MOSCOW, July 25 (RIA Novosti) Russia to halt petroleum exports via Ukraine and Baltics/ Russian gas refused entry to Britain/ BP to share assets with Gazprom/ Construction of Baltic Sea gas pipeline to begin next year
Kommersant
Russia to halt petroleum exports via Ukraine and Baltics
On Tuesday, Russian Transport Minister Igor Levitin said in Riga that Moscow would stop exporting petroleum through foreign seaports.
Oil industry experts said that Russian ports could not handle the volume of petroleum exports, and that once Moscow joins the World Trade Organization railway transport tariffs will rise biting into profits even more.
Last year, Russia exported 84 million metric tons of oil products by sea, including 26.1 million metric tons (31%) via foreign ports. Seaports in the Baltics handled 23.8 million metric tons; and the rest was exported from Ukrainian and Georgian ports.
Estonia, which handled 21.2 million metric tons of Russian oil products last year, will suffer most of all. The Ukrainian Transport and Communications Ministry said Odessa and Feodosia on the Black Sea coast had exported about 6.8 million metric tons of Russian fuel and energy, including petroleum.
Neighboring countries could lose over $200 million a year, after Russia stops exporting oil products via their ports.
But Russia cannot handle this amount and has to transport all crude oil and petroleum by rail because a pipeline to Ventspils, Latvia, has been closed since 2003; and the Druzhba (Friendship) pipeline to Lithuania's Butinga is currently being repaired.
Anna Panovko, project manager of crude oil market analytics in Petromarket Research Group, said Russia lacked the required railway network and port infrastructure on the Baltic coast.
Mikhail Perfilov, director for development of Argus Media, the world's largest independent price reporting agency, said consignors were forced to relocate seaports in the Baltics and Ukraine due to the lack of facilities and "commercial policy specifics at Russian port terminals."
In this connection, Alexei Bezborodov, director of Infranews Agency, called Levitin's statements short-sighted.
RBK Daily
Russian gas refused entry to Britain
The conflict over Moscow's refusal to extradite Andrei Lugovoi to London has claimed its first economic victim. Mike Penning, Tory MP, has urged Prime Minister Gordon Brown to cancel a contract with Gazprom to supply $200 million worth of gas annually to the U.K.'s National Health Service (NHS).
Experts have calculated that British requirements for the fuel over the next few years will grow, and the country will feel uncomfortable without Russian gas.
Efforts to prevent Gazprom from entering the local market were made by Tony Blair's government. In February 2006, when Gazexport deputy head Alexander Shkuta said Gazprom was interested in the British gas distribution company Centrica, the British government started talking about changes in the law on mergers to stop the deal.
Meanwhile, Britain's gas needs keep growing while its own production in the North Sea is declining. According to the Institute of Natural Monopolies, in 2005 Britain consumed 87.7 billion cubic meters of gas, of which 82.3 billion cubic meters was produced domestically. In 2010, consumption is forecast to grow to 100 billion cubic meters a year, and by this time Gazprom is planning to corner 10% of the British market. Perhaps now these plans will have to be adjusted.
"The conflict could affect the growth rates in Russian gas supplies," Sergei Pravosudov, director of the National Energy Institute, told RBK Daily. "Say, the British buy 8 billion cubic meters instead of 10." But they will still have to buy it all the same, the expert said.
Alexei Gromyko, director of the British Studies Center at the Europe Institute of the Russian Academy of Sciences, believes Penning's is a sole voice. "There is no united anti-Russian front in Britain," he told RBK Daily. "Politicians from both parties, as they prepared a regular review of Russian-British relations in July, told me they had not expected such drastic steps from the government."
In the view of experts, the crisis in Russian-British relations is unlikely to spread to the European Union as a whole. "Portugal and Germany have declaratively and very cautiously supported London," Gromyko said. "European diplomats believe Britain is acting too harshly and without grounds."
Vedomosti
BP to share assets with Gazprom
On Tuesday, Tony Hayward, CEO of oil giant British Petroleum, said his company could contribute gas transportation and storage assets to a future joint venture with energy giant Gazprom, which is more interested in BP's power-generation and oil-production assets.
In late June, BP, TNK-BP and Gazprom established an alliance. Moreover, TNK-BP and Gazprom signed a memorandum to sell a 62.89% stake in Rusia Petroleum, which holds the Kovykta development license, to the energy giant.
Gazprom will have a 50% stake in one or several joint ventures due to be established by the alliance; and BP will contribute assets worth at least $3 billion.
A BP spokesperson said the company had not yet selected the assets due to be transferred to the joint venture. BP may offer infrastructure assets, including underground gas reservoirs and regasification terminals, as well as stakes in production and refining units.
A Gazprom spokesperson said the sides had not discussed any specific asset transfers, and that the company would like to receive a stake in BP's power-generating assets in Europe, as well as regasification facilities and production units outside Europe.
The Gazprom spokesperson said the company was not interested in BP's European gas-transport assets because of their declining profitability as a separate business, due to EU plans to cut transport tariffs.
He said some EU countries supported new regulations forbidding gas suppliers from owning transport assets.
The Gazprom spokesperson declined to elaborate.
Valery Nesterov, an analyst with Troika Dialog brokerage, said Gazprom could request a stake in one of BP's Salah Gas and Amenas projects in Algeria in exchange for gas-production assets.
Vremya Novostei
Construction of Baltic Sea gas pipeline to begin next year
An official tender will be held in September to supply pipelines for the first leg of the Nord Stream project, an underwater gas pipeline from Russia to Germany.
The project's operator is Swiss-based company Nord Stream whose controlling stake belongs to Gazprom, and 49% is divided between Germany's Wintershall and E.ON Ruhrgas. It will begin commercial negotiations with potential suppliers that meet the necessary technical requirements.
A source at Gazprom told Vremya Novostei that four companies will bid for contracts to supply 1.2 million metric tons of pipeline: Japan's Nippon Steel and Sumitomo, Germany's Europipe, and also the Vyksun Metals Plant (part of the United Metals Company, or OMK).
According to our source, two more contenders - the Izhora Pipe Plant (belongs to Severstal Group) and Japanese JFE - have failed certification tests for Nord Stream. They will have to prepare for a second leg, which is planned to be built after 2010.
Construction of the first leg is to start next year.
As earlier reported, Nord Stream planned to open official negotiations with pipeline suppliers back in April, and needed to check that potential producers were reliable and could supply good quality products.
While Nippon Steel, Sumitomo and Europipe raised no doubts concerning their output (they have operated on the large-diameter pipeline market for many years), Severstal, OMK, and JFE did not possess such experience.
But to ensure the Russian plants could bid in the tender the customer actually changed the terms for tender participation, throwing out the ten-year rule for market qualification of the supplier.
But a requirement was set to new entrants to manufacture and supply for Nord Stream trial quantities of pipelines to pass certification. Although the official results have not yet been announced, a Vremya Novostei source said that the pipeline produced by the Vyksun plant had withstood the strict testing.
Until 2005, no tubes required for a gas pipeline across the bottom of the Baltic Sea (diameter up to 1,422 mm and a wall thickness of up to 48 mm) were produced in Russia.
In April 2005, OMK launched an assembly line for their manufacture. Now the Vyksun plant is turning out 850,000 tonnes of large-diameter pipes a year, and in 2010 plans to increase their output to 1.5 million metric tons. For Severstal, this project is its first experience in pipeline production.
The Magnitogorsk Metals Plant (MMK), too, has plans to supply for Nord Stream. Its head Viktor Rashnikov said that his company would be ready for a second leg tender.
To design, build and operate the 1,200-km pipeline across the Baltic Sea bed the joint Russian-German venture, North European Gas Pipeline Company, was formed in December 2005.
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