Russia 111005 Basic Political Developments

Gazprom

UPDATE 1-Romania - Factors to watch on Oct 5

http://uk.reuters.com/article/2011/10/05/idUKL5E7L506J20111005

NATURAL GAS

Russian Gazprom OAO is willing to discuss supplying natural gas directly to Romania, without intermediaries, the economy ministry said in a statement. Economy Minister Ion Ariton is on a visit to Moscow.

ROMANIA: The head of Gazprom (RTS: GAZP) Alexei Miller and Romanian Minister of Economy, Commerce and Business Environment Ion Ariton have discussed the possibility of carrying out joint projects in the field of electrical energy, Gazprom said.

http://blogs.wsj.com/emergingeurope/2011/10/05/morning-briefing-polish-rate-call-slovakia-in-view/?mod=google_news_blog

Poles join queue threatening Gazprom over gas prices

http://www.bne.eu/dispatch_text16768

bne
October 5, 2011

Polish state-controlled oil and gas company PGNiG has resurrected threats to take Gazprom to international arbitration unless the Russian company agrees to cut the price of its gas, reports Prime.

The Poles are just the latest of many major customers to resume demands that Russia lower prices as the global economy slows again. The EU has also waded in, with antitrust investigators on September 27 raiding the offices of Gazprom's subsidiaries in Germany, Czech Republic, Hungary, Poland, Bulgaria, Latvia, Estonia and Slovakia to probe whether the company is cooperating with regulators.

Like Ukraine and Turkey, PGNiG has been trying to get Gazprom to reduce the price of Russian gas since 2010. Company officials were in Moscow on Tuesday, October 4 to talk over their demands for a significant change in the pricing formula. It's reported that PGNiG is seeking to cut its gas bill by 10%.

Specifically, the Polish company wants to return to the formula that was used up to November 2006. Changes sparked by a rise in Polish demand saw the price rise 11%. In early March, PGNiG requested Gazprom reduce the price by 10%, having spent $3.3bn on Russian gas in 2010. PGNiG said at the time that it hoped to shrink its gas bill by $300m.

Earlier in the week, Turkey - the second largest buyer of Russian gas - announced it would not renew its 25-year gas contract with Gazprom because of its refusal to renegotiate the pricing formula. Turkish Energy Minister Taner Yildiz complained that the price of Russian gas has risen 39% in the last 29 months. The Russian company will now be left to negotiate new contracts with private Turkish importers.

Meanwhile, Ukraine is still locked in talks to try to persuade Moscow to lower prices. Russia is demanding either control of the country's gas pipelines or that it join its Customs Union with Kazakhstan and Belarus before it will agree.

However, in the last few months Moscow has budged in certain cases by offering price reductions to Greece and Belarus - the latter in return for a cut-price purchase of its gas pipelines leading to Europe.

At the same time, Gazprom is facing the threat of legal challenges from several private European customers that have been pestering Moscow to renegotiate prices since the gas glut which hit Europe in 2009.

In the first half of this year, it looked as though Gazprom may have ridden the storm out, as gas prices recovered on the back of rising demand in Asia for the liquified natural gas from the Middle East that has been flooding the European market. However, with global economic growth looking increasingly sluggish and the unseasonably warm weather in Europe, the Russian company will probably see demand for its gas fall again.

GOOGLE TRANSLATION

http://spb.rbc.ru/topnews/05/10/2011/618714.shtml

Poland threatens to take Gazprom to court for failure on gas discounts

Following Italy, Germany, Lithuania, Turkey, Poland aske Russia’s Gazprom to reduce the price of gas. Warsaw is trying to negotiate with Moscow on binding price formula for natural gas in spot prices. If the negotiations fail, the Poles threatened to file for arbitration in Gazprom.

Polish oil and gas state company Polskie Gornictwo Naftowe i Gazownictwo SA (PGNiG) again is in talks with Gazprom, writes "RBC daily". Now the company wants to not only get a one-time discount on gas, and essentially change the formula for calculating the price of supplies, so that she did not depend on fluctuating oil prices.

Thus, PGNiG will insist on the return of the basic formula, which operated until November 2006.

After 2006. formula has been changed since Poland became a need for additional gas supplies. As a result, the price of natural gas soared to 11%. According to the calculations of the Polish analysts, if there is a return to old-fashioned formula, the cost of PGNiG on gas purchases will be reduced by 10% and the company will save about $ 300 million

If negotiations fail, Warsaw may apply to international arbitration. Gazprom, as well as PGNiG, declined to comment on the situation.

In 2010. Poland imported from Russia, 9.9 billion cubic meters. meters of gas (7.1% of Gazprom's exports to Europe), still about 900 million cubic meters. m. she bought in Europe. The annual gas consumption in the country is about 13.7 billion cubic meters. m, of which approximately 30% is provided by its own production.
October 5 2011.

20:50 04/10/2011ALL NEWS

Gazprom CEO, Ukrainian energy minister hold new round of gas talks

http://www.itar-tass.com/en/c154/239700.html

MOSCOW, October 4 (Itar-Tass) —— Gazprom CEO Alexei Miller and Ukrainian Energy and Mining Minister Yuri Boiko held a new round of gas negotiations on Tuesday, Gazprom said.

They noted the efficiency of the dialog aimed at the fulfillment of the earlier agreements, it noted.

The previous round took place on September 30.

Gazprom and Neftegaz Ukrainy signed two contracts on gas supply to Ukraine in 2009-2019 and on gas transit to Europe across Ukraine in 2009-2019 on January 19, 2009. Gazprom and Neftegaz signed additions to the contracts on April 21, 2010.

Miller said that Gazprom was prepared to search for compromises at the gas negotiations with Ukraine. “The government holds the controlling stake in Gazprom, and we are implementing intergovernmental agreements. It is necessary to bring them to the logical end. Currently, Gazprom and Neftegaz operate under the gas delivery and transit contracts for the period until 2019. Our work is strictly based on these contracts, and there are no other documents or agreements at present. Gazprom is open to the dialog and the search for compromises,” Miller said.

Gazprom to Spend $8 Billion on Central Asia Gas, Vedomosti Says

http://www.bloomberg.com/news/2011-10-05/gazprom-to-spend-8-billion-on-central-asia-gas-vedomosti-says.html
By Yuliya Fedorinova - Oct 5, 2011 6:28 AM GMT+0200

OAO Gazprom, the Russian gas monopoly, may spend as much as $8.3 billion on gas purchases from Central Asian countries, Vedomosti said today, citing people familiar with the situation.

The average price of these contracts is $293.4 per 1000 cubic meters of gas, newspaper said. Russian company may buy as much as 29 billions of cubic meters of gas in Central Asia this year, newspaper said.

To contact the reporter on this story: Yuliya Fedorinova in Moscow at [e-mail]

To contact the editor responsible for this story: John Viljoen at [e-mail]

Gazprom decreases gas purchases from Central Asia - and to spend another RUB 12bn on renewing Gazprom Avia's fleet

http://www.bne.eu/dispatch_text16768

VTB Capital

October 5, 2011

News: Gazprom has revised its estimate for gas purchases from Central Asia (Turkmenistan, Uzbekistan, Kazakhstan and Azerbaijan) for 2011 down from 40.5bcm to 31bcm. According to Vedomosti, the company might spend USD 8.3bn on purchased gas this year. Gazprom also plans to spend another RUB 12bn on its 100% subsidiary Gazprom Avia, which is to renew its fleet.

Our View: According to our estimates, Gazprom might purchase 33bcm of gas from Central Asia, spending USD 9bn, which is broadly in line with the numbers above. As we have discussed previously, the main risk associated with Gazprom is capex surges. Continuing spending growth does little to improve investor sentiment with regards to the company, in our view.

0/05/2011 | 02:20 am

Gazprom OAO : Alexey Miller and Lee Yun-ho: growing gas demand in Asian-Pacific countries offers great prospects for regional gas business

http://www.4-traders.com/GAZPROM-OAO-6491735/news/GAZPROM-OAO-Alexey-Miller-and-Lee-Yun-ho-growing-gas-demand-in-Asian-Pacific-countries-offers-great--13826087/
The Gazprom headquarters hosted today a working meeting between , Chairman of the Company's Management Committee and Lee Yun-ho, Ambassador Extraordinary and Plenipotentiary of the Republic of Korea to Russia.

Background

On May 12, 2003 Gazprom and Korea's Kogas entered into the five-year Agreement of Cooperation which was extended for another five-year term in 2008. The Agreement embraces a wide spectrum of issues including the study of possible ways to deliver Russian natural gas to Korea. To implement the Agreement, the parties set up the permanent Joint Working Group.

On October 17, 2006 the Government of the Russian Federation and the Government of the Republic of Korea signed the Agreement of Cooperation in the Gas Industry identifying Gazprom and Kogas as the companies authorized for overseeing natural gas delivery from Russia to the Republic of Korea.

On September 29, 2008 Gazprom and Kogas signed the Memorandum of Understanding on natural gas supplies from Russia to Korea.

On June 23, 2009 as part of the working visit by Gazprom's delegation to the Republic of Korea, Alexey Miller, Chairman of the Company's Management Committee and Choo Kangsoo, President – CEO of Kogas signed the Agreement to jointly explore the natural gas supply project. In pursuance of the Agreement, a final report was issued in 2010. The report studied options for natural gas supplies from the terminal point of the gas transmission system to Korea.

On September 15, 2011 Gazprom and Kogas signed the Roadmap on natural gas supplies from the Russian Federation to the Republic of Korea. The Roadmap represents a plan of top-priority actions needed for the project implementation.

Big players ready to race for Russian natural gas

http://www.hurriyetdailynews.com/n.php?n=big-players-ready-to-race-for-russian-natural-gas-2011-10-04
Tuesday, October 4, 2011

ALİ KAYALAR

ISTANBUL- Hürriyet Daily News

Turkish energy firms prepare to race to replace state-run BOTAŞ in importing Russian gas via West Line. Aksa, a company close to Russian provider Gazprom, and Bosphorus Gaz, a Gazprom investment, are strong bidders, a source says

Turkish state-run pipeline company BOTAŞ’s recent decision not to renew a natural gas deal with Russian provider Gazprom is whetting the appetite of Turkish private firms, according to Oğuz Türkyılmaz, head of the energy council at Turkish Union of Engineers’ and Architects’ Chambers, or TMMOB.

Big electricity buyers may be among possible buyers of gas from the West Line as the contract for 6 billion cubic meters of gas between the parties fizzled last weekend over the Russian company’s refusal to decrease prices, Türkyılmaz said.

Aksa, an energy firm that has contracts with Gazprom, and Boshporus Gaz, a Gazprom partnership active in Turkey, will be strong bidders, a source close to the issue said.

Aksa and Gazprom signed a memorandum in August 2009 for joint participation in gas distribution tenders in Turkey, the source recalled.

Boshporus Gaz confirmed that it would be interested in west line gas. “BOTAŞ decided not to extend the deal but considering Turkey’s demand, someone has to buy that gas,” Hümeyra Erdoğan, a vice manager at Boshporus, said in a phone interview on Tuesday. “Turkish private companies will take distribution of the [West Line] gas and of course so will Bosphorus,” she said.

Aksa executives did not immediately respond to calls for comment.

Mehmet Şen, chief executive of Bosphorus Gaz, told Reuters on Monday that BOTAŞ’s move was “a very positive step regarding the privatization of Turkey’s natural gas market.” Şen’s father, Ali Sen, is the president of Bosphorus Gaz, where his family has the minority shares.

The move will not spoil Turkey-Russia relations in the natural gas sector, said Mehmet Kazancı, chairman of Turkey’s Natural Gas Distributors Union Association, or GAZBİR. “This will not affect bilateral relations in a negative way. In the end, Russia will sell its natural gas to Turkey anyways, but this time through private sector representatives. On the other hand, Turkey needs Russian gas to meet its domestic demand.”

Replacing the West Line resource is not an easy task, TMMOB’s Türkyılmaz said on Tuesday, citing problems of buying gas from Iran.

“Iran hardly meets its domestic demand and there are some restrictions on trading with the country,” he said.

Turkey’s deal with Algeria, another gas supplier, expires in 2014, Türkyılmaz recalled.

Russia supplies some 60 percent of Turkish natural gas demand.

Turkey buys nearly 16 billion cubic meters of gas from Russia every year via the Blue Stream pipeline, a contract for which was set to expire 23 years later. A smaller contract is for 8 billion cubic meters.

New deals not easy

TMMOB reacted against the cancelation, saying that maintaining new contracts with Russia in a very short period of time would not be easy. The contract that was not renewed expires on Dec. 31.

“May some companies, who have correctly guessed that BOTAŞ will not renew contracts with Russia, have already started talks with the Russian side?” TMOBB chairman Ali Ekber Çakar asked in a written statement on its website on Tuesday.”

The organization said it saw no reasons for Gazprom to sell cheaper gas to private companies compared with the state-run BOTAŞ. k HDN