Royal Dutch Shell Plc  .com Rotating Header Image Energy Watch: Gazprom mulls building a refinery for Iranian oil


Neft said it is considering constructing a $1.7 billion oil refinery with a capacity of 7 million tons of oil annually in Armenia near the border with Iran.

The cost of the transportation infrastructure could cost an additional $1 billion.Industry analysts say that the project has little economic incentive; instead, there could possibly be political considerations behind the project. The project would provide significant political dividends.

Local reports said Armenia’s interest in the refinery is obvious. After relations between Moscow and Tbilisi deteriorated and Georgia adopted a pro-NATO and pro-U.S. position, Russia, which is its main strategic partner and sponsor, threatened to cut Armenia off.

Shipments from Russia to Armenia could become problematic and Armenia could find itself facing its enemy Azerbaijan alone. The refinery would allow Yerevan to preserve some of its current status in the region.Iran thinks that should the United States decide to undertake military action against Tehran, Washington would not hit a partially Russian-owned refinery in Armenia.

Armenia was originally targeting a refinery with a capacity of 3 million to 4 million tons annually, but Moscow wanted to double the refinery’s capacity. Armenia’s petroleum, however, does not exceed 250,000 tons annually. The proposed plant would be building on the Armenian-Iranian border near Megri. Iran would supply the oil through a pipeline from Tabriz where a refinery already exists.

After processing, petroleum products would be transported back to Iran by rail, on a line that, like the pipeline from Tabriz, would be built as part of the project. Singapore and Uzbekistan ink oil and gas dealSingapore’s Oil Tech E&P plans to participate in a project to explore and develop oil and gas fields in Uzbekistan.

The Russian news agency Interfax reported that Oil Tech E&P and Uzbekneftegaz secured a memorandum of cooperation to increase oil production at maturing fields while participating in geological exploration work in Uzbekistan.

The two sides intend to set up a working group to develop a schedule for joint work. Work could begin by the end of the year if the two sides agree on establishing a cooperation agreement, a program for exploring and developing oil and gas fields, and also the volume of investment by the Singapore company.

Uzbekneftegaz has been courting foreign investors by offering lucrative incentives so the country could gain significant technical potential for the rehabilitation of maturing oil and gas fields. China’s CNPC and Sinopec, meanwhile, also plan to implement a $700 million project to rehabilitate Uzbekistan’s maturing fields. The two sides secured an agreement in 2005 to set up UzCNPC Petroleum to develop low-yield oil fields in Uzbekistan at a total cost of $600 million.

Shell still seeks Russian investments despite setbacks.

Royal Dutch Shell said it will continue to search for new investment opportunities in Russia despite recent problems with the Russian government over the management of its $20-plus billion Sakhalin-2 liquefied natural-gas project in Russia’s Far East.

Shell CEO Van de Veer expressed his surprise to the environmental complaints made against Shell’s management of the Sakhalin-2. He said he was glad Shell secured a deal with state-controlled Gazprom to sell about half of the stakes in the Sakhalin-2 project to the Russian gas giant before the year’s end.–Closing oil prices, Jan. 29, 3 p.m. LondonBrent crude oil: $54.90 West Texas Intermediate crude oil: $55.27–(Please send comments to [email protected]) and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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