MOSCOW, November 29 (RIA Novosti) Russia is not waging energy wars - expert / Russia loses control over Central Asian energy / Sakhalin II operator likely facing bankruptcy / Gazprom to share Egyptian production with Novatek / Gazprom, Rosneft may become allies
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Novye Izvestia
Russia is not waging energy wars - expert
NATO must be prepared to confront a new challenge, the manipulation of energy as a weapon, Senator Richard Lugar, R-Ind., chairman of the Senate Foreign Relations Committee, said Tuesday at NATO's annual summit in Riga, Latvia.
The energy wars Russia is waging against NATO members should be equated to an armed attack and given an adequate response, he said.
But Russian experts do not think Lugar's appeal will be heeded, because it would be economically unprofitable for the West to fight such "wars" against Russia.
According to Lugar, "its recent actions to temporarily reduce gas supplies to the West, confiscate some foreign energy investments, and create further barriers to new investment are undermining confidence in Moscow's reliability." Therefore, NATO should "adopt energy security as a mission" in order to repel any attempt at energy intervention.
These militant statements have not alarmed Russian experts.
Sergei Markov, director of the Moscow-based Institute for Political Studies, said Russia was not waging energy wars but was only trying to streamline its trade.
"In the past, we could hope to create an economic alliance with the CIS countries, but the West, alarmed by the idea, has convinced some of them not to form a new USSR by promising them a life of bliss with cheap energy. But now that Russia is raising its energy prices, the West is again alarmed and is threatening to respond accordingly," Markov said.
Agvan Mikaelyan, deputy director general of the FinEkspertiza auditing and consulting group, said Russia is only protecting its national interests.
"Such relations can be compared to marketing wars, but there is no political undercurrent, only the principle of competition, which is part of any market economy," he said.
Referring to NATO's possible response, Mikaelyan said that there would be no political or economic sanctions against Russia. Moreover, he said that the European Union should be viewed as a potential ally of Russia, because the EU is interested in exchanging money and technology for energy.
Nezavisimaya Gazeta
Russia loses control over Central Asian energy
Russia is ceding its positions on the commodities markets of Kazakhstan and the rest of Central Asia. Soon China will be able to further reinforce its already strong foothold in the region's oil and gas sector.
The Energy and Mineral Resources Ministry of Kazakhstan said yesterday it was considering an application by state-owned China International Trust & Investment Corporation, which wants to acquire the oil assets of Canada's Nations Energy. The company's key asset is the Karazhanbas field, with estimated reserves of 340 million barrels of oil and gas condensate. Last year, CNPC, another Chinese firm, paid $4.2 billion for Petro-Kazakhstan. The company, with proven reserves of 535 million barrels of oil, was also being eyed by LUKoil. Chinese companies are already developing some large fields in the west and south of the country. Last year saw the opening of the first branch of the Atasu-Alashankou oil pipeline, which pumps up to 10 million metric tons of crude a year from Kazakhstan to China. Soon another line will be finished, doubling the pipe's capacity.
Turkmenistan is also playing the Chinese card: it has signed an agreement on building a 30 billion cu m gas pipeline to China by 2009. This means that Ashkhabad will have to make a decision on gas supplies to Russia and Ukraine, since its current output will not allow it to honor all its contracts.
The diminishing of Russia's influence in the Central Asian republics in general and Kazakhstan in particular is inevitable, said Valery Nesterov, an analyst with Troika Dialog. "Russia is truly ceding its positions in the region," he said. "Central Asian countries are no longer dependent on Moscow, and Kazakhstan is not inclined to view its northern neighbor as the main transit country for its own crude and gas."
Alexander Razuvayev, head of analysis with Megatrastoil, a brokerage, said that the situation was cause for serious concern. "The world of geopolitics does not tolerate vacuums," he said. "If today our oil and gas sector has a fairly good position in those countries, tomorrow the niche could be taken up by anyone, China, for example." It should be remembered, though, that the United States has significant interests in the region and will try to prevent the increase of China's influence, he said.
The only leverage that is left for Moscow is foreign policy. "While we obviously cannot influence the Chinese, we do have some influence on the leadership of former Soviet republics," Razuvayev said.
Gazeta.ru
Sakhalin II operator likely facing bankruptcy
Russia's Federal Service for Supervising Natural Resources (Rosprirodnadzor) has completed its audit of Sakhalin II and begun handing over the findings on project violations to the Prosecutor-General's Office. As a result, project operator Sakhalin Energy may be stripped of its license. But this is not the worst news - if the state claims lost profits, the company might go to the wall.
The general inspection of Sakhalin II was to have ended on October 25, but Natural Resources Minister Yury Trutnev extended it for more than a month.
Rosprirodnadzor has reported that data on Sakhalin II were passed to the Prosecutor-General's Office throughout the inspection, and now it is up to the Office to hand down its own verdict. Documents on violations will also be submitted for analysis to the Ministry of Natural Resources.
Sakhalin Energy has made no comments so far, but said earlier it is ready to pay a fine if its violations are assessed impartially.
Rosprirodnadzor and Sakhalin Energy have been at odds for several months now. During the course of many inspections and audits, Rosprirodnadzor deputy head Oleg Mitvol has repeatedly said the company broke a number of environmental laws and unless the violations are addressed, the production-sharing agreement governing the development of Sakhalin II can be cancelled. In addition, Rosprirodnadzor has already submitted a request to revoke Sakhalin Energy's 19 water-use licenses.
Another problem, however, makes Mitvol's claims look like peanuts - Russia might sue the operator for lost profits. The amount of the claim has not yet been disclosed, but officials of various ranks have given figures ranging from millions to tens and even hundreds of millions of dollars.
Specialists agree that if Sakhalin Energy has to compensate the Russian government for lost profits, the company will go bankrupt.
Analysts have said time and again that official attacks on Sakhalin II are no more than a way of forcing foreign investors to share ownership in the project. Gazprom is most often mentioned as a possible beneficiary.
Kommersant
Gazprom to share Egyptian production with Novatek
Russia's Novatek and Egypt's EGAS and Tharwa Petroleum have signed memorandums of understanding on geological exploration and gas production in the western part of the country near the Libyan border and on the Mediterranean shelf. The Russian independent gas producer has obtained its first foreign projects by selling part of its stock to Gazprom, which had previously intended to partner with EGAS on its own. Industry analysts say that Gazprom and Novatek have divvied up spheres of influence in Egypt. The state-controlled gas giant will export Egyptian gas, while its subsidiary will boost production in the country.
A source familiar with the progress of the talks said that the Egyptian and Russian parties would soon set up a joint venture that would start operating in 2007. They have yet to agree on their respective shares in the project and the amount of investment.
Egypt controls Africa's third largest proven gas reserves after Algeria and Nigeria, 1.9 trillion cu m. Its gas output last year was 41 billion cu m, of which 8 billion was exported. Novatek's output this year will amount to 28 billion cu m. The Egyptian project would be the first foreign project for Novatek, which so far worked only on the domestic market. In March 2005, Gazprom signed a similar memorandum with EGAS on exploration, production and construction of transport infrastructure in Egypt, but there have been no ensuing agreements.
Valery Nesterov of Troika Dialog said that Novatek's success on the Egyptian market came after Gazprom had acquired a 19.5% stake in the independent producer. The gas giant's interests will not be hurt, as it is represented on Novatek's board and the latter's foreign transactions must be endorsed by Gazprom's management. Moreover, Gazprom was forced to take on a partner in Egypt because it does not have "enough strength and money" to carry out all projects on its own, Nesterov said.
Vedomosti
Gazprom, Rosneft may become allies
Long-time rivals Gazprom and Rosneft signed an agreement yesterday on strategic partnership until 2015. The two state-controlled companies are willing to jointly develop fields and cooperate in petrochemicals and other areas. Gazprom will buy Rosneft's gas from West Siberian fields connected to its gas transportation network. Experts, however, believe that their cooperation will be limited to linking Rosneft's assets to the Gazprom network.
Relations between the two companies are not exactly cloudless. In 2004, Russian President Vladimir Putin announced that they would merge, but Rosneft managed to remain independent. Then they became rivals: Gazprom wanted to acquire Yuganskneftegaz, the key production asset of the beleaguered Yukos, but it was bought by Rosneft. They often compete for licenses as well. Now, however, the companies are trying to form an alliance. They have agreed to take part in joint exploration and production projects as equal partners. According to their spokesmen, however, they have not yet agreed on any specific projects.
For Rosneft, the most important clause of the agreement is the one granting it access to the gas pipeline, a company representative said. After all, Rosneft has repeatedly said it wants to boost its gas output. Access to the pipeline is important for cashing in on its gas reserves, said Steven Dashevsky, head of analysis at Aton.
Rosneft's key asset, which will allow it to become a large and independent player on the gas market, is the Kharampurskoye field in West Siberia, according to Denis Borisov of Solid, a brokerage. The field is expected to yield 15 billion cu m of gas, which is half of the company's planned output for 2013. At present, Gazprom buys gas from LUKoil at the Nakhodkinskoye field at $22.5 per 1,000 cu m, but the price will soon be raised to $40, Borisov said. Rosneft could be charged similar prices, although a Gazprom spokesman said the companies had not yet reached an agreement.
Gazprom and Rosneft may cooperate on individual projects, but they are unlikely to become partners, experts say. Both have ambitious plans which will not allow them to become true allies, Borisov said.
All Rosneft needs from Gazprom is pipeline access, said a company consultant, and none of them is interested in real cooperation. The forthcoming sale of Yukos' assets could result in more discord, as both companies are interested in acquiring the same assets, Borisov said.
