Russia 101202 Basic Political Developments

Activity in the Oil and Gas sector (including regulatory)

Russia's Nov oil output edges down to 10.25 mln bpd

http://www.reuters.com/article/idUSLDE6B101T20101202
2:37am EST

MOSCOW, Dec 2 (Reuters) - Russia's oil output edged down to 10.2 million barrels per day (bpd) in November after hitting a record high of 10.26 bpd in the previous month, Energy Ministry data showed on Thursday.

Daily gas output rose to 1.98 billion cubic metres (bcm) in November from 1.87 bcm in October along with the steady drop in temperature.

(Reporting Jessica Bachman; editing by John Bowker)

Moscow Sweetens The Pot In Bid To Woo Foreign Investment For Upstream Arctic Activity

http://www.oilandgasinsight.com/file/94507/moscow-sweetens-the-pot-in-bid-to-woo-foreign-investment-for-upstream-arctic-activity.html
December 2010 | Industry News

BMI View: The enactment of proposed changes to the upstream regulatory framework will make Russia a more inviting investment destination, as Moscow eyes lucrative Arctic resources.

The Russian government is planning changes to the upstream regulatory framework to attract foreign investors to its offshore Arctic region, where the state has traditionally been reluctant to loosen its grip.

Under proposed laws, foreign companies that make commercial oil and gas discoveries will be either guaranteed a stake in their development or receive financial compensation comprising costs incurred and an additional 'reward' for exploration risk, Upstream reported on December 1 2010, citing Denis Khramov, the director of the Department for State Policy and Regulation of Russia's Ministry of Natural Resources. Additionally, Russia is looking to implement new regulatory procedures regarding drilling permits and the installation of offshore structures, artificial islands and subsea pipelines. No further details were made available.

Landlubbers

Currently, Russia's oil and gas output is sourced from onshore fields, located mostly in Western Siberia and the Volga-Urals region. Given that these onshore assets have sustained high production volumes, little investment has flowed to Arctic resource development. Khramov told Upstream that most of Russia's oil and gas resources are in the seabed

Rosneft Sells January East Siberian Crude to JX-Nippon, Conoco

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aWbhR6jnyRyg

By Christian Schmollinger

Dec. 2 (Bloomberg) -- Rosneft Oil Co. sold 200,000 metric tons of East Siberian Pacific Ocean pipeline crude, or ESPO, for loading in January to ConocoPhillips and JX-Nippon Oil & Energy Co., said three traders who participate in the market.

Details of the sales are as follows:

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

Crude: ESPO, Russia

Buyers: Conoco, JX-Nippon

Quantity: 100,000 tons (or 730,000 barrels) x 2 cargoes

Loading: Jan. 6-9, Jan. 28-31

Port: Kozmino Bay Terminal, Russia’s Far East

Price: Premium of between $2.70 a barrel and $2.80 a

barrel to Dubai price published by Platts.

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

To contact the reporter on this story: Christian Schmollinger in Singapore at [e-mail]

To contact the editor responsible for this story: Clyde Russell in Singapore at [e-mail]

Last Updated: December 1, 2010 23:13 EST

Surgutneftegaz Sells East Siberian Crude Oil Cargoes to Itochu

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aV1GOKfihW5w

By Christian Schmollinger

Dec. 2 (Bloomberg) -- OAO Surgutneftegaz, a Russian oil producer, sold 400,000 metric tons of East Siberian Pacific Ocean pipeline crude for loading in January and February to Itochu Corp., said three traders who participate in the market.

Details of the sale are as follows:

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

Crude: East Siberian Pacific Ocean pipeline crude

Buyer: Itochu

Quantity: 100,000 metric tons (730,000 barrels) x 4 cargoes

Loading: Jan. 9-13, 20-24, 21-25, Jan. 21 to Feb. 4

Port: Kozmino Bay Terminal, Russia’s Far East

Price: A premium of between $2.70 a barrel and $2.80 a

barrel to the Dubai price published by Platts.

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

To contact the reporter on this story: Christian Schmollinger in Singapore at [e-mail]

To contact the editor responsible for this story: Clyde Russell in Singapore at [e-mail]

Last Updated: December 1, 2010 23:02 EST

Med Crude-Urals digests Shell tender win, freight jump

http://af.reuters.com/article/energyOilNews/idAFLDE6B022V20101201
Wed Dec 1, 2010 5:48pm GMT

* Shell wins Rosneft Q1 tender ex-Primorsk

* Primorsk freight rates jump on ice-class regulations

LONDON, Dec 1 (Reuters) - Urals crude weakened in the

Mediterranean and was in limbo in northwest Europe on Wednesday

as traders assessed the results of a large tender to sell crude

by Rosneft and a jump in freight rates.

Shell won the tender to buy Urals for the first quarter in

northwest Europe by offering premiums that were slightly lower

than it had to pay to win last time but still healthy, traders

said. [ID:nLDE6B01DI]

"The contango is flattening, and if it was 50-55 cents over

the past year, now it is only 22-24 cents so obviously people

are not offering such big premiums anymore," said a trader with

a Russian firm.

Shell emerged as a key player in the Urals market, the top

export grade of the world's largest oil producer, several months

ago by winning tenders by Russian producers Rosneft, TNK-BP and

Surgut. It outbid previous market leader Gunvor by offering

unusually healthy premiums to the big surprise of its rivals.

In the window, Vitol sold a Dec. 11-15, 140,000-tonne cargo

in the Mediterranean to ENI at minus $1.20 to dated, 10 cents

weaker than prices indicated earlier this week, traders said.

In the north, no deals have been done in the window, with

traders pegging prices at minus $1.40 a barrel and saying the

narrowing spread between the north and south meant the arbitrage

between the regions was unlikely to work.

In November two arbitrage operations for Urals between the

south and north took place after prices in the Mediterranean

strengthened due to weather-related delays in the Turkish

waterways to a premium of around 80 cents versus the

well-supplied Baltic.

Also potentially complicating the arbitrage was a jump in

freight rates at Primorsk on the Baltic as some traders said the

outlet has introduced ice-class regulations, which would cut the

number of tankers that can service the port.

A tanker broker estimated that freight rates from Primorsk

to the UK and Continental Europe jumped to W135 from W85 in the

Worldscale measure, with average daily earnings for an Aframax

tanker on the route rising to $36,000 a day from $7,000 a day on

Tuesday.

Urals margins for complex refineries in the Mediterranean

edged up on Wednesday to $2.24 a barrel, nearly

closing the gap with the averages of the past 15 days and the

past year.

In other grades, Glencore bid for Azeri Light at plus $2.10,

which was much stronger than previous levels at around

$1.60-$1.70, indicating strong appetite for light grades amid

expected weather-related delays for Urals shipments.

Russia's Surgut sold four cargoes to Japan's Itochu at a

tender of East Siberian ESPO Blend crude for delivery in

January-February [ID:nLDE6B01NY]

(Reporting by Dmitry Zhdannikov and Gleb Gorodyankin; editing

by Jane Baird)