State Companies
Consolidation of assets continues in the Russian oil and gas industry. Novatek has acquired Yamal LNG and Gazprom Neft is going to finalize acquisition of Sibir Energy. The summary index of oil and gas companies’ long-term investment credibility rating (LICRA) edged up 0,04% during the week to 285,11.

Law

PSA, Russian Style:
Officially Discarded, Production Sharing Makes Tentative Comeback in Greenfield Areas
Many Russian officials and policymakers remain skeptical about PSAs, but the need to develop new oil and gas provinces and offshore projects makes them introduce tax benefits for operators. The new version of the tax regime increasingly resembles production sharing, less efficient control leverage from the government.

Upstream

It Remains to Persuade Gazprom:
Kalmykia Hopes to Make It to a New Gas Producing Center
A strategic international investor may arrive in Kalmykia in the summer and help local geologists prove that the area actually contains as much hydrocarbon reserves as they claim. A well has already struck a gas reservoir. The next steps are to find money to finance new drilling efforts and have Gazprom agree to an alliance with a foreign partner.

Natural Gas

All Changing on the Southern Front:
Iran and Iraq Claim a Role in Diversification of Gas Supply to Europe
While Gazprom’s South Stream and the European Union’s pet Nabucco project are engaged in a competition battle, some events in the Middle East may affect the outcome of this competition. Both the Islamic Republic of Iran and the turbulent Kurdish areas of Iraq may become additional sources of natural gas supply via the future southern route.

Caspian Area

A Promising Land:
Russian State Companies Expect Major Discoveries in Central Asia
Gazprom and Rosneft are accelerating exploration efforts in Central Asian onshore projects. Their experience may show that interesting opportunities exist away from the Caspian Sea oil and gas fields, where most of the business focuses on.