revista presei pe energie 18 octombrie – part IV

2010/10/18 Caspian states to debate sea’s ownership at Baku summit

Caspian states Kazakhstan and Turkmenistan will join Russia, Azerbaijan and Iran at a Baku summit in December to resolve remaining legal issues over the ownership and use of the Caspian Sea’s vast energy resources.

Representatives from participating states will discuss the rights to the Caspian Sea’s subsoil, which contains fossil fuels, as well as the separation of the seabed and its legal status, the Trend news agency reported on Friday.

The Caspian basin and sea are considered to be among the largest hydrocarbon sources in the world, and estimates that oil and gas from this area will account for 70 percent of oil supply growth from non-OPEC (Organization of Petroleum Exporting Countries) until 2030, the International Energy Agency reported in 2008.

The news agency estimates that 70 percent of Caspian Sea-issues have been solved in previous high-level meetings, but because the remaining 30 percent of issues are sensitive, an additional meeting is necessary.

Though Kazakhstan, Russia and Azerbaijan have delimitation agreements between their countries, Iran refuses to recognize them as valid and insists on a multilateral agreement of all states bordering the sea.

Turkmenistan has invoked its neutral status and has refused to agree or reject agreements sought by Azerbaijan and Kazakhstan.

Complicating matters is that fact that none of the littoral states – those that border the vast sea – have agreed whether to formally classify the Caspian as a sea or a lake, which makes it easier to keep borders vague, the BBC news service reported in June.

No specific date for the summit has been established. Kazakhstan strengthens penalties for pipeline oil rustlers

Oil-pipeline security guards have little sympathy for those who complain about a bad day at the office.

They know what a bad day really is: Oil rustlers pumping 107 bullets into your car.

That’s what happened not long ago when two KazMunaiGas guards surprised bad guys stealing oil from a pipeline.

The rustlers, who had tanker trucks to carry off the oil, were sporting submachine guns. The state-owned oil company’s guards had light arms and shotguns. It was no contest.

The guards survived only because their security car was bulletproof, said Amangeldy Kurmangaliyev, first deputy director of KazMunaiGas’ Semser Security subsidiary.

“You never know how the outlaws” will react, said Bagdat Baisalbekov, deputy director of KazMunaiGas’ security office in Karaganda in northern Kazakhstan. “All our men understand that they are putting their lives at risk.”

He said KazMunaiGas’ top management should pay the guards commensurate with the dangers they face daily.

Kazakhstan stiffens penalties for pipeline theft

Theft of oil from pipelines is so widespread, and poses such a threat to the guards who confront the desperadoes, that President Nursultan Nazarbayev has signed legislation stiffening rustling penalties.

From now on, the bad guys will get sizable prison terms rather than the relatively short sentences, probation and fines that previous legislation provided for.

One of those who drafted the tougher law, Lower House member Nurlan Nigmatullin, noted that security guards caught a gang with seven tanker trucks of stolen pipeline oil in Atyrau Province last year.

Because of the light penalties under the old legislation, “on January 14 of this year, the same group was caught again with the same Kamaz (Russian-brand) tankers,” he told the New Europe news operation.

The stiffer penalties in the new legislation – five to eight years in prison — are in line with those in Russia but don’t go as far as China’s ultimate pipeline-theft penalty: execution.

“As we worked on this bill, we felt a certain pressure from some persons concerned who questioned such tough measures,” Nigmatullin said. “But when the damage to the country (from oil losses and pipeline-repair work), at a very conservative estimate, exceeds a billion and a half tenge, such a clampdown is absolutely necessary.” One and a half billion tenge is about $10 million.

Stealing oil is so lucrative that well-organized, ruthless criminal gangs are commonplace, although amateurs abound as well.

Sometimes the gangs descend on a pipeline with a convoy of up to 10 tankers.

If a security car blocks their path, one of the tankers slams into it, tossing it off the road, Kurmangaliyev said.

Serikbek Yelshibekov, KazMunaiGas’ general manager for business support, backs another piece of legislation before Parliament that would allow guards to carry grooved-bore rifles, which are accurate from hundreds of yards away.

“Imagine a whole formation of tanker trucks speeding through the steppe – it is simply impossible to stop them with shotguns,” he said.

Grooved-bore guns would allow guards to shoot out tankers’ tires a long way off, before the heavily armed bad guys were on top of the guards.

Securing pipelines requires heavy security

Mostly because of the pipeline thefts, KazMunaiGas has the second-largest corporate security operation in Kazakhstan – 7,500 employees.

The company has 1,667 guard posts along its oil and gas pipelines. In addition, 214 mobile units patrol up and down the lines.

Only the national railway company Kazakhstan Temir Zholy has a guard force larger than KazMunaiGas’ — 14,000. Many of its guards try to prevent thieves from stealing material along the vast lonely stretches of rail.

Together, KazMunaiGas and the railway company account for 28 percent of Kazakhstan’s 77,500 private security guards.

Kazakhstan uses pipelines to transport 60 million tons of crude a year to markets at home and abroad.

They are pecked with hundreds of cuts from oil rustlers, pipeline operators say.

For example, in the section of pipeline that KazMunaiGas’ Karaganda security office is responsible for, guards found 30 new cuts last year, Baisalbekov said. In the section that the Aktobe security operation covers the figure was 120, he said.

Well-organized rustlers have theft down to a science

In a well-organized operation, the desperadoes dispatch an expert welder to breach a pipeline.

Expertise is important because every cut spills oil. A pool of crude on the ground is a tip-off that rustlers are at work. Guards can stake out the site, waiting to apprehend the bad guys.

The trick for the welder is to make a cut quickly, then reseal it with a temporary hatch that the rustlers can lift later to steal the oil.

Welders who can do a quick, clean and spill-minimizing job can get 500,000 tenge, or about $3,400, for a few minutes’ work, pipeline security people said.

The well-organized rustlers have the thefts down to a science. It takes only 15 minutes for them to load 26 tons of crude into a tanker.

They usually use three to 10 tankers per operation, security people said.

Because the commodity that they are selling is “hot,” rustlers can get only a third as much of the market price for crude. But it’s still worth a fortune.

The current price of oil is $83 a barrel. A third of that would be roughly $28.

Rustlers with 10 tankers could steal 260 tons of crude. There are six to eight barrels per ton, depending on the oil’s density.

At six barrels per ton, 10 tankers would contain 1,560 barrels. At $28 a barrel, that would mean $44,000 for two and a half hours of work.

Because regular refineries would be likely to report someone trying to sell them a few tankers’ worth of crude, the bad guys usually sell it to black-market refineries.

Once it’s converted into gasoline, diesel, kerosene or another refined product, it’s easier to sell without authorities becoming suspicious.

“The illegal refineries are usually located in the middle of nowhere in the steppe,” Baisalbekov said.

Before the stiffer anti-rustling legislation, they were “found, closed down, but in a short time — six months maximum – they were up and running again,” he said.

The new legislation not only provides for sending pipeline thieves to prison, but black-market refiners as well.

It makes it a crime not only to steal pipeline oil, but also to transport it, buy it, store it or refine it. Turkmen president shifts rhetoric on global energy partners

Turkmenistan’s underrated, but bold president Gurbanguly Berdimuhamedov made it official Thursday: The days of isolation are over. His country is courting international and multinational investment on an unprecedented scale.

In a national address to the Turkmen people on Thursday, Berdimuhamedov said he had initiated a new “strategy to diversify (the nation’s) export routes to world markets.”

This marked a radical shift from the days of Turkmenistan’s founding president, Saparmurat Niyazov, also known as Turkmenbashi. At that time, the country was the most isolated and repressive of any nation in Central Asia or the entire post-Soviet Commonwealth of Independent States (CIS).

However, since current president Berdimuhamedov succeeded Niyazov at the beginning of 2007, he has worked hard to attract foreign investment, particularly to develop his nation’s immense reservoirs of natural gas.

Though Thursday’s announcement marked a shift in public rhetoric, Berdimuhamedov’s intentions to diversify have been clear since he risked the Kremlin’s anger by approving a new gas pipeline to China which broke Russia’s historic monopoly on regional energy export routes. The line started operating on December 15 and will eventually supply a significant portion of China’s gas imports.

What is significant about Berdimuhamedov’s Thursday announcement is that he had not previously been so publicly outspoken about his intentions.

His boldness reflects the fact that 2010 has been the country’s most successful year in attracting foreign direct investment (FDI).

The Turkmen government attracted an impressive $2.8 billion in FDI last year. But officials say another $4 billion in FDI will flood in this year, an increase of 43 percent over 2009.

Despite its relatively small size, Turkmenistan sits on, and controls in the Caspian Sea, the fourth largest confirmed reserves of natural gas in the world.

Berdimuhamedov has been keen to improve diplomatic relations with Russia from the deep freeze that his predecessor Niyazov kept them in. But at the same time, he has been emulating Kazakh President Nursultan Nazarbayev’s practice of maintaining relationships with diverse international partners.

Berdimuhamedov told his national audience Thursday that he also wants to export his nation’s energy riches in a big way to the 27-nation European Union.

He said the Turkmen government is “using all means at its disposal to realize major new projects in this field,” and that Ashgabat was ready to “extend its cooperation with foreign, including European, partners”.

The Reuters news agency reported Thursday that Turkmenistan was close to approving new production sharing agreements (PSAs) with Chevron of the United States and Total of France to produce oil from its potentially rich fields in the Caspian.

As previously reported by Central Asia Newswire (CAN) in August, Turkmenistan has also approved Chevron, ConocoPhillips and TXOil from the United States and Mubadala Oil and Gas of Abu Dhabi to develop its oil fields in other parts of the Caspian.

Turkmenistan is rapidly increasing its own oil production. It produced 4.4 million tons in 2009. But that figure is a drop in the ocean compared with the 1.3 billion tons that the Turkmens believe is there.

Turkmenistan also contains the giant South Yolotan gas field which is the fourth largest in the world. Berdimuhamedov has publicly put the size of the field at 18 trillion cubic meters. Turkmenistan has a confirmed 24.6 trillion cubic meters of natural gas and there may be far more there.

Berdimuhamedov last week announced that he was setting the goal of increasing annual natural gas production by 700 percent over the next 20 years . With the increase he hopes to boost gas exports sevenfold, to 230 billion cubic meters. And more controversially, he also said he wanted to get Russia, China and Iran to purchase Turkmen gas at the higher regular market prices that the Europeans were willing to pay.

In addition to developing diverse relationships, Turkmenistan is trying to position itself as the hub of a massive network of gas export pipelines extending in multiple directions.

In May this year it began work on building a new East-West pipeline to link northeast Turkmen gas fields with the Caspian Sea and it has hinted at supporting the contentious Nabucco gas pipeline project to run through former Soviet states Azerbaijan and Georgia and then across Turkey to the Mediterranean Sea.

Berdimuhamedov has set himself and his country an ambitious agenda, and he risks angering Russia in particular by the scale of his desire for diverse international relationships.

But the benefits for his country will be immeasurable if he can pull it off. And he has the resources and the will to do it.


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