Ukraine Tt Allow Naftogaz to Create Joint Venture with RosUkrEnergo, Itar-Tass Reports

According to Russia's Itar-Tass on Jan. 28, Ukraine's national oil and gas company Naftogaz Ukrainy will be allowed "...to set up a joint venture with RosUkrEnergo, registered in Switzerland, that will sell natural gas to domestic consumers."

However, there are "two conditions." One, "...the charter fund of the new company [must be at least] five million hryvnas (about one million U.S. dollars), 'with the Ukrainian founder having a share of no less than 50 percent, contributed solely in monetary assets.' The second condition is that 'Naftogaz Ukrainy has to get the founding documents of the company and changes to them approved by the Ministry of Fuel and Energy, the Ministry of Economics, the Ministry of Finance, and the Ministry of Justice.'"

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Russia's LUKoil discovers Major Caspian Oil Field

Russian giant LUKOil has discovered a major new oil field in the Caspian Sea, according to a press release from the company on Jan. 25:

"LUKOIL opened a major multilayer oil and gas condensate field in the Severny licensed area, in the northern part of the Caspian sea. The field was discovered with the first exploration well in Yuzhno-Rakushechnaya structure, 220 km from Astrakhan.

The primary well gave inflow of light water-free low sulfur oil with over 800 tons per day flow rate at 0.2 MPa depression. Such flow rates in Russia are only known at few wells (average flow rate in Russia is 10.5 tons per day).

The reserves of the new field under the “probable” and “possible” categories are estimated to be 600 million barrels of oil and 1.2 trillion cubic feet of gas. Completion of exploration, preparation and approval of the design documentation for the development of the field will allow to upgrade the reserves in to the “proved” category.

The new field is the first predominantly oil field within the licensed areas of LUKOIL in the Northern Caspian. 75% of the total reserves of the field is oil, while all the other fields opened by the Company in the Caspian region are mostly gas fields.

The oil reserves of the new field considerably exceed those of the adjacent field after Yu. Korchagin which is prepared for development, and favorably differ from the latter by the main geological parameters. The new field surpasses the previously opened fields in the Caspian region in its oil production potential.

Preliminary calculations show that the maximum oil production rate at the new field will exceed 5 million tons and the accumulated production will be around 80 million tons (with the extraction ratio of 0.5).

The new field and the field after Yu. Korchagin set foundation for future vast off-shore oil production infrastructure with reliable crude material base and annual production rate of around 8 million tons.

The new field is the major oil field which was ever opened in Russia for the last 10 years and allows LUKOIL to essentially increase efficiency of the expensive works in the Caspian sea.

The new field was give the name of Vladimir Filanovsky, famous oil man who made a great contribution into the development of the national oil industry."

Bulgaria's Dnevnik: Gazprom Insisting on Renegotiating Natural Gas Transit Contract

Bulgaria's Dnevnik reported on Friday that Russian gas monopoly Gazprom "...has persisted with demands to renegotiate the contract for the transit of Russian natural gas via Bulgarian territory to Turkey, Greece and Macedonia, Bulgarian economy minister Rumen Ovcharov said Friday in parliament. The government official said Bulgaria's position is unchanged from early December 2005 when Sofia refused to renegotiate the contract."

"...Sources from the economy ministry said on Friday that the Gazprom letter sent in response to Bulgaria's refusal to sit at the negotiating table admitted that the contract is based on market principles but pointed out that it no longer reflects the price fluctuations on the international markets. The letter also reportedly insists that the 10-year contract signed in 1998 should be revised in the context of the two states' future gas trade relations. The Russian side has also proposed a meeting at the level of ministers to discuss the situation. Ovcharov told parliament that he has an unofficial arrangement for a trip to Moscow."

Indebted Romanian Oil Refinery Faces Conflicting Ownership Claims, Says Newspaper

The Bucharest Daily News reported today that the ownership of a refinery heavily in debt, Rafo Onesti, is the subject of an ownership dispute between two claimant shareholders. An excerpt follows.

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Heavily indebted oil refinery Rafo disputed by two owners

by Adrian Hamzescu
Jan. 26 2006
Rafo Onesti is currently disputed by Balkan Petroleum and Calder A International, each claiming to be the main shareholder of the Romanian refinery.

Calder A International, a company registered in Holland, issued a press release in which it states that it is the rightful owner of the local refinery through a contract signed with Balkan Petroleum to take over the entire capital of the refinery as well as the rights and shares owned by BKP in Rafo, together with the obligations stipulated in the privatization contract and all debts of the company.

The contract was recognized by Marian Iancu, the president of Balkan Petroleum (registered in Great Britain), but said that his company is still the owner of the refinery. According to Iancu, the contract needed to be approved by the Authority for the Recovery of State Assets (AVAS). "The Romanian state did not agree with the property transfer, thus the contract has no effect," said Iancu. The authority did not accept the offer and repayment of debt forwarded by Calder A International, considering them out of line with Romanian legislation, added Iancu. Moreover, AVAS announced last August that the Prosecutor's Office of the High Court of Cassation and Justice has levied a restraint on Balkan Petroleum's shares in Rafo and the stake's sale would not be possible without AVAS's approval.

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Planned Iran-Armenia Gas Pipeline: "a Very Important Geopolitical Development," Columnist Says

In a recent article, Turkish columnist Fikret Ertan muses that the planned gas pipeline from Iran to Armenia is " very important geopolitical development."

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Iran-Armenia Natural Gas Pipeline

The harsh winter conditions we have been experiencing recently are causing a headache for Turkey. Thank God we have no energy problem under these difficult circumstances.


We have electricity and natural gas, however, the situation is not the same for some of our neighbors. They have no natural gas and also have electricity problems.


Georgia is one of our neighbors going through difficult times nowadays. This country is without fuel and electricity, due to last Sunday’s explosions which occurred on the natural gas and power transmission lines coming from Russia, hence, it is trying to purchase fuel and electricity from Turkey, Iran and Azerbaijan.


Our other neigbor, Armenia, is also facing similar problems these days, though not as much as Georgia. Because it buys the Russian natural gas via Georgia, there is a natural gas crisis in this country as well.


Since Armenia depends completely on Russia’s natural gas, just as Georgia, but had foreseen these problems, it wants rid itself of Russia’s Gazprom natural gas monopoly and so is looking for ways to make this materialize. Armenia’s search for other alternatives has made it have close natural gas ties with its neighbor Iran, where we also purchase natural gas.


This natural gas ties between Armenia and Iran will result in the completion of a new natural gas line that is expected to start operating at full speed towards the fall of 2006. Preparations for this new line began two years ago after an agreement between the Armenian government and the Iranian National Gas Company, (NIGC), and this line starts from the vicinity of the Iranian city of Tabriz and ends at Iranian-Armenian border. The line costs about $220 million. This 160-km line, expected to be completed ahead of schedule, will first go into operation in the fall of 2006 and then will start operating at full capacity towards the middle of 2007. Hence, Iran will ultimately rid itself of its dependence on Russia’s natural gas, thus obtaining a real trump card against Russia’s Gazprom.
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NTV: A Natural Gas Crisis for Turkey after Iranian Flow Ebbs?

According to NTV, the severe reductions in Iranian gas coming to Turkey may develop into a real crisis.

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Turkey might face threat of natural gas crisis

Güncelleme: 09:32 ET 25 Ocak 2006 Çarşamba
Turkey’s faces the possibility of natural gas shortages just at the time when consumption has jumped due to severe cold weather, with the country’s main supplier cutting deliveries.

Using the excuse of cold weather in their own country, Iranian officials have drastically reduced shipments of natural gas shipment to Turkey, cutting supplies from 26 million cubic meters to six million cubic metres. Officials in Tehran have refused to answer calls from the Turkish natural gas officials to discuss the shortfall.

Added to the reduction in supplies from Iran, there has also been a drop in the amount of Russian natural gas being shipped through Ukraine.

While slightly increasing the amount of gas it ships to Turkey through a pipeline laid beneath the Black Sea, Russia has said this increase can only be gradual as it would not like to risk pushing the capacity of the undersea pipeline. The increase being pumped through the Blue Stream pipeline is minimal and is not able to cover Turkey’s requirements.

Officials of Turkish pipeline authority BOTAS are working to ensure supplies to private homes but concede that gas used by power stations may be reduced.

The Energy Ministry has sent a written complaint to Ukraine over the decrease in the natural gas shipments.

LukOil Discovers Major Oil and Gas Field in the Caspian, Says AFX

LukOil finds major oil and gas field in Caspian Sea

01.25.2006, 04:36 AM
LONDON (AFX) - Russian oil giant OAO LukOil said it discovered a major oil and gas condensate field in the Yuzhno-Rakushechnaya structure, in the Northern Caspian, 220 km from Astrakhan.

The probable and possible reserves of the new field are estimated at 600 mln barrels of oil and 1.2 trln cubic feet of gas. About 75 pct of the total reserves are estimated to be oil.

Preliminary calculations show that the maximum oil production rate at the new field will exceed 5 mln tons and the accumulated production will be about 80 mln tons, it said.

Hungarian, Croatian Planned Gas Pipelines to Augment European Networks

The Portfolio Online Financial Journal of Hungary reported earlier this month about a Hungarian plan to develop a new gas pipeline from Turkey to Austria (retracing the course of Ottoman expansion), but this time for the purpose of reducing Europe's dependency on Russian oil and gas.

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ANALYST VIEW - Hungary to favour Adriatic pipeline over Nabucco - KBC

Thursday, 5, January 2006 03:04:00 PM

Hungary appears to be giving priority to building a pipeline that would connect the CEE region with the Adriatic over the Nabucco plan, said Péter Tordai, analyst at KBC Bank on Thursday.

Russia and Ukraine struck a five-year gas supply deal on Wednesday morning, which will ensure stable supplies to Europe.

While the pressure of Russian gas arriving in Hungary via Ukraine remained stable yesterday, discussions about a more secure gas supply continued.

“Although the CEE4 countries did not support Hungary's original proposal to build a big joint natural gas storage facility to lower dependency on potential Russian gas supply interruptions, a meeting of experts in Brussels yesterday agreed with Hungary's proposal to consider building a pipeline connecting the CEE region with the Adriatic," Tordai said.

Croatia, Slovenia and Austria indicated they would support the construction of such a pipeline.

“It now seems to us that this solution will receive priority over the Nabucco plan for Hungary, mainly because of its much more immediate potential implementation," he added.

Hungarian fuels group MOL singed a joint venture deal in June 2005 with Austria's OMV, Turkey's Botas, Bulgaria's Bulgargaz and Romania's Transgaz to build a natural gas pipeline extending from Turkey to Austria. Each firm has a 20% stake in the Nabucco project, which could reduce Europe's dependency on Russian gas.

There is no formal decision to start building the pipeline, as the partners wish to secure potential buyers first.

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At the same time, an Austrian-Italian consortium announced plans to build a 195 km gas pipeline in Croatia- and finish it in just 6 months.

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Croatia: Austro-Italian Consortium to Construct Gas Pipeline

14:44 - 09 January 2006 - A consortium of Austrian construction company Habau and Italian pipeline company Ghizzoni announced plans to build a 195 km natural gas pipeline between two Croatian towns, according to Hina news agency reports.


The consortium needs to sign a contract worth €90 mln with gas transportation company Plinacro on January 10, 2006.

The pipeline construction is set to start in mid-January 2006 and is expected to be completed within six months.

Moreover, Croatian oil and gas company INA will build an underwater gas pipeline from the offshore platform Ivana K to the Adriatic coastline and into the mainland to the town of Vodnjan.
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[End Excerpt]

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Gazprom Looks to Belarus to Save Frozen Europe's Gas Needs

According to the Moscow Times, Reuters reports that "Gas monopoly Gazprom is shipping more gas to Europe via Belarussian territory to compensate for losses in transit gas in Ukraine, a Gazprom official said on Tuesday.

'We have started shipping more gas via the Yamal-Europe [pipeline via Belarus] and the Blue Stream [pipeline to Turkey] to compensate for losses in Ukraine. We are still calling on Ukraine to optimize its gas use,' the official said."

The record cold spell gripping much of Europe has meant a concomitant rise in gas consumption, making for acrimonious accusations between Russia and Ukraine, recently locked in a price standoff. Georgia too has protested following a pipeline explosion in North Ossetia that crippled the country and drastically reduced its supplies of gas and electricity.

"Gazprom, which has been forced to dramatically boost supplies to Russian clients amid extreme cold, is blaming Ukraine for lower-than-expected deliveries to European customers as it says the state is burning gas above agreed levels," adds Reuters.

Bulgaria Heading for "Inevitable" Natural Gas Prike Hikes from Gazprom, Reports Sofia Echo

The Sofia Echo reported on Monday that Bulgaria is facing the likelihood of "inevitable" price increases for natural gas from Russia's Gazprom, and probably by 2007; "accepting a price increase only after 2010 would mean a sharp price increase," they conclude, quoting an industry official.

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Mon 23 Jan 2006
Natural gas price hikes in Bulgaria loom
Business Staff

WHILE Bulgaria may be refusing to re-negotiate its contract to receive natural gas from Russian giant Gazprom, to stave off price increases, an increase in cost appears inevitable.


At a meeting on January 16 with the management of Bulgarian natural gas company Bulgargaz and the managers of 14 company managers, Economy and Energy Minister Roumen Ovcharov said that from 2007, natural gas would be subject to an excise.


According to a report by Ovcharov’s ministry, the imposition of the excise would mean a price increase of about six to seven per cent.


Another factor that could push up the price is the fact that, from next year, the Galata deposit, which currently supplies about 14 per cent of domestic consumption, will seriously diminish.


Bulgaria’s contract with Gazprom is to expire in 2010. Controversy was stirred up this month by reported statements by representatives of Gazprom and of the Russian government that Russia wanted to re-negotiate the term of the contract before its expiry.


Currently, Bulgaria pays a relatively low price for natural gas supplied by Gazprom, enabling it to keep domestic prices low.


In response to the likelihood of a hike in costs, specialist groups are to be set up to analyse the natural gas market and recommend steps to moderate the scale of post-2010 price increases. These groups will include representatives of Ovcharov’s ministry, Bulgargaz, and natural gas consumers, and have been given until early February to produce a report.

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[End Excerpt]

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Canadian Company Looks to Macedonia for Oil Discoveries: MIA

Black gold in a small Balkan state? The Canadians think so...

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20/01/06

BANKERS PETROLEUM TO SEARCH FOR OIL IN MACEDONIA

Canadian company "Bankers Petroleum" is interested in the prospect of finding oil at Macedonian territory, and has already sent letters to the country's Government, to Prime Minister Vlado Buckovski and Economy Minister Fatmir Besimi, expressing its interest, MIA reports from London.

"Bankers Petroleum" is already present at the Balkans, researching oil fields in Albania. Company experts are aware that such research was conducted in Macedonia 30 years ago, and are ready to renew and intensify these tests. In the letters to Macedonian political establishment they introduce themselves and ask the Government to decide on initiation of research operations in order the Bankers Petroleum company to get the job. It is assumed that an oil vein coming from Albania goes further to east and midland Macedonia.

Macedonian government and the Parliament on their behalf are responsible for creating legal framework providing foreign companies with research licenses for oil exploitation.

Gazprom's Medvedev Accuses Ukraine of Hoarding European Countries' Gas, Says Itar-Tass

According to Russia's Itar-Tass, Ukraine - which had previously forced Russia to blink first in a gas prices standoff - is guilty of withholding gas meant for other European destinations.

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Gazprom says Kiev takes more gas than it should, Kiev confirms

MOSCOW, January 23 (Itar-Tass) -- Ukraine takes away more Russian gas than it should under bilateral agreements, Gazprom Deputy CEO Alexander Medvedev has said. This creates hindrances to the Russian gas giant in honoring its contractual liabilities to European partners.

“The amount of gas that remains in Ukraine exceeds the originally expected amounts. This does not allow us to fully comply with our liabilities to foreign consumers,” Medvedev said Monday on a Russian television channel.

According to the Gazprom official the company over the past few days increased the amount of gas entering Ukrainian territory by 35 billion kilometers.

Prime-Tass quotes the Gazprom official as saying the Ukrainian partners should display a more responsible behavior and shift to alternative fuels, whenever and wherever possible.

Medvedev said that in this situation Gazprom was doing its best to meet the requests of foreign consumers. The company brings to the Ukrainian in-takes as much gas as is needed for honoring its contractual liabilities.

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Repair Work on Damaged North Ossetia Mozdok-Tbilisi Pipeline Hampered by Gas Leak, Says RIA Novosti

According to Russia's RIA Novosti, repairing the gas pipeline exploded in North Ossetia has been hampered by technical difficulties, and welding work has not begun; the government hopes repairs can begin tomorrow.

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Still no welding on damaged Russia-Georgia gas pipeline

VLADIKAVKAZ, January 24 (RIA Novosti) - Welding work to repair a Russian gas pipeline to Georgia that was damaged in a suspected terrorist attack has not started yet, a spokesman in southern Russia said Tuesday.

Vladimir Ivanov, a representative of the Emergency Situations Ministry in the Republic of North Ossetia, said the welding on the Mozdok-Tbilisi pipeline had been postponed after gas condensate began to leak through a pipe in Georgia.

"As a result, workers failed to start the welding: they had to pump out the gas condensate all night and are continuing to do so," Ivanov said.

He said that pipe layers had planned to complete the welding by the morning, to blow compressed gas through the pipes, and then to gradually fill the pipeline with gas.

However, Ivanov said the welding work had been postponed until Georgia, which is currently experiencing a cold snap, installed a new hermetic plug.

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Ihlas News Agency: Turkish Energy Ministry to Purchase Gas from Azerbaijan, Egypt and Turkmenistan

According to the Ihlas News Agency, Turkey is seeking to "diversify" its gas purchasing from other countries, as traditional suppliers Russia and Iran have become problematic in various respects.

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Turkey Seeks Alternatives To Iranian, Russian Gas -IHA

ISTANBUL (IHA)--The Turkish Energy Ministry said Tuesday that it wants to diversify its natural gas supplies by purchasing gas from Azerbaijan, Egypt and Turkmenistan as problems with Iran and Russia continue, the Ihlas News Agency, or IHA, reported Tuesday.

Iran and Russia, the country's two main gas suppliers, both reduced gas flow to Turkey last week just as the country faces harsh winter conditions.

A senior Energy Ministry official told IHA that Turkey initially aims to complete the construction of the Baku-Tbilisi-Erzurum natural gas pipeline on time. Previously, BP PLC (BP) warned Turkey it will face penalties if the BTE project isn't completed by the end of 2006.

"We have completed tenders to construct the pipeline and the compressor," said the official. "We will complete the BTE project before the end of this year." He added that the priority was to start to buy low-cost natural gas as soon as possible. "We will be able to buy 2 billion cubic meters of gas from this line when completed - we are trying to speed up construction," said the official.

The BTE pipeline will export natural gas from the Shah-Deniz deposit in the Caspian Sea region. Greek company CCIC is constructing the Azerbaijan part of the project (443 kilometers), the Spie Capag/Petrofac consortium is constructing the Georgian part (250 kilometers) and Botas is constructing the section in Turkish territory (225 kilometers).

The BTE pipeline has an annual capacity of 7 billion cubic meters and it will carry 6.3 billion cubic meters to Turkey a year.

The Turkish Energy Ministry considers Egypt and Turkmenistan as important gas sources.

However, various obstacles are delaying gas imports from these new sources.

Turkey, Syria, Jordan and Egypt agreed to construct a pipeline running through their countries to carry Egyptian natural gas to Turkey and Europe, but construction won't be completed by the end of 2007 as previously forecast, the official said.

The official said the amount of gas to be sold on to the European market is another problem with Egypt as it wants more concrete figures than Turkey is currently able to provide, the official said.

Turkey also wants to purchase Turkmen gas and transit it to Europe but it can't get the permission to transit the gas through Iran. "We have to persuade Iran first," said the official.

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