|TOPIC OF THE ISSUE|
As Assoneft, Russia's association of independent oil producers, struggles to retain and protect market share for Russian independents, it is worth taking a look at Nelson Resources Ltd, the leading independent oil development and production company operating in neighbouring Kazakhstan.
|TOPIC OF THE ISSUE|
|A WRONG KIND OF «SANDWICH»|
In October 2004 Russia's independent oil producers association Assoneft celebrates its 10th anniversary. The OilMarket offers its congratulations and wishes strength and prosperity to the members of association. At the same time, for our magazine, Assoneft's historical milestone is more than just a mere well-wisher's diary date, but rather an opportunity to highlight those sorry tendencies dogging this sector of Russia's oil industry.
|PERSON OF THE ISSUE|
President of Rosneft oil company
The discussion of Rosneft and Gazprom merger has been followed up for some time now. The topic was further heated up after the media got hold of a public letter from Rosneft's president to the President of Russia. Examining the letter without undue haste will simmer it down to the following: Rosneft, as embedded by its president, has no objection to a merger with Russia's gas giant, at a cost.
|PHOTO OF THE ISSUE|
The Italian Afromax class tanker Vallombrosa, moored at Pivdenny oil terminal (Ukraine, Odessa region), loaded 80,000 t of Russia's export blend Urals. This is the first load of «reverse» oil from Odessa–Brody trunk pipeline; the reverse was launched this summer after Ukrtrans nafta, Ukraine's pipeline operator signed an agreement with TNK-BP.
|DIRECTLY TO EUROPE|
Oil product pipeline Kstovo– Yaroslavl–Kirishi–Primorsk being under construction from 8 October, will allow Russia both to increase export of oil products and bypass Ventspils port, channeling a significant part of exports directly to Europe.
|THE CPC AND RUSSIA, A NEW STAGE|
The CPC expansion plans are likely to go through by the end of the year, said Ian MacDonald, general director of the CPC on KIOGE-2004 conference in Almaty. The statement is an assessment of negotiations between the consortium and the largest shareholders, governments of Russia and Kazakhstan and shows that all sides are interested in timely and speedy expansion of the pipeline system.
|REVERSE IN ACTION|
The day of 29 September was a launch date for Odessa–Brody trunk pipeline reverse project: Italy-registered Vallombrosa was loaded with 80,000 t of Russia's export blend Urals. Although the port has been loading crude before, the reverse flow direction then applied only to Avgustovka–Pivdenny 52-km leg of the pipeline.
Insufficient throughput capacity of CPC systems forced US–Kazakh–Russian JV Tengizchevroil, the largest oil producer in Kazakhstan, to resume export railway shipments starting from 2005.
|KIOGE-2004: THEY DID IT AGAIN!|
British ITE Group Plc and its Caspian and Russian subsidiaries Iteca and ITE Moscow along with IEG-GIMA (Germany) for the 12th time held very successful Kazakhstan International Oil & Gas Exhibition and Conference (KIOGE-2004), the most popular industry annual venue in the CIS and Baltic region.
Ukraine's oil&gas company NAK Naftogaz Ukrainy signed PSA agreement with Libya's National Oil Corporation (NOC) on 10 October in Tripoli. Only a year has passed since NAK and NOC signed memorandum on cooperation but Ukrainian operator already reached the launch stage for its projects on oil and gas production in the country formerly closed for foreign investors. The Libyan projects are the integral part of strategy for the Ukrainian company, which aims to diversify oil&gas production assets and to participate in development of the fields outside Ukraine — including Libya and Iraq among other countries. The strategy, used previously by Finland's Fortum and Austria's OMV, now global companies, would propel NAK into the global league, too.
Despite of historical alliance with Russia's oil industry, nowadays Lithuanian company Mazejkiu Nafta partitioned from Russian petroleum sector not only by its territorial location but also by sheer technological advance. Having walked a thorny path and having paid a full price for EU entry ticket, the Lits were able to build upon the existing potential, expanding oil the sector along the way.
|Tackling the stereotypes|
Despite Russia's oil producers benefiting from mega-profits on crude oil sales, the gap between the performance standards of refineries incorporated in Russia's largest vertically integrated oil companies and those of the Western refining industry is constantly widening.
Despite growing since the end of September crude prices for the benchmark North Sea and US blends, discounts for the medium sulphur blends, including Russia's Urals, reached record-breaking levels ever both in NWE and in the Mediterranean. By mid-October, the discount on Russia's export blend to Brent benchmark topped $7.6/bl, keeping Urals out of the sacred $50/bl level.
|BETTING ON THE DIFFERENTIATION|
The task group of governmental commission on safeguard measures in foreign trade and tariff policy has developed a new concept for shaping oil products duty. Its impact on export efficiency and on domestic prices will be apparent in 2005.
|TOTAL'S RUSSIAN STRONGHOLD|
The reports in media on a French company desire to acquire shares of «modest Russian oil company» led the market to believe that the transnationals are interested in top-ten of Russia's oil&gas producers, which even rallied the share price of some of them. Shortly afterwards it surfaced that the French target controlling stake of Novatek, the second largest gas producing company in Russia.
|EXPLORATION AND PRODUCTION|
|KAZAKHSTAN: THE BEST DAYS END|
Foreign investors forced to accept Astana's new rules of the game
A mounting number of disputes between foreign investors and the Kazakh government has hampered several upstream projects over the last couple of years. These cases involve both the biggest corporate names and many minor producers, with multimillion and even multibillion claims earmarked.
|EXPLORATION AND PRODUCTION|
|THE MPR LINES UP LICENSE-HUNTERS|
In October Russia's ministry of natural resources (MPR) defined new 2005 procedures for oil&gas production industry. The most important, from our point of view, is the news about approved list of the sites to be auctioned in 2004–2005, the comments and recommendations on the new reading of «On Subsoil» legislation, and development trends at Kovykta and Sakhalin–3 project.
ConocoPhillips purchase of the Russian government's 7.59% stake in Lukoil, an oil producer, is hailed as the biggest privatisation in Russian history. The appeal and price of the slice stem from a number of factors, including the volume of stocks in Russian giant's repository and company's involvement in international projects. In the same time, both the set-up of the auction and the price the state received for the stake spurred off contradictory appraisals from industry's analysts and state officials alike
|THE END IS NIGH|
The well-publicised capitalisation audit of Yuganskneftegaz and the actions of Russia's federal authorities indicate that the Yukos siege is about to come to the gloomy end.
|SAFETY IS AFFORDABLE TODAY|
Soaring oil prices and swelling bank accounts of oil exporters seem to be changing Russia's oil companies set of priorities, ultimately leading to better safety of labour and environmental standards of operations.