Posts Tagged ‘Gazprom’

Royal Dutch Shell CEO Peter Voser (left) and Gazprom Chairman, Alexey Miller

Sunday, 22 Jan 2012

The Gazprom headquarters hosted a working meeting between Mr Alexey Miller Chairman of the Company Management Committee and Mr Peter Voser Chief Executive Officer of Royal Dutch Shell.

The parties discussed the issues of bilateral cooperation as part of the Sakhalin II project.

They also addressed the joint efforts of Gazprom and Shell within the Protocol on Strategic Global Cooperation and highlighted the companies’ success in the global energy market.

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By NATALIYA VASILYEVA, AP Business Writer: 23 December 2011

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MOSCOW (AP) — The sinking of a floating oil rig that left more than 50 crew dead or missing is intensifying fears that Russian companies searching for oil in remote areas are unprepared for emergencies — and could cause a disastrous spill in the pristine waters of the Arctic.

Only four months ago, Russian energy giant Gazprom sent Russia’s first oil platform to the environmentally sensitive region, and industry experts and environmentalists warned it is unfit for the harsh conditions and is too far from rescue crews to be reached quickly in case of an accident. They are demanding Russia put Arctic oil projects on hold.

Russia is the world’s largest oil producer, but it extracts most of its oil onshore, with no more than 2 percent of its production coming from mature offshore fields in the warm Black and Caspian seas and relatively new fields just off Sakhalin Island in the far east.

As Russia’s core oil fields in Eastern Siberia are depleted, companies are looking north. The government hopes that up to 80 million tons of oil will be produced annually in the Arctic by 2030.

Russia is trying to assert jurisdiction over parts of the Arctic, which is believed to hold up to a quarter of the Earth’s undiscovered oil and gas. By speeding up the Arctic oil project, the government is strengthening its bid.

The Kolskaya floating oil rig that capsized and sank in the Sea of Okhotsk on Dec. 18 had done exploratory drilling for Gazprom Neft Shelf, a subsidiary of Gazprom. It was being towed back to an eastern Russian port in a fierce storm when a strong wave broke some of its equipment and portholes, and it capsized in the choppy water.

Gazprom is now pioneering the oil development of Russia’s sector of the Arctic and was the first Russian company to dispatch a drilling rig to the Pechora Sea in northwest Russia.

Russian oil companies have never operated in weather conditions as harsh as those found in the ice-bound Arctic, where ice ridges are meters (yards) deep and storms are frequent. The Kolskaya accident has reinforced fears that they are unprepared to meet the challenges.

“This tragedy has once again reminded us of how high the risks of offshore accidents are,” said Alexei Knizhnikov, an oil and gas policy officer with the World Wildlife Fund.

WWF, Greenpeace and five regional Russian environmental organizations signed a petition on Thursday calling for a parliamentary investigation and urging the government to suspend the oil projects for now.

The petition accuses government agencies of failing to enforce environmental and safety regulations and says that current laws are inadequate for dealing with the magnitude of risk in the Arctic.

Environmentalists first raised their concerns when Gazprom announced in August that it was sending its platform to the Arctic for exploratory drilling in the Pechora oil field, which holds some 6.6 million tons of oil.

The platform’s underwater section was built in Russia in the 1990s, while its upper part comes from a platform built in Scotland in 1982 and decommissioned from the North Sea in 2002.

Gazprom insists the Prirazlomnaya platform, billed as the first to be ice resistant, is safe and contains no old equipment except for its frame.

“We’ve done our best to implement the latest technology and regulations to prevent any accidents,” Vladimir Vovk, chief of Gazprom’s department for the management of equipment and technologies in developing marine fields, said at a news conference in September.

Environmentalists question both the state of the equipment and the platform’s design. Because the Prirazlomnaya is situated hundreds of kilometers (miles) offshore, it is designed to store huge quantities of oil until tankers can arrive to collect it. The platform’s storage tanks can hold up to 120,000 tons (840,000 barrels).

Unlike the Kolskaya, which was carrying no oil when it sank, the Arctic platform could potentially cause a disastrous spill if it capsized in icy, rough seas.

The distance from shore would also complicate any rescue or cleanup mission. The nearest port of any size is in Murmansk, some 1,000 kilometers (600 miles) away.

Even in warmer, more hospitable waters, accidents at oil platforms have been disastrous.

A giant oil slick was approaching the coast of Nigeria on Friday after what Royal Dutch Shell said was a spill during the transfer of oil from its floating platform in the offshore field to a waiting tanker. The spill came less than a week after Shell received approval from the U.S. government to drill exploratory wells off Alaska’s northwest coast, in the Chukchi Sea near Russian waters.

In the Gulf of Mexico, the 2010 explosion of the BP-operated Deepwater Horizon rig killed 11 workers and led to more than 200 million gallons (4.8 million barrels) of oil spewing from a well deep beneath the sea.

Russia’s parliament gave preliminary approval in September to a bill intended to tighten regulations on oil companies working in the Arctic.

Yekaterina Khmelyova, an environment law officer at the WWF, said the bill does not do enough to hold the oil companies publicly accountable or to guarantee a full assessment of the environmental risks. She said environmentalists and the business community are working on a new draft that among other things would provide for the creation of clean-up funds.

Oil industry experts also have expressed doubts about Gazprom’s expertise in offshore drilling in the Arctic as well as the platform’s design.

They have questioned the economic justifications for the project. The oil in the Pechora field is of low quality and the project will be loss-making without tax breaks, said Valery Nesterov, a senior analyst with the Moscow-based investment bank Troika Dialog. For state-controlled Gazprom, the Arctic project appears to be more of strategic importance than about any immediate economic benefits, he said.

“This is clearly a strategic task that the company is executing,” Nesterov said. “It looks like Russia is not going to give up that strategy since the interests of ship yards, machinery producers and, possibly, the military are involved.”

Four years ago, Russia staked its claim to supremacy in the Arctic by planting a titanium flag on the ocean floor and arguing that an underwater ridge connected the country directly to the North Pole. The United States does not recognize the Russian assertion and has its own claims, along with Denmark, Norway and Canada.

Russia, Canada and Denmark are planning to their respective file claims to the ridge to the United Nations.

In past years, Russian ship yards and machinery producers have been able to stay afloat largely thanks to large orders coming from state-owned plants and government-sponsored projects. A large-scale oil and gas development of the Arctic is likely to give a welcome boost to both industries.

Copyright © 2011 The Associated Press. All rights reserved.

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At least four people have died and 49 are still missing after an oil rig overturned in the Sea of Okhotsk in the Russian Far East, the regional emergencies service reported on Sunday.

The Kolskaya drilling rig with 67 people aboard was being towed in a severe storm, when it overturned and sank some 200 km (125 miles) off Russia’s Sakhalin Island early on Sunday.

Fourteen people have been rescued, the emergencies service said.

Russia’s Transport Ministry told Prime news agency that “of the 67 people aboard the Kolskaya rig, 53 are crewmembers and 14 are workers and support staff.”

The drilling rig belongs to the Arktikmorneftegazrazvedka exploration company, which carried out work under a contract with energy giant Gazprom.

The drilling rig, which can take up to 102 people on board, was built in 1985 in Finland. The rig started its operations in September to drill and test the Pervoocherednaya well on the West-Kamchatka licensed block of the Okhotsk Sea shelf.

The rig, which is 69 meters long and 80 meters wide, was intended to drill a well at a depth of 3,500 meters.

A Gazprom spokesman said that the rig had fulfilled its works for Gazprom by the time of the accident and was heading for its base.

Investigators have said they are considering the rig’s tow in disregard of a severe storm as the most likely reason for the accident.

The regional emergencies service has said the accident poses no threat to the environment.

“Fuel stocks at the Kolskaya drilling rig are minimal and are stored in hermetically sealed tanks, and there is no danger of a fuel spill,” the service said.

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By Stephen Bierman – Dec 7, 2011 12:15 PM GMT

Royal Dutch Shell Plc. (RDSA) said its Sakhalin venture with OAO Gazprom, Russia’s natural gas export monopoly needs to expand fast to sell liquefied natural gas to Asia at maximum profit.

There’s a window of opportunity in the Asia Pacific from 2015 to 2020, Harry Brekelmans, the head of the energy company’s Russian unit, told reporters today in Moscow. The market will tighten after that with additional LNG volumes coming from Australia, Shell spokesman Maxim Shoob said today.

Shell, Gazprom and Japanese partners Mitsui & Co. and Mitsubishi Corp. are considering investing in a third processing train to the Sakhalin-2 LNG plant to add capacity. Demand for LNG has soared in Japan, South Korea and other Asian markets after an earthquake and tsunami led to the Fukushima nuclear disaster and boosted Japan’s need for other fuels.

The Sakhalin project is in a position to capture this demand window, Brekelmans said.

The group will have to resolve how to supply natural gas for any additional train it seeks to build. Gazprom may seek an asset swap with a foreign partner in the project before committing further reserves off the Pacific coast of Sakhalin Island for the expansion of the LNG plant, Gazprom’s Deputy Chief Executive officer Alexander Medvedev said on Sept. 27.

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

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Qatar also signed an initial agreement with local Chinese authorities, the Chinese state-run oil company C.N.P.C. and Royal Dutch Shell to be part of a petrochemical and refining complex in China, the world’s second-biggest oil consuming nation.

That’s in marked contrast to Shell, which while operating Sakhalin-2 in 2006, was forced to execute a below-market sale of its operating position at bargain prices to Gazprom, the country’s giant gas gathering and distribution company.

By Anna Shiryaevskaya – Sep 14, 2011 4:04 PM GMT+0100

OAO Gazprom expects the Sakhalin-2 venture to produce enough fuel to support the expansion of Russia’s only liquefied natural gas plant as its partner Royal Dutch Shell Plc (RDSA) seeks resources outside the project.

The partners plan to extend the Piltun-Astokhskoye field to feed Sakhalin-2’s liquefied natural gas plant, Vsevolod Cherepanov, head of Gazprom’s gas, condensate and oil production department, told reporters today in St. Petersburg. Additional volumes from producing fields may feed the plant’s expansion or be shipped via the Gazprom-owned pipeline network, he said.

There will be enough gas for a third LNG train “if there is such a will,” Cherepanov said. The project’s two LNG units, called trains, are working at their full capacity, producing more than 9.6 million metric tons of liquid fuel a year.

Shell has been pushing to add a third LNG production unit at the $22 billion Sakhalin-2 venture north of Japan as the Hague-based producer seeks to boost gas production worldwide. Gazprom hasn’t yet agreed as it tries to balance its obligations to supply gas domestically against the attractiveness of exports to Asia’s growing markets.

Cameron in Moscow

Expansion of the LNG plant, which was designed to accommodate a third unit, was on the agenda for talks between Russian President Dmitry Medvedev and U.K. Prime Minister David Cameron in Moscow earlier this week. Shell Chief Executive Officer Peter Voser met with his Gazprom counterpart Alexei Miller yesterday, the Russian company said in a statement.

Producing gas at the southern part of Piltun-Astokhskoye, one of the two offshore fields that feed the plant, may be challenging as it lies under layers of oil and condensate, Cherepanov said. Gazprom, Shell and its partners in Sakhalin-2 Mitsubishi Corp. (8058) and Mitsui & Co. will seek to develop the extension as “the next stage,” boosting profitability, Cherepanov said.

Output at the Lunskoye field may be increased, a Kremlin official said ahead of Cameron’s visit.

The two producing fields may boost output by 4 billion cubic meters a year for as long as five years, Cherepanov said. The additional gas may be supplied to the LNG plant or into the pipeline system to supply to domestic consumers, he said. That volume would be sufficient for about 3 million metric tons of LNG, while the additional LNG unit may have a capacity to produce almost 5 million tons.

Supply Sources

“Sources of supply will be discussed by Gazprom and Shell as part of a protocol signed in November 2010,” Vera Surzhenko, a spokeswoman for Shell in Russia, said by phone today. They will include existing fields and potentially new fields, she said.

Gazprom and Shell in November agreed to expand cooperation in Russia and abroad. Shell may offer Gazprom assets in Asia in exchange for a deal to expand Sakhalin-2, people with knowledge of the negotiations said in February.

Gazprom last week opened a domestic pipeline from Sakhalin Island to the port city of Vladivostok on Russia’s Pacific coast under government orders to build pipelines and supply gas to Russia’s infrastructure-poor eastern regions.

Output from Gazprom’s Kirinskoye field, part of the neighboring Sakhalin-3 project, will be the main field feeding the link after production starts next year. Reserves at Yuzhno- Kirinskoye, also part of Sakhalin-3, may rise by as much as 100 billion cubic meters to 360 billion cubic meters this year after new exploration data, Cherepanov said.

Shell looked at Gazprom’s nearby Sakhalin-3 development for reserves on concerns the Sakhalin-2 fields may not be sufficient for the expansion. Prime Minister Vladimir Putin invited Shell to participate in Sakhalin-3 during a meeting in 2009 with outgoing CEO Jeroen van der Veer and his replacement Voser. Gazprom has since said it wants to develop Sakhalin-3 without foreign partners.

Gazprom, Russia’s biggest gas producer and export monopoly, agreed in 2006 to buy just more than 50 percent of the Sakhalin- 2 venture for $7.45 billion. Shell controls 27.5 percent of the Sakhalin Energy Investment Co. operator, and Mitsubishi and Mitsui hold the balance.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net

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Will Exxon Be Safe in Russian Hands?

That’s in marked contrast to Shell, which while operating Sakhalin-2 in 2006, was forced to execute a below-market sale of its operating position at bargain prices to Gazprom, the country’s giant gas gathering and distribution company.

By Blanche Gatt – Sep 12, 2011 7:57 AM GMT+0100

Royal Dutch Shell Plc (RDSA) : Russian President Dmitry Medvedev will propose Royal Dutch Shell Plc expand cooperation with state-run OAO Gazprom during the first visit by a U.K. prime minister in six years, as the leader seeks to improve relations between the countries.

Separately, South Rub Al Khali Co., a joint venture between Royal Dutch Shell Plc and Saudi Arabian Oil Co., named a chief executive to run the company that explores for natural gas in Saudi Arabia. The stock slumped 2.1 percent to 2,017.5 pence.

To contact the reporter on this story: Blanche Gatt in London at bgatt@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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May 25, 2011 12:40 P.M. ET

MOSCOW (Dow Jones)–Royal Dutch Shell PLC’s (RDSB) Chief Executive Peter Voser met Russia’s top energy official Wednesday to discuss joint projects on Russia’s Arctic shelf, the Black Sea and Sakhalin-3, but said the company won’t seek to swap shares with state oil champion OAO Rosneft (ROSN.RS).

The meeting between Voser and Deputy Prime Minister Igor Sechin, who oversees the oil and gas sector, came two days after Russian Energy Minister Sergei Shmatko said he doesn’t expect state-controlled oil giant OAO Rosneft (ROSN.RS) and BP PLC (BP) to revive their strategic alliance after it was blocked by BP’s existing Russian partners, a group of Soviet-born billionaires known as AAR.

“Shell welcomes the constructive talks in Moscow this week regarding potential exploration co-operation with Rosneft in the Arctic, broader strategic co-operation and technology development for the Arctic and other areas as well as opportunities for Rosneft to join Shell in developments outside Russia,” a Shell spokesman said.

BP and Rosneft, whose chief executive, Eduard Khudainatov, was also present at the talks Wednesday, announced in January plans for a $16 billion share swap and joint development of three blocks in Russia’s Arctic Sea. But AAR, arguing the pact violated the terms of its agreement with BP in their TNK-BP Ltd. joint venture, went to court in the U.K. to block the deal.

After months of talks, discussions broke down earlier this month.

While BP said last week it is still discussing the joint exploration of the Russian Arctic with Rosneft, Shell has expressed renewed interest in that region. However, the idea of a share swap with Rosneft isn’t under consideration, the company said.

“These discussions excluded any proposals to use Shell’s shares,” the spokesman said.

At Wednesday’s meeting, Voser and Sechin also “discussed the deepening of the company’s cooperation with its Russian partners,” in particular the Sakhalin-2 and Sakhalin-3 projects, a statement on the government’s website said. Shell already holds a stake in the OAO Gazprom (GAZP.RS)-led Sakalin-2 project off Russia’s Far East coast.

Voser met with Gazprom CEO Alexei Miller in April to discuss potential joint projects in Russia as well as Gazprom’s participating in Shell’s exploration and production projects elsewhere. Shell signed an agreement on strategic cooperation with Rosneft in 2007.

-By Alexander Kolyandr and Jacob Gronholt-Pedersen, Dow Jones Newswires; alexander.kolyandr@dowjones.com

(Guy Chazan in London contributed to this story.)

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One of the most striking features of the oil industry in recent times has been the divergent fortunes of Royal Dutch Shell and BP.

BP has well-publicised problems that explain its recent under-performance, such as uncertainty over its future in Russia and the shock of last year’s Deepwater Horizon drilling rig explosion in the Gulf of Mexico’s Macondo area, which left 11 workers dead. Photo: REUTERS

By Damian Reece, Head of Business: 29n April 2011

The past two years has seen Shell outperform the All-Share index by 7pc, while BP has under-performed by 58pc.

Results on Thursday from Shell once again underlined the companies’ differences, such as profitability and prospects, which are driving investor sentiment.

BP has well-publicised problems that explain its recent under-performance, such as uncertainty over its future in Russia and the shock of last year’s Deepwater Horizon drilling rig explosion in the Gulf of Mexico’s Macondo area, which left 11 workers dead.

Going further back, under Lord Browne’s regime we had his own troubled exit, the Texas City refinery blast, the Prudhoe Bay spill, problems in the Gulf’s Thunder Horse field and price-fixing allegations in New York.

If you consider the Texas City blast, which killed 15, was back in August 2005, BP has been beset by serious problems for nearly six years. This begs the question, can BP ever really change?

However unpalatable it might be, chief executive Bob Dudley could look across at his age-old rival, Shell, for the answer. Shell had its own Macondo moment back in 2004, with its reserves scandal. For nearly 10 years prior to that, Shell had been trying to change its culture, a process that had been largely ineffective.

Since the reserves scandal, under chief executives Jeroen van der Veer and latterly Peter Voser, it has changed tack, focusing on more investment upstream in exploration and production, more investment in OECD countries to reduce political risk and to replace its declining heart lands, more investment in gas and more large projects.

It has developed four key strategic partners in PetroChina, Gazprom, Aramco and Qatar Petroleum and shaken up its downstream refining and retail operations. Internally, Shell workers are now subject to a continuous improvement programme that stresses the speed of decision-making, the operational effectiveness of its assets and their integrity in terms of safety.

Another crucial difference has been the creation of the modern BP from a strategy of acquisitions (Amoco, Arco and Burmah Castrol, to name a few) bequeathing different cultures within the group.

Shell, an Anglo-Dutch construct, was a federal structure that found it difficult to issue shares to pay for deals, so stuck to organic growth. Even since adopting a unified structure it has avoided major deals. It is arguably a more unitary culture than BP.

This, then, is all the boring nitty-gritty behind Shell’s numbers on Thursday. But it goes a long way to explaining the increasingly marked difference between Shell and BP.

Oil investors rank companies in terms of what they deliver today in terms of earnings, the prospect of improving on that with more assets and management’s credibility and strategic vision. BP is struggling in all these departments. Maybe Bob Dudley should consider what he can learn from the way Shell has learned from past problems before deciding on how BP moves on from its own.

damian.reece@telegraph.co.uk

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