Weekly Kickoff - October 22, 2012

Deal of the Decade? BP to Announce Plans to Sell 50% Stake in TNK-BP to Rosneft October 22:
BP is set to announce a preliminary agreement in the much talked about TNK-BP-Rosneft deal that would make Rosneft the world’s largest publicly-traded oil company, in terms of reserves and production. The deal will be valued at $26 to $28 billion and leave BP with just under a 20 percent shareholding stake in Rosneft. Rosneft is also negotiating to buy out BP’s original partners in TNK-BP, AAR, for $28 billion in cash. A final settlement could come in November.

Leading news on the deal:
“Rosneft Said to Have Deal for BP’s Russina Venture,” The New York Times- http://www.nytimes.com/2012/10/18/business/global/deal-on-russian-oil-venture-seems-near.html?_r=0

“Rosneft set to clinch deal on TNK-BP,”-

“BP escapes with $27 billion. Now the oligarchs have to deal with Putin,” Steve LeVine, Quartz- http://qz.com/17915/bp-escapes-with-27-billion-now-the-oligarchs-have-putin-to-contend-with/

“TNK-BP/Rosneft: turning the clock back to 1993,” beyondbrics Blog, FT.com-

Does the BP-Rosneft Deal and the rise of U.S. Shale Gas weaken Gazprom?:
Rosneft Chief Executive Igor Sechin plans to meet with President Vladimir Putin October 22 to discuss the landmark deal that would speed up Rosneft’s eclipse of Gazprom as the dominant force in Russia’s energy industry. Rosneft’s deal with BP would increase the company’s oil production to about 4 million barrels per day, more than any other oil producer except Saudi Arabia, and raise the company’s market value to rival that of Gazprom’s. At the same time, a rise in independent gas producers in Russia and the boom in U.S. shale gas production threaten Gazprom’s traditional market share.

More on the rise of Igor Sechin (AKA “Darth Vader”) and Rosneft:
“Rosneft’s Sechin marks rise of Kremlin as oil power”-

“With a BP deal, Russia’s powerful oil czar may also finally get his revenge,” Steve LeVine, Quartz- http://qz.com/16962/with-bp-deal-russias-powerful-oil-czar-may-also-finally-get-his-revenge/

Gazprom Increases Blue Stream Gas Exports to Turkey:
…Meanwhile, a pipeline carrying Iranian gas to Turkey was damaged after an explosion on October 18, halting Turkish gas imports from Iran. Turkish company Botas requested an increase in gas supplies from Gazprom, which responded by raising daily gas supplies to the country to 48 million cubic meters, via the underwater Blue Stream pipeline. Turkey is Russia’s largest gas customer after Germany.

Central Asian Dispatch

China Begins Construction on New East-West Pipeline for Central Asian Gas:
China National Petroleum Corporation (CNPC) began construction on a $19.93 billion, 5,000 km cross-country pipeline to transport Central Asian gas to southeastern China. The new pipeline will start in China’s Xinjiang province in the west, linking up to existing gas pipelines coming from Kazakhstan. It will have the capacity of 30 billion cubic meters per year and construction should be completed in 2015.
-Key takeaway: “The surge in gas imports from central Asia has also contributed to an impasse in gas pipeline talks between Russia and China, through which Moscow had hoped to sell 68 bcm of gas per year.”

Kazakh Deputy PM Calls for Economic Diversification:
Kazakh Deputy Prime Minister Kairat Kelimbetov announced on CNBC that his country needs a new economic strategy to reduce it’s dependence on oil. Kelimbetov said opportunities to expand mining, chemicals, food processing, and agricultural industries offer a way to diversify the Kazakh economy and attract outside investment. The Kazkah GDP has grown 5.6% this year, down from 7% in 2011. But the supergiant Kashagan oilfield is set to come online in 2013, which might boost the country into the top 10 oil-producing countries.

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