Russia 100811 Basic Political Developments

Russia imports more Norwegian salmon

http://www.barentsobserver.com/russia-imports-more-norwegian-salmon.4805905-16179.html
2010-08-11

Russian import of salmon from Norway continues to rise. Russia is the second largest market for Norwegian salmon outside the EU.

In July Russia imported Norwegian salmon for 259 million NOK (app. 32,8 mill EUR), web site Fishonline.ru writes, referring to the Norwegian Seafood Export Council. This up 46 percent compared to the same period in 2009. The largest export market for Norwegian salmon is France, with 14 percent of the export value.

Russia is still Norway’s largest market for fjord trout, with more than 50 percent of the total export value.

The export price for one kilo fresh whole Norwegian salmon was nearly 5 EUR in July. Consumers in Murmansk had to pay 8,45 EUR for the same commodity.

Activity in the Oil and Gas sector (including regulatory)

Russia May Boost Oil Export Duty in September on Urals Price

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aGHnBEVs.IgE

By Anna Ulaeva

Aug. 11 (Bloomberg) -- Russia may boost its duty on crude exports by 5.1 percent for regular fields and as much as 11.5 percent for deposits with a discounted rate next month after prices for its Urals blend rose.

The standard tax rate may rise to $273.80 to $277.10 a metric ton, while the discounted rate may increase to $87.20 to $89.50 a ton, according to Bloomberg calculations based on Finance Ministry data.

Russia sets the duty based on the average Urals price from the 15th day of each month to the 14th day of the next. Urals, Russia’s benchmark export blend, may average from $76.57 to $77.26 a barrel during this monitoring period, Alexander Sakovich, head of the Finance Ministry’s analysis department, said by phone today. The regular tax was set at $263.80 a ton in August and the discounted tax on flows through the East Siberia- Pacific Ocean pipeline was $80.30.

To contact the reporter on this story: Anna Ulaeva at [e-mail]

Last Updated: August 11, 2010 03:06 EDT

EU Seeks to Broker Trans-Caspian Pipeline Deal Between Turkmenistan and Azerbaijan; Russia Finds Project 'Absurd'

http://www.eurasianet.org/node/61716
August 10, 2010 - 11:08pm, by Catherine A. Fitzpatrick

The European Union is attempting to broker a deal between Azerbaijan and Turkmenistan to enable Turkmen gas ultimately to flow to Europe, Bloomberg reported August 3, citing a draft document of the EU regulator's energy unit. The EU is hoping to re-boot the long-stalled Trans-Caspian pipeline project across the Caspian Sea bed, envisioned to support the Nabucco pipeline.

In a speech July 27 at the International Odessa Forum published on the EU's website europa.eu, Günther Oettinger, EU Commissioner for Energy, indicated the EU would find a way to end dependency on Russia's energy transit corridors. He outlined a number of projects to achieve the EU's goals and acknowledged that the Southern corridor required an "extraordinary effort" and that the energy industry has said "no institution, the European Union included, had the muscle to open the Corridor" given the many difficult bilateral and multilateral relations among Caspian states.

However, "the European Commission is showing that a way can be navigated through this tangle of countries," said Oettinger, admitting that the EU "may need extraordinary measures" to build the Trans-Caspian pipeline.

Azerbaijan recently attended an EU-hosted meeting in Brussels with Turkmenistan but no agreements were signed, Vagif Aliyev, head of investment at Azerbaijan's State Oil Company, told Bloomberg. Azerbaijan has yet to receive a concrete proposal from Turkmenistan, he said, although Baku is ready to provide transit for Turkmen gas.

The 1,600 kilometer Trans-Caspian pipeline has been stalled due to the failure of Baku and Ashgabat to agree on a demarcation of their border in the oil fields known as Serdar by Turkmenistan and Kyapaz by Azerbaijan in the Caspian Sea. Last year Ashgabat even threatened to take Baku to court over the issue, but eventually dropped plans to force arbitration, and has continued to pursue the dispute through diplomatic negotiations.

A high-ranking Russian Foreign Ministry official told Kommersant, the Russian business daily that the EU was trying to resolve the conflict between the two neighbors. The U.S. also unsuccessfully tried its hand at this, the same source claimed. In a speech in Ashgabat last week, Richard Morningstar, U.S. Special Envoy for Eurasian Energy, said the U.S. had no plans to serve as mediator in the bilateral dispute.

Last year, regional media reported that Daniel Stein, a senior assistant to Morningstar had indicated Washington was willing to mediate the Azeri-Turkmen territorial dispute for the sake of the Trans-Caspian pipeline.

Now the EU believes it can lobby the construction of the Trans-Caspian pipeline needed for Nabucco by making an offer to Turkmenistan and Azerbaijan that does not involve delimitation of the Caspian Sea shelf. Sources within the Russian government told Kommersant they find the proposal "absurd" and vow to oppose it.

That's not surprising, given that Russia's energy monopoly Gazprom buys most of Azerbaijan's gas. In an interview with Rafael Mustafayev of regnum.ru, Ilkham Shaban, head of the Center for Oil Research in Azerbaijan, said he was skeptical of the Trans-Caspian project.

"Why should Azerbaijan ruin its ecology for the sake of somebody in Brussels getting Turkmen gas? Or will this new pipeline provide a perceptible impetus to the development of Azerbaijan's economy?" he asked.

Shaban also believes there are commercial, political and even military risks involved in laying the pipeline. He also invoked an agreement signed in Teheran in 2007 by all the Caspian littoral states, whereby no major pipelines would be built on the Caspian Sea bed without the consent of all parties.

Currently, Azerbaijan is not able to sell all of its excess gas remaining after it satisfies its own needs, says Shaban; other than some gas going to Turkey from the Shah- Deniz field, Russia's Gazprom is currently the main buyer of Azerbaijan's gas, he said. As for Azerbaijan's agreement with Iran to purchase at least 500 million cubic meters per year, Shaban said the purchase had not yet been made. Turkey, which agreed to buy 6.3 billion cubic meters (bcm) a year, was buying only 5 bcm.

Shaban also stressed the internal inconsistency within the EU. When Paolo Scaroni, the CEO of the Italian energy company ENI was in Baku on July 20, he did not even mention the Trans-Caspian pipeline. Instead, he made a proposal for transporting Turkmen gas on four tanks where liquefied natural gas would be produced. The budget for that project was $700 million -- $600 million for the tankers and $100 for the initial infrastructure, in order to transport 4-5 bcm a year. Meanwhile the Trans-Caspian has been estimated to cost $5 billion or more.

At a press conference following his meeting with President Gurbanguly Berdymukhamedov in Ashgabat last week, Morningstar said he discussed various projects in a "multipronged strategy" where the U.S. could work with Turkmenistan. The Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI) was discussed as well as the potentials for Turkmen gas going west into the Southern Corridor.

Asked about the feasibility of Nabucco, Morningstar said that the recent agreement between Turkey and Azerbaijan on the price of Azerbaijan's gas as well as transit fees would allow for progress on the Southern Corridor:

The Shah Deniz Consortium and SOCAR have requested proposals from the various potential projects to go through the Southern Corridor. It will now be a commercial decision as to which project or projects will go forward whether it be Nabucco or some other project in the Southern Corridor.

From the stand point of Nabucco, Turkmen gas is important. There are other sources of gas from such places as Iraq and other places in the Middle East, and we hope that Turkmenistan gas will be part of the project. But now it is up to commercial interests to determine which specific project makes the most sense.

Regarding the Chinese presence in Central Asia and its increasing dominance in the Turkmen market, Morningstar said it was good China was using gas, a cleaner form of energy than coal. "Gas that goes to China helps to open supplies of gas from other sources that otherwise might go to China," he said. Meanwhile Alexander Rahr, a Russia and Eurasia expert at the German Council on Foreign Relations says the EU is running out of time as Turkmen pumps more gas to China, Bloomberg reported.

In Ashgabat, Morningstar was quizzed by a reporter about recent implied criticism of the EU by Kazakhstan's President Nursultan Nazarbayev.

"In Europe there is a lot of talk on Nabucco [...] but in reality little gets done," Nazarbayev said at a joint news briefing with German Chancellor Angela Merkel in Astana, Reuters and euractiv.com reported.

Morningstar said he felt Europe "has been making a very strong and concerted effort in regards to Nabucco". As for U.S. involvement, Morningstar said that in his meetings the U.S. indicated that "American companies would like very much to participate in Turkmenistan in respect to all sorts of projects both on shore and off shore.," although declined to discuss any specifics as they were still under negotiation.

Two Turkmen officials headed to New York this week for talks at the UN on setting up an ad-hoc panel of experts that would draft an agreement on international pipeline security. Turkmenistan has been pushing for such an international pact since a resolution it sponsored passed at the General Assembly in 2008. While obviously referring to the insecure regions of Afghanistan and Pakistan, Turkmenistan's effort at the UN is also a tacit effort to enlist the help of the UN secretariat and other UN member states to withstand Russia's pressure on energy corridors in its sphere of influence.

It's hard to know what Russia might do to stop the plans for the Trans-Caspian pipeline. When an explosion occurred on the Turkmenistan pipeline in April 2009, disrupting deliveries for 9 months, Turkmenistan blamed Gazprom for sharply reducing flows, creating conditions for the blast. Gazprom blamed Turkmenistan's aging infrastructure. Either reason explains why pipelines trying to bypass Russia are expensive.

"Without Russia, these issues cannot be resolved, and that means there won't be a pipeline," the Foreign Ministry official told Kommersant regarding Caspian disputes. Another Russian government official said that without the border agreement, Russia would not give its consent to the laying of the Trans-Caspian pipeline.

Morningstar said he couldn't comment on the Turkmen-sponsored effort at the UN because he has not seen a specific text. He noted that security of transit routes would be "critical to the success of a possible TAPI pipeline."

Trebs and Titov fields to be sold in December

http://www.businessneweurope.eu/dispatch_text12479

UralSib
August 11, 2010

Starting price set at $603 mln. The Natural Resources Ministry has set a final price of RUB18.2 bln ($603 mln) for the Trebs and Titov oilfields in the Nenets region, the largest un-allotted fields remaining in state reserves. The fields are to be sold via an auction on 2 December as a single lot. Foreign companies will be allowed to participate in consortiums or form JVs with Russian state companies. The auction terms state that the winner will have to sell at least 15% of the crude produced at the fields via a Russian commodity exchange (which does not currently exist) and refine at least 42% at Russian refineries (swap operations are not allowed). Thus far, Rosneft, LUKOIL, TNK-BP, Gazprom Neft, Bashneft, and India's state-run ONCG have expressed interest in these fields.

Tough conditions decrease attractiveness. The Trebs and Titov fields are very tempting for oil companies. Recoverable C1+C2 oil reserves are estimated at 140.06 mln tons, with peak production possibly reaching 10 mln tons per annum. The fields are located in the Nenets region, 60 km from Varandey village, where LUKOIL has a marine loading facility with a tanker terminal. However, the conditions imposed decrease the attractiveness. If swaps are not allowed, a direct pipeline from the fields could be constructed to LUKOIL and Surgutneftegaz refineries in Ukhta and Kirishi. Otherwise the high quality crude from the fields would have to be blended in the Transneft system.

Rosneft the likely winner. Previously, the energy ministry had estimated the starting price at RUB60 bln ($2 bln). Although there is no infrastructure at the fields in place, the final price of RUB18.2 bln ($603 mln) set by the Natural Resources Ministry makes it possible for smaller bidders to participate in the auction. We believe that despite the conditions imposed, Rosneft still has a high chance to be successful, while other bidders may need to create a consortium to participate in the auction.

Victor Mishnyakov

TNK-BP might sell Novosibirskneftegaz; no major implications for production profile and Eurobonds

http://www.businessneweurope.eu/dispatch_text12479

VTB Capital

August 10, 2010

News: According to RBC Daily, TNK-BP might sell one of its producing assets, Novosibirskneftegaz. The subsidiary accounts for roughly 3% of TNK-BP's production and in our view could be worth around USD 500-800mn. The newspaper speculates that the reason for the divestment is to raise money for a possible acquisition of assets in Venezuela from its shareholder, BP.

Our View: In the past, TNK-BP has sold some of its low-productive assets. Should the sale of Novosibirskneftegaz occur, it would not have any material effect on TNK-BP's production profile, given that Novosibirskneftegaz's output is likely to be declining in the coming years.

We believe that TNK-BP Eurobonds (YTM - 3.5-6.0%, 260-330bp to swaps), are trading at roughly Gazprom's levels, and will not react to the news. However, investors might not welcome the idea, if the ultimate purpose of this sale is to raise funds for a potential acquisition of BP's assets in Venezuela

Gazprom

11.08.2010

Gazprom Finishes Over 750 Kilometers of the Sakhalin-Khabarovsk-Vladivostok Pipeline

http://www.oilandgaseurasia.com/news/p/0/news/8320
750 kilometers of the Sakhalin-Khabarovsk-Vladivostok Pipeline has been laid, welded and covered, Deputy Gazprom Chair Aleksandr Ananenkov said during a meeting in Khabarovsk. The line segment of the pipeline is being synchronized with the main compressor station on Sakhalin island. Mid-range pipeline barnches are also being built, including a branch from Vladivostok to Russkoye island, the Gazprom press office reported.
Copyright 2010, Oil and Gas Information Agency. All rights reserved.

‘Gazprom’ decides about Southern Stream and not Borisov and Tadic

http://english.blic.rs/Economy/6775/Gazprom-decides-about-Southern-Stream-and-not-Borisov-and-Tadic
T.Trikić - B. Stamenković - Z. Panić | 11. 08. 2010. - 00:02h | Foto: Reuters

Serbia and Bulgaria may speak about their wishes regarding the ‘Southern Stream’ route but the final say over it shall have the ‘Gazprom’ as the press service of the Russian concern told the ‘Blic’ referring to information that Belgrade is trying via Bulgaria to push its idea that the gas pipeline enters Serbia at Dimitrovgrad and not Zajecar as was agreed with the Russians the last time.

The future chief gas pipeline the ‘Southern Stream’ is a mutual project by the Russian ‘Gazprom’ and Italian ‘Eni’. It is to transport the Russian gas below the Black Sea through a pipeline 900 kilometers long to Bulgaria and via Serbia to other European countries. The value of the investment is estimated to EUR 20 billions. The capacity of the gas pipeline should be 63 billions of cubic meters per year. Its construction should begin in 2011 and be finished in 2015. The inter-state agreement on construction of the ‘Southern Stream’ has been signed with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria.

Serbia was the first to set up a joint venture with the ‘Gazprom’ for realization of the ‘Southern Stream’ in which the Russian company has a 51 percent stake.

In Moscow yesterday nobody wanted to comment the meeting between Tadic and Borisov.

‘We do not want to comment what Serbia President Boris Tadic and Bulgarian Prime Minister Bojko Borisov talked about. Those are their wishes. The decision on the ‘Southern Stream’ route shall depend exclusively on the feasibility study presently being worked on’, the comment from Moscow says.

At the ‘Gazprom’ they explain that ‘exchange of opinions’ with all sides involved are being continued and that all suggestions of interest shall be taken into consideration.

‘Of course, the opinion by Serbia shall also be taken into consideration but the final proposal shall be given by the ‘Gazprom’’, the press release of the Russian monopolist says.

Press in Moscow reports that Belgrade ‘has been from the very beginning interested that the ‘Southern Stream’ enters Serbia at Dimitrovgrad what was opposed and still is being opposed by the ‘Gazprom’’ and that ‘now Belgrade tried to impose its wish via Sofia which until recently has been blackmailing Moscow threatening to stay out of the project’.

The ‘Gazprom’ insisted on Zajecar because that variant is cheaper. Belgrade on the other side was for the pipeline to enter the country at Dimitrovgrad because in that case it would run along the whole territory of Serbia. By ‘Zajecar variant’ the whole south of Serbia together with Nis would be cut off.

Serbia President Boris Tadic confirmed to have talked with Borisov about the gas pipeline route.

‘I said that it would be very useful for Serbia that the pipeline enters our country at Dimitrovgrad because in that case we would be able to supply gas to the major part of the country and that is in our national interest’, Tadic said.