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Eastern Europe and CIS
Azerbaijan The country increased gas production in the first 10 months of 2009 by 1.0%, compared with the same period in 2008, to 19.3bn cm. Some 8.2bn cm was associated gas produced by BP-led AIOC at the Chirag, Azeri and Guneshli oilfields in the Caspian Sea. The rest was produced by the same consortium and state-owned Socar at the offshore Shah Deniz deposit. Oil output increased by 12.1% compared with 2008 to 42.257m tonnes in the January-October period. Of the total, AIOC produced 35.2m tonnes, up by 15.2%. Transit of gas from phase two of the Shah Deniz field could be re-routed through Russia if already difficult talks with Turkey fail, according to a Dow Jones report quoting Total's senior vice-president for Central Asia, Arnaud Breuillac. Turkey is demanding prices as low as those negotiated during the first phase, despite the change in market conditions, he said. Total holds a 10% interest in AIOC, which is developing Shah Deniz. The other consortium members include BP (operator) Statoil, Russia's Lukoil, Turkey's state-owned TPAO and Socar. Bulgaria The country has warned Russia it will pull out of the trans-Balkan oil pipeline unless the Kremlin guarantees the project will not pollute the Black Sea coast. Bulgaria agreed to host the pipeline running from Bourgas, on the Black Sea, to Alexandroupolis, on the Greek Adriatic, in 2007, but local environmentalists have protested against the scheme since then. The pipeline will provide Russian with a new outlet from the Black Sea to the Mediterranean that bypasses the crowded Bosporus Straits. State-owned energy group Bulgarian Energy Holding (BEH) will float on the stock market at end-2010, at the earliest, once restructuring has been completed. BEH groups together the assets of the country's Kozloduy nuclear power plant, gas monopoly Bulgargaz, Bulgartransgaz and several coal mines and power stations. The government has signed a gas-supply deal with Azerbaijan in an attempt to reduce its almost total dependence on Russian imports. The two countries will also look at the option of delivering compressed Azeri gas by tanker to Black Sea ports. Energy minister Traicho Traikov said Azeri imports could amount to as much as receive 1bn cm/y. Croatia Italy's Eni and local Ina have started gas production from six wells at the Annamaria A platform, in the Adriatic Sea. Annamaria, which straddles the maritime border between Italy and Croatia, is set to produce about 1.6m cm/d of gas at capacity. Czech Republic France's Areva has signed a 15-year contract with state-owned utility CEZ to provide uranium enrichment services for two reactor units at CEZ's Temelin nuclear power plant. Hungary Mol reported third-quarter net profit of Ft12.9bn ($71.44m), up from a loss of Ft4.9bn in the same period of 2008. The company consolidated Croatia's Ina, in which it holds a 47% stake, into its results for the first time. Mol said its third-quarter results were underpinned by a stronger upstream performance resulting from higher production volumes and an improvement in petrochemicals and the gas and power segment. Kazakhstan Eni has signed a memorandum of understanding with state-owned KazMunaiGaz to explore the offshore Isatay and Shagala blocks in the Caspian Sea. Eni has also offered to invest in a plant to sweeten gas from the Karachaganak field and to help upgrade the Pavlodar oil refinery. The Italian company is seeking to bolster its presence in the country where it is a partner in foreign groups developing the Karachaganak and Kashagan fields. The latest agreements were signed in the presence of President Nursultan Nazarbayev and Silvio Berlusconi, the Italian prime minister, who was visiting the country. Coal production is expected to drop this year to about 93m tonnes, almost 12m tonnes less than in 2008 following a sharp fall in export demand. The country exported 27m tonnes of coal in 2008, mainly to Russia. Exports are expected to total 19m tonnes in 2009, but should rebound in 2010. Oil exports to China through a pipeline from the centre of the country totalled 6.02m tonnes in the first 10 months of the year, 20% more than in the same period of 2008. The pipeline's 10m t/y capacity will double this month following start up of a 1,800 km extension to tie in oilfields in the west of the country. Some 18.2m tonnes of Kazakhstani oil has been delivered to China since the pipeline became operational in June 2005. Indian steel magnate Lakshmi Mittal has reportedly pulled out of a project to develop an oil block with Indian joint-venture partner Oil and Natural Gas Corporation (ONGC). ONGC Mittal Energy was to have acquired a 25% stake in Satpayev block from KazMunaiGaz and invest a total of $400m in the project. However, "Mittal Investments has decided that it does not wish to pursue the investment opportunity in Satpaev. This will be developed by ONGC alone," according to a report in India's Economic Times, citing an unnamed Mittal group representative. KazMunaiGaz' consolidated net profit in the January-September period fell by 70% compared with same period a year earlier to KT107bn ($718m) because of the lower oil price. Kosovo The government has abandoned a project to build a €3.5bn, 2 GW thermal power plant because of a lack of investor interest caused by global economic crisis. Two consortia – Czech CEZ and US-based AES; Italy's Enel and Greece's Sencap – were left in the race, but had asked the government to improve the conditions. Instead, the government will issue a new tender for a 1 GW plant. Poland The country's largest utility PGE said it has agreed with France's EdF to run a feasibility study of Warsaw's plans to develop at least one nuclear plant by 2020. Last year, prime minister Donald Tusk picked PGE to lead the project aimed at building two 3 GW nuclear power plants. The country's second-largest utility, Tauron, has selected the local arm of UniCredit and UBS to manage its planned initial public offering (IPO) next year, which could be worth more than $1.5bn. Following the IPO, Tauron would become the country's third listed energy firm. The other two are state-controlled PGE – which, in November, completed Europe's largest IPO in 2009, worth $2.2bn – and Enea, which floated on the stock exchange last year. Romania UK AIM-market-listed Aurelian Oil & Gas says the shallower sections of its Voitinel-1 well in the Brodina concession turned up a gas discovery of 50bn-100bn cf. The discovery is a change of fortune for the Voitinel-1 well, which was drilled in September, but initially produced disappointing results from its main, deeper target zone. Russia State-controlled Gazprom produced 1.45bn cm of natural gas in October, 20.8% more than in the previous month, as gas demand began to pick up in Russia and Europe. Production totalled 460.3bn cm in the first 10 months of the year, 16.6% less than in the same period of 2008. Lukoil has borrowed $300m from the European Bank for Reconstruction and Development to help fund modernisation of the TGK-8 electricity company. The project will reduce greenhouse-gas emissions at TGK-8's generating facilities. Serbia German utility RWE and JP Elektroprivreda Srbije are to start work on a 3 GW hydro-electric power plant. Potential sites for the plant include locations on the Danube, Morava and Drina Rivers. Turkmenistan The country will double the capacity of its existing gas-export pipeline to neighbouring Iran to 14bn cm/y, according to energy minister Oraznur Nurmyradov, although no timeline was given for the expansion. Russia, which traditionally bought almost all the country's exports, stopped imports earlier this year following a pipeline explosion, which has escalated into a diplomatic stand-off over new supply terms. That has prompted the country to seek closer ties with alternative buyers such as Iran, China and the West. Ukraine The country plans to convert Special Drawing Rights, the nominal monetary unit of the IMF, to help pay for Russian gas imports, having struggled this year to settle its monthly gas bills. Unpaid bills have raised fears of a fresh dispute with Gazprom over gas trading terms that could undermine European energy security. Russian gas supplies to Europe were disrupted for two weeks in January 2009 after Gazprom cut deliveries to the country. The IMF has provided Ukraine with $2bn to help soften the effects of the global financial crisis. The European Bank for Reconstruction and Development (EBRD) is postponing a decision on forwarding a portion of a loan to Naftogaz, because the state-owned company has delayed certain reforms. The delayed $300m is part of a larger loan package intended to fund the state-owned company's Russian gas imports and storage. It was contingent on a series of reforms in the sector and the company, including regular audits, changes to its tariff policy and the establishment of new legislation on state purchases. "Unfortunately, very little progress has been achieved," says a Kiev-based EBRD spokesman. Uzbekistan State-owned Uzbekneftegaz says it is in talks with the EU about possible co-operation in gas-pipeline modernisation projects that could pave the way for the country to export gas to Europe. Relations with the EU have warmed since the 27-nation bloc agreed this year to lift an arms embargo imposed on the republic in 2006. The country produces about 70bn cm/y of gas and exports 15.2bn cm/y to Russia. The completion of a gas pipeline to China this month will allow the republic to diversify its export routes. Russia's Lukoil plans to speed up development of gas condensate fields in the Southwest Gissar area. Production is now expected to start in the second half of 2010. The Southwest Gissar area contains seven gas condensate and oil fields with combined reserves of about 100bn cm of gas and about 6m tonnes of liquids. Lukoil also holds exploration licences for two blocks at the Ustyurt area. Lukoil plans to invest $1.196bn on development projects in the country.
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