Russia 110214 Basic Political Developments

Gazprom

Russia to start natural gas export to China in end-2015, report

http://www.istockanalyst.com/article/viewiStockNews/articleid/4886378
Monday, February 14, 2011 1:35 AM

BEIJING, Feb. 14, 2011 (Xinhua News Agency) -- Russia is to start natural gas export to China in the end of 2015, according to Russian media reports reaching here on Monday.

Russian RBC newspaper quoted a source with Gazprom as saying that the Russian natural gas monopoly has planned to sign a natural gas supply agreement with Chinese counterpart in 2011 and is set to begin the gas export in the end of 2015.

Marina Surzhenko, an official in charge of Gazprom Export, said earlier that the Russian gas giant planned to strike a deal with China National Petroleum Corporation (CNPC) in July 2011.

CNPC, the parent company of PetroChina (PTR.NYSE; 601857.SH; 0857.HK), has been in talks with the Russian natural gas producer on building pipelines and LNG supply for several years. But the two sides have not reached substantial deal by now due to disagreements on natural gas price. (Edited by Qiu Jun, [e-mail])

Gazprom Tells Investors Pipeline Costs are Cut: Vedomosti Says

http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQIvI7LoMg.Q

By Henry Meyer

Feb. 14 (Bloomberg) -- OAO Gazprom told investors it cut pipeline costs on major projects 38 percent between 2006 and 2009, Vedomosti reported.

The company said in an investor presentation Feb. 11 that construction costs fell to 95 million rubles ($3.2 million) per kilometer (0.6 mile), the newspaper said.

The costs refer to large diameter pipes and include only the actual pipeline and not compressor stations and other facilities, the newspaper said.

Gazprom, a state-run gas export monopoly and the largest natural gas producer in the world, reported the data after Prime Minister Vladimir Putin ordered it to cut spending on pipelines in October, Vedomosti said.

To contact the reporter on this story: Henry Meyer in Moscow at [e-mail]

To contact the editor responsible for this story: Willy Morris at [e-mail]

Last Updated: February 14, 2011 00:23 EST

Gazprom Sees 15% Price Rise for Europe

http://www.themoscowtimes.com/business/article/gazprom-sees-15-price-rise-for-europe/430909.html
14 February 2011

Bloomberg

Gazprom expects European gas prices to rise 15 percent and supplies about 9 percent this year, as demand recovers in the Russian exporter's biggest market by revenue.

The average price will probably rise to $352 per 1,000 cubic meters this year from $306 last year, according to a presentation to analysts and investors Friday. Gazprom's prices are linked to oil prices. Brent has risen 39 percent in the past year.

Exports to Europe are planned at about 152 billion cubic meters of gas this year, compared with 139 bcm last year, according to the materials. Gazprom said it had 23 percent of the market in 2010.

"This year, Gazprom expects growth because of rising demand in Europe and increasing spot prices in Europe, which make Russian gas competitive," said Svetlana Grizan, an analyst at VTB Capital.

European sales accounted for 52 percent of Gazprom's revenue last year, according to the presentation. Deliveries may return to pre-crisis levels this year after spot prices increased, deputy chief executive Valery Golubev said last week in St. Petersburg. Supplies, mostly shipped under long-term contract via pipeline, will face less pressure than last year, he said.

Gazprom's shipments to Europe slumped to 140.6 billion cubic meters in 2009, from 158.8 billion cubic meters in 2008, as the financial crisis eroded demand and some of the Russian company's customers shifted purchases to cheaper liquefied natural gas cargoes. Exports were 150.5 billion in 2007.

Gas for next-month delivery in Britain, Europe's most liquid market, has risen about 57 percent in the past year, according to broker prices compiled by Bloomberg.

Gazprom, which has depended on pipeline supplies to Europe for decades, plans to build a link to China and increase LNG trade, according to the presentation.

"Gazprom has made LNG a priority," Grizan said.

LNG is chilled to a liquid for shipment by tanker to remote markets, such as Asia, and doesn't pass through transit countries.

The producer, which agreed to gain control of Royal Dutch Shell's Sakhalin-2 LNG project in 2006, plans to carve out as much as 14 percent of global LNG trade by 2030, according to the presentation. Its share didn't exceed 2 percent last year.

Gazprom is selecting LNG projects outside Russia for potential participation, which could add as much as 25 billion cubic meters of gas to the company's portfolio annually by 2030.

Gazprom expects total debt to drop to $43 billion at the end of this year, compared with $44.1 billion at the end of 2010, according to the presentation. That would be a decline of about 2.5 percent.

One-fourth of EU member states support South Stream: Gazprom

http://www.focus-fen.net/index.php?id=n242080

12 February 2011 | 21:06 | FOCUS News Agency

Home / World

Moscow. South Stream project enjoys the support of a quarter of the EU member states, said the chief of the legal affairs department in Gazprom Ivan Gudkov at a meeting of the supervising council of the Russian Gas Society, UNIAN news agency reported.
“About one-fourth of the EU member states have expressed directly or indirectly support for South Stream project, which is a strong argument in favor of giving it a status not worse than the one of South Corridor project.” said Gudkov.

Gazprom Neft Profits Up, Eyes Sibir

http://www.themoscowtimes.com/business/article/gazprom-neft-profits-up-eyes-sibir/430914.html
14 February 2011

Bloomberg

Gazprom Neft, the oil arm of natural gas exporter Gazprom, may buy the remaining shares of Sibir Energy from the city of Moscow as early as this month.

The company may buy the 22.4 percent stake in February or March, Yekaterina Stenyakina, a Gazprom Neft spokeswoman, said Friday. She didn't say a price.

Sibir Energy owns half a Siberian oil production venture with Royal Dutch Shell that last year supplied Gazprom Neft with more than 80,000 barrels per day, according to the company.

Gazprom Neft and Sibir also control the Moscow Refinery, which processed 10.15 million tons of crude last year.

Gazprom Neft spent $2.51 billion in building up a stake of about 80 percent in the company between April 2009 and May last year. In July, it sold about 3 percent to Moscow, the oil producer said in its third-quarter financial statement.

Gazprom Neft plans to boost oil and gas output about 7.6 percent, and increase capital expenditures, according to a company presentation to analysts Friday.

The oil producer plans to produce 56.8 million tons of oil equivalent (1.14 million bpd) this year, compared with 52.8 million tons last year.

Investments may decline as Gazprom Neft boosts capital expenditures about 15 percent to $3.8 billion and cuts planned "new projects" by half to $800 million, according to the materials.

Gazprom Neft increased total proved oil and gas reserves by 0.9 percent last year based on the standards of the Petroleum Reserves Management System.

Total proved reserves rose to 7.53 billion barrels of oil equivalent at the end of 2010, compared with 7.46 billion a year earlier, the Russian producer said Friday on its web site. Crude reserves accounted for 6.44 billion barrels of that.

Gazprom Neft said fourth-quarter profit rose about 1 percent to $873 million from $869 million in the previous three-month period.

Sales advanced 8 percent to $9.06 billion, Gazprom Neft said on its web site. Gazprom Neft will cut the price of winter diesel sold at its stations by 1 ruble per liter starting Saturday, the company said Friday in an e-mailed statement.

The Federal Anti-Monopoly Service last week opened an investigation into diesel and jet fuel price increases by Gazprom Neft, Rosneft and LUKoil. Prime Minister Vladimir Putin said the same day that oil company executives hadn't responded to previous inquiries from the government.

Gazprom Neft presents 4Q10 numbers, gives views on taxation

http://www.bne.eu/dispatch_text14230

Troika Dialog
February 14, 2011

Gazprom Neft on Friday released its headline 4Q10 and 2010 US GAAP figures, while the company's CFO, Vadim Yakovlev, made a presentation during Gazprom's Investor Day. The results themselves were largely in line with our projections, with 4Q10 EBITDA of $1,841 mln coming in slightly better, buoyed by a strong pricing environment. The company booked $107 mln in provisions against a Federal Antimonopoly Service (FAS) fine, which led to weaker net income. We were surprised at the very low level of operating cash flow in the quarter of just $1,073 mln, against the $1,600 mln we had expected; we believe this could only have been attributable to a major reversal in working capital, though we will not know for sure until the full set of results is published.

Yakovlev made several interesting points during his presentation. He said that the company has been able to pass the entire increase in diesel excise taxes onto the final consumer, but has had less luck in doing so with gasoline, where the market has been more saturated lately. This, coupled with recent calls by the FAS and Prime Minister Vladimir Putin to reduce prices at the pump, could lead to lower margins for Gazprom Neft, which is more reliant on domestic gasoline sales than its peers (about 11% of total revenues in 4Q10, we estimate). The CFO also said that the switch to the 60/66 taxation system would be net positive for profitability, based on the company's estimates. On our numbers, it would be neutral in the best case, but Gazprom Neft would gain less than any other integrated major apart from Bashneft regardless.

Finally, the company expects organic (consolidated) capex to increase by about $500 mln in 2011 to $3.8 bln, which is above our flat projection and may imply a necessary step up in drilling in order to support declining production, something we may have already spotted in January output numbers.

TNK-BP and Gazprom Neft buy operator of Yamal oil and gas deposits

http://www.bne.eu/dispatch_text14230

RIA Novosti
February 11, 2011

Russian-British joint venture TNK-BP and Gazprom Neft, the oil arm of the country's energy giant Gazprom, have bought equal stakes in Messoyakhaneftegaz, operator of the Messoyakh oil and gas deposits, from their subsidiary Slavneft, Slavneft said on Friday.

Gazprom Neft and TNK-BP said in January that their investment in the development of the deposits might amount to $15-18 billion.

Reserves of the Messoyakh deposits, located in the oil and gas rich Yamal peninsula in Russia's north, are estimated at 560 million tons of oil and 230 billion cubic meters of gas under C1+C2 category.

Gazprom: Ambitious plans disclosed during investor day

http://www.bne.eu/dispatch_text14230

UralSib
February 14, 2011

Maintaining high output and exports against market expectations. Last Friday, Gazprom (GAZP - Hold) held an investor day in Moscow. Despite the gloomy forecasts, Gazprom is confident it will continue to increase deliveries to the EU and expects them to go up 9% to 165 bcm in 2011. According to the company, the export price should increase 15% to $352/bcm. By 2030, Gazprom plans to have a 32% share in EU gas market, 33% in the CIS gas market, 13% in the Asian gas market and 14% in the global LNG market. At the same time, Gazprom admits that its share on the domestic market will shrink, which, however, will be offset by further business diversification with new Asian markets and the increased sale of LNG. Production plans for 2011 stand at 508 bcm (al- though this is a conservative, low-range estimate) and 640 bcm in 2030, keeping the reserves recovery ratio at 1. Gazprom plans for capex of $23-30 bln/annum, up from current levels due to a number of large projects such as Shtokman and Yamal.

Gain from the sale of NOVATEK will be in dividends. Gazprom plans to make further progress in a deliveries agreement with China, which was finally achieved in the middle of 2010, with actual deliveries to begin in late 2015. Regarding the low price of its stake in NOVATEK sold to Gazprombank, the company's management claimed that the price was set sometime at the end of the summer or the beginning of autumn 2010 when NOVATEK's market value was lower than now, and that it is inappropriate to compare the market price with the price of such a large deal. Gazprom assured investors that the gain from this deal will be added to net income and allocated to dividends.

We are not overly optimistic. Gazprom's production and export targets seem slightly unrealistic in our view. We forecast 149 bcm for EU exports this year, 9.7% below the company's expectations. We also believe Gazprom will have to go for further price discounts with its European customers, which will reduce its free cash flow. We have made no changes to our model and retain our cautious view on Gazprom, reiterating our Hold recommendation and a price target of $5.9/share.

Gazprom to help Poland reduce CO2 emissions?

http://www.thenews.pl/business/artykul149278_gazprom-to-help-poland-reduce-co2-emissions.html

14.02.2011 07:21

Alexander Medvedev, the president of Russia’s oil giant Gazprom has said that with the company’s help Poland could switch to gas for its electricity production, which would help reduce its reliance on CO2 emitting coal.

“If I'm not mistaken, Poland produces over 90 percent of its electricity from coal,” Medvedev told the Puls Biznesu daily.

“If that energy was produced from natural gas then Poland could reduce its carbon dioxide emissions by more than 50 percent. The EU plans to reduce CO2 emissions by 20 percent, compared to 1990 levels. But Poland could achieve this much faster by replacing coal with natural gas for electricity generation,” he said.

Gazprom is looking for further opportunities to invest in Poland, says Medvedev, particularly in the electricity generating sector.

“Our cooperation with Polish companies has been very successful and we are looking for opportunities to further develop this,” he said.

It was announced last week that Poland's state gas delivery monopoly Polskie Gornictwo Naftowe i Gazownictwo (PGNiG) and Gazprom are planning joint energy and mining projects. Working groups are to discuss the construction of gas power stations in the south-east of Poland, according to media reports. (pg)