Russia 110601 Basic Political Developments

Odfjell got $50 million from Sevmash

http://www.barentsobserver.com/odfjell-got-50-million-from-sevmash.4927970-16175.html
2011-05-31

Sevmash pays just one day after powerful director Nikolai Kalistratov leaves office. Russia’s Supreme Court last Thursday rejected the shipyard's appeal on the ruling to pay compensation to the Norwegian company. The sum is however just one-sixth of the original claim according to Sevmash.

Odfjell received some USD 50.7 million from Sevmash on Tuesday, the company reports. The appeal from Sevmash in the long-running compensation dispute was rejected by the Supreme Court on Thursday last week.

Kalistratov leaves office
The board of directors of Sevmash on Monday this week decided to suspend the powers of General Director Nikolai Kalistratov after what the shipyard says was “his personal application.”

There are officially no direct links between Monday’s decision by the board of directors to replace Kalistratov and the ruling in the Supreme Court in Moscow in favor of the Norwegian shipping company Odfjell.

BarentsObserver reported already in April that Kalistratov was on his way to resign from the post as boss for the state owned Sevmash shipyard in Severodvinsk near Arkhangelsk.

Bad reputation for Sevmash
It is however no secret that the dispute between Sevmash and Odfjell had turned into a case creating a negative reputation of Sevmash regarding deals with foreign clients.

When Odfjell in 2004 signed the deal with Sevmash to build the chemical tankers, the order was the single largest ever placed in Russia by a Norwegian company.

Norwegians are pleased with result
- We are pleased that this case has now come to a satisfactory close, says Odfjell CSO Jan A. Hammer to the press on Tuesday.

The amount paid from the Severodvinsk based shipyard includes the award from the arbitration court in Stockholm, legal cost and accumulated interest.

In 2009 Odfjell accounted for the awarded amount with USD 43.3 million as income. The shipping company’s efforts to enforce the payment of the award have been ongoing since December 2009, and the first ruling in favour of Odfjell was in the Court of Arkhangelsk in December 2010.

Read also: Arkhangelsk court ruled in favour of Odfjell

Sevmash informs on Tuesday in a statement on their portal that the amount is transferred to Odfjell in line with the decision in the Arbitration Court of the Chamber of Commerce in Stockholm.

One-sixth of original claim
Sevmash says in their short statement that it is important to note that the original claim by Odfjell was USD 303.860.000.

Largest business order
Odfjell in 2008 decided to cancel the major contract with Sevmash following the latter’s reported inability to follow up contract terms. The contract from 2004 was of 12 chemical tankers, each of about 45,000 dwt. The construction of the chemical tankers was the single-largest Norwegian business-order ever placed in Russia.

The Norwegian shipping company claimed for damages and was awarded USD 43 million plus interest by the Stockholm Arbitration Tribunal in Sweden on December 30, 2009. The Russian shipyard failed to honour the international award, forcing Odfjell to seek enforcement within Russia. A ruling was made by the State Commercial Court in Arkhangelsk on 10 December 2010, in Odfjell’s favour. However, Sevmash appealed the decision and in March this year the Cassation Court in St. Petersburg turned down the appeal and ruled in favour of Odfjell. Sevmash again appealed the court order.

Case closed
On Thursday last week, Russia’s Supreme Court made a final review of the case and turned down the appeal from Sevmash as reported by BarentsObserver on Friday.

Text: Thomas Nilsen

Activity in the Oil and Gas sector (including regulatory)

Russia FinMin sas no gas tax hike for independents

http://af.reuters.com/article/energyOilNews/idAFLDE7500JL20110601
Wed Jun 1, 2011 8:16am GMT

MOSCOW, June 1 (Reuters) - Russian Finance Minister said on Wednesday that the state will not increase mineral extraction tax for independent gas producers, the government web site said.

Alexei Kudrin also said that the tax burden for gas industry will be increased by 150 billion roubles ($5.37 billion) in 2012, with further increases planned for the following two years.

(Reporting by Vladimir Soldatkin; editing by Melissa Akin)

Shell and Rosneft in talks about Arctic deal

http://www.ft.com/cms/s/0/a5fecd56-8ba6-11e0-a725-00144feab49a.html#axzz1O0BUwqte
By Sylvia Pfeifer in Doha

Published: May 31 2011 20:36 | Last updated: May 31 2011 20:36

Royal Dutch Shell has held talks with Rosneft about exploring the same blocs in the Arctic that the Russian state oil champion had originally committed to BP.

Peter Voser, chief executive, said talks last week in Russia with Rosneft and Igor Sechin, the energy tsar, had looked at “a multitude of blocs”. These included the three in the South Kara Sea that had been earmarked for the alliance with BP.

In his first public comments about the meeting, Mr Voser said it was “too early to say where this will go”. But the revelation underlines the fact that Rosneft has wasted no time in looking for alternative partners to BP.

A proposed $16bn (£9.7bn) share swap collapsed after the two sides were unable to reach agreement on buying out the UK oil group’s partners in the TNK-BP joint venture. The partners had opposed the alliance, claiming that it breached their shareholder agreement.

Mr Sechin has said Rosneft is open to further talks with BP. But Sergei Shmatko, energy minister, said last week the BP-Rosneft deal was dead in its current form.

Rosneft has been courted by several majors keen to explore the oil-rich Arctic. Shell signed a strategic agreement with Rosneft in 2007 but needs to agree on individual projects. Unlike BP, Shell has indicated that it would not be willing to enter into a share swap as part of an alliance.

After years of heavy investment, Shell is bringing 20 big projects online. Among these is the giant gas-to-liquids Pearl project in Qatar, which will turn natural gas into valuable liquids such as cleaner-burning diesel and aviation fuel, and oils for advanced lubricants.

The company, which has invested close to $20bn in the plant, produced its first GTL diesel fuel on Sunday. The plant is expected to start operations around the end of June.

Mr Voser did not rule out building more GTL plants but said he always wanted to see Pearl running first. North America is seen as one possibility by analysts given its abundance of shale gas.

Shell is betting heavily on gas and by next year will produce more gas than oil. The nuclear crisis in Japan has seen demand for gas soar and prompted governments to review plans for reactors. Germany decided this week to phase out its nuclear reactors by 2022.

Mr Voser said the forecast period of overcapacity of natural gas had been “considerably shortened” by the demand for LNG. “This will have an impact on volume and pricing,” he said.

Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Lukoil - Gaidamaka indicates growth to be "robust" from 2014

http://www.bne.eu/dispatch_text15683

Citi
June 1, 2011

Right-hand man to 2nd-largest shareholder Leonid Fedoun, Director of Strategic Development Andrei Gaidamaka, told Bloomberg in an interview yesterday that the company will see robust production growth starting in 2014. Unfortunately, not all production growth is created equal, as a good bit of what he has in mind is likely to come from Iraq, we think, which earns a (very) modest $1.15/bbl operating fee, which is taxable at 35%. By way of comparison, LUKoil has earned an average of $10 per produced barrel of oil equivalent (boe) over the last 6 years at the net income line. The other contributor will be the company's Caspian projects, which will add production at more typical profit margins, but are unlikely to be enough to offset West

Siberian declines.

Lukoil may buy ConocoPhillips' share in Kashagan, speculates RBC

http://www.bne.eu/dispatch_text15683

Citi
June 1, 2011

So speculates RBC Daily, as COP moves to liquidate assets to decrease its leverage. This could be the intended use of much of the $1.8bn in foreign acquisitions set aside in LUKoil's 1Q11 report. Neither party has commented on the report. COP owns 8.4% of Kashagan, an offshore field with an estimated 9-18bn bbl of recoverable reserves and considered to be the largest oil field discovered in the last 30 years. It is intended as the primary source of crude for the 120kbd Kazakhstan-China oil pipeline. Production is slated to begin next year. Note that we think the most likely recipient of COP's stake, should it be sold, could be state-owned KazMunaiGas given that the Kazakh government has imposed a number of changes on the project in recent years.

Additionally, RBK reports that TNK-BP "may" be able to pick up COP's Vietnam assets, having already acquired gas assets in the country from BP last year for $1.8bn.

All of the above appears to be on the level of speculation, with little to no hard reporting apparent in the article. Therefore, we recommend investors flag this as potential newsflow but make no investment decisions based on the article.

05:23 01/06/2011ALL NEWS

Six petrol trucks involved in eliminating oilspill on Sakhalin.

http://www.itar-tass.com/en/c154/154982.html

1/6 Tass 54

VLADIVOSTOK, June 1 (Itar-Tass) — Six petrol trucks are involved in eliminating an oilpsill after three oil tank-cars swerved off the rails. The trucks are to pump the spilt petroleum products out on Wednesday. Following that, the 20-tonne tank-cars by means of heavy-duty machinery will be put back on track, the press service of the Russian Ministry for Emergencies (RME) center for Sakhalin Region announced.

The derailment incident occurred on Tuesday at the 40th kilometre of the Pobedino- Pervomaiskoye railway leg in Smirkhykh District (central Sakhalin). The railway branch affected is not a mainline. Therefore the incident did not lead to any interruptions in train traffic along the Yuzhno-Sakhalinsk- Nogliki route.

Gazprom

Akimov, Mau Named State Representatives On Gazprom Board

http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201106010351dowjonesdjonline000249&title=akimovmau-named-state-representatives-on-gazprom-board
May 31, 2011

MOSCOW -(Dow Jones)- Russian state gas firm OAO Gazprom (GAZP.RS) has picked academic Vladimir Mau and banker Andrey Akimov as new state representatives for its board of directors, replacing Economy Minister Elvira Nabiullina and Energy Minister Sergei Shmatko, the company said Wednesday.

Mau, who is rector of the Russian Presidential Academy, and Akimov, head of Gazprombank, have been nominated as board candidates for Gazprom's annual shareholder meeting, which will take place on June 30.

President Dmitry Medvedev in March ordered all ministers to leave the boards of state-owned companies in a bid to improve corporate transparency.

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; [phone]; [e-mail] (Ira Iosebashvili in Moscow contributed to this story)

Gazprom to agree on price conditions with China by 10 June - pricing terms still uncertain

http://www.bne.eu/dispatch_text15683

VTB Capital/Alfa Bank

June 1, 2011

VTB writes: According Deputy Prime Minister Igor Sechin, quoted by Interfax, Russia plans to agree on gas supply terms with China by 10 June. In October 2009, Gazprom signed a framework agreement with CNPC. At that time, Sechin said that the final agreement might be signed in 2010-11, and gas deliveries would start in 2014-15. Gazprom CEO Alexei Miller said that the contract would be long-term with annual volumes at around 70bcm.

Our View: Implementing the contract on time would improve Gazprom's chances of obtaining a significant market share in China. Signing the deal on time is a pre-condition of starting gas supplies in 2015 (as Gazprom's strategy currently implies).

Despite the news being positive for Gazprom, we note that the pricing terms and financing conditions are a crucial to assessing the value of the project for Gazprom. Details are probably going to be announced later this year.

Alfa Bank writes: Sechin said an agreement to supply 68 bcm per annum may be signed in June, as had been planned. The news comes in contrast to last week's announcement that the agreement could be postponed until the end of the year. Also, a dispute over prices for oil supplies to China was apparently resolved this week, which may help advance the gas negotiations.

We believe that if Gazprom manages to sign the contract as planned in June, it will be positive for the company and may support the stock, which has recently been hit by uncertainty over domestic tariffs and taxes, as well as rising concern over a decoupling of the European spot/contract prices.

Although any supplies to China are likely at least 4-5 years away, the Chinese market has the potential to be crucial for Gazprom going forward, accounting for nearly half of its current European sales. The firm currently sells 140-150 bcm per annum to Europe.

Shtokman shareholders want more Russian participation

http://www.barentsobserver.com/shtokman-shareholders-want-more-russian-participation.4927593-116321.html
2011-05-31
Shtokman Development AG wants as much Russian participation in the giant Shtokman gas field development as possible. In return, the shareholders expect a high level of support from Russian authorities.

At a meeting in the Russian State Duma on “legislative support to the gas sector” organized by the Duma committee for budget and taxes Chief Executive Officer of Shtokman Development AG Alexey Zagorovsky said that the shareholders have decided to increase Russian participation in the project as much as possible.

- Shtokman must give a new impulse to the development of Russia’s regions and industry. Its realization will boost the economy in the country’s North-Western regions, create new jobs, increase budget incomes and give both local companies and the Russian industry as whole, opportunities to develop, Zagorovsky said, according to REGNUM.

In return, the shareholder hope that the Russian authorities see that such a large and ground-breaking project as Shtokman needs serious and long-term investments and support from all levels of state power.

- Shtokman will give Russia the opportunity to create a new gas region on the Arctic shelf. With the increasing demand for energy it will be of the highest strategic importance for the country, Zagorovsky underlined.

Text: Trude Pettersen