July 2005

GAS PIPELINES:

TRANS-CONTINENTAL GAS PIPELINE

• Major gas pipeline established.

FIVE partners in the construction of the trans-continental gas pipeline that will connect the Caspian region with Central and Western Europe signed a co-operation agreement in Vienna on June 28. Vienna-based Nabucco consortium started the construction of the pipeline to supply natural gas to Europe. Partners in the consortium are ?Botas?, Turkey, "Bulgargaz", Bulgaria, TRANSGAZ, Romania, MOL, Hungary and OMV, Austria, each holding 20% of shares. Each of five gas companies would have to finance the necessary infrastructure within their respective countries. Bulgagaz alone will have to allocate 400 million euro. National companies are expected to operate gas pipelines on their own countries' territories. The project has been included into the European Union's TEN programme. The pipeline will be 3300 km long and will have a transit capacity from 25.5 billion to 31 billion cubic metres a year. The total costs have been initially calculated at 4.5-5 billion Euro. The stretch that will pass through Bulgaria will be around 400 km long. Bulgaria expects to collect 60-100 million euro annually in transit fees. The construction of the pipeline network is to begin in 2009. The pipeline will supply Europe with natural gas from Iran, Kazakhstan, Turkmenistan, Egypt, Iraq, Syria, as well as that extracted from Shah Deniz field in Azerbaijan.

Source: http://www.sofiaecho.com, www.azertag.com 11.07.2005

OTHER ENERGY NEWS:

ARMENIA

• Tehran and Kiev offer Armenia to join the project of gas importation from Iran to Ukraine.

On July 25, representatives of Iran and Ukraine signed a memorandum in Tehran offering Armenia to take part in the works of a five-sided commission to construct a gas pipeline from Iran to Ukraine. Deputy Oil Minister of Iran, Mohammad Nadi Nejad-Hosenian, announced that Ukraine is interested in importing 20-30 cubic meters of gas annually. `The two sides have offered Armenia, Georgia and Russia to form a five-sided commission to project and to construct the Iran-Ukraine gas pipeline that Kiev proposed the Iranian side two alternatives for getting the Iranian gas to Europe, both routes stretching through Armenia: Iran-Armenia-Georgia-Russia-Ukraine-Europe and Iran-Armenia-Georgia-Black Sea-Ukraine-Europe. Experts have worked out a few alternatives of importing the Iranian gas via Armenia, Georgia, Russia, Turkey and the Black Sea.

Source: AZG Armenian Daily 27.07.2005

AZERBAIJAN

• Socar to begin exploration in the Ashrafi field in 2nd half of 2005.

The State Oil Company of the Azerbaijani Republic (Socar) plans to start an independent exploration work at the Ashrafi field in the second half of 2005. Caspian Drilling Company will more than likely carry out this work. The Ashrafi field was discovered in 1997 and a PSA for the Dan-Ulduzu-Ashrafi block was signed on December 14, 1996. The shareholders in the project were Amoco - 390%, Unocal - 25.5%, Delta - 4.5%, ITOCHU - 20% and Socar - 20%. The first exploration well was drilled in 1997, and two oil and gas deposits were discovered. Drilling at the Dan-Ulduzu structure did not uncover any hydrocarbons and it was decided not to develop the field. Reserves at the Ashrafi are estimated at 30 million tonnes of hydrocarbons. The field is located 105 km northeast of Baku and is 15 km long and 6.5 km wide. The sea depth at the structure amounts to 160-180 meters.

Source: Interfax Information Services, http://www.rigzone.com/ 07.07.2005

• Lukoil got EBRD credit for Shahdeniz field development.

Russia's Lukoil has received a $110 million loan from EBRD for developming the first stage of the giant Shah Deniz gas condensate field of Azerbaijan. Lukoil has 10% shares in this BP-led project. Financing is sought for stage 1 of a 4-stage SD field development. Initially 9 wells will be drilled at the SD field from a fixed offshore platform. After processing onshore, gas will be sold to Azerbaijan at the gates of the Sangachal terminal and via the South Caucasus Pipeline (SCP) exported to Georgia and Turkey. Condensate will be exported to the world market via the BTC pipeline. Lukoil Overseas is a holding company that manages Lukoil's participation in exploration and production projects outside Russia. In Azerbaijan the Lukoil group has various oil and gas activities, and is project operator in the D222 (Yalama) structure (owning 80% of rights in the PSA), and of a network of petrol stations. BP of the UK is the operator for the upstream development of SD, while Statoil of Norway is the operator of the SCP system.

Source: www.azertag.com 13.07.2005

• Gas pipeline running via Turkish territory to be one of the world?s biggest projects.

?Shahdeniz? gas condensate field is expected to meet 15 percent of Turkey?s needs in gas (43,185 billion cubic meters) until 2020. In 2007, Turkey will be purchasing 24 bln cm of gas from Russia, 9,5 bln from Iran and 2 bln from Azerbaijan.Turkey is seeking to get some gas through transit of gas from Azerbaijan, Iran, Russia, Kazakhstan, Turkmenistan, Egypt, Syria, and Iraq to the European countries. The intergovernmental agreement on laying 3,4 km pipeline worth ?4,6 bln from Turkey via Greece to Austria has already been signed. The pipeline with 13-bln cm throughput is expected to be put into operation in 2011. In 8-9 years, the pipeline will transport 30 billion cm of gas from Turkey to Europe.

Source: www.azertag.com 11.07.2005

GEORGIA

• Georgia to tender free licensed oil fields in October.

The Georgian State Agency for Regulation of Oil and Gas Resources will announce tenders for development and exploration work at all free licensed oil and gas fields in October.There are about ten such fields in Georgia, three of which are offshore in the Black Sea. Among the tenderers there are companies from Britain, the United States, Turkey, Argentina and Russia. There have been two previous similar international tenders in the past three years. The first tender in the summer of 2002 offered seven fields with a total area of 16,866 square meters. Canargo-Norio, a subsidiary of Canargo Energy, received a 25-year license to develop two fields with areas of 300 and 186 square meters. National oil company Gruzneft received the right to develop one field in the east and north-east of the country with an area of 3,200 square kilometers. However, the company did not submit the necessary $250,000 on time, as specified in the terms of the tender, so it was refused from the license. The next tender was held in the fall of 2003 and offered three fields in eastern Georgia with a total area of 10,640 square meters. Gruzneft received one license to develop an area of 2,680 square kilometers, but there was no demand for the other fields. Note: Georgia has predicted oil resources of about 600 million tonnes, of which 200 million tonnes are offshore in the Black Sea and gas resources are predicted at about 125 billion cubic meters. Georgia is thought to have potential oil and gas production areas totaling 26,500 square kilometers onshore and 9,000 square kilometers offshore in the Black Sea. Analysts calculate sum geological oil resources at 3.3 billion tonnes, including 2 billion onshore and 1.3 billion offshore. The overall volume of oil resources subject to extraction is estimated at no more than 1.1 billion tonnes.

Source: Interfax Information Services, http://www.rigzone.com/ 07.07.2005

KAZAKHSTAN

• Russia and Kazakhstan sign deal on massive Caspian oil field.

The Heads of Russian and Kazakh largest state oil companies signed a deal on exploiting the massive Kurmangazy field in the Caspian Sea. The agreement between Russia's Rosneft and Kazakhstan's Kazmunaigaz resolved two years of wrangling over the tax conditions applying to exploitation of the field, which spans the two countries' sea border and is estimated to hold about a billion tonnes of oil. This project can be classified as a giant, this deposit contains nearly one billion tonnes of extractable oil reserves," Kazmunaigaz President Uzabak Karabalin marked. The project will require up to $23 billion in investment over the next half century. While the field lies within Kazakh jurisdiction, the Kazakh and Russian oil firms each hold 50 per cent stakes in the project.

Source: http://www.gulf-daily-news.com/ 07.07.2005

• The Kazakhstan-China pipeline will be operational this year.

According to President Nazarbayev of Kazakhstan, the Atasau-Alashankou pipeline, which is to transport oil from Kazakhstan to China, is to be operational as of December 2005. Contractors are hard at work and have promised President Nazarbayev that the pipeline will be ready by December 16th 2005. Negotiations are under way between KazMunaiGas - Kazakhstan's national oil and gas company - and the Chinese National Petroleum Corporation (CNPC) on the construction of such a gas pipeline. This pipeline would open the Chinese market to Kazakh natural gas suppliers. Atasau-Alashankou is 988 kilometres long and is the second phase of the petroleum transportation project between Kazakhstan and China. The pipeline starts from the rail ink at Atasau in the Karaganda region (Central Kazakhstan) and crosses the border at the Droujba-Alashankou rail terminal. The cost of the construction of this section of the pipeline is estimated at US$ 700 million. Private investments in the project are at US$ 650 million. Upon completion of the Atasau-Alashankou pipeline, the route Western Kazakhstan - China will have carrying capacity of 10 million tons of oil per year at the initial stage, and 20 million tons of oil per year by 2008. Maximum carrying capacity of the project makes up 50 million tons and that can only be reached by 2035; that is why it is most likely that the oil exports from Kazakhstan to China along this route will reach 20 million tons of oil per year by 2015. The Caspian Sea basin has number of large oilfields such as Tengiz, Astrakhanskoye, and the oilfields of Buzachi Peninsula. Taking into account the recently discovered Kashagan oilfield - with forecasted oil reserves estimated at about 7 billion tons - the total oil reserves of Kazakhstan are estimated at 13 billion tons, which will allow Kazakhstan to enter the top ten oil producing countries.

Source: http://www.prnewswire.com/ 25.07.2005

KYRGYZSTAN

• Kyrgyzstan, Uzbekistan ink gas agreement.

Igor Chudinov, the Director of Kyrgyz gas company Kyrgyzgaz, declared that his Company has signed a contract with Uzbekistan's Uztransgaz for Uzbekistan to ship natural gas to Kyrgyzstan up through the end of 2005. Under the contract, Kyrgyzstan will receive 350 million cubic meters of gas in 2005 at a price of $42 per 1,000 cubic meters. Uzbekistan had refused to sign a new gas deal until Kyrgyzstan made good on a $13 million debt incurred in 2004.

Source: http://www.eurasianet.org 21.07.2005

RUSSIA

• Transneft to report on the possible effects of its Eastern Pipeline.

Russia's No. 1 oil transporter Transneft will prepare a report on possible negative environmental, social and economic consequences of its Eastern Siberia-Pacific Ocean Pipeline following a request from the Ministry of Industry and Energy. These consequences will be considered at public hearings in affected regions after a feasibility study for the pipeline is completed this August. The $13 billion pipeline, to run from the Irkutsk Region town of Taishet to Perevoznaya Bay on the Pacific, will allow Russia to increase exports of raw materials to the rapidly developing Asian region. South Korea and Japan have shown most interest in the project, including investment terms. The pipeline's capacity will be 80 million tons of oil, and the timeframe of the project is 5-7 years. The first section of the pipeline (from Taishet to Skovorodino in the Amursk Region), with a total capacity of up to 30 million metric tons, is due to be commissioned in the second half of 2008.

Source: RIAN, http://www.therussiajournal.com 04.07.2005

• Russia to export $245.4 bln worth of oil in 2005.

Russian oil exports in 2005 will amount to $245.5 billion, Andrei Klepach, Head of the Macroeconomic Forecast Department at the Economic Development and Trade Ministry stated. Earlier the Economic Development and Trade Ministry forecast exports at $232.2 billion. Exports in 2004 amounted to $182 billion. According to the new forecast by the Economic Development and Trade Ministry, oil exports from Russia in 2005 will amount to 269 million tonnes, instead of the 263 million tonnes forecast earlier. Production forecasts have also been increased - from 470 million tonnes to 474 million tonnes. Klepach noted that the export forecast was increased due to an increase in the forecast price for oil in 2005 to $47 per barrel.

Source: http://www.interfax.ru/ 26.07.2005

TURKEY

• Turkey, Greece launch pipeline project.

The Turkish and Greek Prime Ministers met on a bridge over the river that divides their countries to launch a joint construction project to connect rich natural gas fields in the Caspian Sea area and Central Asia to energy-hungry markets in Europe. The Greek-Turkish pipeline should also offer an alternative to the Middle East supplies at a time when oil and gas prices are soaring. The 186-mile pipeline from Bursa in Turkey to Komotini in Greece is expected to go into operation in 2006, and will later be extended to Italy as a part of the Southern Europe Gas Ring Project. The pipeline is expected to carry 405 billion cubic feet of gas a year when connections are made to other planned pipelines, and as demand for Caspian gas -- an alternative energy source to the politically volatile Middle East -- expands in coming years.

Source: Caspian Post 03.07.2005

UKRAINE

• Joint Work of NSC ?Chornomornaftogaz? and OMV Exploration & Production GmbH in the Black Sea Offshore.

Within the framework of a state visit of the President of Ukraine Viktor Yushchenko to Austria NJSC ?Naftogas of Ukraine?, NSC ?Chornomornaftogaz? and OMV Exploration & Production GmbH signed Bidding Agreement concerning joint works in the Black Sea offshore. The parties plan to apply for the license for joint geological study of the perspective area in the northwestern part of the Ukrainian sector of the Black Sea offshore. The area chosen for joint work ? Area Skifs?ka ? is located at the water depth of 100-2000m. Notwithstanding the fact that the area in not completely studied large reserves of oil and gas could be deposited there according to the specialists? meaning. NJSC ?Naftogas of Ukraine?, NSC ?Chornomornaftogaz? and OMV Exploration & Production GmbH plan to apply for the license for its joint geological study within 2005.

Source: Press Release of Chornomornaftogaz13.07.2005

• Ukraine wants Iran to ship gas to Europe.

Ukraine wants Iran to ship its natural gas to Europe via Ukrainian pipelines. Some 128 billion cubic meters of natural gas from Russia, Turkmenistan and other countries go through Ukrainian pipelines annually, meeting about 50 percent of European demand. Given growing European needs for gas, Iran should look to use Ukraine's pipelines in the future. European countries' demand for gas may increase to 480 billion cubic meters a year, and Iran might play an important role in it by supplying some 240 billion cubic meters. Iran, which has the world's second largest reserves of gas, could boost its exports within the next two years. Ukraine gets millions in transit revenues annually from shipping Russian natural gas to Europe via its pipelines.

Source: www.tehrantimes.com 13.07.2005

• Ukraine clears gas debt to Russia.

Russia?s Gazprom, Ukraine?s Naftogaz of Ukraine and RosUkrEnergo, a joint venture between Gazprombank and Austria's Raiffeisen Bank Zentralbank Oesterreich AG, have signed an agreement settling a dispute over 7.8 billion cubic meters of Russian gas stored in Ukraine?s underground storage facilities. Under the agreement, Naftogaz of Ukraine will get 2.55 billion cubic meters of gas as part payment for gas transit services in 2005. Transit of Russian gas via Ukraine will be increased by 8 billion cubic meters this year and between 8 billion and 11.5 billion next year. Gazprom sold 5.25 billion cubic meters of Russian gas stored in Ukraine?s underground facilities to RosUkrEnergo. Naftogaz of Ukraine promised to transfer 5.25 billion cubic meters of gas from Ukrainian underground facilities to RosUkrEnergo in 2005-2006. After the agreement was signed, the parties said this was a mutually advantageous arrangement and a basis for future.

Source: http://top.rbc.ru/ 22.07.2005

• Iran, Ukraine ink 30b cu. m. gas export Memorandum of Understanding.

Iran and Ukraine inked a memorandum of understanding on export of 30 billion cubic meters of natural gas to Ukraine. Commenting the signing of the MOU, Iran?s Deputy Oil Minister Mohammad Hadi Nejad-Hosseinian noted: ?The Ukrainian counterpart has expressed his country?s interest in importing annually from 20 to 30 billion cubic meters of natural gas from Iran for domestic use. Ukraine has also agreed to allow Iran using its infrastructures for the transit of 20 billion cubic meters of natural gas to Europe. Both sides have as well decided to invite the en route countries (Armenia, Georgia, and Russia) to establish a five-sided committee for following up study, design and construction of this project.? The contract parties are said to be National Iranian Gas Export Company and Ukrainian Oil and Gas Company. About 128 billion cubic meters of natural gas from Russia, Turkmenistan and other countries go through Ukrainian pipelines per year. Given the growing demand for gas in Europe, Tehran should ship gas through Ukrainian pipelines in the future.

Source: http://www.tehrantimes.com 26.07.2005

UZBEKISTAN

• Indian businesses to bid for Uzbek gas, oil assets.

Indian businesses are planning to acquire oil and gas assets in Uzbekistan. Oil & Natural Gas Corp (ONGC), India's largest oil explorer, and Lakshmi Mittal, who owns the world's biggest steelmaker, plan to set up two companies to acquire oil and gas assets overseas and boost the nation's energy security. The firms would be known as ONGC Mittal Energy Ltd and ONGC Mittal Energy Services Ltd. One of them would be involved in trading and shipping of oil and gas including liquefied natural gas (LNG), and the other would invest in oil and gas production, officials said. The ventures will bid for assets in Indonesia, Kazakhstan, Uzbekistan, Azerbaijan, Angola and Trinidad and Tobago.

Source: UzReport.com 25.07.2005