Editor's Letter

Gazprom Calls Up the Heavy Artillery

Pat Davis Szymczak

It's one thing for Gazprom to snatch a share out of the Sakhalin Energy project; to play hard ball with TNK-BP in Kovykta, or to talk tough with ExxonMobil. It's another thing to steal the big idea I got at New Year for my next editorial - Russia needs to hire a consortium of the best western PR agencies it can find ... quickly!

While watching Gazprom (and Russia by association) shoot itself in the foot this New Year for the umpteenth time on international television, I found myself...

Today's Top Story --- Yukos Shareholder to Take Legal Action against Asset Buyers

The potential buyers of the remaining Yukos assets which include a 9.44% stake in Rosneft set to go under the hammer tomorrow with the starting price of $7.5 billion are now running the risk of having lawsuits filed against them by the GML, formerly known as Group Menatep, still a majority shareholder of the bankrupt oil company. The director of the GML Tim Osborne said that “anybody buying assets at auction should think long and hard about it; we say that Yukos was stolen by the Russian Federation and anybody that buys its assets at auction is receiving stolen goods.”

Russia's Drilling Rig Industry Struggles to Cope

Russia's domestic drilling rig market is consolidating as domestic manufacturers attempt to stay competitive in a world where the demand for drilling equipment, fueled by high oil prices, outstrips the supply.

Volgaburmash Invests to Build a Better Bit

With global drilling at an all-time high, the demand for downhole tools - primarily drill bits - is bullish, and will remain so for the foreseeable future.

Russian Oil Majors Announce Growth in Drilling Plans

With oil prices at all time highs, the push continues to get as much out of the ground and to market as fast as possible. Here's what Russian majors are telling OGE about their plans this year to drill more wells.

How Compressible Cement Slurries Can Mitigate Annular Pressure

Tightness of tubing-casing and casing-borehole annulus remains a topical issue for gas and gas condensate wells both in Russia and abroad. To mention but one example, in the Mexican Gulf 8,122 wells out of total 11,498 have annular pressure. Whether the pressure appears, depends directly on the specifics of geological structure, well design and technologies used in well construction.

Making Russian Pipe Manufacturing Competitive in the Run Up to WTO

With its admission to the World Trade Organization (WTO) imminent, Russia must adjust the way it runs its pipeline manufacturing industry so as to sustain international competition and protect the domestic market.

VMP is Ranked No. 1 Among Large Diameter Pipe Manufacturers

Based on the total production output in 2006, the Vyksunsky Metallurgical Plant (VMP), a business unit of the United Metallurgical Company (OMK), was ranked No.1 worldwide manufacturer of large diameter pipes (LDP). By the end of 2006, the VMP's overall production of LDP reached 850,000 tons; the annual production of Nippon Steel and Sumitomo will approximate 500,000 tons.

Double Effect of Water Alternation Gas Technology

Sumbat Zakirov, author of the Water Alternating Gas (WAG) technology for enhanced recovery saw first hand how basic science becomes applied technology when he visited Gazprom Neft's principal production fields outside of Noyabrsk this winter. Oil&Gas Eurasia joined Zakirov on his visit to cluster #104 of the Novogodneje field.

Plasmochemical Processing of Methane Using Microwave Discharge

Plasmochemistry technologies are a strong alternative to standard thermal and catalytic thermal conversion of hydrocarbon material.

Gazprom Board Approves Sakhalin Energy Purchase

Gazprom’s board of directors approved the purchase of a majority stake in Sakhalin Energy on Wednesday gaining control of the company that manages the World’s biggest LNG project Sakhalin-2 worth over $20 billion. In December 2006 Gazprom signed an agreement with other shareholders of Sakhalin Energy Royal Dutch Shell, Mitsui and Mitsubishi to buy 50% plus one share of the company for $7.45 billion.

British Petroleum, Gazprom Discuss Joint Venture

Russian gas giant Gazprom announced it was in talks with BP on forming a joint venture hoping to develop its business in the international liquefied natural gas market and expand partnership opportunities with the U.K. based energy supermajor. BP Plc. CEO Lord Browne and member of BP group’s Chief Executive’s Committee Tony Hayward who is set to become Browne’s successor met with Gazprom Chief Executive Alexei Miller on Thursday to discuss the possibilities of establishing an international joint venture for liquefied natural gas. The companies did not disclose any other details of the meeting. According to Dow Jones Newswires, Hayward and Browne later met with Gazprom Board Chairman and first deputy Prime Minister of Russia Dmitry Medvedev to proceed with the negotiations.

Putin to Sign Oil Pipeline Deal in Greece

President Vladimir Putin will visit Greece on March 14 to sign the long awaited deal to build the Bourgas-Alexandropoulis pipeline which will carry Russian oil across Bulgaria and Greece to the Mediterranean Sea bypassing the Turkish Bosporus Strait. The 176 mile pipeline, worth about €900 mil ($1.2 bln), will have the carrying capacity of 700,000 barrels a day with the potential to eventually reach over a million barrels a day. Greek Development Minister Dimitris Sioufas and Bulgarian Prime Minister Sergei Stanishev are expected to join Putin at the signing ceremony in the culmination of 13 years of ongoing negotiations.

Russia Considers Cutting Transit Dependence on Belarus

Head of Russian state pipeline operator Transneft Semyon Vainshtok said Tuesday the construction of a direct pipeline to Europe could begin as early as April aiming to cut the transit dependence on neighboring Belarus in half. This move is expected to help Russia redeem its reputation as a reliable oil supplier tarnished by January’s events when oil supplies to Europe were cut off due to economic tensions between the two countries and resumed when new transit tariffs were introduced. Today, Belarus faces having its transit profits considerably reduced. The Druzhba pipeline transports 100 mil metric tons of oil annually and the new pipeline, which would go from the Russian town of Unecha to seaport Primorsk in Russia’s European enclave Kaliningrad as a second leg of the Baltic pipeline system, will transport 50 mil metric tons of Siberian oil directly to Germany and on to the rest of Europe and the United States, reports RIA Novosti.

Russia and Japan to strengthen partnership in energy sector

Japanese authorities expressed their interest in buying pipeline gas from Sakhalin-1 energy project on Monday during Russian Government’s delegation’s official visit to Tokyo as a part of the ongoing discussion on a broad range of energy issues. Foreign minister Taro Aso told Russian Industry and Energy Minister Viktor Khristenko Japan would also look into the possibility of acquiring LNG from Sakhalin-1 project, reports Reuters. The agency stated the project is under pressure to switch to LNG, natural gas chilled to liquid state for transportation, as Asian end users often lack facilities to accept natural gas.

Gazprom to Cooperate with Brazilian Oil and Gas Giant

World’s largest gas company Gazprom solidified presence in South American market by singing a Memorandum of understanding with Brazilian company Petrobras, one of the largest gas producers in the region and the owner of the local oil and gas transportation systems. The Memorandum was signed in Rio de Janeiro on Friday. The document puts emphasis on technological cooperation as well as on collaborative efforts in offshore field development and liquefied natural gas production. The companies also aim to launch mutually beneficial projects in hydrocarbon exploration, production and transmission in South America.

EU Antitrust Watchdog OKs Lukoil’s Deal

European Commission cleared Russia’s largest private oil company Lukoil’s purchase of a chain of gas stations from ConocoPhillips on Wednesday bringing the deal worth $400 mil closer to being sealed. The deal has cleared the biggest hurdle in passing the antitrust requirements and now only needs the EU’s regulatory approval. The purchase is expected to be completed in the second quarter of 2007.