|TOPIC OF THE ISSUE|
|BEEFING UP THE STATE MUSCLE|
Russia's natural gas monopoly Gazprom is set to take over Rosneft
The Kremlin gave a nod to the transfer of the state oil company shares to the natural gas monopoly in exchange for Gazprom's subsidiary shares in order to consolidate in the state hands controlling stake in Gazprom. This, the government authorities say, is paving the way to much sought market capitalisation growth and liberalisation of Gazprom's shares trade. Analysts name different reasons for the share swap and many hold that the state uses this step to boost its control over strategically important sector setting up at the same time conditions for attracting multibillion investments to the country.
|TOPIC OF THE ISSUE|
The memorandum on cooperation, signed by Russia's companies Gazprom and Rosneft and Norwegian Statoil on 8 September sets up a new stage in the development of Shtockman gas and gas condensate field located on the Barents Sea shelf.
|TOPIC OF THE ISSUE|
|ROSNEFT'S HARVEST SEASON|
The only state-owned Russia's vetically integrated oil company tangibly strengthened its positions.
|PERSON OF THE ISSUE|
|The man and the pipeline|
The appointment of Semyon Vainshtock as a head of oil pipelines operator Transneft five years ago meant little to everyone but narrow circle of industry professionals. However, over the past five years, Transneft achieved mind-blowing results, almost doubling export capacity from 120mn t (2.4mn b/d) to 210mn t (4.2mn b/d).
|PHOTO OF THE ISSUE|
The launch 14 September of Lukoil's hydro-cracking unit, part of the company's newly built $365mn crude processing facility at 240,000 b/d Perm refinery, was no doubt the most remarkable landmark on the industry's otherwise dim landscape over the last two years.
|CPC: COMPLEXITY OF GROWTH|
On 10 September, the Caspian Pipeline Consortium (CPC) reported that since beginning of shipments in October 2001, its systems had moved a total of 40mn t of Caspian crude volumes for export. This volume, pumped through the CPC and Southern Ozereyevka oil terminal over almost three years of operation may look remarkable, but it fails to impress the Russian side. In contrast, the Baltic Pipeline Systems (BPS), which was launched two months later, now is capable of shipping such a volume in less than a year. This comparison puts the CPC in an unfavourable light and raises a great deal of questions regarding the development of the CPC as well as calls for an unbiased assesment of the project's future.
|CASPIAN CRUDE: assessing export routes|
The rapid growth of Kazakhstan's crude and gas condensate production, nearing 1.2mn b/d this year and set to rise to 2mn b/d by 2010, poses massive challenge for Kazakhstan pipeline infrastructure. Having started the project on pipeline crude shipments to China, Kaztransoil, the Kazakhstan pipeline operator, also studies another strategic direction — shipments from the Kazakhstan's Caspian shelf. The start of output there is penciled for 2007. This means that Kazakhstan's key pipeline operator must design and launch new strategic project within very limited period of time.
|WORKING FOR THE FUTURE|
Aktau port modernisation and reconstruction make up an impotant part of Kazakhstan's strategy of exports diversification.
|THERE'S ALWAYS ROOM FOR BUSINESS...|
CIS industry of oil terminals construction largely remains the prerogative of oil companies or state structures. The story of the company Illichevsk fuel terminal (ITT by Russian acronym) proves that every rule has its exceptions: in March 2004 the ITT company completed a new transhipment facility in Illichevsk near Odessa. Regardless of abundance of oil loading facilities in the region, the owners of the company hold that the growing volumes of Black Sea oil transit shipments will ensure stable workloads for the new complex. The terminal's advanced technology reduces the possibility of loss in terms of both volume and quality of oil products.
|CHOKING UP THE INDUSTRY|
The government's resolution on regulation of the domestic oil products market for more than half-year haunts the federal officials. With all due diligence of resolution’s executors, there is still no efficient regulation route: certain hopes were pinned on the change of export duty rates, but the export duty hike, leave alone the other options, is not a cure-all solution.
|NIZHNEKAMSK REFINERY: IN THE VORTEX OF THE MARKET|
The life adjusts the plans of Nizhnekamsk modernisation
Having laid the first stone of Nizhnekamsk refinery in 1997, Tatneft, the key investor of the project, has managed over the five-year period to create one of the most high-tech refineries on the FSU landscape. Presently the refinery facilities include primary oil treatment unit, middle distillates hydrofining complex, visbreaking unit, facilities for production of hydrogen and unoxidized road bitumen. The launch of bitumen production facility in 2003 practically completes the first stage of refinery modernisation.
|LUKOIL BRINGS EURO STANDARDS TO PERM|
On many occasions OilMarket has highlighted the problems of the sorry state of Russia's refining sector. High returns on crude oil exports have turned domestic refineries into the «cinderellas» of the industry. However, the advanced oil processing complex (known as KGPN by its Russian acronym) launched by Lukoil at its 240,000 b/d Perm refinery on 14 September, proves that the sector still holds some promise and raises hopes that the industry leader's initiative on refinery modernisation will be followed by other oil companies.
|CRUDE EXPORTS: UP TO THE NEW HEIGHTS|
Transneft approved oil export schedule for 4Q 2004 (outside the CIS) at record 47.27mn t, (including 40.42mn t of Russia-produced crude), comparing to 45.46mn t penciled for export shipments in 3Q 2004. Thus, 4Q scheduled volumes exceed 3Q allocation by some 4%.
|YUKOS: EXPORTS FACE DISRUPTIONS|
Russia's troubled giant Yukos crude exports disruptions, largely anticipated by foreign buyers, become reality. Following 16 September decision of the company's board, Yukos suspended crude deliveries to Lithuania's 260,000 b/d Mazejkiu refinery, outlined by the 17 June 2002 agreement with the Lithuanian side. According to the agreement, the Russian company guaranteed an annual delivery of no less than 4.8mn t (96,000 b/d) of crude to the Lithuanian unit for the period of ten years.
Ukraine steps up its efforts in gas industry
The legacy of depending on imported energy carriers prompted managers of Ukrainian gas industry to step up the activities both in gas reserves exploration and in securing payments for the distributed gas.
|THE PHENOMENON IN RUSSIA|
ENSURING QUALITY — ENSURING SURVIVAL
It is common in Russia and other former Soviet republics to believe that if something is domestically produced it must be cheap and of poor quality. Managers traditionally try cutting costs when buying on the science-intensive market of laboratory equipment for the oil and gas industry. Plain to see that low price is the key factor in this shopping. Suppliers of domestically manufactured equipment are forced to offer their clients «fashionable» goods and services, only dreaming of the times when quality domestic manufacture would be appreciated. No doubt that cutting cost against quality places a ticking time bomb under the future development of customer's ventures. However, as with every other rule, there are exceptions. On these pages we discuss one of those.
|EXPLORATION AND PRODUCTION|
|ON CLAY FEET|
The exploration of new reserves is hopelessly lagging behind the pace of production growth
The lack of proven reserves is becoming an increasingly alarming reality for the Russian oil industry which has contributed much to an unprecedented budget surplus over the past few years. But industry insiders warn: today's party may very soon turn into tomorrow's bad hangover.
|EXPLORATION AND PRODUCTION|
|To Russia … via Libya|
The exhaustion of Ukraine's oilfields urges Naftogaz Ukrainy to search for resources outside the country. It took the company less than a year to succeed in signing the production sharing agreement (PSA) with the National Oil Company of Libya. Now similar negotiations are underway with Syria and Saudi Arabia. Somewhat unexpectedly, however, it is the Russian project that will most likely be first to materialise.