revista presei pe enrgie 19 octombrie – part III


Novinite: Bulgaria Gets Alpine Bau to Knock EUR 10 M Off Hydro Plant Price

Austrian company Alpine Bau has agreed to knock off EUR 10 M from the money owed to it by the Bulgarian government for the construction of the much problematic hydro power plant “Tsankov Kamak“.

The hydro plant in the Rhodope Mountain near the southern town of Devin became notorious after Bulgarian Prime Minister Boyko Borisov visited the site in March 2010 and expressed his outrage at the fact that a 22-km road to the plant cost the state budget the staggering BGN 220 M. Borisov blamed the former governments, and most notably, the Socialists and the ethnic Turks for using the project to drain money from the state.

The outrage of the Borisov government at the situation that it uncovered with respect to state spending on Tsankov Kamak eventually culminated in an investigation and a suit against the leader of the ethnic Turkish party DPS (Movement for Rights and Freedoms) Ahmed Dogan for conflict of interest since Dogan, despite being a MP, was a consultant for Tsankov Kamak and three other similar projects, and received a fee of over BGN 1.5 M.

Interestingly, just as the Borisov government haggled with the Austrian construction company, a Bulgarian Court acquitted Dogan of the conflict of interest charges.

On Monday, Borisov made his second visit to the site of the hydro plant and met with representatives of Alpine Bau, together with Bulgarian Economy MinisterTraicho Traikov and the head of the National Electric Company NEK Krasimir Parvanov.

According to Traikov, the Austrian company has agreed to reduce its escalation cost claims by EUR 10 M. Thus, Bulgaria still owes Alpine Bau EUR 20 M in “escalation costs.”

With Monday’s knockoff, the total cost of the Tsankov Kamak, an 80-MW hydro power plant, that Bulgaria is paying Alpine Bau is rounded at EUR 380 M. When the additional expenses of NEK (such as the problematically costly road mentioned above) are factored in, the total price of the project, which was started in 2004, reaches EUR 500 M.

NEK CEO Krasimir Parvanov has announced that the state-owned energy company is considering seeking a new loan to finance the payments it has to make to Alpine Bau for Tsankov Kamak because the Austrian company has threatened to file suits over some delays on its part. This is largely the reason the Bulgarian government started “political” negotiations with Alpine Bau over the price.

The notoriously expensive hydro power plant is still expected to be started by the end of the year although any revenue that will come from its operation will be insufficient to cover the costs for its construction at least in the years to come.

NEK has already gotten an EUR 160 M loan from Credit Suisse for Tsankov Kamak. Since it is said to have been overburdened with investment projects in the past few years, NEK is unable to finance its due payments to Alpine Bau, and has asked its principal, the Bulgarian Energy Holding, to start a tender for a new EUR 50 M loan.

Parvanov said NEK has already started preliminary talks for such a loan with Credit Suisse and Bank of Austria but the two banks are said to be “twisting the arms” of the Bulgarian state company by demanding huge interest rates.

The NEK CEO said that the company might avoid having to seek a loan to financeTsankov Kamak if it manages to increase its allowed overdraft from the Bulgarian banks keeping its reserves, and receives up to EUR 250 M that it expects to get from exporting electricity to Turkey starting at the end of 2010. SOCAR reduced total and own production by 4%

In September, State Oil Company of Azerbaijan (SOCAR) reduced the total oil production by 3.9% compared with August while company’s own oil and gas production fell by 4%, the company said.

In 2009, total oil production (including gas condensate) amounted to 97.1% of the production for 2008 (9,337.1 thousand tons).

748,000 tons of oil was produced in September against 777.6 thousand tons in August, 773.7 thousand tons in July, 745.2 tons in June, 779.3 thousand tons in May, 756, 6 thousand tons in April, 780.3 thousand tons in March, 703.8 thousand tons in February, 782.3 thousand tons in January this year and 759.25 tons in December 2009.

Oil and gas production by the company’s units amounted to 602.5 thousand tons against 627.5 thousand tons in August, 621.4 thousand tons in July, 599 tons in June, 619.3 thousand tons in May , 597.6 thousand tons, 625.9 tons, 570.5 tons, 624.6 thousand tons and 610.96 tons, respectively, while the share of SOCAR in the production of joint ventures and operating companies (JVs and OC) totaled 145.5 thousand tons against 150.1 thousand tons in August, 152.3 thousand tons in July, 146.2 tons in June, 160 tons, 159 thousand tons, 154.4 thousand tons, 133.3 tons, 157.7 thousand tons and 148.29 tons.

In January-September, total production amounted to 6,806.7 thousand tons, with domestic production totaling 5,488.2 thousand tons and share in the JV and OC totaling 1,318.5 thousand tons, the company said. In 2009, total production amounted to 9063.19 tons, own production – 7301.41 thousand tons, while the share in the JV and OC topped 1,761.78 tons.

In September 2010, SOCAR deposited for recycling 527.1 thousand tons of oil against 502.2 thousand tons in August, 508.9 thousand tons in July, 532.9 tons in June, 502.3 thousand tons in May, 524.7 thousand tons in April, 544.4 thousand tons in March, 465.7 thousand tons in February, 564.6 thousand tons in January and 566.7 thousand tons in December 2009. In January-September, 4672.9 thousand tons of oil was deposited for recycling while deposit processing was 6,035.97 tons in 2009 vs. 7,351.25 tons in 2008.

In September, oil exports amounted to 220.4 thousand tons against 196.7 thousand tons in August, 247.7 thousand tons in July, 200.7 tons in June, 266.8 thousand tons in May, 232.4 thousand tons in April, 232.4 thousand tons in March, 186.4 thousand tons in February, 216 tons in January and 195.65 tons in December 2009. In January-September, it reached 1,999.5 thousand tons. Some 3,240.36 tons vs. 2,280.94 tons in 2008 was exported in 2009.

Crude oil sales were not realized in 2010, as in the July-November 2008 and in 2009. In 2008 it was conducted only in March by SOCAR’s oil and gas producing units and amounted to 0.1 tons vs. 0.5 tons in January-July 2007. Kazakh and Russia discussed partnership prospects

Scientists and experts from Kazakhstan and Russia noted that it is necessary to give more importance to a micro-level while discussing partnership prospects of the two countries.

The round table participants referred to the micro-level as the cooperation of enterprises, ventures, and companies. It is necessary to create more joint ventures in order to make the integration between the two countries develop progressively, experts believe.

Gennady Chufrin, directorate member, Institute of World Economy and International Relations, Russian Academy of Sciences
“There’s a lack of sufficient integration on a micro-level. We have to do a lot in this respect, although we still have a unique position here as we managed not only to retain but also restore the production ties which existed in the Soviet period in border districts and so on. There’s a good reason why from 40 to 70% of our mutual commodity turnover falls at these areas.”

Cooperation in science and education is yet another direction which should be made priority for the two countries, which are declaring the modernization of their economies. According to experts, while still being states of raw materials both Kazakhstan and Russia should invest the obtained petrodollars into joint construction of technological economies each in its own territory.

“We are interested in the industrial and innovative breakthrough and for implementing this program we need to cooperate with Russia. We don’t have to compete in the markets with our goods but develop some compromise terms which would suit us and at the same time so that we could withstand the pressure of trans-national corporations”, said Bulat Sultanov, director, Kazakhstan Institute of Strategic Studies.

The meeting participants established a Kazakh-Russian expert council which will be encouraging the development of bilateral cooperation. Kazakhstan SA made a petrol production report between January and September

Petrol production reached 2 million, 273 thousand tonnes within the period between January and September which exceeds the rate of the same period in 2009 by 20.9%.

This features in the monthly report of the Kazakhstan Statistics Agency. According to the document, kerosene production increased by 54.5% up to 388 thousand tonnes alongside gas oil and black oil by 6.5% and 22% respectively. Poland and Russia agree on new gas deal

Russia and Poland have agreed a new gas supply deal conforming to European Union rules, easing worries that Europe, which takes gas through the Polish pipeline, might face shortages during the coming winter.

An agreement on increasing Russian gas delivery to Poland and its transit to Germany through the Yamal pipeline was negotiated last year but was not signed due to worries that it was incompatible with EU laws.

“The EU delegation participated in the talks and did not raise any objections to the governmental agreement,” Poland’s Deputy Economy Minister, Joanna Strzelec-Lobodzinska, told reporters in Moscow.

Poland’s current supply contract runs out next week, and the delay in signing the deal raised fears of supply disruptions similar to those experienced last year, when Russia left European consumers shivering during a price row with Ukraine.

Russian gas export monopoly Gazprom and Poland’s gas monopoly PGNiG will now work on details with Gazprom’s deputy chief executive Alexander Medvedev, saying the contract would be finalised within two weeks.

“What is left is to finalise corporate agreements regarding the functions of the operator of the Yamal-Europe project,” Reuter’s quoted Medvedev as saying.

Philip Lowe, the European Commission’s director-general for energy, said the talks were “very constructive”.

The deal covers 10 billion cubic metres of Russian gas a year for Poland until 2037, as well as gas flowing onwards to the rest of Europe through the pipeline.

The Commission has said the deal must respect EU rules, which say that the pipeline must not be monopolised by PGNiG and Gazprom.

Gazprom warned last week that the bloc’s gas industry reforms would mean the end of stable supplies to Europe.

Poland imports about 65-70% of its 14 Bcm annual gas consumption from Russia, a dependence that worries many in the EU’s biggest ex-communist state. Gazprom rankled by ‘Great Wall’ of gas

Gazprom warned the European Union today that proceeding with the bloc’s gas industry reforms would mean the end of stable supplies as the Russian energy giant would send more gas to Asia.

Gazprom’s export chief, Alexander Medvedev, said that Europe’s gas-sector initiatives would build “a sort of Great Wall of China” that would cut off his company, which supplies a quarter of the EU’s gas needs, from gas transmission infrastructure.

EU legislation requires pipelines to be open to all companies, which threatens Gazprom’s position in countries such as Poland where it is a dominant supplier via its Yamal pipeline.

“Having no opportunity to get reasonable income while the gas pipeline is operating or take part in its operation, the suppliers will not wish to make such significant investments. They will start searching for more attractive markets,” Medvedev said in a Reuters report.

The EU’s gas reform has figured at the centre of Russia’s inability to strike a gas-supply deal with Poland, whose current deal runs out on 20 October, and whose supplies from its main Yamal pipeline fall short of annual gas needs.

Last October Warsaw and Moscow, as well as Gazprom and Polish gas monopoly PGNiG, clinched a deal prolonging the Yamal contract to 2037 and increasing supplies by some 2.5 billion cubic metres annually to 10 Bcm.

But the European Union blocked the deal, saying it violated the 27-nation bloc’s energy policy and forcing Warsaw into last-minute renegotiations.

Poland imports from Russia about two-thirds of the 14 Bcm of natural gas it uses annually.

The European Union is trying to pull together the fragmented energy policies of its 27 member states into a single, unified strategy, which aims to reduce the risk of sudden energy shortages and open energy markets to more competition.

Gazprom says this new gas market model creates supply-side risks because it favours competition between producers bound to short-term supply contracts over traditional long-term supply “take-or-pay” contracts, which Russia usually insists on.

“Without long-term price contracts, the volume of gas coming to market starts depending on the price appeal. The gas will be available when the price is high. If the price is low, the volumes may outflow to more attractive markets,” said Medvedev.

“The reliability of European gas supply will be determined by the competition with other global gas markets, primarily with Asian ones,” he said.

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