Issue 19 News
Russia and Slovenia in South Stream Pact
Russia and Slovenia have signed a pact on the South Stream pipeline, which will transport Russian gas to Europe.
Russia’s Energy Minister Sergei Shmatko and Slovenian Economy Minister Matej Lahovnik on Saturday signed the deal ensuring Slovenia’s participation in the project, Reuters reported.
The deal was signed in the presence of Russian prime minister Vladimir Putin and his Slovenian counterpart Borut Pahor.
Slovenia’s approval brings the South Stream pipeline a step closer to being built, though its backers — Russian gas behemoth Gazprom and Italy’s Eni — still have to raise billions of dollars to finance the project.
«We have now signed deals with all the European partners needed for this project to be completed,» Putin told reporters at his Novo-Ogaryovo residency outside Moscow after signing the cooperation deal with Slovenian counterpart Borut Pahor.
Slovenia is the fifth country to sign such an agreement with Russia on the South Sea pipeline, which will skirt Ukraine and cross Bulgaria, Serbia, Hungary, Greece, Slovenia to Italy.
With a capacity of 63 billion cubic metres a year, the pipeline is expected to cost between 19 billion and 24 billion euros ($28 billion to $36 billion). It is due to become operational in 2015.
South Stream as mooted by Russia is racing against the European Union-backed Nabucco pipeline. The EU project seeks to curb dependency on Russia by pumping gas from the Caspian and the Middle East.
OSIsoft: Launches Official Presence in Russia
A ceremony at the Grand Marriott Moscow on Tuesday, September 29 marked the formal launch of an OSIsoft presence in Moscow and throughout Russia. OSIsoft has acquired a customer list comprising more than 60 Russian companies in many industries. These companies have successfully implemented more than 100 PI Systems.
«This well established user base is our main motivation to announce this evening that we will be opening an OSIsoft sales and support office in Moscow in 2010,» Bernard Morneau, president of OSIsoft, told the gathered crowd of customers and partner companies, analysts, government officials and partners.
«We recognize we have a need to invest, learn and adapt to the Russian market in order to continue expanding these business relationships. We foresee a long and mutually beneficial presence in the Russian market.»
Vladimir Raag, the local Business Manager in Russia, has responsibility for a formal office opening in 2010 while continuing to develop relationships with new and existing customers and partners.
US pushes for more Turkmen stakes
The US urged Turkmenistan to allow its companies to invest in onshore Turkmen gas deposits including South Iolotan, a giant field seen as a key future source of Caspian energy.
In the Turkmen capital Ashgabat to attend an annual energy conference, US Deputy Assistant Secretary of State George Krol told Reuters US companies were keen to develop Turkmen gas but were allowed only to invest in riskier offshore projects.
«American companies have advanced technology,» Krol said in an interview.
«US companies would like to invest not only offshore but also in onshore projects including in South Iolotan.» Central Asia, particularly Caspian deposits in Turkmenistan, has been at the centre of geopolitical rivalry involving the US, China and Russia since the region gained independence after decades of Soviet rule in the early 1990s.
CNPC, pushing aggressively into thinly populated Central Asia to feed its energy needs, won a licence to develop the onshore Bagtyyarlyk deposit two years ago.
South Iolotan, another lucrative onshore project, contains between 4 trillion cubic metres of gas and 14 Tcm, according to Britain’s Gaffney, Cline and Associates, making it one of the world’s five largest deposits.
It is seen as one of the new potential gas suppliers for the EU-backed Nabucco pipeline designed to ease Europe’s dependence on Russian gas by connecting Caspian gas with Western markets.
Western companies, eyeing new energy sources in remote places in Turkmenistan as easier deposits become depleted, have urged Turkmenistan’s new leadership to allow them to bid for projects like South Iolotan.
A number of smaller foreign companies are currently investing in costlier offshore Turkmen projects. Russia, which has so far controlled Turkmen gas exports through gas monopoly Gazprom, stopped imports altogether this year following an April pipeline explosion which has escalated into a diplomatic stand off over new supply terms.
That has forced Turkmenistan, its budget suffering due to the row, to seek closer ties with alternative buyers like Iran, China and the West.
Global oil and gas executives have flocked to Turkmenistan this week to attend the conference, an annual event used by foreign players to test the waters as they seek to convince Turkmenistan to open up to more investment.
Chevron in South Iolotan Talks
US oil supermajor Chevron is in talks with Turkmenistan over its possible participation in developing the giant South Iolotan gas field. Washington has urged the Caspian nation to allow US companies to invest in its lucrative onshore projects but Turkmenistan has so far admitted only China National Petroleum Corporation (CNPC).
Turkmenistan, an isolated country north of Iran, is at the heart of a geopolitical struggle between the US, Russia and China for access to its resources, notably its abundant gas.
South Iolotan contains between 4 trillion and 14 trillion cubic metres of gas, according to Britain’s Gaffney, Cline & Associates, making it one of the world’s five largest deposits.
Douglas Uchikura, head of Chevron Nebitgaz Turkmenistan, told Reuters on the sidelines of an annual energy conference that he was in talks with Turkmen officials on the project. «Yes, we are interested,» he said. «We are making proposals and we are in discussions».
South Iolotan, another key onshore project, is seen as a potential gas supplier for the EU-backed Nabucco pipeline, designed to ease Europe’s dependence on Russian gas by connecting Caspian gas with Western markets.
Putin warns Gas Flarers they’ll get burnt
Russian oil companies will face «huge fines» should they fail to meet gas flaring targets requiring them to boost associated gas utilisation to 95% by 2012, Prime Minister Vladimir Putin said.
«Oil companies that do not meet this requirement will pay huge fines,» Reuters quoted him as telling an industry meeting.
Eni ties up Kazakhstan deal
Italian oil and gas group Eni has signed a cooperation agreement with Kazakhstan’s state oil company KazMunayGas on exploration and production activities in Kazakhstan. Under the agreement, Eni and KazMunayGas will jointly study the Isatay and Shagala exploration areas located in the Caspian Sea, said Eni.
The agreement also includes the optimisation of gas usage in Kazakhstan and a number of industrial initiatives including a gas sweetening plant, a gas turbine power plant, a drydock shipyard and the upgrading of the Pavlodar refinery. The agreement follows a preliminary Memorandum of Understanding signed in July 2009.
Eni said it expects to further strengthen its presence in Kazakhstan, where it is co-operator in the Karachaganak field and equity partner in the Kashagan field, reported Reuters.
Subsea UK Urges Companies to Capitalise on Opportunities in Russia
Subsea UK is driving a concerted effort to capitalise on the opportunities in Russia. The industry body believes the Russian market presents significant new business for UK companies but only if they act on it now before the window of opportunity closes.
«The UK has the capability and the expertise to support, finance and deliver major capital projects in upstream production, facilities or infrastructure and has a long track record in working with overseas partners in achieving success. We can help build Russian competency in the upstream sector,» said Alistair Birnie, chief executive of Subsea UK who has just returned from a highly successful trade mission to Moscow and Murmansk in association with SDI and UKT&I.
«Scandinavian companies and Norway in particular have already made significant in-roads in establishing relationships at the highest level. Some Scottish and UK subsea companies are starting to do the same but we must ensure that we don’t leave it too late and lose out to our competitors.»
«The UK subsea sector leads the way around the world and the Northern waters of Russia promise to be the next global energy frontier. The unrivalled experience and expertise of the UK’s subsea supply chain could hold the key to unlocking the potential in the Russian Arctic shelf. Our industry and our Government need to demonstrate to Russian industry and Government that we can collaborate to overcome the technical challenges, lack of infrastructure and labour shortages.»
During his visit to Murmansk, Birnie signed a Memorandum of Understanding (MoU) between Subsea UK and Murmanshelf, an organisation that helps businesses enter the oil and gas industry in the Murmansk region. The aim of the MoU is to develop relationships to facilitate UK participation in the region and ensure Uk companies are on the main contractors’ sub-vendor list.
At the heart of the opportunities in this area is the giant Schtokman gas field. Located at a depth of over 300 metres and nearly 600 kilometres from the mainland, this field is estimated to hold about 1% of total global gas reserves. Investment in Schtokman alone is estimated at $50 billion with investment decisions scheduled for 2010.
Murmansk will play a critical role in the development of this field and become the centre of onshore production. The region has infrastructure developments totalling $8 billion planned which will transform this region of Russia. The Schtokman field, one of the largest developments in the world, has some unique challenges. As the first of a series of 24 field development in this region, the technologies and methods developed here will potentially be exploited to other parts of the arctic region, making it a hotspot for our member companies.
Subsea UK is a self-sustaining industry body that champions the UK subsea industry at home and abroad. With over 200 members, it represents the entire subsea supply chain in the country which employs 40,000 people and generates sales of Ј5 billion.
SPE and GKZ Agree to Map Russian Reserves and Resources Classification to SPE’s Petroleum Resources Management System
Society of Petroleum Engineers (SPE) and the FGU State Commission on Mineral Reserves of Russia (GKZ) have entered into a Memorandum of Understanding to cooperate on programs to enhance the global understanding of petroleum reserves and resources.
Under this agreement, GKZ and SPE will form a joint work group to map the Russian reserves classification system to the SPE Petroleum Resources Management System during the 2010-2011 time frame. Neither system is expected to be changed as a direct result of the MOU, and any changes will be made at the sole discretion of the relevant organization. The alignment of the two classification and categorization systems will help to ensure greater consistency of petroleum reserves and resource estimates.
The two organizations also will work together to develop a workshop to be held in Moscow in 2010 on reserves estimation and classification to enhance the understanding of the technical issues related to reserves and resource assessments.
