Central and Eastern Europe

09 March 2009

Eastern Europe and CIS

Azerbaijan

  • Socar, the national oil company, is studying whether it is technically feasible to export gas from the offshore Shah Deniz field to Russia. Experts from Azerigaz, the domestic gas-distribution firm, and BP-Azerbaijan have been sent to study the condition of sections of an old pipeline that previously delivered Russian gas to the country, and compressor stations along its route. In 2007, Azerbaijan ceased being a net importer of gas, with the launch of Shah Deniz.
  • Khoshbakht Yusifzade, vice-president of Socar, says the country has more than 2 trillion cm of gas reserves - enough to support the Nabucco pipeline to bring Caspian gas to Europe. Reserves are concentrated in the Caspian Sea at the 1.2 trillion cm Shah Deniz field and at a cluster of three deposits, called ACG, which hold a combined 300bn cm. Other fields hold more than 0.5 trillion cm of reserves. Yusifzade, trained as a geologist in the Soviet era, is one of the country's most respected and long-serving oilmen. The Nabucco project is designed to bring first gas to Europe in 2013, but investors have not secured enough gas to fill the system.

Belarus

  • Energy minister Alyaksandr Azyarets says the government plans to allocate almost $64bn for the construction of a nuclear power plant in 2009. The plant site is in north Astravets district, in Hrodna region.
  • Gazprom has increased its stake in Beltransgaz to 37.5%, after paying $0.63bn for another 12.5% stake in the state-controlled gas-pipeline operator. Under a 2006 agreement between Gazprom and the government, the Russian gas firm will buy a 50% stake in Beltransgaz for $2.5bn, in four tranches, to form a joint gas-transport company. Gazprom paid for the first two tranches, and a 25% stake, in 2007 and 2008, while the final 12.5% stake and $0.625bn payment is due before 1 June 2010.

Bulgaria

  • US-based Direct Petroleum Exploration (DPE) has found 6bn cm of gas in the Deventci well in the north of the country. The gas was found at a depth of 4,100 metres and contains a high content of condensate, which will be sold to the country's Lukoil Neftochim refinery. Further testing is under way.

Central Asia

  • Iran has proposed to join Russia in the creation of a unified electricity-supply system in the region, where both countries are competing for control of hydro-electric projects that could supply the whole of Central Asia. Iran is already investing in hydropower plants in Tajikistan, while Russia recently agreed to take over the Kambarata hydro-electric project in Kyrgyzstan. Both Iran and Russia are interested in investing in Tajikistan's 2.4 GW Rogun project, which was shelved following the collapse of the Soviet Union in 1991.

Czech Republic

  • The government, which holds the EU's rotating presidency, has invited Kazakhstan and Turkmenistan to a May conference in Prague to consider ways of developing natural gas transit through the southern Caucasus to the EU. A significant theme will be Central Asian input into the proposed Nabucco pipeline, through Turkey to Austria.

Kazakhstan

  • Tengizchevroil (TCO), the Chevron-led joint venture, boosted oil production at the Tengiz field to 17.3m tonnes last year, up from 13.9m tonnes in 2007. Tengiz, one of the biggest oil deposits in the world, holds 0.75bn-1.00bn tonnes of recoverable reserves and 3bn tonnes of explored reserves. An additional 190m tonnes of oil lies at the neighbouring Korolveskaya field, also licensed to TCO. Chevron's partners in TCO include ExxonMobil, LukArco (a joint venture between Lukoil and BP) and state-owned KazMunaiGaz.
  • Liquids production rose to 6,296 tonnes, or 1.48m b/d, in January, up by 8.4% compared with January 2008, according to the country's statistics agency. Oil output was 5,294 tonnes, with condensate production at 1,001 tonnes. The agency also said that crude exports in 2008 were almost unchanged compared with 2007, at 60.7m tonnes.
  • The president of Kazatomprom, Mukhtar Dzhakishev, says the state-owned nuclear company could start exporting uranium to India as early as this year, once a memorandum is signed over the use of nuclear energy for peaceful purposes.

Kyrgyzstan

  • President Kurmanbek Bakiyev has signed an agreement with Russia that will see the latter provide a loan to complete construction of the Kambarata-1 hydro-electric power plant. Completion of construction of Kambarata-1 is essential to helping the country alleviate chronic power shortages. The intergovernmental-loan agreement will see Russia loan $300m at a 0.75% annual interest rate, while Russia's Inter-RAO UES will represent the country in a 50:50 joint venture with the state in operating the plant.

Poland

  • The country's largest oil and gas producer, PGNiG, is planning capital expenditure of Zl3.5bn ($0.94bn) this year. Of the total, between Zl1.35bn and Zl1.45bn would be spent on exploration and production, at home and abroad, concentrating on the North Sea. PGNiG has a 15% stake in three license areas in the Skarv and Snadd fields on the Norwegian Continental Shelf. Production in the fields, which contain an estimated 37.9bn cm of gas and 15m tonnes of crude, is expected to start in the second half of 2011.
  • Testing at the state-owned energy holding Tauron's new 460 MW coal-fired power plant, at Lagisza, began in February. The new unit should be fully operational either at the end of the first quarter or the start of the second. Construction began at the start of 2006, and cost Zl2bn.

Romania

  • Aurelian Oil & Gas, which operates the Lilieci-1 well in the EIII-4 Bacau concession, said it logged test production at rates of up to 4,600 cf/d of gas and said it could be developed as a commercial discovery across multiple producing zones. Lilieci-1 is Aurelian's third successive successful well in the country, following Fratauti-2 and Vicsani-1 in the Brodina EIII-1 concession. The Lilieci-1 well is the company's first well in the Bacau concession and highlights the general potential of the block, says Aurelian. Around two-thirds of the country's gas consumption comes from indigenous production, the remainder is imported from Russia.

Russia

  • Gazprom estimates it will cost €25bn to build the South Stream pipeline to deliver natural gas across the Black Sea to southern Europe, providing a new export route that bypasses Ukraine. South Stream is being undertaken in a partnership with Italy's Eni and is expected to start up by 2015.
  • Rosneft, the state-controlled oil company, plans to invest $2.7bn in eastern Siberia in 2009. The highlight of the year will be start up of the Vankor oilfield, in the far north of Krasnoyarsk region, near the Arctic coast, where production will eventually build to 25m t/y. It is not clear when Rosneft will start production at Yurubcheno-Tokhomsk, its other big field in eastern Siberia, which holds an estimated 0.7 trillion cm of gas and 380m tonnes of oil.
  • The country exported 204.88m tonnes of crude to markets outside the FSU last year, 7.4% less than in 2007, according to the federal customs service. Sales of refined products outside the FSU increased by 32.7%. Crude-oil exports to former Soviet republics totalled 16.76m tonnes in 2008, about the same as in the previous year. Natural gas exports totalled 174.3bn cm in 2008, 158.4bn cm delivered to Europe and 15.9bn cm to the FSU. Exports of oil and gas accounted for 72.4% of the country's total foreign earnings in 2008, compared with 68% in 2007.
  • Surgutneftegaz expects to produce 61m tonnes of oil in 2009, a slight drop from last year's production of 61.7m tonnes. Most of the company's upstream assets are in western Siberia.
  • RusHydro will invest $2.44bn to expand the country's hydro-electric power potential in 2009, adding 145 MW of new capacity. Last year the state-controlled company had to slash expenditure by almost 30% after the onset of the credit crunch. This year, the government plans to invest about $0.5bn buying more shares in the company. RusHydro is the world's second-biggest producer of renewable energy, after Canada's Hydro-Quebec.
  • Sibir Energy, the UK-listed independent, says it is owed $325m by its main shareholder, Chalva Tchigirinski - not $115m as earlier stated. Sibir said in October that it was prepared to spend $340m bailing out distressed property assets owned by Tchigirinski, including the 612 metre Russia tower designed by Norman Foster in Moscow's glitzy new business district. But the company abandoned the proposal after shareholders revolted.
  • The European Court of Human rights accepted a $34bn lawsuit filed against the Russian government by the former management of Yukos, the biggest claim it has ever handled. Mikhail Khodorkovsky, the founder of Yukos was jailed for fraud and tax evasion in 2004 and is still serving a nine-year sentence in an eastern Siberia prison. He is also facing new theft and embezzlement charges. It is not clear when the European Court will hear the case.

Tajikistan

  • The country began receiving electricity imports from Kazakhstan, through Uzbekistan, at the start of February. Kazakhstan is reportedly supplying 1.5 GWh/d through the same high-voltage cable that Turkmenistan formerly used to supply electricity to the country. Tajikistan failed to reach a new supply and transit agreement to extend the 2008 electricity-import agreement with Turkmenistan.

Turkmenistan

  • The country plans to increase gas exports to 51.9bn cm this year, from 47.7bn cm in 2008. About 80% of exports are sold to Russia, with Iran lifting the remainder though a southern pipeline. China has contracted to buy up to 30bn cm/y of gas from the country through an under-construction pipeline east out of central Asia. Plans to commission the pipeline late in 2009 have been delayed for an unspecified period.
  • Russian gas producer and trader Itera has filed a bid to develop blocks 21 and 22 on the Caspian Sea shelf. The company's CEO, Vladimir Makeyev, says a delegation of Itera officials will visit the country in the near future to discuss development of these blocks. He adds that development of the blocks would be risky, as their reserves have not been proved.

Ukraine

  • Gas-transit volumes through the country dropped by 58.3% in January, compared with the same month in 2008, according to the fuel and energy ministry. Only 4.41bn cm of gas passed through the transit system in January as Russian exports to Europe were halted for two weeks as a result of a price dispute between Gazprom and state-owned Naftogaz Ukrainy.

Uzbekistan

  • The country says it would support a new gas pipeline to carry extra central Asian supplies to Russia, easing concerns in the Kremlin that the country might divert gas to Europe. The announcement came after Gazprom agreed to pay European prices for gas imports from the country this year.
  • The country halved gas supplies to Tajikistan in February, to 20,000-22,000 cm/d, because of an $18m debt to the national gas company, Uztransgaz, a Tajiktransgaz representative told newswires. The country is the only supplier of natural gas to Tajikistan.





Comment on this article

Comments
  • All comments are subject to editorial review.


 

Latest issue: October 2014

The G-word

Geopolitics has lost its impact on the market and the fundamentals are bearish


View online now