Activity in the Oil and Gas sector (including regulatory)

Activity in the Oil and Gas sector (including regulatory)

Russia May Make Oil Companies Maintain Output, Vedomosti Reports

Russia’s government may make it illegal for oil companies to reduce crude output and oil-product sales when “there’s demand” and sales won’t be loss-making, Vedomosti reported.

The measure is included in the latest version of a new law on oil extraction, refining and transporation that is being debated in the government, the Moscow-based newspaper said, citing a copy of the drafted dated March 1.

To contact the reporter on this story: Yuliya Fedorinova at yfedorinova@bloomberg.net

To contact the editor responsible for this story: Brad Cook at bcook7@bloomberg.net

Delay seen in building of Russia oil pipeline to China –paper

MOSCOW, March 29 (Reuters) - Construction of one of Russia's new pipelines to transport Arctic oil to China may be postponed due to an internal conflict between companies involved, the daily Kommersant reported on Tuesday.

A disagreement on financing between Transneft TRNF_p, which is in charge of the project, and oil majors LUKOIL , Gazprom Neft and TNK-BP , which have agreed to provide funds, may shelve the project until 2016, Kommersant reported, citing sources from Transneft.

Transneft, Russia's pipeline monopoly, said in September it would begin engineering work on the pipeline in January for commission in 2014 [ID:nLDE6851BO].

The new pipeline would transport Arctic oil to a trunk line further south for onward shipment toward East Siberia, and eventually China. (Writing by Lidia Kelly; Editing by Clarence Fernandez)

Key Yamal oil pipeline may be delayed by three years

http://www.bne.eu/dispatch_text14583

UralSib
March 29, 2011

Zapolyarnoye-Purpe construction may only begin in 2016. Kommersant reports that Transneft (TRNFP RX - Sell) and a pool of oil companies including Gazprom Neft (SIBN RX - Hold), LUKOIL (LKOH RX - Hold), and TNK-BP (TNBP RU - Hold) disagree on the planned tariffs and volumes for the Zapolyarnoye-Purpe pipeline project. The 0.9 mln bpd pipeline was supposed to go into operation in three stages in 2013-15, but the start of construction may now be delayed by three years or more. There is also a risk of upward capex revision from the current estimate of RUB120 bln ($4.2 bln).

Pipeline a prerequisite for Yamal oil production. Zapolyarnoye-Purpe is due to connect a number of promising Yamal fields to Transneft's existing system, including Gazprom Neft's and TNK-BP's Messoyakha group, LUKOIL's Pyakyakhinskoye, and TNK- BP's Suzun, Tagul, and Russkoye fields. The three companies agreed jointly to finance the pipeline's construction and sell it to Transneft after 2015. However, Transneft is now insisting that the companies guarantee a volume schedule until 2030, a re- quirement that they see as unrealistic at this early stage of the fields' development.

Gazprom Neft, LUKOIL, TNK-BP's medium-term plans at risk. We were never as optimistic on the companies' Yamal produc- tion plans, as the Zapolyarnoye-Purpe initial completion schedule suggested, so the possible pipeline delay comes as no surprise. We expect the three companies' Russian oil output to increase at a CAGR of 1% or less in 2011-15.

Alexei Kokin

http://www.rbcnews.com/free/20110329105809.shtml

      RBC, 29.03.2011, Moscow 10:58:09.Rosneft's RAS net profit dropped 24% year-on-year to RUB 191.92bn (approx. USD 6.76bn) in 2010, according to the company's report.

      The oil major's net profit in October-December 2010 increased 16% on the quarter to RUB 65.57bn (approx. USD 2.31bn). The rise in net profit is attributable to higher oil prices and the ruble's appreciation against the dollar.

      The company earlier posted a RUB 126.34bn net profit (approx. USD 4.45bn) for January-September 2010.

Standard Life Investments tells BP to drop Rosneft deal share swap

BP is losing shareholder support as it attempts to salvage the share-swap part of the $16bn (£10bn) Arctic oil deal with Rosneft, the 75pc state-owned Russian energy group

Comment

BP wants to push ahead with the share-swap and on Monday plans to ask the court to rule on whether that also breaches the TNK-BP shareholder agreement. The swap would see BP buy a 9.5pc stake in Rosneft, taking its holding to 11pc, while the Russian group would take 5pc of the UK oil giant.

However, David Cumming, Standard Life's UK equities head, questioned whether the exchange alone made sense. "At the moment we don't think BP has got a Plan B so unless there is some clear commercial benefit to BP shareholders for doing this deal...we're not supportive at the moment," he told the BBC.

He is the first major shareholder to publicly voice opposition since the Swedish ruling. But another top 10 investor also expressed reservations. "I'm not sure the company has really articulated why such a transaction in isolation would be a good idea," he said. "Share swaps alone rarely do anything positive."

Other investors have been prepared to accept the BP view that the court decision was a "nothing event" because the Rosneft deal had the backing of the Russian Government.

Mr Cumming said he believed other shareholders "weren't particularly keen on the initial deal", adding the Rosneft agreement could collapse unless BP finds a solution to the TNK-BP problem. "At the moment I think the deal's in trouble," he added.

BP feels it continues to enjoy the support of most shareholders and Sergey Shmatko, Russian energy minister, said on Monday that he expected the share exchange to be completed shortly.

The Russian oligarchs operating as Alfa Access Renova who own the other half of TNK-BP insist the tribunal ruling took account of the share swap, the exploration arrangement and the strategic partnership. AAR argues any share swap should be seen as a "strategic investment".

There were signs another Rosneft partnership deal was running into problems. Chevron is reported to be looking at whether to go ahead with the $32bn Black Sea exploration project with Rosneft.

Sechin turns up heat as Rosneft insists will push through BP deal

http://www.bne.eu/storyf2594/Sechin_turns_up_heat_as_Rosneft_insists_will_push_through_BP_deal

Rosneft issued more menace-laden warnings on March 25 as it insisted it will push through its planned tie-up with BP in full and has no plans to allow the Russian oligarchs in the TNK-BP joint venture, who were responsible for a Swedish arbitration court blocking the BP-Rosneft tie-up, into the deal.

In January, the two sides signed off on a deal that would have seen BP own 9.5% of Rosneft's shares, while the Russian group would have taken a 5% stake in BP, and form an exploration and production joint venture to explore for oil in the Arctic. This angered the holding company Alfa-Access-Renova (AAR), which owns 50% in the TNK-BP joint venture and represents four of the most powerful businessmen in Russia, because they allege the tie-up violates a shareholder agreement inside the JV that either partner must run all Russian projects via TNK-BP. An independent arbitration tribunal in Stockholm agreed, finding that the deal breached agreements in place and extended an injunction on the tie-up.

AAR CEO Stan Polovets said in an e-mailed statement: "Wilfully ignoring the provisions of the shareholder agreement was a serious misjudgement by BP that has severely damaged the relationship between the TNK-BP shareholders; it has also harmed BP's reputation in Russia. We expect [BP CEO] Bob Dudley to make every effort to rectify the situation and rebuild the trust that has been lost."

For its part, BP said in a statement it "will now apply for a determination whether the share swap may proceed on its own." It added that it hopes to "[find] a way to resolve its differences with its Russian partners to allow these important Russian Arctic developments to proceed in future."

There was less ameliorative talk out of Rosneft. Russian Deputy Prime Minister Igor Sechin and CEO of Rosneft, a man who has been dubbed the scariest in Russia in the past, insisted the company will push through the full tie-up, and warned that the company could seek compensation should the Arctic project it plans to carry out with BP fall through.

Sechin reminded reporters on March 25 that the Swedish court only granted a temporary restraint. "The court didn't block [the deal], it extended the injunction until April 7. We must await the court's verdict."

The original agreement signed in January sets April 14 as the date to ink the final deal, but the pair are said to be looking at moving the deadline.

Whilst the press has been discussing the failure of the deal, you'd be hard-pressed to find an analyst in Moscow who believes that the Kremlin - which is essentially the power standing behind Rosneft – won't force the deal through, one way or the other. The oligarchs inside AAR are very powerful - but no match for the likes of Sechin.

The Arctic exploration is a key plank in the Kremlin’s energy strategy. The Rosneft-BP deal is also a blueprint for tie-ups that are central to Russia's plans to modernise and diversify the economy: large international companies are offered access to Russia's rich natural resource basis through minority stakes in state-owned companies and in return the Russian company gets access to world class technology.

The deputy PM went on to yet again denigrate the idea that TNK-BP could take BP's place in the deal and denied there were any talks to buy out the oligarchs. "Rosneft is not holding any talks with AAR. We haven’t received any proposals regarding these proceedings and are not holding any talks," Sechin said.

Answering a question on whether TNK-BP could participate in Rosneft's deal with BP, Sechin said that TNK-BP's shares are of no interest for the swap deal, as they aren't traded in New York, London or Frankfurt.

There were more reports on March 28 that BP could be forced to spend more than €10bn to buy out its partners in TNK-BP. Sources close to the dispute were cited by The Scotsman on March 28 as saying that Mikhail Fridman, chief executive of TNK-BP and the main partner in AAR, has told BP to buy out him and his colleagues, a claim denied by AAR.

West Siberia boost for Exillon

http://www.upstreamonline.com/live/article250065.ece

Russia-focused UK independent Exillon Energy has found more oil with an appraisal well drilled on its East EWS I field in West Siberia.

Upstream staff  28 March 2011 08:01 GMT

The probe, with pre-drill estimates of 13.3 million barrels of possible reserves, was designed to test a five square-kilometre northern extension to the field.

Having struck the Jurassic P reservoir at 1858 metres, wireline logging data and oil shows confirmed the presence of 13.9 million barrels of gross oil pay.

Testing of the well will now be carried out and is due to be completed by the end of April.

Published: 28 March 2011 08:01 GMT  | Last updated: 28 March 2011 08:06 GMT

Transneft's net profit rises in 2010 http://www.rbcnews.com/free/20110329120145.shtml

      RBC, 29.03.2011, Moscow 12:01:45.Transneft's net profit under RAS surged 25.7% to RUB 4.89bn (approx. USD 172m) in 2010, the oil pipeline monopoly said in a report today.

      The upturn in profit was attributed to a rise in transportation volumes, higher oil transportation tariff, and higher interest on funds deposited by the company.
Transneft minimum state ownership may be set at 75%

http://www.bne.eu/dispatch_text14583

Citi
March 29, 2011

The Energy Ministry's law draft on crude oil stipulates that the minimal state ownership in Transneft should be set at 75%, Vedomosti reports. The article doesn't specify whether this threshold refers to voting or total capital.

Transneft owns 100% of the company's voting shares or 78.11% of the total capital. Earlier, the Finance Ministry suggested decreasing state ownership in the company to 51% but met strong opposition from the Economy and Energy Ministries and Transneft's management, which argued that lowered state ownership may prompt repurchase of its Eurobonds. There are "change of control" clauses in Transneft's Eurobonds agreements: three issues are putable when government ceases to control 100% of voting capital and two issues are putable when the state ownership falls below 75% of voting capital. We do not believe, however, that these clauses represent a significant obstacle for privatization as the issues are trading above par and given the company's financial resources ($8.8bn at the end of 2Q10).

Transneft's privatization plans were put on hold indefinitely last year and a Vedomosti source in the government said that they are not being discussed at this time. If the 75% threshold mentioned in the law draft refers to the voting capital, this could imply that the government is still considering the possibility of reducing state ownership in future. We are sceptical about such a
possibility, however, as the Economy Ministry has been against the idea.

Transneft discloses in-line 2011 financials forecast

http://www.bne.eu/dispatch_text14583

Citi
March 29, 2011

Transneft published on its website detailed forecasts for the company's 2011 financials, including sales, operating costs, capital expenditures and financial investments. Operating profit (ex-inventory sales and other non-core items) is expected at Rbl170,8bn, -0.4% to our estimate, total capital expenditure is guided at Rbl243.1bn, +0.7% to our estimate. Transneft also expects that in 2011 its acquisitions and financial investments will amount to Rbl83bn, which is likely to reflect transactions related to stakes in Primorsk and Novorossiysk export terminals (not included in our model). The company didn't specify whether these number account for possible 2-3% tariff hikes this summer (not included in our model). We view the numbers as neutral to our forecasts.

Ildar Khaziev

Gazprom

Gazprom considers internal upgrades

http://www.upi.com/Science_News/Resource-Wars/2011/03/28/Gazprom-considers-internal-upgrades/UPI-44531301324602/
Published: March. 28, 2011 at 11:03 AM

ST. PETERSBURG, Russia, March 28 (UPI) -- Russian energy company Gazprom said it was looking to overhaul significant parts of its natural gas transmission system to St. Petersburg and Leningrad Oblast.

Gazprom Deputy Chairman Alexander Ananenkov met with officials in St. Petersburg and the Leningrad Oblast to review plans to enhance the reliability of gas facilities in the region.

Gazprom in 2008 unveiled a comprehensive action plan that called for improvements in its domestic gas transmission network.

The gas monopoly last year said it overhauled 275 miles of gas trunklines, 83 miles of gas laterals and more than 5 miles of compressor station flowlines.

Ananenkov said a reliable supply of gas was a top priority for his company, especially in heavily populated areas like Moscow and St. Petersburg.

"Gazprom primarily faces the challenge of uninterrupted gas supply to consumers," he said in a statement. "The challenge can be met through reliable operation of each and every element of the gas transmission system."

Prirazlomnaya platform to be registered in Nenets

http://www.barentsobserver.com/prirazlomnaya-platform-to-be-registered-in-nenets.4902977-116321.html
2011-03-28

The ice-protected oil platform will be registered in Nenets Autonomous Okrug, license holder Gazprom Neft Shelf says. This will give the region large incomes from property taxes.

General Director of Gazprom’s subsidiary Gazprom Neft Shelf said in a meeting with Governor of Nenets Igor Fyodorov that the platform will be towed to its designated place at the Prirazlomnoye oil field this summer, most probably in the end of June or beginning of July, Nenets Regional Administration's web site reads.

Prirazlomnoye oil field is located in the eastern part of the Pechora Sea about 60 km north of the Nenets Autonomous Okrug.

Gazprom Neft Shelf (former Sevmorneftegaz) is Gazprom’s 100 per cent subsidiary set up in 2002 to develop offshore oil and gas fields. Since 2008 the company has been performing geological exploration in Gazprom’s license areas on the Yamal Peninsula (Severo-Tambeyskoye, Zapadno-Tambeyskoye, Malyginskoye and Tasiyskoye fields, as well as in the Nilivoysky and Seyakhinsky areas) and in Yakutia (Chayanda field), the company’s web site reads.

The Prirazlomnaya platform will be operated by a crew of about 200 men working on two-week shifts. The field holds resources of up to 41 million tons and annual peak production is believed to amount to about six million tons. A total of 36 wells will be drilled on site by year 2019.

The platform has a length and width of 126 meters, oil storage capacity of 136,000 cubic meters and a daily production capacity of 19,000 cubic meters. The topside of the platform is based on the “Hutton” platform, an installation previously operating in the North Sea and acquired by former license holder Sevmorneftegaz in 2002.

Text: Trude Pettersen

Gazprom may get EUR 13 million in Lietuvos dujos dividends for 2010

http://www.steelguru.com/russian_news/Gazprom_may_get_EUR_13_million_in_Lietuvos_dujos_dividends_for_2010/197880.html

Tuesday, 29 Mar 2011

Interfax reported that the management at Lithuania gas import and transportation company Lietuvos dujos suggests that company shareholders vote at their annual meeting April 20 to pay dividends totaling LTL 120 million out of 2010 profits meaning 37.06% owner OJSC Gazprom could receive LTL 44.4 million or roughly EUR 13 million.

Lietuvos dujos made LTL 159.715 million in profits last year. The recommendation is that dividends be paid at a rate of 25.6 cents per share.

Aside from Gazprom, E.ON Ruhrgas International owns 38.9% of Lietuvos dujos and the Lithuanian government 17.7%. If shareholders take the recommendation the former would receive LTL 46.8 million in dividends and the latter LTL 21.2 million.

(Sourced from Interfax)

Equal access rules for Gazprom gas transport system could come soon - Mr Artemyev

http://www.steelguru.com/russian_news/Equal_access_rules_for_Gazprom_gas_transport_system_could_come_soon_-_Mr_Artemyev/197878.html

Tuesday, 29 Mar 2011

Interfax citing Mr Igor Artemyev head of Russia Federal Antimonopoly Service as saying that rules governing equal access to OJSC Gazprom gas-transportation system may be forthcoming in the near future, as the relevant document is now undergoing inter-departmental coordination.

Mr Artemyev said when asked when a draft resolution on those rules might be considered that "In two or three weeks there will be key meetings at the White House and final decisions will be made on a report by the prime minister. The prime minister, as you know, ordered its preparation and submission for confirmation. That means these rules should appear in the nearest future."

This past February Prime Minister Mr Vladimir Putin instructed Gazprom to work out means for equal access to its gas-transport system for all independent producers. He said at a meeting devoted to how the country fuel and energy industry did last year that this is necessary for securing long term contracts with gas-suppliers for power-industry facilities put into capacity agreements.

Mr Putin said in the context of their mandatory investment programs, power companies will invest significant money in construction and should be confident about receiving the volume of gas they need, which could be effected with long-term deals.

(Sourced from Interfax)

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