MOSCOW, March 25 (RIA Novosti) Iran's political games take Mideast-EU gas traffic out of Russia's control/ Russia to bid in Egyptian nuclear plant construction tender/ LUKoil hopes to return to Iraqi market/ Shareholder spats delay Burgas-Alexandroupolis pipeline/ Government admits ESPO pipeline project delay/ No new 'Yukos affair' but TNK-BP more flexible in asset sale
Kommersant
Iran's political games take Mideast-EU gas traffic out of Russia's control
Tehran has applied for membership in the Shanghai Cooperation Organization in a bid to assure itself of Russia's and China's support in case of a conflict with the United States. But neither Moscow nor Beijing are keen to exacerbate tensions with the West, so they have not rushed to grant Iran's request.
On the other hand, Moscow could change its mind to protect the interests of its natural gas giant Gazprom. The latter might lose the chance to take control over the Middle East-EU gas traffic because Russian and Iranian relations have become strained of late.
Iran currently has an observer status with the SCO, along with India, Pakistan, and Mongolia. It is not a full-fledged member like Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.
The majority of SCO members took Iran's news with predictable wariness. Analysts attribute this attitude to the specifics of the candidate.
"Iran is not looking to the SCO as a cooperation platform but wants to use it as an instrument of pressure in its bargaining with the West," said Alexander Lukin, director of the Center for East Asian and Shanghai Cooperation Organization (SCO) Studies under the Moscow State Institute of International Relations. "But the SCO does not want to become a confrontational organization, so before accession Iran will have to settle its nuclear program issue with the IAEA."
Meanwhile, Moscow's ambivalent attitude to contacts with Iran has already affected Gazprom's interests. Small European companies were the first to make forays into Iran. Switzerland's state-controlled EGL Group signed a contract last week with Iran's state oil and gas company NIGEC to supply gas for 25 years beginning in 2009. Austrian EconGas GmbH controlled by OMV also said it would be ready to buy natural gas from Iran in 2013.
Russia is bound to lose control of the gas flows from the Middle East to Europe, something Gazprom has been carefully arranging for the past few years. Iranian gas may now reach Europe by pipelines across Turkey. The Turkey-Greece leg of the Trans-Adriatic Pipeline has been commissioned to transport 10 billion cu m of natural gas a year (the throughput capacity can later be expanded to 20 billion cu m). The gas line will continue into southern Italy (Apulia region) in 2012.
The new pipeline will rival one of the projected South Stream links (also with capacity of 10-20 billion cu m), which will also be linked to Apulia by 2013. This means small European gas traders will outrun Gazprom in beginning deliveries to Italy, which is Europe's second largest gas market (after Germany). The situation might jeopardize Gazprom's plans to expand its share of EU markets from 25% to 35% by 2015.
Vedomosti
Russia to bid in Egyptian nuclear plant construction tender
On Monday, Egyptian President Hosni Mubarak began a two-day visit to Russia. A source in the Kremlin said both sides would sign an intergovernmental agreement on the peaceful use of nuclear energy during the visit.
The agreement will allow Atomstroyexport, Russia's nuclear power equipment and service export monopoly, to bid in a tender for building the first Egyptian nuclear power plant.
A source in the Federal Nuclear Power Agency (Rosatom) said the tender could be announced this year, and that it now cost about $2 billion to build one nuclear reactor.
Alina Volkova, a senior analyst at RosAfroExpertiza Center specializing in African affairs, said Russia would face tough competition from French nuclear giant Areva, and that the Russian-Egypt bilateral agreement had been discussed during President Mubarak's Russian visit in the fall of 2006.
Volkova said Mubarak would discuss the situation in the Middle East, but that no breakthroughs should be expected. Cairo is therefore hinting that its foreign policy does not depend on the United States, the chief mediator in the Middle East conflict, Volkova told the paper.
Ruslan Aliyev from the Moscow-based Center for Analysis of Strategies and Technologies said Egypt completely depended on the United States for military technology, and that it was annually receiving $2 billion in U.S. military aid under the Camp David accords.
Nevertheless, Egypt is looking for independent arms suppliers and has signed several cheap air-defense contracts with Russia.
Aliyev said a 1999 contract for the modernization of S-125 surface-to-air missile (SAM) systems had been fulfilled only recently, and that Moscow had also upgraded Shilka self-propelled anti-aircraft guns and supplied a small batch of Tor SAMs, radars and Mi-17 Hip helicopters.
He said Washington would not let Egypt buy large batches of Russian weaponry. A manager at a Russian defense company said the 2006 talks on selling 40 Mikoyan-Gurevich MiG-29SM fighters to Cairo had failed due to U.S. pressure.
Gazeta.ru
LUKoil hopes to return to Iraqi market
Iraq has offered foreign companies the opportunity to develop its oil and gas fields. Russia's largest private oil producer LUKoil also wants to return to the Iraqi market though experts say it will not be that easy to do.
According to experts, the reserves of the Akkas gas field in the Sunni western province exceed 60 billion cubic meters.
Despite the fact that such global oil giants as BP, ConocoPhillips, Repsol and Royal Dutch Shell have displayed an interest in Iraqi oil, the absence of a legal framework giving foreign investors access the country is hampering the investment process. A bill on the Iraqi energy resources has been under discussion for over a year. The debates around the new law focus on who owns the Iraqi oil fields. After the U.S. invasion, many projects have lost their investors and the state has nationalized the ownerless assets.
Russian oil sector's experts think that Russia will not benefit from Iraqi oil projects.
Natalia Milchakova, head of the fundamental analysis department at the Otkrytie financial corporation, is of the same opinion. "LUKoil had been in Iraq from 1997 and invested about $4 billion in the Western Qurna-2 field. Now the Iraqi government has actually nullified the results of LUKoil's work and its investments. The fields have been put up for tender again. LUKoil may get a share in the Iraqi fields but most probably on terms of a product sharing contract, in which transnational corporations will have a larger share," she said.
The company's press service told the paper that LUKoil is negotiating the resumption of work in the Western Qurna field. "Much has changed of late in Iraq and at LUKoil, too," they said. "LUKoil has found a strategic investor, the U.S.-based ConocoPhillips, which owns a 17% stake in the Western Qurna project under the agreements signed. Besides, we have an indisputable advantage [over our rivals] - the results of the three-year geological and seismic study of the Iraqi fields conducted by our specialists under the memorandum of understanding and cooperation between the Iraqi Oil Ministry and LUKoil."
Kommersant
Shareholder spats delay Burgas-Alexandroupolis pipeline
International company Trans Balkan Pipeline, managing the Burgas-Alexandroupolis project, has approved its construction budget for 2008. But, according to sources, the negotiating process is proving heavy going, with shareholder differences standing in the way and above all arguments over expenses incurred by the sides when they signed the inter-governmental agreement.
The agreement to build the oil pipeline from Burgas in Bulgaria to Alexandroupolis in Greece was signed on March 15, 2007. A pipeline 285 kilometers long is expected to pump 35 million tons of oil annually, with the possibility of expanding to 50 million tons. The project is estimated at 1 billion euros. Russia holds 51% of the project through the Burgas-Alexandroupolis Pipeline Consortium (equally owned by Gazprom Neft, Rosneft and Transneft). The remaining 49% is shared by Greece and Bulgaria.
Sources close to the consortium's leadership doubt that feasibility studies will be approved in the near future. "Everything depends on how long it takes to negotiate the details," one source said. "So far, the process is slow going." The source recalled that Bulgaria and Greece have no experience of building oil pipelines on their territories, they have previously only built gas pipelines, whereas oil pipelines are more specific and involve higher environmental risks.
Valery Nesterov, an analyst at Troika Dialog, said: "The project need not be delayed, because there are alternative routes, making it possible to bypass the Turkish straits, and implementation of one of them could put the other in question."
RusEnergy analyst Mikhail Krutikhin said the project has a formidable rival: the Samsun-Ceyhan pipeline across Turkey, and its construction has already been announced. Eni, the project initiator, could take advantage of Burgas-Alexandroupolis capacities. However, this would require the timeline for increasing the throughput capacity of the Kazakh-Russian Tenghiz-Novorossiisk pipeline, oil from which could feed into Burgas-Alexandroupolis. Meanwhile, Russian and overseas shareholders at the Caspian Pipeline Consortium are still a long way from reaching final agreements on the realization of that project.
Vedomosti
Government admits ESPO pipeline project delay
The completion of the first leg of the projected Eastern Siberia-Pacific Ocean pipeline has been officially moved to the fourth quarter of 2009, as the Ministry of Industry and Energy approved a new project timeframe in mid-March.
The Energy Ministry's spokesman Kirill Fedorov confirmed the delay.
Russia's pipeline monopoly Transneft asked to move the ESPO deadlines (December 2008) late last year, when it became clear that the construction process was far behind schedule. Transneft submitted the new schedule to the ministry in early February, the company's president Nikolai Tokarev said. He also explained the reasons for the delay in an interview with Vedomosti then, citing the contractors' failure to meet deadlines and the rerouting of the projected pipeline.
He said Prime Minister Viktor Zubkov had only signed the resolution to reroute the pipeline on February 27, 2007, although President Vladimir Putin had instructed him to do it in April 2006.
At first the Energy Ministry was reluctant to agree with Transneft's reasoning. A high-ranking ministry source then said the ministry would insist on the pipeline's completion in December 2008. First Deputy Prime Minister Dmitry Medvedev insisted on it, too. The ministry declined to comment on the change in its position.
The decision to move the deadline was expected and is unlikely to change the situation dramatically, said Denis Borisov, analyst with the Solid brokerage. He said even oil companies had long realized that the first ESPO link would not be ready by the end of this year, and therefore did not press on with the development of east Siberian oilfields. So they would be unable to fill the new pipeline with enough oil by the end of this year anyway - all they could provide was 15 million metric tons, whereas by the end of 2009, they will be able to supply 20-23 million metric tons a year.
Russia's state-controlled oil company Rosneft, which is developing the Vankorskoye field, the largest in Eastern Siberia, said the delay in the ESPO commissioning would not affect the company's plans: the first oil to be produced in late 2008 will be channeled westward.
$martMoney
No new 'Yukos affair' but TNK-BP more flexible in asset sale
Since the beginning of this year, a series of criminal cases have been filed, linked to TNK-BP in one way or another. But no official complaints have been made against the company itself.
At the end of February a search was carried out of the offices of Slavneft, a 50% subsidiary of TNK-BP, for non-payment of taxes in 2003. Last week, law enforcers visited TNK-BP itself and its Moscow office. The Interior Ministry's investigating committee cited a criminal case against Sidanco as the cause.
But later the FSB said that on March 12 two Zaslavsky brothers: Ilya (member of TNK-BP Management) and Alexander (member of the British Alumni Club), were detained on suspicion of industrial espionage. They are accused of passing classified commercial information for the benefit of some overseas oil and gas companies.
This is not the first spy scandal involving TNK-BP staff. Last fall, the Prosecutor General's Office filed a criminal case against government officials who "illegally handed over photocopies of documents with confidential information to a representative of TNK-BP company." The documents concerned an investment program of national power grid Unified Energy Systems and materials on the organization of a gas exchange in Russia.
It does not look, however, that there are only criminal episodes in this serial. At the end of 2007, the moratorium expired on the sale of stock by TNK-BP shareholders (the company is 50% owned by BP and 50% by a consortium of Alfa-Group, Renova and Access Industries). It was a nice pretext for an attack by those wishing to get a stake in the company.
Gazprom and TNK-BP have still failed to agree a deal to sell a stake at the Russo-British company (62.9%) in Rusia Petroleum, the Kovykta field operator.
Gazprom, with its declining production, is keen to start the Kovytka development as soon as possible while paying as little as possible for the deposit.
Now it is not only Gazprom that is eyeing TNK-BP assets. Rosneft or BasEl, which bought out Russneft from the embattled Mikhail Gutseriyev, would not mind taking part in their redistribution either.
But even with such a raft of criminal cases it appears unlikely that a case is being prepared on the lines of the Yukos affair with Mikhail Friedman or Viktor Vekselberg as principal players. It is not a battle of ideas or a clash over somebody's political ambitions, it is just a scuffle to redivide assets.
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