Environment and Energy Publishing, LLC
Greenwire
September 27, 2006 Wednesday
OIL AND GAS: Black Sea summit discusses pipelines, energy contracts
Russia and 10 other countries in the Black Sea region began talks
today on new pipelines and long-term natural gas contracts at a
summit of the Black Sea Economic Cooperation organization.
Russia is this year’s chair of the BSEC as well as of the Group of
Eight. Ministers affirmed their commitment to energy security today,
as G8 ministers did in July in St. Petersburg, Russia. The BSEC
includes Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece,
Moldova, Romania, Russia, Serbia, Montenegro, Turkey and Ukraine.
Russian Energy Minister Viktor Khristenko said Russia has made
"significant progress" on the Burgas-Alexandropoulis oil pipeline,
which will carry 30 million-35 million metric tons of oil to Europe
annually. He also said BSEC would discuss extending the
Russian-Turkish Blue Stream gas pipeline, which the two countries
have been arguing about since it came online in 2003. Khristenko said
he wanted to extend it to Israel and possibly southern and central
Europe, which would allow Russia to increase shipments regardless of
decreased demand from Turkey.
Khristenko is expected to meet with Ukrainian Energy Minister Yury
Boiko to discuss a new gas supply contract, sorely needed after the
two countries’ pricing dispute led to a supply cutoff in Western
Europe in January.
Ukraine published a strategy document on its Web site today that
projected it would cut imports of natural gas by increasing its own
production. According to the document, Ukraine plans to reduce its
annual consumption from more than 77 billion cubic meters to less
than 72 billion by 2010.
BSEC countries will also discuss Russia’s failure to ratify the
Energy Charter Treaty, which supports market liberalization. Armenian
and Moldovan representatives are expected to press Russia to ratify
the charter (Stephen Boykewich, Agence France-Presse). Russia defends
enforcement of Sakhalin enviro regs
Russian officials continued today to defend their sanctions of
Shell’s Sakhalin II oil and gas project on environmental grounds,
rejecting accusations that they are targeting foreign-owned projects.
On Sept. 5, the Environment Ministry said it was filing suit against
Shell and the other members of its Sakhalin Energy consortium for
failing to prevent erosion and violating other environmental
provisions in the group’s contract to build a pipeline and liquefied
natural gas facility on Sakhalin Island (Greenwire, Sept. 20). Last
week, officials said work could continue on the pipeline.
"The idea that foreigners are being pushed out of the Russian energy
market has no basis," said Foreign Minister Sergei Lavrov. Russia’s
demands "are based exclusively on the demands of the law," he said.
Ian Craig, head of the Shell-led Sakhalin Energy consortium, said it
was "quite possible" the dispute was linked to state-owned Gazprom’s
attempts to buy a 25-percent stake in the project. He said a one-year
delay in the project would cost $10 billion and "the greatest damage
of all by far would be the damage to Russia’s reputation as a
reliable energy supplier" (Dario Thuburn, Agence France-Presse).
Russian President Vladimir Putin warned at the BSEC meeting that he
would take action against "unconscientious" energy firms that do not
fulfill their contractual obligations. "I expect the [natural
resource] ministry and the government as a whole to take such
decisions, including as regards companies that work
unconscientiously," he said.
Natural Resources Minister Yury Trutnev said the number of inactive
wells and reserves is currently "twice the legal norm" (Agence
France-Presse). Iran tells Japan to develop its oil field or lose it
Iran today warned Japan that if it does not finalize a $2 billion
deal by Friday to develop the onshore Azadegan oil field, it will
give the project to an Iranian contractor.
"If the Japanese response for development of this oil field is
negative, the development operations will start through domestic
sources," said Oil Minister Kazem Vaziri Hamaneh. The deadline for
Japan’s Inpex Corp. to start developing the field has been pushed
back from March 2005 to this Friday. Azadegan has an estimated 26
billion barrels of oil (Aresu Eqbali, Agence France-Presse).
Production resumes at eastern Prudhoe field
BP restarted oil production yesterday on the eastern side of the
Prudhoe Bay in Alaska and said it expects to reach near-normal
capacity of 150,000 barrels per day by the weekend.
Production will still be 50,000 bpd below capacity because the
corroded transit line that originally prompted the shutdown Aug. 10
is still shut down. BP is building a bypass for that line and hopes
to begin constructing a replacement pipe by early next year (Mary
Pemberton, AP/Anchorage Daily News). (All cites Sept. 27 unless
noted.) — DK