Wednesday, September 23, 2009

Eurasian Energy Briefs

by Roman Kupchinsky

Russia Seeks Partners to Develop the Yamal Gas Fields.

Russian Prime Minister Vladimir Putin will meet with representatives of the world’s largest energy companies on Thursday to discuss their participation in the development of the huge gas fields located in the Yamal Peninsula. Among them will most likely be French Total and GDF Suez, Norway’s StatoilHydro, British-Dutch Shell, ExxonMobil and ConocoPhilips from the U.S.

The licenses for the Yamal fields are held by the Russian companies Gazprom and Novatek, but they do not have the necessary experience in drilling in the Arctic and need the expertise of such companies as StatoilHydro.

“We are looking for the possibility to expand our business in Russia,” said Mari Dotterud, a spokeswoman for StatoilHydro. “We want to offer our experience in developing gas deposits in the Arctic, and in this way Yamal is a priority for us.”

The Yamal Peninsula’s gas reserves are believed to be 16 trillion cubic meters and the estimated coat of the project is in the range of $100 billion. Gazprom expects that by 2030 it will produce 310-360 billion cubic meters annually –some 60-70 percent of current production.

Western companies are approaching the project with well considered caution. Past experience has shown that the Russian state has a tendency to play hard ball with its Western partners. Despite early promises of fair play by the Kremlin, some companies have been forced to abandon Russian gas projects, such as Sakhalin 1, after being pressured by government agencies for allegedly violating various regulations once the project was completed.

Russia to resume buying Turkmen Gas?

The 6 month-long Russian-Turkmen gas dispute might finally be resolved, or so stated Turkmen President Gurbanguly Berdymukhamedov on September 21. He explained that at long last the damaged section of the Central Asia “Center” – 4 pipeline had been fixed after an explosion in April and that Ashgabat was now ready to begin talks on resuming gas sales to Russia’s Gazprom.

The reality, however, is somewhat different according to Mikhail Korchemkin, the President of East European Gas Analyst. The pipeline was repaired back in April, a few days after the explosion and remained empty due to Gazprom’s decision not to buy expensive Turkmen gas at a time when demand for Russian gas in Europe and Ukraine fell to records lows.

The Russian daily newspaper Kommersant points out that the decision to resume gas purchases was in fact made during Russian President Dmitri Medvedev’s recent visit to Turkmenistan. The reason for Russia’s renewed interest in doing so is to prevent the gas rich Central Asian state from supplying gas to the Nabucco pipeline project, a competitor to Russia’s South Stream pipeline project.

Some analysts are speculating that Russia will go so far as to pay Turkmenistan the original price of $300 per 1,000 cubic meters negotiated by Vladimir Putin in December 2008 just to insure that Turkmen gas is not pledged to Nabucco.

At the same time, the Turkmen leadership finds itself in a bind –revenues from gas sales have declined significantly due to Gazprom’s decision to stop buying.

And while two new Turkmen gas export pipelines are due to come on line soon – one to China and the other to Iran, the initial sales volumes will be small and not enough to cover Turkmenistan’s needs.

Poland Still Suffering from Gazprom Scam

Polish gas giant PGNiG released a fourth quarter prognosis stating that the company will be short of 0.5 billion cubic meters of gas and will likely reduce supplies to industrial consumers.

The shortage of supplies is due to the liquidation of the murky middleman company RosUkrEnergo (RUE) from the Ukrainian gas market in January 2009. RUE, owned 50 percent by Gazprom and 50 percent by Ukrainian businessman Dmytro Firtash and his partner Ivan Fursyn, supplied Poland with 2.5 billion cubic meters of gas per year since 2006.

According to Polish media reports, Polish Prime Minister Donald Tusk discussed this situation with Russian Prime Minister Vladimir Putin on September 1 and talks are underway to negotiate a new delivery contract.

Putin, however, is partially to blame for this shortage since he was personally involved in creating RUE in 2004 while Russian President Dmitri Medvedev was then chairman of the Board of Gazprom.

1 comment:

  1. Very thoughtfull post on leadership. It should be very much helpfull.

    Thanks,
    Karim - Mind Power

    ReplyDelete

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