revista presei pe energie 24 ianuarie – part IV

2011/01/24 Russia vows Belarussian oil subsidies to stay amid price row

Russia promised to keep on subsidizing Belarussian oil industry, with the final oil price still pending to be agreed on.

Prime Minister Vladimir Putin met in Moscow with his Belorussian counterpartMikhail Miasnikovich on Thursday to try and iron out the conflict over the oil price, which resulted in Moscowhalting supply to its neighbour on the 1st of January.

Earlier in December the two countries agreed that Belarus will get Russian oil duty- free and in return give Moscow all export fees it receives from selling oil products abroad. However, Belarusian oil refineries haven’t yet recieved any oil supplies in 2011, as new documents weren’t signed.

The main sticking point in the dispute was Russia’s demand that Belarus paid more for Russian oil, as Russian oil producers sought to provide for equi – profitability of oil deliveries to Belarus with those to other countries.

Anyway, Putin allayed fears saying Russia would assist Belarus in keeping its promise to buy 21.7 million tonnes of the black gold in 2011 and maintain the volume of subsidizing Belarusian oil sector at least at the existing level.

“There are, of course, questions regarding the details. But we have reconfirmed our position and we’ll get this approved as soon as possible. The Belarus economy will receive the subsidy of no less that$4.124 billionin return for cheap Russian oil deliveries.”

Denis Borisov, oil and gas analyst at the Bank of Moscow, told Vedomosti on Friday that to agree with Russian oil producers would be far more profitable for the country than turning to other oil reach countries, as almost a half ofthe price for Venezuelan oil, for example, is an export duty. Pipeline Projects to Europe ‘Not Compatible’

Italian Industry Minister Paolo Romani said the South Stream, ITGI and Nabucco pipelines, designed to bring natural gas to Europe from Russia, the Caspian and Central Asia, are incompatible.

“Nabucco, South Stream and ITGI are incompatible, given European financing, and Europe, through an accord among the large nations, has to find a definitive accord,” Romani told reporters in Rome late last week.

The European Union has agreed to help fund the $10.7 billion Nabucco pipeline, planned to ship Caspian gas more than 3,300 kilometers via Turkey to Austria. The venture is competing with South Stream, a project headed by Gazprom and Italy’s Eni. Interconnector Turkey-Greece-Italy, or ITGI, led by Edison, Greek natural gas supplier Depa and Botas, is also vying for Caspian gas.

Nabucco, which has been bogged down by financing, pricing and politics, is aiming to get supplies from Iraq and the Caspian.

“We need more clarity on the strategy of the European Commission and, in particular, of Commissioner Günther Oettinger,” Romani said.

Suggestions that the Nabucco and South Stream pipelines could merge were rejected by the EU’s executive body earlier this month. Both the Nabucco and South Stream routes avoid Ukraine, with the EU project going through Turkey, Bulgaria, Romania, Hungary and Austria, and South Stream running under the Black Sea from the Russian to the Bulgarian coast.

The EU is seeking to diversify its sources of energy after price disputes between Gazprom and Ukraine, the Moscow-based gas exporter’s main transportation route, disrupted supplies in 2006 and 2009. The bloc relies on Gazprom for about a quarter of its gas, of which 80 percent is shipped via Ukraine.

Meanwhile, Bulgaria will borrow $1.63 billion from the European Investment Bank for guarantees to the Nabucco natural gas pipeline project, Prime Minister Boyko Borissov said in Sofia on Friday.

The venture’s shareholders — which include Germany’s RWE, Vienna-based OMV, Budapest-based Mol Nyrt., Bulgargaz, Romania’s Transgaz Medias and Ankara-based Botas — plan to provide 30 percent of the financing for the pipeline themselves, with the rest from loans.

“We have ensured the financing for the Nabucco project,” Borissov told reporters in Sofia after meeting European Investment Bank president Philippe Maystadt. “We’ve arranged to take the money from the EIB once our partners in the project reach the stage of payment of guarantees.”

Nabucco said Sept. 6 that it may get as much as $5.4 billion in loans from the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank. The European Union has pledged to give $270 million to the pipeline.

The Nabucco pipeline venture aims to conclude all financing and construction contracts by the end of 2011, the company said in November. Operations are due to start in 2015.

Novinite: Critics Fear Finnish Company Can Be Russia’s ‘Trojan Horse’ in Bulgarian NPP

Finnish company “Fortum” could be the “Trojan horse” of Russian state companyRosatom in the project for the second Bulgarian nuclear power plant Belene, according to the rightist Blue Coalition.

Non-binding documents on Belene signed in Sofia in November 2010 provided for participation in the project of Finnish company Fortum with a share of 1%, and of French company Altran Technologies with a share of 1%-25%. NEK is to keep a majority share of 51%, while Rosatom is also expected to have a share of 25%. Serbia’s government might also expected to have a share, mostly likely 5% or 10%.

Fortum has declared it had no intention to acquire more than 1% in Belene. However, according to MP Ivanov, who sees the Finnish company as a protege ofRosatom, however, Fortum can get up to 25%, thus helping Rosatom acquire control over the plant.

Ivanov believes this is a possibility since Fortum and Rosatom manage together anuclear power plant in Finland, which means that they are “connected entities.”

“This changes radically the stakes in the Belene NPP project and the way of decision-making with respect to its construction. PM Borisov has stated many times that we are seeking a strategic European investor, while Fortum meets only the condition of being European. I think this is unacceptable, and my concerns are more than evident. We need an investor that will be truly independent with respect to its decision-making. Fortum‘s very inclusion in this project proves the impotence of the government to find really big European investors,” MP Ivanov declared in Parliament.

Economy and Energy Minister Traikov, however, has responded that Fortum meets all requirements of the Bulgarian government for participation in the project for the construction of the Belene plant.

“The fact that Fortum has a joint project with Rosatom does not make them dependent in their decision-making on Rosatom or Rosneft. The answer depends on how you define “connected entities”. This situation is acceptable if the financial terms of the construction are favorable for us,” Traikov declared.

Finland‘s government is the majority owner of energy concern Fortum, which is active in the Scandinavian and Baltic states, Russia, and Poland.

“The Finnish government has a 51% share in Fortum. From what I understand, the company’s participation in the Belene project will have to get the approval of the Finnish Parliament. What stronger guarantee do you want?” Traikov asked the Blue Coalition.

Reports in the Bulgarian media have voiced concerns that the other major foreign investor in Belene, the French company Altran Technologies, might also be connected with Rosatom as the Russian company has announced plans to enter the French market, and might do so with Altran’s help as an intermediary.

The rightist Blue Coalition led by former Bulgarian PM in 1997-2001 Ivan Kostov has been demanding the abandoning of the Belene NPP project arguing it would increase Bulgaria’s dependence on Russia.

Bulgaria’s Borisov Cabinet declared that it would not provide money from the state budget for the construction, it set out in search of potential foreign investors to fuel the construction of the plant. By the end of 2010, it reached a certain level of progress in talks with Russia and Rosatom‘s subsidiary Atomstroyexport, and with some foreign companies interested in having shares in the project.

In November, shortly after a visit to Sofia by Russian PM Putin, Bulgaria’s National Electric Company NEK and Russian state company Rosatom signed a memorandum providing for a final fixed price for the two reactors of EUR 6.298 B.

This sum is still not final since the document is not binding; a final binding agreement for the establishing of a joint company for Belene is expected to emerge in 4-5 months, according to Rosatom head Sergey Kirienko, who was in Sofia to sign the document, at the same time when the non-binding agreements with Fortum and Altran were inked.

After it was first started in the 1980s, the construction of Bulgaria’s second nuclear power plant at Belene on the Danube was stopped in the early 1990s over lack of money and environmental protests.

After selecting the Russian company Atomstroyexport, a subsidiary of Rosatom, to build a two 1000-MW reactors at Belene and signing a deal for the construction, allegedly for the price of EUR 3.997 B, with the Russians during Putin’s visit to Sofia in January 2008, in September 2008, former Prime Minister Stanishev gave a formal restart of the building of Belene. At the end of 2008, German energy giant RWE was selected as a strategic foreign investor for the plant.

The Belene NPP was de facto frozen in the fall of 2009 when the previously selected strategic investor, the German company RWE, which was supposed to provide EUR 2 B in exchange for a 49% stake, pulled out.

Subsequently, in the last months of the Stanishev government in early 2009, Putin offered Bulgaria a Russian state loan of EUR 4 B, which ex PM Stanishev refused.

In late 2009, after the Borisov government took over, Rosatom offered Bulgaria a loan of EUR 2 B so that the construction can continue, in exchange for a stake in the future plant that the Bulgarian government could then buy out by returning the money. The offer was refused by the Borisov Cabinet which also made it clear it would construct the Belene plant only if an European (apparently meaning EU or Western European) strategic investor can be found.

Under Bulgaria’s preliminary contract with Atomstroyexport signed in 2008, the construction of the Belene plant with two 1000-MW VVER nuclear reactors is supposed to cost EUR 3.997 B.

As the contract expired on September 30, 2010, Bulgaria and Russia decided to extend it by 6 months until they reach a final agreement on how much the construction of the Belene NPP will cost.

In mid November, the Bulgarian Energy Holding, NEK’s parent company, picked HSBC, one of UK’s biggest banks, for a consultant to help it decide how to proceed and attract new investors for the planned Belene nuclear power plant.

Novinite: Bulgaria to Start Exporting Electricity to Turkey in March

Bulgaria is expected to resume its electricity exports to Turkey at the end of March 2010, according to the head of the Bulgarian National Electric Company NEK,Krasimir Parvanov.

“I am all up for restarting the electricity trade with our southern neighbor because it is no secret that the prices there are better than the market prices in the region,” Parvanov said during a forum at the Parliament organized by the Sofia-based Center for the Study of Democracy entitled “Energy and Better Governance: Trends and Policies.”

In October 2010, during a visit of Turkish Prime Minister Recep Tayyip Erdogan in Sofia, Bulgarian Minister of Economy, Energy, and Tourism, Traicho Traikov, and his Turkish counterpart, Energy Minister Taner Yildiz agreed that Bulgaria can start exporting electricity to Turkey once Turkey completes the synchronization of its power network with the European electricity network (UCTE) that it formally joined in September.

At the time the agreement was made, the two parties expressed hopes that Bulgaria could start exporting electricity to Turkey by the end of 2010.

Turkey stopped buying electricity from Bulgaria in 2003 arguing the latter did not fulfill the intergovernmental agreement signed in 1998, which stipulated Bulgarianelectricity exports for Turkey in exchange for the participation of Turkish companies in Bulgarian infrastructure projects.

Under the 1998, the Turkish company Tetas bought from Bulgaria 4 billion kW/h ofelectricity annually.

On Tuesday, Parvanov said that NEK could use money from its international trade for investments into Bulgaria’s power grid as long as the State Commission for Energy and Water Regulation (DKEVR) approves NEK‘s investment plan.

The NEK CEO said that his company will ask DKEVR to approve an investment plan for 2011 worth BGN 219 M, which is a 50% compared with the investments in 2010; 80% of these are supposed to be spent on rehabilitation of the power grid.

Novinite: EC Courts Turkmenistan over Natural Gas Supplies

The EU countries see Turkmenistan as a key energy partner and are ready to purchase the country’s natural gas, according to the President of the European CommissionJose Manuel Barroso.

Borroso is on an official visit to Ashkhabad, where he met with the country’s President, Gurbanguly Berdymukhammedov.

The negotiations lasted 2 hours, three times longer than planned, to be followed by another round, including a larger number of officials, the Bulgarian National Radio, BNR, reports, citing the Presidential press office

Barroso said Turkmenistan is a reliable gas exporter, stressing on the great perspective for partnership with the EU in the creation of a safe and multifunctional transport infrastructure,

The EC President appealed to the country to join the World Trade Organization which would have positive economic effect and attract foreign investments. He promised EU support in case Turkmenistan applies for WTO membership.

Berdymukhammedov pointed out his country has trade relations with all EU Member States with a total trade volume of USD 1.5 B for 2010, but added the data does not reflect the real partnership potential. He proposed the preparation of a mid- and long-term program for collaboration between the EU and Turkmenistan.

Regarding gas supply to Europe, the President pointed out a gas pipe on the bottom of the Caspian Sea would be the most attractive for Turkmenistan from trade, financial, and infrastructure viewpoint, but did not dismiss the possibility to transport liquid gas on tankers via the Caspian Sea.

“This will require special infrastructure and a tanker fleet. This and other opportunities can become the topic of serious negotiations between Turkmenistanand the governments of interested European countries and companies,” Berdymukhammedov is quoted saying, adding his country was fully prepared to develop a European trend in its energy policy.

Turkmenistan is considered a main supplier for the EU “Nabucco” gas pipelineproject. China 2010 LNG Imports Rise 69%, More Ahead

China raised its liquefied natural gas imports by 69% last year to meet rising domestic demand for the relatively clean-burning fuel, final monthly data released by the General Administration of Customs confirmed Friday.

China shipped in 1.03 million tons of LNG in December, up 87% from a year earlier, bringing the year’s total to 9.36 million tons, the data showed, in line with numbers issued by the Hong Kong-basedChina Customs Statistics InformationCenter on Jan. 19.

LNG imports are expected to rise to 12 million metric tons this year, according to the research unit of China National Petroleum Corp.

In a forecast issued Thursday, CNPC said domestic natural gas output could rise by 11% to 105 billion cubic meters this year, while consumption will hit 130 billion cubic meters.

CNPC, the nation’s top oil and gas producer by volume, will bring online its first two LNG receiving terminals this year, one in northeastern Dalian city and one in eastern Jiangsu province, each with annual receiving capacity of 3 million and 3.5 million tons, respectively.

China also imported 446,250 tons of natural gas in December.

Friday’s data confirmed that December crude-oil imports reached 20.86 million metric tons, equivalent to 4.93 million barrels a day, down 1.9% from a year earlier. Russia, Afghanistan announce Russian involvement with TAPI

Russia will participate in the construction of the proposed Turkmenistan-Afghanistan-Pakistan India (TAPI) pipeline, the Russian and Afghan presidents announced in a joint statement released Friday.

The announcement comes in the midst of a two-day state visit by Afghan President Hamid Karzai to Moscow. Karzai is meeting with his Russian counterpart Dmitry Medvedev to discuss security and economic concerns, the RIA Novosti news agency reported on Friday.

The pipeline is expected to cost $4 billion and is supported by the Asian Development Bank.

The announcement is a surprise to some because the pipeline’s biggest proponent and main supplier, Turkmenistan, has so far been publically opposed to Russian involvement in the line.

Turkmenistan has been working to create a diverse pipeline network and to lower its dependence on Russia for certain gas exports.

Russian-Turkmen relations also turned sour in October 2010 after Russian envoy Igor Sechin claimed that Turkmenistan had agreed to allow Russian gas giant Gazprom participate in the TAPI pipeline.

Turkmenistan immediately rebuffed the comments and denied any such agreement had been brokered.

“Turkmenistan views the published remarks (by Sechin) as an attempt to interfere in the normal course of international energy relations, and cast doubt on our responsibilities to our partners,” the Turkmenistan Foreign Ministry said in response to the Gazprom claim.

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