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turkish stream

  The daily Vedomosti published an article on Turkish Stream, quoting Foreign Minister Lavrov on the need for direct EC guarantees and second rating bilateral agreements, signaling  rising nervousness at the Kremlin with the project advance. It is a most revealing moment for what Russia and its main energy pivot – Gazprom – can afford these days in defying market gravity, while leveraging the Kremlin’s geostrategic moves. Russia’s gas monopoly admitted in June that it is unable to raise project financing – neither in Russia, nor abroad. The new sanctions left Gazprom without a choice but to tap into its own pocket – the 2017 capex program. Banks and investment funds ignored Gazprom’s request, fearing project uncertainty and US sanctions.   The investments associated with Turkish Stream this year, according

Views:2576
gaz

  A little noted two-liner in the newsfeed from Moscow sent shivers down the spine of gas experts – it means a lot both for Russian energy policies and for the EU’s energy market. The lines read that the interdepartmental commission on national security in economic and social affairs with the Security Council of the Russian Federation has decided to recommend the Russian Government revoke Gazprom’s monopoly on export of Russian gas to Europe.   This commission has consultative functions with the Security Council and reports to the Secretary of the Council Nikolay Patrushev. There have been many instances in the past of attempts from different business quarters in the Russian capital to press the government to allow more Russian gas producers to directly export their gas. The final say,

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  Two events overshadowed the geopolitical landscape on the eve of President Trump’s visit to Poland to attend the Three Seas Initiative Summit. The TSIS is a joint Polish-Croatian project, launched in 2016, with the aim of strengthening trade, infrastructure, energy and political cooperation among countries bordering the Adriatic, the Baltic and the Black seas. Twelve countries are members: Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Lithuania, Estonia, Latvia, Croatia, Slovenia and Austria.   The fact that the American President will preach the case to CEE leaders for US LNG imports comes as no surprise, yet there is a hidden context and a more complex backdrop against which both the expectations and the deliverables of the visit should be judged.   The Case for US LNG gas   Washington has

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ilian vassilev

  In understanding the “pros” and “cons” of spot vs oil prices, the main policy guidelines of the government should not be confined to just securing the physical supply of natural gas, but should allow for ensuring competitive interplay – the invisible hand of the market – between all traders, while protecting the consumers’ interests. This usually boils down to arriving at the best price, which is not always the lowest. Over time consumers start to cherish flexibility and response options to market turbulence over stable prices.   The answers to most of these questions are not contingent on whether we pick oil-based or spot prices. One may enjoy a low price for a certain period, only to be forced to buy mandatory ‘take or pay’ volumes that are not

Views:3579
gaz

  As the Bulgarian government is expected to comment on Gazprom’s draft commitment to the EC regarding the commission’s statement of objections on the Russian gas giant’s abuse of its dominant position, the issue of price formula and the choice between spot and oil-indexed price loom high. The Russian company strives to settle the case out of court and avoid reviews of the current price formula and the merits of linking the gas price to oil derivatives.   The divergence of opinions on the issue is immense. They cover the whole range of choices of specific derivatives, their relative “weight” and overall relevance as benchmarks in the natural gas trade.   The price formula is a separate issue that warrants a snap review of oil-indexation. What might work as trade

Views:4455
gazoprovod

  Recent weeks have provided exemplary cases of the impact of Bulgaria’s high political risk on major projects and gas prices. The caretaker government exacerbates the situation; there is no parliament to control and preempt shady deals, and the gravity of public life and media attention is focused on the elections. Few if any would notice a change at the top of state companies or projects or an unprecedented gas price hike – almost 30% – a record in Bulgaria’s modern history.   The perpetrators of such backdoor policies understand that under open, transparent and functioning market conditions such drastic price swings would be impossible. Even if oil moves up or down in an unpredictable manner, and this is not the case, the interplay between the multitude of gas traders

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gaz

  The new Russian pipeline projects – Nord Stream 2 and Turkish Stream – are designed to kill Ukrainian gas transit. However, there also is a collateral damage – the diversion of gas flows would significantly reduce transit volumes and hurt operators’ revenues in Slovakia, Romania, Bulgaria and Austria. Keeping Ukrainian transit alive is beneficial for all parties, except contractors of Gazprom.     Revenue of Slovak Eustream is already affected by higher utilization of the OPAL pipeline capacity recently permitted by the European Commission. In early January 2017, Gazprom and European operators reported record daily volumes of Russian gas delivered by Nord Stream. The flow reached 168 million cubic meters per day (mmcmd, at +20°C) compared with the average of 126 mmcmd of the first half of December[1]. Cold

This entry was posted in Europe, The Region and tagged , , , , , , , , , by Mikhail Korchemkin.

About Mikhail Korchemkin

Dr. Mikhail Korchemkin is the founder and managing director of East European Gas Analysis, a consulting company that specializes in cost-benefit and financial analysis of natural gas projects in the former Soviet Union. His previous experience includes performing numerous feasibility studies for the USSR Gas Ministry, predecessor of Gazprom. Prior to going into full-time consulting Mikhail taught at the University of Pennsylvania. He has also had visiting scholarships at Harvard University and Erasmus University in Rotterdam. Mikhail has consulted numerous corporate and governmental clients including ABN-AMRO Bank, Amoco, BP, British Gas, Chevron, Conoco, Ernst & Young, ExxonMobil, Gas Strategies, Gasunie, Neste Oy, Osaka Gas, OTA of the U.S. Congress, Ruhrgas, Shell, Statoil , Swedegas, Total, Vattenfall and The World Bank. He has acted as expert witness in arbitration cases concerning natural gas business in Russia and Eastern Europe.
Views:3685
putin-sechin

  The recent privatization of a 19.5 percent stake in Rosneft has generated substantial media interest with greater details emerging.   The buildup of suspense following the sudden arrest of Russia’s economic minister Ulyukyaev fits well into a game plan involving President Putin, his chief oil boyar Sechin and a number of highly-placed officials and legal and corporate finance experts capable of putting together in ultimate secrecy a complicated deal structure with debatable business content yet high geopolitical and personal value.   The timing of Ulyukyaev’s arrest, just 20 odd days before the formal announcement of the deal, which had taken many months to assemble, relates directly to his stated opposition to the deal. The arrest of Russia’s economic minister by FSB counterintelligence officers also attests that Ulyukyaev posed a

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oil_pump_bashneft_large

I have always thought that awareness is the foundation of good management practice. However, information in the form of news and analysis is not automatically converted into good findings and hence into good practical and optimal solutions. Unfortunately, in our country, what prevails is the inertia of “stability” understood as status quo reproducing itself, with the lack of analysis of costs and benefits and proactive management on a public and corporate level, rather than the employment of catching-up and breakthrough policies.   Let’s try and read through the news from last week that we cover in our newsletter.   The first item is that margins in processing costs between refineries in America and Europe and the rest of the world have decreased. Markets globalize and integrate.   The second is

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  The news of the arrival of the first LNG tanker from the US to the Turkish terminal Aliaga, and the arrival of another one in the bunkering port of Kalamata in Greece, stirred agitation among gas traders and major market players in Southeast Europe.   The long-expected entry of US shale gas on the natural gas market in the region was associated mainly with the hope for an earlier diversification than the one promised with Azeri gas, which even under the most optimistic estimates is scheduled to reach South Eastern Europe after 2019.   The news that the first tanker has arrived in Turkey is not really news. To paraphrase the famous bankers’ saying : gas just like money goes where it is least needed – the Turkish natural