Gazprom forever...

Thursday, July 20, 2006.


The Associated Press
State-controlled gas monopoly Gazprom has offered to buy out a 20 percent stake in its oil subsidiary, which is still owned by the shattered Yukos oil company, news reports said Wednesday.

The move comes on the eve of a Yukos creditors' meeting at which the company is to present its plan to pay off its remaining debts within 18 months.

Creditors are expected to consider whether the company can be saved or should be liquidated.

The stake in question is in Gazprom Neft, formerly Sibneft, 73 percent of which Gazprom bought from billionaire Roman Abramovich last year.

Yukos still owns 20 percent of the company after it paid $3 billion for the shares as part of a 2003 merger with Sibneft that unraveled as the government mounted a back tax campaign against the company.

That tax probe and the parallel jailing of Yukos founder Mikhail Khodorkovsky brought the company to it knees in an apparent drive to recapture state influence in the oil sector and punish Khodorkovsky's political ambitions.

Yukos' financial rehabilitation plan includes the sale of its stake in Gazprom Neft.

However, Interfax and RIA-Novosti reported that Gazprom was seeking a discount for the stake.

Yukos was placed in insolvency proceedings at the request of international banks that had lent to it.

They subsequently sold their nearly $500 million in debts to Rosneft, the state-controlled oil company, which is the company's single largest creditor after the tax service.  

Thursday, July 20, 2006.
 

President Vladimir Putin has signed a law that enshrines Gazprom's monopoly over the country's gas exports, his office said Wednesday.

Analysts have said the law may be designed to ensure the status of Gazprom, the world's largest gas company, cannot be challenged on the basis of an international Energy Charter, which Russia has signed but not ratified.

The law consolidates Gazprom's hold over gas exports, including piped natural gas, liquefied natural gas and liquefied petroleum gas -- butane and propane. (Reuters)
 

Thursday, July 20, 2006.


Gazprom may work with BG Group, the third-biggest British oil and gas company, to market liquefied gas in the Britain or the United States.

Gazprom plans to diversify gas exports from deliveries to Europe through pipelines. It will expand into liquefied natural gas so it can be shipped by tanker to a terminal, where it is turned back into gas.

The company plans to reach markets as far away as the United States, the world's largest energy consumer, in its bid to build a global supply business. Gazprom is looking for partners to supply LNG to re-gasification terminals for retail sales. (Bloomberg)  

Thursday, July 20, 2006.

LONDON -- Russia could achieve emission credits worth 2.3 billion euros ($2.9 billion) by cutting gas flaring and other types of waste, the International Energy Agency, a policy adviser to 26 nations, said in a report.

The country could save 30 billion cubic meters of the fuel per year, one-fifth of the nation's exports to the Organization for Economic Cooperation and Development countries in Europe, the IEA said in a report Wednesday called "Optimizing Russian Natural Gas."

Those savings could generate 150 million tons of carbon dioxide equivalent credits that Russia could sell on emerging emissions markets, the report said. (Bloomberg)
 

Thursday, July 20, 2006.
 
The Nuclear Energy Agency and Gazprom may form a company to buy nuclear assets and then sell 20 percent of it in an initial public offering, Vedomosti said, citing three unidentified people familiar with the matter.

State-run Gazprom will participate in the project via Gazprombank, its lending arm, the daily reported.

Russia plans to build 40 new reactors by 2030 to boost nuclear power's share of electricity production to 25 percent from 16 percent now. (Bloomberg)  

June 30 2006 15:40
SHAREHOLDERS’ MEETING APPROVES ANNUAL REPORT, ANNUAL ACCOUNTING STATEMENTS AND DIVIDEND AMOUNT

The Annual General Shareholders’ Meeting of Gazprom has approved the Company’s 2005 Annual Report and Accounting Statements including Profit & Loss Accounts and decided on the distribution of profit (dividends inclusive) based on the financial year results.

Based on the Gazprom 2005 operating highlights, the Shareholders’ Meeting approved RUR 1.5 per 1 share in dividends (26 per cent up on last year), which is the maximum dividend amount ever paid out by the Company.

The total sum earmarked as dividends payable based on the 2005 results accounts for RUR 35,510.3 mln, or 17.5 per cent of overall net profit. December 31, 2006 was fixed as the dividend distribution deadline. These decisions are fully in line with the Board of Directors’ recommendations.

The Shareholders’ Meeting also decided on the remuneration of the Gazprom Board of Directors and Audit Commission Members, who are not public officials, in the amount recommended by the Board of Directors.  

 

Monday, July 24, 2006.
 
Reuters
Gazprom is offering Yukos $1.3 billion to $1.9 billion for its 20 percent stake in oil firm Gazprom Neft, Interfax reported Friday.

Interfax, quoting sources who had seen Gazprom's written offer, said Gazprom referred to the acquisition of LUKoil shares by ConocoPhillips in 2004 when calculating the bid price.

Yukos confirmed earlier that it had received an offer from Gazprom, but said the offer had not yet been discussed.  

Gazprombank, the finance arm of natural gas monopoly Gazprom, bought the shares of Austrian gas retailer Centrex that it did not already own, Vedomosti said.

 
Gazprombank bought the 20 percent of Centrex held by Austrian businessman Robert Nowikowski in April, the newspaper reported, citing unidentified people familiar with the situation. Nowikowski, the co-owner of the Jurimex trading company, wants to focus his business on oil products from Belarus, one of the people told Vedomosti.

Nowikowski knows Andrei Akimov, the chief executive officer of Gazprombank, from the time Akimov directed the Austrian financial company IMAG, the paper said, citing Gazprom managers. (Bloomberg)  

Gazprom has been offered the chance to acquire 50 percent of Kyrgyzstan's pipelines and storage facilities for natural gas, Kommersant reported, citing Kyrgyz officials.

In return, Gazprom would have to build an oil refinery and ensure stable crude supplies for the plant, the newspaper said, citing the board chairman of Kyrgyzneftegaz, after a meeting that approved a Jan. 27 accord with Gazprom on setting up a joint venture.

Gazprom is not planning to build a refinery in Kyrgyztan, Kommersant reported, citing the company. The gas producer has held back on investing in the Central Asian country because of a lack of political stability there. (Bloomberg)  

Gazprom on Friday bought oil field licenses in the Evenkia and Krasnoyarsk regions.  

 

The country's natural gas production in the first seven months of the year rose 2.6 percent compared with the same period last year, the Industry and Energy Ministry said.

Gazprom accounted for about 83 percent of the 383 billion cubic meters of gas that Russian companies produced from January through July, the ministry said by e-mail Wednesday. (Bloomberg)

 

Domestic oil companies are no longer allowed to sell propane and butane abroad because of a new law granting Gazprom a monopoly on natural gas exports, Vedomosti reported.

The Federal Customs Service sent a letter to oil companies last month saying they needed the Economic Development and Trade Ministry's permission to export liquid petroleum gas, the newspaper said Tuesday. (Bloomberg)

 

Thursday, August 24, 2006.

Yukos' court-appointed receiver, Eduard Rebgun said Wednesday that he had hired Gazprombank and Ernst & Young to help him prepare the sale of the company's assets. In a separate development, the Moscow Arbitration Court rejected an appeal by Yukos of a decision declaring the company bankrupt.

The court had declared Yukos bankrupt on Aug. 1, upholding an earlier vote by the company's creditors -- a group dominated by the tax authorities and state oil company Rosneft.

Court officials could not immediately be contacted to confirm the decision.

Rebgun has to sell off the firm's assets or refloat its subsidiaries to raise enough cash to pay off creditors' demands of at least 492 billion rubles ($18.4 billion), a process that may take a year.

"There were talks [with Gazprombank] about what we need to do to carry out all these procedures," Rebgun said. "We realized that they could offer what we needed, so we are going to transfer [Yukos'] accounts to them."

Gazprombank, not previously one of Yukos' bankers, is a unit of Gazprom, which tried to buy several Yukos assets on the eve of its bankruptcy.

Analysts say Rosneft, the only company to successfully challenge Gazprom in a corporate deal in the last few years, is likely to be the main beneficiary of Yukos' demise and win most of its assets.

 
Rosneft already bought Yukos' main production unit, Yuganskneftegaz, after mounting back tax demands that eventually topped $33 billion and forced Yukos to sell it in December 2004.

The sale left Yukos hollowed-out and Rosneft in dire need of Yukos' refining capacity to process Yugansk's output of around 1 million barrels of crude oil per day.

Rosneft has said it might take over capacity from Yukos, which has five refineries in Russia, but its claims on Yukos assets may enable it to take over an even bigger chunk of the firm.

Already the second-biggest creditor after the Federal Tax Service, Rosneft has asked the courts to approve a claim of $8.4 billion on top of its existing $2.8 billion demand. Gazprom has no claim as a creditor, but is keen to buy 20 percent of its oil unit, Gazprom Neft, held by Yukos, the remnant of an aborted merger three years ago between Yukos and what was then Sibneft.

In its 11th-hour bid, which foundered when Yukos creditors voted in favor of bankruptcy, Gazprom also expressed an interest in Yukos' ArcticGaz unit and the Angarsk refinery and made a $105 million offer for its 49 percent stake in Slovakian pipeline operator Transpetrol.

TNK-BP has also said it will always look at any assets put on the market.

Yukos' assets are now likely to go under the hammer, and Rebgun has hired Ernst & Young, one of the world's four largest accounting firms, to prepare terms for choosing a valuer.

"We asked them to do it quickly," Rebgun said, but added that there was no definite idea of when the sell-off might begin.

(Reuters, AP)  

Thursday, August 24, 2006.

A bank owned by close friends of President Vladimir Putin has bought Leader, the country's biggest asset management fund, which holds a 3 percent stake in Gazprom, Vedomosti reported Wednesday.

Bank Rossiya, which was set up in St. Petersburg by friends of Putin in the early 1990s, bought the fund for an undisclosed sum earlier this year, the newspaper said.

The Leader fund not only owns a 3 percent stake in Gazprom, currently worth some 217 billion rubles ($8.13 billion), but it also has the largest assets of any fund in the country, with the fund including more than 100 billion rubles in Gazprom's pension fund, Gazfund.

The fund also has shares in pension funds belonging to LUKoil, Russian Railways and Unified Energy Systems, the newspaper said.

Bank Rossiya bought an 81 percent stake in Gazprom's insurance arm, Sogaz, two years ago, the paper noted, giving it access to Gazprom's financial business.

Gazfund has been a client of the bank for the last three years, the newspaper said.

In 2003, Yury Shamalov, the son of Nikolai Shamalov, who owns a 9.7 percent stake in Bank Rossiya, became Gazfund's president, the newspaper added.

The bank's main shareholders are believed to include Yury Kovalchyuk, a St. Petersburg businessman considered close to Putin, said Vladimir Pribylovsky, head of the Panorama think tank.  

Thursday, August 31, 2006.

Gazprom is looking at assets in France and Belgium as it continues its powerful push into the gas markets of Western Europe.

Deputy CEO Alexander Medvedev said Gazprom would consider buying up assets left out of a contentious merger between Paris-based utilities Gaz de France and Suez, French newspaper La Tribune reported Wednesday.

The companies may be forced to spin off the assets as a part of their pending merger, announced earlier this year, which has attracted the attention of European competition authorities.

Yet, Gazprom's interest in the assets is prompting concerns that the gas behemoth would exercise undue influence in France, where it is already the biggest gas supplier.

Gazprom has made no secret of its plans to expand in Western Europe, home to some of the world's biggest gas consumers. Target markets for gas delivery, investment, or acquisitions include Britain, France, Belgium, the Netherlands, Spain and Italy.

Meanwhile, this week Gazprom finalized a deal with German energy firm E.On to supply a total of 400 billion cubic meters of gas through 2035, as well as additional cooperation on the North European Gas Pipeline, which is planned to run under the Baltic Sea to northern Germany.

 
"They're very interested in picking up assets downstream in Europe to further consolidate their market," said Daniel Simmons, a gas supply expert with the Paris-based International Energy Agency. "Gazprom currently supplies France with gas, so there is some potential logic to a potential bid," he said, referring to the Suez and Gaz de France assets.

The French government is currently considering lowering its stake in state-controlled Gaz de France. Suez, a French-Dutch company, owns a stake in Belgium's Fluxys gas company through its Tractebel unit.

Gaz de France is in talks with Gazprom on the prolongation of a long-term supply contract.

Gazprom did not immediately reply to a request for comment on its Western European strategy.

Christel des Royeries, a Gaz de France spokeswoman, said it was "much too early" to talk about possible asset sales in the wake of the merger with Suez.

Des Royeries said the French parliament was working on legislation to allow the state's share in the gas company to fall to 33 percent. Currently, under French law the state has to own at least 70 percent of the utility, and the state now owns 80 percent.

The European Commission has listed its anti-monopoly concerns in a letter to Suez and Gaz de France, a preliminary step to granting approval to the merger, she said.

"The competition authorities have said they cannot own virtually the whole of the French and the whole Belgian gas monopoly," said Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies.

Stern said it was too early to say exactly what assets Suez and Gaz de France would spin off, but that attention had focused recently on the gas distribution and marketing network in Belgium. If the Belgian property were put up for sale, Gazprom would not be the only bidder.

"When we see the assets announced, you'll just see a huge number of very large utilities descend," Stern said. "Literally every one of the actors on the European gas scene will be in on it."

Stern said these wealthy European utilities could quite possibly outbid Gazprom, since a gas network in their backyard means more to them than to Russia. But Gazprom could acquire the network through an asset swap: trading the network for access to Gazprom's gas deliveries or upstream production.

Earlier this year, Gazprom agreed to swap stakes in its vast Yuzhno-Russkoye gas field near Tomsk in return for assets held by Germany's E.On and BASF, which with Wintershall are Gazprom's partners in building the Baltic pipeline.

E.On took a stake of 25 percent minus one share Yuzhno-Russkoye and gave Gazprom stakes of 50 percent minus one share in its Hungarian gas companies. BASF took a 35 percent minus one share in Yuzhno-Russkoye. In return, Gazprom increased its stake in BASF's gas distribution firm, Wingas, from 35 percent to 50 percent minus one share, and also won a stake in a BASF production subsidiary in Libya.

Stern said that with gas-related assets trading at sky-high prices, Gazprom would probably use swaps to get its hands on more European assets.

Outright purchases require spending cash or issuing debt. In 2005, Gazprom borrowed more money abroad than any other Russian company, with $4.3 billion issued in foreign-currency denominated debt, not including debt issued by Gazprombank, according to data from Dealogic. Trading assets helps Gazprom develop partners and integrate itself into Western energy markets, an important step for future deals, including liquefied natural gas, or LNG.

But Adam Landes, an oil and gas analyst at Renaissance Capital, said that because of the relatively small size of the Gaz de France and Suez assets compared with Gazprom, an outright acquisition might make more sense.

Recently, Gazprom has bartered for and purchased LNG for small shipments to Britain and the United States. Currently Gazprom cannot process its own gas into LNG, but starting 2010 it hopes to send LNG from its Shtokman fields to the United States and Western Europe.

Gazprom is in talks with the Netherlands on entering the Dutch energy market, and Dutch firm Gasunie in June agreed to take a stake in the North European Gas Pipeline, which may be extended to the Netherlands and on to Britain.

In Italy, Gazprom has approached Eni subsidiary Italgas about swapping some of its assets for a stake in Russian exploration and production. Medvedev has said Gazprom is considering supplying spot LNG deliveries to Spain through swap deals. Meanwhile, the Spanish gas company Repsol has expressed interest in Gazprom's LNG plant at the Baltic port of Ust-Luga.

Simmons said that if Gazprom acquired more assets in Western Europe, competition regulators might want to look at the consequences, since it already supplied more than one-quarter of the continent's gas.

"The worry has been in the past that if they're buying all these downstream assets, what are they doing upstream in order to make sure Europe is getting all the gas it needs in future?" Simmons said. "Whenever a company is diversifying, you worry about its core business."  

Gazprom's petrochemicals unit, Sibur, may sell as much as $500 million in Eurobonds next year.

Sibur's board approved hiring Credit Suisse Group and UBS AG to help arrange a sale that may offer between $300 million and $500 million in bonds, the company said Thursday on its web site.

Sibur said in December that 2006 revenues might reach 122 billion rubles ($4.6 billion) on higher prices for its products. (Bloomberg)  

Gazprom, the country's gas export monopoly, said it would fulfill a contract to supply Belarus with as much as 21 billion cubic meters of gas this year.

Gazprom CEO Alexei Miller gave the assurance to Dmitry Kazakov, CEO of Belarus pipeline operator Beltransgaz, at a meeting in Moscow, Gazprom said Friday in an e- mailed statement. (Bloomberg)  

Gazprom raised forecasts for 2006 sales by 19 percent as export prices to former Soviet republics almost quadrupled.

Gazprom may earn 2.25 trillion rubles ($84 billion) this year, 363.7 billion rubles more than it expected in February, the company said in an e-mailed statement. At the same time, Gazprom will spend 358.9 billion rubles more than planned for 2006. (Bloomberg)  

A firm owned by Ukraine's richest man, Rinat Akhmetov, has struck a deal to buy gas directly from Gazprom, cutting out gas trader RosUkrEnergo, Vedomosti reported Friday.

Under a deal struck in July, Metinvest, owned by Akhmetov's Systems Capital Management holding, will buy 2 billion cubic meters of gas directly from Gazprom, Vedomosti said, citing an unidentified official in Ukraine's energy regulator.

 
The gas will be sold at a price of $110 to $130 per 1,000 cubic meters, and will be distributed to 90 Ukrainian companies, Vedomosti said. (MT)  

Tuesday, September 12, 2006.

European utilities are ready to make strategic investments in Russian power firms if electricity prices rise, said Manfred Wiegand, head of global utilities at PricewaterhouseCoopers.

"The Russian market is certainly of interest to European utilities," Wiegand said Friday in an interview in Moscow.

The domestic electricity sector, known for its aging grid and generation facilities, could become a "shrewd investment" for European utilities as a host of domestic power firms line up to offer shares, he said.

On Thursday, Italy's Enel said it planned to invest $2.4 billion in acquiring Russian electricity and gas assets.

After a decade of lukewarm interest, Enel would become the first European utility after Finland's Fortum to put serious cash in Russian electricity.

Troika Dialog said it expected Enel to invest in a stake in one of the country's five wholesale retail firms.

State-controlled utility Unified Energy Systems plans to offer investors stakes in five wholesale and several of the country's territorial power generation companies in the next two to three years.

From a strategic investor viewpoint, European utilities would likely acquire "significant" stakes of more than 10 percent in Russian power firms to give them a say in the way they are run, said David Gray, a partner at PricewaterhouseCoopers in Moscow working on energy, utilities and mining.

 
Gazprom is also likely to gain stakes in European utilities that sell electricity to the end consumer, Wiegand said. Despite political caution, "the legal structure is not there to stop Gazprom" buying stakes in European utilities, he said.

Half of Europe's utilities currently expect gas shortages or supply interruptions, according to PwC's 2006 annual survey of energy company CEOs. Given the supply uncertainty, European utilities are actively seeking to expand and diversify their fuel and country portfolio, Wiegand said.

"We are on the verge of making a lot of these investment decisions," Wiegand said. "Companies that are investing in gas and coal are also considering investing in nuclear power plants."

In Russia, the recent liberalization of wholesale electricity prices could "transform the economics" of power companies, Gray said. As prices for corporate consumers are freed up, higher prices for domestic users cannot be far behind, he said.

The risk with introducing market principles into the power sector is that Russia has few traders with knowledge of how to complete electricity contracts and work with a flexible price environment, Gray said. And yet, mistakes in trading would mean a collapse in profits, he said.

Independent experts noted that the possibility to build or invest in a power plant in Russia has existed for several years now, but drew little enthusiasm from foreign utilities due to fixed prices and the vast sums needed to modernize the country's generation and grid facilities.

Enel are either "bluffing or they are insane," said Gianguido Piani, an Italy-based expert on Russian electricity.

Piani noted that in 2002 Germany's E.On made a pre-feasibility study for a 900-Megawatt combined cycle gas turbine plant in the Tula region, but soon dropped their plans, seeing it as economically unviable.

"With the elections coming up, I can't see the price for consumers rising," said Derek Weaving, a London-based energy analyst.

In the electricity sector, "shareholders in Russia have not been getting a return on equity," Weaving said. While utility majors have circled Russia for over a decade, "the watershed year is when consumers start to pay real prices" for electricity, he said.  

Gazprom and Italy's Eni said Tuesday that they had agreed on guidelines for a broad cooperation agreement that would range from oil and gas production to sales.

During their meeting in Moscow on Tuesday, Gazprom CEO Alexei Miller and Eni CEO Paolo Scaroni agreed on the "principles and main conditions of the cooperation agreement, which includes the entire production chain, from production to sales of oil, gas, electricity and liquefied natural gas," Gazprom said in a statement.

The companies said the agreement would be signed by Oct. 15.  

Gazprom and Britain's BP have signed a deal to supply liquefied natural gas to Atlantic basin countries, Gazprom said Wednesday.

Under the deal, BP will supply LNG to Gazprom's British-based branch, Gazprom Marketing & Trading, which will market it across the Atlantic basin, Gazprom said in a statement. The companies would not specify to which countries the LNG would be supplied.  

Gazprom CEO Alexei Miller met Ukrainian Energy Minister Yuriy Boyko in Moscow, Gazprom said in a statement Wednesday.

The two men discussed cooperation this year and in 2007, the company said in the statement.