Russian Oil and Gas Industry: News

Hannibal Barca wrote:South stream will not be canceled. There is no alternative.

Austin wrote:Why does Gazprom asks for European price from China's market .......what a frekin stupid they are ....expecting China to pay $400 for Gas price ?

The situation is more worse now as Europe is moving away from Russia and South Stream prospects are dead.

Give them a good discount of $100 and sell as much Gas as possible to China ........Russia has huge Gas Deposits that would last 100 + years.

U.S. President Barack Obama is ready to allow exports of gas to Europe in order to free it from dependence on Russian gas. However, experts agree that this is a bold but not particularly realistic statement. At least for the next several decades, the Americans will be unable to replace Gazprom as Europe’s key gas supplier.

"We are ready to authorize the export of as much natural gas each day as Europe uses each day," U.S. President Barack Obama said at a news conference on March 26 following the U.S.-EU summit in Brussels.

Speaking of possible new sanctions against Russia over the events in Ukraine, Obama said that the EU and the U.S. should focus on energy. "Europe needs to look at how it can further diversify its energy sources," he stressed.

This is a bold statement, according to Sergei Vakhrameyev, an industry expert with the investment company Ankorinvest. But there are a lot of buts here that indicate that Obama's threat cannot be put into action at least for the next several decades.

Terminals to be built first

In order to export gas overseas, in addition to liberalizing gas exports, the U.S. needs to build LNG terminals. Since 2011, the U.S. Department of Energy has approved only six applications for the construction of export LNG terminals, with the seventh approval coming at the end of March. Among those terminals approved are a Cheniere Energy Partners terminal in Louisiana and a Freeport terminal in Texas. Meanwhile, 25 more projects have still not received the go-ahead.

However, even the approved terminals have to be built first. The first LNG export terminal will be completed no sooner than the end of 2015, which means that the first export deliveries of U.S. gas cannot start earlier than 2016. The construction projects that have already received approval will be completed by 2020, with projects beyond that date not having been approved yet.

The total capacity of the approved terminals that will be commissioned between 2016 and 2020 is 118 billion cubic meters of gas.

However, even if the U.S. were to supply the total amount of 118 billion cubic meters of gas directly to Europe, European countries would still be unable to give up Russian gas. In 2013, Russia supplied some 135 billion cubic meters of gas to Europe (excluding Turkey), according to Sergei Vakhrameyev. "It is impossible to give up such an amount overnight," he pointed out. Not to mention that the prospects of U.S. gas entering the European market are still quite remote.

Besides, the anticipated amount will not be allowed to be exported in its entirety since it may not leave the U.S. with enough gas for domestic consumption.

"Before 2012, the U.S. was experiencing a shortage of gas, although this shortage was constantly diminishing. By 2013, it had a surplus, though not a large one, so it is not yet clear how much gas it will be possible to supply to the European market," said Rustam Tankayev, managing director of the company Info-TEK-Terminal and a leading expert with the Russian Union of Oil and Gas Producers, in comments to news portal Vesti.ru.

Would traders agree?

Another problem is that initially the U.S. planned to supply its gas not to Europe but to the more profitable Asian markets.

"Traders can supply this gas anywhere. However, the market is such that in Asia gas prices are considerably higher. Besides, traders are the most pragmatic market players. It is not clear how they
 could be made to sell gas at cheaper prices (say, to Europe)," said Sergei Vakhrameyev.

According to him, in Asia the price of gas is $15 per million British thermal units (BTU), in Europe, slightly under $12. The difference of $3 translates into about $100 per thousand cubic meters. That is to say that 1,000 cubic meters of gas in Asia costs at least $100 more than in Europe, and in some cases even more than that.

"It may happen that first U.S. gas will go to Asia and when prices there go down (because of excessive supply), they may start deliveries to Europe," suggested Vakhrameyev. In other words, the (partial) replacement of Russian gas in Europe with American gas is, one way or another, pushed back by many years.

Europe is not ready to receive U.S. gas

Even if the U.S. manages, by some miracle, to resolve all of its domestic difficulties with LNG supplies to Europe, it will have to deal with another one, that of the lack of a ready-made infrastructure there. This problem is particularly acute in Eastern Europe, which is most dependent on Russian gas. For instance, Lithuania relies on Russia for 100 percent of its gas supplies.

"The U.S. can supply gas to West European countries, for example Spain, the UK, and France, because there are LNG terminals there, whereas supplies to Eastern Europe are impossible because of infrastructure limitations. There are no LNG terminals for receiving American gas there and no capability to redirect American gas via a gas pipeline from Western to Eastern Europe. All gas flows go from east to west," Vakhrameyev explained.

Furthermore, European countries have 20-year-long contracts with Gazprom. "What are they going to do with those? Break them?" Vakhrameyev wondered. Of course, Europe's dependency on Russian gas will be gradually reduced over time, but very slowly, he concluded.

Austin wrote:Analysts believe that for the next several decades, the Americans will be unable to replace Gazprom as Europe’s key gas supplier.

Does U.S. natural gas pose a threat to Russia?

Viktor wrote:This is huuuge   

Huuuge new 30 bin $ pipeline conecting Russian Altai region with India throughout China !


Talks on Russia to India oil pipeline make headway

Russia is helping Iraq Return To the World Oil Market

Now Iraq wishes to become the fastest-growing oil exporter, compensating for the loss of Libyan production in the market, and possibly reviving the competition for participation share in the market among OPEC members. Despite the escalation of violence in the country, due to the exports of instability from neighboring Syria, Iraq, which is already the second largest oil supplier among OPEC members, has shown one of the most spectacular increases in annual production in the history of the industry. These successes are associated with the fact that foreign oil companies are developing deposits in the south – a region that almost has not been affected by the unrest.

Thanks to the fact that it was possible to eliminate export “bottlenecks” in the terminals of Basra in the south of Iraq, through which almost all Iraqi oil is exported, it is expected that Baghdad will be able to maintain, or even increase, the volume of oil exports. The exports in 2014 are estimated at about 140-150 million tons. If Baghdad manages to keep the export of oil at this level, its revenues will exceed $100 billion (at oil prices of $100 per barrel).

Oil renaissance. In 2010, the world’s leading oil companies began the work on expanding production at the giant South Iraqi oilfields of Rumaila (British Petroleum), West Qurna-1 (Exxon), Zubair (Eni), Majnoon (Shell), and Halfaya, where PetroChina operates under service agreements signed with Baghdad. This revival has been in progress for five years, and has allowed Iraq to set a goal of achieving an export level of 170 million tons per year.

Russia is making a significant contribution to this process. On March 31, 2014, the Russian company Lukoil started oil production in the Iraqi field of West Qurna-2. Its estimated reserves are 4.8 billion tons of oil, with recoverable reserves set at 1.8 billion. It is planned to extract at least 100 million tons from there by 2035.

Lukoil received the first oil in West Qurna-2 in October of last year. Now the field has reached the production level of 16,000 tons per day, which allows talking about the beginning of commercial operations. Lukoil is developing the field as a service company, under a contract signed with the Iraqi government in 2010 and valid through 2025. It owns 75% of the project, its partner, the Iraqi state-owned company South Oil Co, owns 25%.

The Iraqi government will compensate Lukoil’s costs for the project with oil produced in West Qurna-2. The compensation will start in three months. Lukoil has already spent about $4 billion on the project, and the total investment will be about $40 billion by the end of the contract.

The total amount of compensation for Lukoil, over the term of the contract, will be 90-100 million tons, which is comparable to the annual production of Lukoil. This oil will be sold through Lukoil’s trading company Litasco. Lukoil expects to earn about $90 billion from this project. Deductions to the Iraqi side will be about $1 trillion dollars, and to achieve this, Lukoil has to increase production at the field by 10 times, i.e., up to 160,000 tons per day by 2017, and to keep this level for almost twenty years. Thus, it is obvious that it will be not only a mutually beneficial, but also long-term cooperation between Russia and Iraq in this country’s critical industry.

Moreover, gradually this will apply to the processing of the associated gas, extracted during the production of oil (after reaching peak production, the West Qurna-2 will produce up to 6 billion cubic meters annually). In two months, Lukoil intends to submit proposals, to the Iraqi government, for the creation of capacities for processing of associated gas. Most likely, this will be the production of polyethylene and polypropylene, as the associated gas produced has a very high content of ethane.

According to one of the top-managers of South Oil Co (SOC), partner of Lukoil, Ibrahim al-Maliki, unlike the Western companies operating in Iraq, the Russian company “pays special attention to the development of social facilities in areas of its presence”. This fact is also noted by elders of Imara Tribe, who welcome the work of the training center for local residents, established back in 2011 by Lukoil, where 350 specialists in various professions are being trained, who subsequently will be able to find good jobs, both in the oil industry and in other spheres.

On its own initiative and at its own expense, Lukoil supplies the necessary materials and equipment to the local school, medical and sports facilities, and even searches for new sources of drinking water for the population, something that is definitely not provided for in the formal agreements with the Iraqi government. Moreover, 2/3 of the 11,000 people employed in Lukoil’s enterprises in Iraq are Iraqis. No foreign company operating in Iraq has this ratio of local and foreign labor force.

http://journal-neo.org/2014/04/18/rus-rossiya-pomogaet-vozvrashheniyu-iraka-na-mirovoj-ry-nok-nefti/

Russia's Gazprom and Austria's OMV said on Tuesday that they had signed a memorandum of understanding to build a spur of the South Stream gas pipeline to Austria, despite Western sanctions against Moscow over Ukraine.

The pipeline is designed to carry Russian gas to Europe, bypassing Ukraine - through which existing pipelines carry nearly half the gas that Europe buys from Russia. The project faces stiff resistance from some EU and U.S. officials, who want Europe to reduce its reliance on Russian energy.

navyfield wrote:There are different kinds of reserves ,proven ,potential etc..., most of new reserves are expencive far away and yield less profits then old did...
Also that production timetable 600 mill T for 30 years is pretty amateurish ,production follows a curve because of geologic and physics reasons.
Russia has peaked its oil production. Gas is 20 years behind...

Russia’s oil reserves are enough to provide a yearly extraction of 600 million tons of oil for the next 30 years, RIA Novosti quoted Natural Resources Minister Sergey Donskoi as saying on Wednesday. Russia “has a substantial potential to expand its oil reserves – the most reliable prospective oil resources found in the country make up 12.5 billion tons,” Donskoi said. “The less carefully studied forecast resources are estimated to have 50 billion tons,” he added.

Austin wrote:How much 600 Million Tons of Oil will cost taking $100 per barrel ?

Asf wrote:

Austin wrote:How much 600 Million Tons of Oil will cost taking $100 per barrel ?

About 440 billion dollars if I'm correct

Austin wrote:
Do you know how much Oil Tax Revenue Russia Government gets as that would determine how much of 440 billion dollar oil sale would Russian Government get as tax revenue ?

TR1 wrote:

navyfield wrote:There are different kinds of reserves ,proven ,potential etc..., most of new reserves are expencive far away and yield less profits then old did...
Also that production timetable 600 mill T for 30 years is pretty amateurish ,production follows a curve because of geologic and physics reasons.
Russia has peaked its oil production. Gas is 20 years behind...

There are new surveying and prospecting methods in the works, that will ensure a much more viable supply than with today's technology.

navyfield wrote:

TR1 wrote:

navyfield wrote:There are different kinds of reserves ,proven ,potential etc..., most of new reserves are expencive far away and yield less profits then old did...
Also that production timetable 600 mill T for 30 years is pretty amateurish ,production follows a curve because of geologic and physics reasons.
Russia has peaked its oil production. Gas is 20 years behind...

There are new surveying and prospecting methods in the works, that will ensure a much more viable supply than with today's technology.

people in that branch tend to get over optimistic...