Russia 090108

Basic Political Developments RF to strive for just settlement of Mid-East situation at UN - Russia will strive for

achieving a just settlement at the UN Security Council of the situation in the Middle East, said here on Wednesday Russian Deputy Foreign Minister Alexander Yakovenko, speaking with Russian reporters.

Russian plane brings humanitarian aid to Palestinian people - This special flight brought 33 tonnes of humanitarian aid for Palestinian population: 28 tonnes of foodstuffs and five tonnes of medicines. They will be brought from Egypt to the territory of the Palestinian National Authority.

Russia set to evacuate second group of citizens from Gaza - Russian diplomats are planning to evacuate a second group of Russian citizens from the Gaza Strip via Jordan by an emergencies ministry plane, the Russian consul in Israel said on Thursday.

Ukraine to hold more gas talks in Moscow-Naftogaz - A Ukrainian delegation is likely to travel to Moscow for more gas talks with Russia's Gazprom after three-way negotiations in Brussels, a spokesman for Ukraine's state-run energy company said on Thursday.

Russia and Ukraine hold gas row talks in Moscow - The two top gas executives from Russian and Ukraine held talks in Moscow on Thursday, in the first face-to-face contact since their row choked off supplies to EU countries in bitter winter weather.

Gazprom, Naftogaz chiefs discuss in Moscow ways to get out of gas crisis - The chiefs of the Russian Gazprom holding and Ukraine's Naftogaz held talks here on the night from Wednesday to Thursday, Gazprom spokesman Sergei Kupriyanov has told Itar-Tass.

Gazprom's CEO holds talks with Naftogaz's Dubina - The heads of the Russian and Ukrainian gas companies have held an unexpected meeting in Moscow to discuss the dispute that has caused an energy crisis in Europe.

Russia's Gazprom cites attempts by 'every means and at any cost' to block direct dealings between Gazprom, Naftogas

Kiev and Moscow talk as EU freezes - Russia and Ukraine's top gas executives - Alexei Miller and Oleh Dubyna - started talks in Moscow today, the first face-to-face contact between Gazprom and Naftogaz Ukrainy since their payment dispute choked gas supplies to European Union countries in bitter winter weather.

Russia, Ukraine resume talks on gas dispute Russia, Ukraine Resume Talks as Gas Supplies Still Disrupted - OAO Gazprom

Chief Executive Officer Alexei Miller held talks overnight with his counterpart at NAK Naftogaz Ukrainy, Oleh Dubina, Naftogaz spokesman Valentyn Zemlyanskyi said in a telephone interview. Both were due in Brussels later today to meet European Union officials.

Miller, Dubina to meet in Brussels Thur - Naftogaz Ukrainy Russia to Open Gas Talks With EU in Brussels - The EU has given Russia and

Ukraine an ultimatum to resolve the gas crisis, but hasn't defined the

consequences of non-compliance. Thursday, a top Russian energy official is to meet with EU representatives in Brussels.

Moscow talks bid to resolve gas row Italy Has Two Months of Gas Reserves, Quadrino Tells Giornale EU intervenes in gas row as Serbia looks to Belarus - Serbia has asked to receive

Russian gas via an alternative route, going through Belarus. The Serbian government has appealed directly to Gazprom asking it to re-start

supplies of natural gas as soon as possible. The country's foreign minister Vuk Jeremic told RT that Serbia is fully dependent on Russian gas shipments.

EU sends observers to monitor gas, Gaza  - European Commission President José Manuel Barroso revealed yesterday in Prague that following a series of telephone conversations with Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Timoshenko, an EU monitoring mission will be sent to monitor gas flows. 

Medvedev airs gas grievances in telephone conversation with Yushchenko Row over prices masks political wrangling - Ukraine says it cannot afford to pay

the $450 per 1,000 cubic metres of gas demanded by Gazprom. Russia claims it is only asking for $250 per 1,000 cubic metres, compared with $195 in 2008. Gazprom alleges that Naftogaz, Ukraine's state energy firm, still owes it $600m for 2008; the Ukrainians dispute this.

Russia's Gas War Gets Credit-Crunched - Gazprom has economic incentives to do a deal with Ukraine.

Vladimir Putin - speedy implementation of North Stream Project Become More Urgent

Mr. Putin's Cold War: The Russian leader orders the suspension of gas deliveries to Europe. Is Ukraine really to blame?

FACTBOX-18 countries affected by Russia-Ukraine gas row RT: Chronology of Russia-Ukraine gas war Russia arms to Iran: A mistimed gambit? - Reports originating from within Iran,

alleging an agreement by Russia to supply Tehran with modern air defense systems, have sparked mixed reactions from official sources in Moscow

National Economic Trends

Business, Energy or Environmental regulations or discussions Russia’s Ruble, Ukraine’s Hryvnia Climb After Gas Talks Resume UPDATE 1-Alcoa says cuts to affect 18 pct of Russia workforce Norwegian Ministry of the Environment supports projects in Russia Nikel plant pollution increasing - Recent studies show increased downfall of

heavy metals from the melting plant in the Russian border town of Nikel. Norwegian authorities will now intensify monitoring of the emissions.

Activity in the Oil and Gas sector (including regulatory) Russian Petroleum Product Exports to Heat Up in Future, RNCOS - As the global

energy needs are rising and refineries capabilities improving, exports of

petroleum products from Russia are projected to grow at a CAGR of 4.26% between 2008 and 2012.

Italy-Russia deal threatens U.S. business goals in Libya - A proposed joint venture in Libya between two energy giants, Italy's Eni and Russia's Gazprom, is posing an immediate headache for the first U.S. ambassador to take up residence in Tripoli in 36 years.

Gas crisis could speed Russian pipeline projects Rosneft to spend 30 bln dollars on Russian offshore field development

Gazprom

FT: Gazprom battles to restore its reputation - In the short term, it needs to extract as much revenue as possible from Ukraine. In the long term, its tactics in the crisis could stand in the way of its ambition of becoming a leading global energy business.

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Full Text Articles

Basic Political Developments

RF to strive for just settlement of Mid-East situation at UNhttp://www.itar-tass.com/eng/level2.html?NewsID=13451949&PageNum=0

UNITED NATIONS, January 8 (Itar-Tass) - Russia will strive for achieving a just settlement at the UN Security Council of the situation in the Middle East, said here on Wednesday Russian Deputy Foreign Minister Alexander Yakovenko, speaking with Russian reporters.

He participates in the work of the UN Security Council. “The situation in the Gaza Strip is very serious, and now the Council is looking vigorously for a way out of this situation,” he said. Closed consultations at the Council started at 15.00 local time.

“The Council has on its agenda the draft of an Arab resolution, and the Council would discuss moves which the Council can take,” the Russian diplomat continued. The question on possible adoption of a statement by the UN Security Council president is also under discussion.

According to the deputy minister, members of the UN Security Council are in agreement that it is necessary to reach a sustainable ceasefire in the zone of the Palestinian-Israeli confrontation from both sides. It is also necessary “to avoid a humanitarian disaster and open control passage points” in order to render humanitarian support for residents of the Gaza Strip,” Yakovenko continued.

“The Council actively discusses the initiative by Egypt and France, which they put forth and which enjoys wide enough support at the Council,” the high-ranking diplomat noted. “It is important now to record this initiative in writing. Delegations will be preoccupied with this work during informal consultations at the Security Council,” the diplomat added.

Asked when an opening meeting of the Council is held where it can take some decision on this question, Yakovenko stressed that this would depend on the results of consultations.

Russian plane brings humanitarian aid to Palestinian peoplehttp://www.itar-tass.com/eng/level2.html?NewsID=13451834&PageNum=0

MOSCOW, January 8 (Itar-Tass) - A plane of the Russian Ministry for Emergencies brought humanitarian aid to Palestinian population.

“A freight Il-76 plane of the Ministry for Emergencies landed at the airport of the Egyptian city of Larish with humanitarian aid for residents of the Palestinian National Authority,” the public relations service of the Russian Ministry for Emergencies told Itar-Tass.

This special flight brought 33 tonnes of humanitarian aid for Palestinian population: 28 tonnes of foodstuffs and five tonnes of medicines. They will be brought from Egypt to the territory of the Palestinian National Authority.

This is already the fourth batch of humanitarian aid for Palestinian citizens. Earlier, three planes of the Ministry for Emergencies delivered 84 tonnes of humanitarian cargoes, including tents, foodstuffs, medicines, blankets and diesel power plants.

Humanitarian aid to Palestine is rendered on instructions by the Russian President.

Russia set to evacuate second group of citizens from Gazahttp://en.rian.ru/russia/20090108/119393647.html

TEL AVIV, January 8, (RIA Novosti) - Russian diplomats are planning to evacuate a second group of Russian citizens from the Gaza Strip via Jordan by an emergencies ministry plane, the Russian consul in Israel said on Thursday.

A group of over 250 foreign nationals, including at least 30 Russians, is currently moving by busses through Gaza toward the Israeli border where they will be met by diplomats and transported to the Jordanian capital, Amman.

"There are nationals from 17 countries. We are certain that there are Russians among them, but how many we don't know. It will be clear after the last foreigner crosses the border," Vladimir Yukalov said.

Moscow evacuated the first group of 101 Russian citizens from Gaza on January 2, a day before the start of a major Israeli ground offensive against Hamas militants in response to frequent rocket attacks on Israeli territory.

There were at least 250 Russian citizens in the Gaza Strip, most of them wives and children of Palestinians who studied at Russian universities, prior to the evacuation.

According to latest reports, at least 700 Palestinians have been killed, including 215 children and 89 women, and more than 3,000 injured as a result of Israeli airstrikes and ground operations since the beginning of "an all-out war" against Hamas in late December.

Russia said on Wednesday it would continue its efforts in the UN Security Council and across the Middle East to bring about a settlement to the conflict in the Gaza Strip.

Ukraine to hold more gas talks in Moscow-Naftogazhttp://www.reuters.com/article/marketsNews/idUSL85746120090108

Thu Jan 8, 2009 3:58am EST

KIEV, Jan 8 (Reuters) - A Ukrainian delegation is likely to travel to Moscow for more gas talks with Russia's Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) after three-way negotiations in Brussels, a spokesman for Ukraine's state-run energy company said on Thursday.

The spokesman said that Naftogaz chief Oleh Dubyna held talks overnight in Moscow with Gazprom and is now on his way to Brussels.

"Dubyna held talks in Moscow and is now going to Brussels where there should be three-way talks," said Valentyn Zemlyanski, Naftogaz's spokesman. "After that, the delegation will likely go to Moscow."

"We are not commenting on any results of the talks yet," he said. (Reporting by Pavel Polityuk, writing by Guy Faulconbridge and Sabina Zawadzki; Editing by Christian Lowe)

Russia and Ukraine hold gas row talks in Moscowhttp://news.yahoo.com/s/nm/20090108/ts_nm/us_russia_ukraine_gas_70;_ylt=AkTcTox4nCyWwSJrvo9rqRD7SpZ4

By Dmitry Zhdannikov and Guy Faulconbridge Dmitry Zhdannikov And Guy Faulconbridge – 1 hr 25 mins ago

MOSCOW/KIEV (Reuters) – The two top gas executives from Russian and Ukraine held talks in Moscow on Thursday, in the first face-to-face contact since their row choked off supplies to EU countries in bitter winter weather.

There was no immediate word on the outcome of the talks, but further urgent diplomacy was planned for later on Thursday when delegations from Kiev and Moscow were to meet officials from a European Union increasingly concerned at the gas cut-offs.

Russia's state-controlled gas export monopoly Gazprom fully suspended supplies of transit gas toward Ukraine on Wednesday, saying there was no longer any point delivering the gas because Kiev had shut down the pipelines.

Ukraine -- whose pro-Western leaders have clashed with the Kremlin over their drive to join NATO -- said Russia was deliberately starving Europe of gas. Russia cut off gas for Ukraine's domestic consumption on New Year's Day.

The row over gas prices and debts owed by Ukraine to Russia cut heating to tens of thousands of households in Bulgaria and hit supplies as far west as France and Germany as Europe faced freezing mid-winter temperatures.

In Bulgaria, one of the worst affected countries, at least 45,000 households were without central heating on Wednesday. Schools were shut and some companies were closed. Temperatures in Sofia fell to minus 14 degrees Celsius overnight.

Gazprom Chief Executive Alexei Miller and Oleh Dubyna, head of Ukrainian state energy firm Naftogaz, met overnight in Moscow, a Gazprom official told Reuters. The official declined to give any details.

The two men "discussed ways out of this crisis situation," Russian news agencies quoted Gazprom spokesman Sergei Kupriyanov as saying.

Miller and Dubyna were expected to meet again in Brussels when they hold talks with European Energy Commission Andris Piebalgs and Czech Trade and Industry Minister Martin Riman, representing the Czech EU presidency.

Against a backdrop of mounting pressure from European countries on both Kiev and Moscow to get gas flowing again, Russian President Dmitry Medvedev spoke by telephone late on Wednesday with Ukrainian President Viktor Yushchenko.

Medvedev told his Ukrainian counterpart gas supplies had become hostage to squabbling in the Kiev leadership and that Moscow would only resume pumping gas for Ukraine's own use if Kiev agreed to pay a market price for the fuel.

ENERGY DEPENDENCE

Gazprom said it was increasing supplies to the European Union and Turkey via other routes. Despite those measures, the dispute cut Russia's supplies to Europe -- which depends on Moscow for a quarter of its gas supplies -- by half.

The reduction in supplies has been sharper and more prolonged than a similar disruption in January 2006.

The euro zone's major economies have escaped significant economic repercussions, but France has reported a drop in supplies and an Italian industry ministry spokesman said Italy has begun tapping its stockpiles of natural gas.

A total of 18 countries were experiencing supply disruptions. Most were drawing on alternative sources or using stockpiled gas, but with the row in its eighth day and a cold snap pushing up demand, those reserves were dwindling.

Eastern and Central Europe have borne the brunt of the row. Bulgaria cut back or suspended supplies to industrial users and Slovakia declared a state of emergency after a complete halt in supplies from Russia.

Czech and Slovak energy firms said on Thursday supplies from Russia through Ukraine were still at a standstill.

(Additional reporting by James Kilner in Mosocw and European bureaux; writing by Ralph Boulton and Christian Lowe; editing by Dominic Evans)

Gazprom, Naftogaz chiefs discuss in Moscow ways to get out of gas crisishttp://www.itar-tass.com/eng/level2.html?NewsID=13452054&PageNum=0

MOSCOW, January 8 (Itar-Tass) - The chiefs of the Russian Gazprom holding and Ukraine's Naftogaz held talks here on the night from Wednesday to Thursday, Gazprom spokesman Sergei Kupriyanov has told Itar-Tass.

"Talks between Alexei Miller and Oleg Dubina were held in Moscow last night. The sides discussed ways of how to get out of the current crisis situation," Kupriyanov said.

Gazprom's CEO holds talks with Naftogaz's Dubinahttp://www.google.com/hostednews/ap/article/ALeqM5ime-eB29lh2E2m_LwNapeBBPHMBAD95IRGU80

35 minutes ago

MOSCOW (AP) — The heads of the Russian and Ukrainian gas companies have held an unexpected meeting in Moscow to discuss the dispute that has caused an energy crisis in Europe.

Both companies confirmed they met early Thursday but released no details. It was the first face-to-face meeting between Gazprom's Alexei Miller and Naftogaz's Oleh Dubina since talks over prices broke down New Year's Eve.

The meeting was unexpected because both men are due in Brussels Thursday to meet with EU officials.

Gazprom stopped all gas shipments to Ukraine on Jan. 1 but kept supplies flowing to Europe through Ukraine's pipelines until Wednesday, when all deliveries stopped.

The cutoff has left many European countries struggling to cope in the depths of winter.

Russia's Gazprom cites attempts by 'every means and at any cost' to block direct dealings between Gazprom, Naftogashttp://www.kyivpost.com/business/32853

Today, 10:23 | Interfax-Ukraine

Moscow, January 8 (Interfax) - Gazprom spokesman Sergei Kupriyanov has highlighted a Ukrainian Fuel and Energy Ministry statement.

The Ukrainian government statement insists on the removal of  "corrupt" gas intermediaries such as RosUkrEnergo between the two nations. Kupriyanov said the statment reveals that internal Ukrainian political disputes led to the current gas standoff.

"We are getting the impression that the current problems in relations in the gas sector on the Ukrainian side stem not from commercial issues or lack of coordination on prices and tariffs but from the fact that there are political forces in Ukraine that are trying by every means and at any cost force us to keep mediators groups between Gazprom and Naftogaz," he said.

"We think that these internal Ukrainian disputes should by no means affect the reliability of Russian gas transit across Ukraine to European consumers which unfortunately has happened," Kupriyanov added.

Earlier the Ukrainian side declared that the government, the Fuel and Energy Ministry and Naftogaz Ukrainy won't permit attempts of the return of mediator groups or non-transparent relations to the national system of gas supplies.

"The current situation in gas relations between Ukraine and Russia may stem from the attempts to return such mediators as RosUkrEnergo and UkrGaz-Energo to Ukraine's gas market," a statement of the Fuel and Energy Ministry press service received by Interfax says.

"The Ukrainian government, the Fuel and Energy Ministry and Naftogaz Ukrainy will not permit under any circumstances attempts of involving mediators or returning non-transparent corrupt relations which accompanied the operations of the above named mediator groups in the system of gas supplies in Ukraine," the statement says.

It notes that the government, ministry and Naftogaz will insist on establishing direct, transparent and predictable relations in the gas sector directly between Naftogaz and Gazprom.

Kiev and Moscow talk as EU freezes

http://www.upstreamonline.com/live/article169185.ece

By Upstream staff 

Russia and Ukraine's top gas executives - Alexei Miller and Oleh Dubyna - started talks in Moscow today, the first face-to-face contact between Gazprom and Naftogaz Ukrainy since their payment dispute choked gas supplies to European Union countries in bitter winter weather.

There was no immediate word on the outcome of the talks, but further urgent diplomacy was planned for later today when delegations from Kiev and Moscow were to meet officials from a EU increasingly concerned at the gas cut-offs.

Russia's state-controlled gas export monopoly Gazprom fully suspended supplies of transit gas towards Ukraine yesterday, saying there was no longer any point delivering the gas because Kiev had shut down the pipelines.

Ukraine - whose pro-Western leaders have clashed with the Kremlin over their drive to join Nato - said Russia was deliberately starving Europe of gas. Russia cut off gas for Ukraine's domestic consumption on New Year's Day.

The row over gas prices and debts owed by Ukraine to Russia cut heating to tens of thousands of households in Bulgaria and hit supplies as far west as France and Germany as Europe faced freezing mid-winter temperatures.

In Bulgaria, one of the worst affected countries, at least 45,000 households were without central heating yesterday. Schools were shut and some companies were closed. Temperatures in Sofia fell to minus 14 degrees Celsius overnight.

Gazprom boss Miller and Dubyna, head of Ukrainian state energy player Naftogaz, met overnight in Moscow, a Gazprom official told Reuters. The official declined to give any details.

The two men "discussed ways out of this crisis situation", Russian news agencies quoted Gazprom spokesman Sergei Kupriyanov as saying.

Miller and Dubyna were expected to meet again in Brussels when they hold talks with European Energy Commission Andris Piebalgs and Czech Trade & Industry Minister Martin Riman, representing the Czech EU presidency.

Against a backdrop of mounting pressure from European countries on both Kiev and Moscow to get gas flowing again, Russian President Dmitry Medvedev spoke by telephone late last night with Ukrainian President Viktor Yushchenko.

Medvedev told his Ukrainian counterpart gas supplies had become hostage to squabbling in the Kiev leadership and that Moscow would only resume pumping gas for Ukraine's own use if Kiev agreed to pay a market price for the fuel.

Gazprom said it was increasing supplies to the EU and Turkey via other routes. Despite those measures, the dispute cut Russia's supplies to Europe - which depends on Moscow for a quarter of its gas supplies - by half.

The reduction in supplies has been sharper and more prolonged than a similar disruption in January 2006.

The euro zone's major economies have escaped significant economic repercussions, but France has reported a drop in supplies and an Italian industry ministry spokesman said Italy has begun tapping its stockpiles of natural gas.

A total of 18 countries were experiencing supply disruptions. Most were drawing on alternative sources or using stockpiled gas, but with the row in its eighth day and a cold snap pushing up demand, those reserves were dwindling.

Eastern and Central Europe have borne the brunt of the row. Bulgaria cut back or suspended supplies to industrial users and Slovakia declared a state of emergency after a complete halt in supplies from Russia.

Today Czech and Slovak energy companies said supplies from Russia through Ukraine were still at a standstill.

Thursday, 08 January, 2009, 08:27 GMT  | last updated: Thursday, 08 January, 2009, 08:30 GMT

Russia, Ukraine resume talks on gas disputehttp://en.rian.ru/russia/20090108/119392465.html

MOSCOW, January 8 (RIA Novosti) - Russian energy giant Gazprom and Ukraine's national energy company Naftogaz resumed talks early on Thursday to resolve the current crisis around gas supplies to Europe via Ukraine, Gazprom's spokesman said.

"Alexei Miller and Oleh Dubyna held talks overnight on ways to deal with the current crisis," Sergei Kupriyanov said without adding any details.

Talks between Russia and Ukraine ended on New Year's Eve with no agreement on how to settle Kiev's gas debts or on a contract for 2009 deliveries.

Gazprom halted on Wednesday gas supplies to Ukraine for transit to Europe. A final check established that Ukraine was not carrying any gas to Europe despite Russia's move to continue gas supplies to Ukraine through the Sudzha station.

Kiev closed on Wednesday the fourth, final gas pipeline pumping Russian gas to Europe. The latest closure added Austria, the Czech Republic, Romania and Slovakia to the growing list of countries receiving no Russian gas.

The three other pipelines were closed on Tuesday, ending deliveries via Ukraine to Hungary, Serbia, Macedonia, Croatia, Bulgaria, Turkey, Greece, and Bosnia. Supplies to Italy, Poland, France and Slovenia are seriously disrupted.

Gazprom earlier accused Ukraine of stealing more than 86 million cubic meters of gas since the start of the year.

Gazprom and Naftogaz officials, as well as the two countries' government and EU officials are scheduled to meet later on Thursday in Brussels to consider the resumption of Russian gas supplies to Europe via Ukraine.

Russia, Ukraine Resume Talks as Gas Supplies Still Disruptedhttp://www.bloomberg.com/apps/news?pid=20601092&sid=aVe7ijTnDPDc

By Maria Ermakova and Daryna Krasnolutska

Jan. 8 (Bloomberg) -- Russia and Ukraine resumed talks on a dispute over natural gas prices which has disrupted shipments to Europe for the second time in three years, as freezing weather boosted power demand across the continent.

OAO Gazprom Chief Executive Officer Alexei Miller held talks overnight with his counterpart at NAK Naftogaz Ukrainy, Oleh Dubina, Naftogaz spokesman Valentyn Zemlyanskyi said in a telephone interview. Both were due in Brussels later today to meet European Union officials.

Each side blamed the other for the shutdown, which halted gas supplies to Europe through Ukraine yesterday and came amid renewed calls in Western Europe to develop nuclear power plants and alternative sources of energy. Gas supplies are dwindling as temperatures as low as minus 25 degrees Celsius (minus 13 degrees Fahrenheit) in Germany and Poland spur demand for the fuel. U.K. natural gas prices have climbed 20 percent this week.

“They should come to an agreement pretty soon,” said Christian Kleindienst, senior credit analyst at UniCredit SpA in Munich. “The stakes are too high and neither side’s bargaining position is strong enough.” A deal could take place by “mid to end-January.”

Russian President Dmitry Medvedev spoke with his Ukrainian counterpart Viktor Yushchenko by phone yesterday, the first high-level contact between the two sides since negotiations broke off on Dec. 31. Medvedev said Ukraine should pay the full market price for its gas and clear its debt to Russia.

Market Price

EU Energy Commissioner Andris Piebalgs will meet with Gazprom’s Miller today in Brussels and Dubina will also be in the city for negotiations. Naftogaz said it’s “ready to hold constructive talks with Gazprom wherever, the place doesn’t matter.”

Gazprom said yesterday it suspended transit supplies after discovering that Ukraine wasn’t shipping fuel intended for European customers to its final destination. Its European customers receive 80 percent of supplies through pipelines that cross Ukraine. The company said its overall deliveries to Europe were cut by about 60 percent yesterday.

European spot natural-gas prices declined amid signs cold weather may give way to warmer temperatures in coming days, reducing heating demand. Gas for next-month delivery in the U.K., Europe’s biggest gas market, dropped 4 percent to 58.3 pence a therm at 5:02 p.m. London time, according to broker ICAP Plc. That’s equal to $8.88 a million British thermal units.

‘Real Problems’

European Commission President Jose Barroso said “real problems” may arise unless transit flows resume through Ukraine. Russian and Ukrainian officials have accepted a proposal to have international monitors verify gas transit, Barroso told a press conference in Prague yesterday.

Hungary and Slovakia are most exposed to the stoppage because they depend more on the fuel for energy than other European nations, according to UniCredit SpA. The dispute has already lasted longer than a similar conflict in January 2006 which interrupted fuel shipments to Europe.

Hungary ordered industrial users of natural gas to switch to other fuels, a day after it stopped receiving Russian supplies through Ukraine. Turkish electricity producers cut output from their gas-fired power plants to conserve fuel.

Slovensky Plynarensky Priemysel AS, Slovakia’s dominant gas company, said it would curb deliveries to the largest industrial users. Affected companies include refiner Slovnaft AS, which consumes more than 1 million cubic meters of gas a day.

Austrian Stocks

OMV AG, Austria’s largest oil and gas producer, said it’s able to meet demand by tapping stockpiles, sourcing imports from elsewhere and using its own output. The Czech Republic’s RWE Transgas is using supplies from Norway and underground storage.

E.ON AG, Germany’s largest utility, increased the amount of gas it gets from non-Russian providers, taking “more than usual” from Norway and the Netherlands.

Eni SpA, Italy’s biggest energy company, reported a “substantial” interruption in gas supplies from the TAG pipeline yesterday.

Norway, the biggest supplier of gas to the EU after Russia, is producing natural gas at “more or less” full capacity and can do little in the short term to increase output, Deputy Petroleum and Energy Minister Liv Monica Stubholt said.

The Czech Republic, which holds the rotating EU presidency, called a meeting of ministers in Brussels today with Gazprom and Naftogaz representatives to seek a “technical solution.”

‘End of Tunnel’

“There’s a certain light at the end of the tunnel of an otherwise very complicated bilateral situation,” Czech Prime Minister Mirek Topolanek said yesterday.

Gazprom delivered about 170 million cubic meters of gas to Europe yesterday, compared with 420 million to 450 million cubic meters a day normally, the company’s Deputy Chief Executive Officer Alexander Medvedev said on a conference call yesterday. Gas is being supplied through Belarus and from underground storage.

Since 2006, European nations have diversified their sources of fuel and improved inventories. They are also using more gas, the source of 24 percent of the world’s energy consumption in 2007, to reduce emissions linked to global warming.

In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the European Union, and also cut shipments by 50 percent last March during a debt spat.

IMF Bailout

Russia cut shipments intended for Ukraine’s domestic market Jan. 1, and accused Ukraine of siphoning off gas destined for other buyers. Gazprom has warned that Ukraine risks amassing a debt of “billions of dollars” if the conflict continues.

Gazprom raised its demands on Jan. 4 as Miller cited a possible price of $450 per 1,000 cubic meters for deliveries to Ukraine this month, reflecting the average price in countries

bordering Russia’s neighbor. Ukraine, which paid $179.50 for its Russian gas last year, rejected a Gazprom offer last week of $250 for 2009 and says $201 would be fair.

Ukraine’s political leaders, Yushchenko and Prime Minister Yulia Timoshenko, are grappling with a financial crisis that has forced it to seek a $16.4 billion International Monetary Fund bailout.

To contact the reporters on this story: Maria Ermakova in Moscow on mermakova@bloomberg.net; Daryna Krasnolutska in Kiev on dkrasnolutsk@bloomberg.net

Last Updated: January 8, 2009 02:30 EST

Miller, Dubina to meet in Brussels Thur - Naftogaz Ukrainyhttp://www.itar-tass.com/eng/level2.html?NewsID=13451510

KIEV, January 7 (Itar-Tass) - Naftogaz Ukrainy CEO Oleg Dubina will pay a working visit to Brussels on January 8, the company’s press secretary Valentin Zemlyansky told Itar-Tass. According to him, Dubina plans to meet with Gazprom CEO Alexei Miller.

New contract needed for gas supply resumption to Ukraine-Medvedevhttp://www.itar-tass.com/eng/level2.html?NewsID=13451480&PageNum=0

MOSCOW, January 7 (Itar-Tass) - Russian President Dmitry Medvedev has said that “for the resumption of natural gas supplies to Ukrainian consumers it is necessary to conclude a new contract between Gazprom and Naftogaz on the market European price without discounts and privileges.” Medvedev expressed this stance in a telephone conversation with Ukrainian President Viktor Yushchenko that was held on the initiative of the Ukrainian side.

According to the president, “The debt problem has not been settled still, and Ukraine’s (gas) debt should be settled in the full volume and as soon as possible.”

The Russian president also said “it is inadmissible that European consumers have not received Russian gas due to its misappropriation by the Ukrainian side.”

Energy | 08.01.2009

Russia to Open Gas Talks With EU in Brussels http://www.dw-world.de/dw/article/0,,3927951,00.html

The EU has given Russia and Ukraine an ultimatum to resolve the gas crisis, but hasn't defined the consequences of non-compliance. Thursday, a top Russian energy official is to meet with EU representatives in Brussels.Following talks with Russian Prime Minsiter Vladimir Putin, the chief of Russian gas supplier Gazprom said he would meet with his partners at the European Commission and European Parliament on Jan. 8, 2009. Gazprom's Alexei Miller repeated his company's accusation that Ukraine was stealing some of the Russian gas transiting its pipelines for delivery to the rest of Europe.  "The volume of theft of Russian gas on Ukrainian territory rises every day," Miller told AFP news agency. Delivery suspension  "According to the latest estimates, Ukraine is stealing nearly 15 percent of gas delivered to the border between Russia and Ukraine," he said. On Jan. 1, Russia suspended delivery of gas for use by Ukraine after the two countries failed to agree a rate for 2009 and on the amount Kyiv owed for previous deliveries. The subsequent gas supply problems, which each country has blamed on the other, have begun to be felt in several European Union countries, reaching as far west as Italy and France.Approximately 80 percent of Russia's gas exports to Europe pass through Ukraine. Ultimatum from EU On Wednesday, Jan. 7, the EU gave Russia and Ukraine 24 hours to resolve their commercial dispute and resume gas deliveries to Europe or face unspecified political consequences. "If supplies are not restored tomorrow, we will have to see a strong intervention by the EU," said Czech Prime Minister Mirek Topolanek, whose country holds the bloc's rotating presidency. "Obviously there is a political dimension to this problem," Topolanek said in Prague ahead of a meeting with the EU's executive, the European Commission. Officials in Brussels declined to elaborate on the substance of the EU threat, but experts believe some leverage may lie in the fact that Ukraine has expressed strong interest in joining the EU, while both countries trade heavily with the bloc. Damaged reputations? 

Prior to his arrival in Prague, EU Commission President Jose Manuel Barroso accused the sides of holding the EU's gas supply "hostage" because of their dispute over unpaid bills. "Now the two countries' reputation as reliable partners to the EU is at stake," Barroso told Russian President Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko over the phone.Much of Europe was forced to tap into its gas reserves while some countries began taking emergency steps after Russia cut all supplies to the continent via Ukraine early Wednesday. Hungary, Germany, Italy, Austria, Slovakia, Greece, Turkey and most of the Balkan nations were among the hardest hit by the drop in Russian gas, which has coincided with one of the coldest winters in decades, heightening fears of possible shortages over the coming days or weeks. In Brussels, the European Commission proposed sending observers to monitor Russian gas flows through the Ukraine as a way of helping resolve the standoff. The offer was immediately taken up by Ukrainian President Viktor Yushchenko. Pain across Europe In a letter to Barroso, Yushchenko suggested EU technicians could independently evaluate the volume of Russian natural gas entering Ukraine. Moscow has repeatedly accused Kyiv of siphoning off gas destined to Europe -- a claim strongly denied by the Ukrainians. Meanwhile, Hungary became one of the first European countries to impose restrictions on industrial gas use as underground reserves were being tapped at maximum capacity. Serbia's reserves were virtually depleted while Bulgaria, which is 100 percent dependant on Russian gas, was considering re-opening one of its Soviet-era nuclear reactors -- shut down for safety reasons when it joined the EU -- in order to meet its energy needs. Emergency measures were also triggered in Slovakia, while Poland was compensating for a complete cut-off by boosting supplies via neighboring Belarus.

Moscow talks bid to resolve gas rowhttp://www.google.com/hostednews/ukpress/article/ALeqM5gQPjVBn_GpyVSO-4NKUDw7bKKP6g

26 minutes ago

Russia, Ukraine, and the European Union are bidding to end a crisis which has left at least seven EU countries facing major gas shortages amid a winter freeze.

Talks in Moscow between Russia's state-controlled Gazprom gas company and Ukraine's Naftogaz are aimed at resolving a row in which Gazprom has turned off the gas tap to Ukraine - hitting onward supplies to the EU in the process.

Meanwhile, Gazprom boss Aleksey Miller is holding talks in Brussels with EU Commission president Jose Manuel Barroso and Euro-MPs to answer mounting fury that member states are being hit in the midst of a bitter winter.

Mr Barroso earlier telephoned Russian prime minister Valdimir Putin and Ukraine's prime minister Yuliya Tymoshenko, to warn them that it was unacceptable to hold the EU's gas supply hostage and that the credibility of both countries as "reliable partners" of the EU was now at stake.

As the meetings began, exports of Russian gas to Europe via Ukraine were reported to have stopped completely - with no sign of Russia's commitment to maintain supplies via other routes being fulfilled.

Russia has accused Ukraine of siphoning off gas destined for Europe to replace the supplies Ukraine lost when Gazprom turned off the tap last week in a dispute over unpaid bills and price increases.

But Ukraine denies the charge and no-one is predicting a swift outcome of the Moscow meeting between senior Gazprom and Naftogaz executives.

In Brussels the Gazprom boss will be at the centre of a series of meetings at European Commission headquarters and at the European Parliament. He will be asked to justify allowing a "commercial" dispute to spill over with potentially devastating consequences for EU energy supplies.

So far seven EU countries - Austria, Greece, Hungary, Romania, the Czech Republic, Slovakia, Bulgaria - as well as Bosnia-Herzegovina, Croatia, Macedonia and Serbia, have reported a total stoppage of gas supplies from Russia, while Italy says its supply is down one tenth of the normal flow.

The UK is immune for now - only 2% of its gas supply comes from Russia, and if that stopped, it could easily be topped up from other sources, according to the Government.

Italy Has Two Months of Gas Reserves, Quadrino Tells Giornale

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGoNQFZeGzYE

By Armorel Kenna

Jan. 8 (Bloomberg) -- Italy has two months of natural-gas reserves and the country relies less on imports from Russia’s OAO Gazprom than others in Europe, Edison SpA Chief Executive Officer Umberto Quadrino told Il Giornale in an interview.

Russia and Ukraine are locked in a dispute over gas prices, transit fees and debt, which has shut down Russia’s main gas transit route to Europe. Gazprom and Ukraine are blaming each other for the disruption.

Italy will get more of its gas imports from Algeria, Qatar and Azerbaijan in the future, Il Giornale cited Quadrino as saying.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

Last Updated: January 8, 2009 01:45 EST

EU intervenes in gas row as Serbia looks to Belarus

http://www.b92.net/eng/news/politics-article.php?yyyy=2009&mm=01&dd=08&nav_id=56269

8 January 2009 | 09:26 | Source: B92, Beta, Tanjug

Belgrade, Moscow -- Ukrainian and Russian representatives in Brussels are seeking a way out of the gas crisis.Serbia has asked to receive Russian gas via an alternative route, going through Belarus.

Officials from Russian Gazprom and the Ukrainian national gas company Naftogas met unexpectedly last night in order to find a way out of the crisis between the two countries over the supply of gas, Russian agencies reported this morning.

“(Gazprom CEO) Alexei Miller and (Naftogas) Oleg Dubyna met last night to look at ways of resolving the crisis,“ said Gazprom spokesman Sergei Kupryanov, agencies report.

It is Dubyna’s first visit to Moscow this year and the first meeting of the CEOs since the crisis broke out, Itar-Tass states.

The two men will also resume talks today on neutral ground, in Brussels, where, together with ministers from the two countries, they will speak with EU officials about overcoming the crisis.

The talks in Brussels will be brokered by the Czech EU presidency. Brussels has voiced its optimism ahead of the talks in the hope that full-scale Russian gas deliveries via Ukraine could resume tomorrow evening.

Russian President Dmitry Medvedev has spoken by phone with Ukrainian counterpart Viktor Yushchenko about “urgent activities“ with a view to reaching the necessary agreements and the immediate resumption of Russian gas deliveries.

Medvedev said that Ukraine’s “illegal usurpation of gas“ was to blame for European consumers having to go short.

“This situation goes against the existing agreements between Russia, Ukraine and European consumers, as well as other international agreements,“ said the Russian president.

Meanwhile, in Novi Sad, three thermo power plants had to be completely shut down overnight, leaving some 80,000 customers without central heating.

These were the only three plants in the city unable to use crude oil as an alternative energy form for the production of heat energy.

Nor are the plants able to produce hot water, while homes were left without any gas supply.

http://www.russiatoday.com/guests/detail/1970

January 7, 2009, 20:37

The Serbian government has appealed directly to Gazprom asking it to re-start supplies of natural gas as soon as possible. The country's foreign minister Vuk Jeremic told RT that Serbia is fully dependent on Russian gas shipments.

EU sends observers to monitor gas, Gaza   http://www.euractiv.com/en/energy/eu-sends-observers-monitor-gas-gaza/article-178354

Published: Thursday 8 January 2009   

As was the case during last summer's Georgia crisis, the EU has once again responded to the first international challenges of 2009 by sending observers, this time to monitor the borders between Gaza and Egypt, and Russia and Ukraine to supervise the supply of gas intended for Europe.

Almost simulateneously, it emerged that the Union will dispatch observers to deal with the two crises in a bid to reassert the perceived success of Europe's so-called 'soft power'. 

Firstly, the Union made known that it will dispatch observers to monitor the border between Egypt and Gaza, hoping to put the ongoing Gaza violence to an end (EurActiv 05/01/09). The border is laced with a network of hundreds of tunnels, bringing not only food and commodities to Gaza, but weapons too. 

Next, yesterday (7 January) the EU finally agreed to send observers to monitor the supply of gas intended for Europe, amid a gas row opposing Russia and Ukraine whereby Moscow accuses Kiev of siphoning off gas destined for Europe. Russia had been tipped to suggest such a move from some time. At first, the EU appeared reluctant to get involved in what it saw as a bilateral dispute, but its position changed after the situation deteriorated (EurActiv 07/01/09). 

European Commission President José Manuel Barroso revealed yesterday in Prague that following a series of telephone conversations with Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Timoshenko, an EU monitoring mission will be sent to monitor gas flows. 

Gazprom Deputy CEO Alexander Medvedev said yesterday in a telephone press conference that Russia will stop gas supplies to Ukraine completely, because the gas was "disappearing" inside this country instead of being exported to the West. The Russian position now appears not to favour the restoration of supplies until international monitors are put in place in Ukraine. 

Commission spokespeople said yesterday that although the mandate of the observers to be sent to monitor the gas row had not yet been determined, the Union would able to dispatch them fairly soon. 

Despite the challenging circumstances, the Union recently managed to send a 200-strong observer mission to monitor borders along the breakaway Georgian provinces of Abkhazia and South Ossetia at short notice (EurActiv 15/09/09). 

Medvedev airs gas grievances in telephone conversation with Yushchenkohttp://www.kyivpost.com/nation/32851

Today, 10:16 | Interfax-UkraineJan 08 ThuMoscow, January 8 (Interfax) - Russian President Dmitry Medvedev and Ukrainian President Viktor Yushchenko talked on the phone Wednesday evening at the initiative of the Ukrainian side, the Kremlin press service told Interfax.

During the conversation Medvedev drew Yushchenko's attention to the following: firstly, that the question of gas deliveries to European consumers and gas relations between Russia and Ukraine are not political. "For Russia it is a question of fulfilling its economic commitments. But unfortunately, this problem became a hostage of the differences inside of the Ukrainian leadership and its inability to make adequate decisions in the current situation," Medvedev noted.

Secondly, Russia has not withdrawn from the talks with Ukraine and is ready to resume them any time. In this context Medvedev urged Yuschenko to give all the necessary instructions to the Cabinet and the Ukrainian energy authorities.

Thirdly, Gazprom and Naftogaz must sign a contract to resume gas deliveries to Ukrainian consumers. It should be a market price meeting the current level of gas prices in Europe and calculated according to the price formula. There should be no discounts or benefits whatsoever.

In the fourth place, Medvedev drew Yuschenko's attention to the fact that European consumers did not receive gas transited across Ukraine due to the misappropriation of the gas by the Ukrainian side which is absolutely impermissible. This contradicts the existing agreements between Russia, Ukraine and European consumers and also other international agreements.

In the fifth place Medvedev noted that the problem of debts had not been settled. The Ukrainian side must pay the debts in full and in the shortest period of time.

In the sixth place the resumption of gas supplies requires the formation of a verification mechanism that should include representatives of the two gas companies, representatives of the energy authorities of Ukraine and Russia, observers from the European Union and also representatives of international legal firms representing the interests of Gazprom and Naftogaz Ukrainy.

Medvedev urged Yuschenko to take immediate action to reach necessary understandings and immediately resume Russian gas transit to European consumers, the Kremlin press service noted.

Row over prices masks political wranglinghttp://www.guardian.co.uk/world/2009/jan/08/russia-ukraine-gas-dispute

The Guardian, Thursday 8 January 2009

What is the dispute about?

Prices and politics. Ukraine says it cannot afford to pay the $450 per 1,000 cubic metres of gas demanded by Gazprom. Russia claims it is only asking for $250 per 1,000 cubic metres, compared with $195 in 2008. Gazprom alleges that Naftogaz, Ukraine's state energy firm, still owes it $600m for 2008; the Ukrainians dispute this.

Which countries are affected?

Gazprom has now stopped gas supplies to Europe via Ukraine, accusing Kiev of shutting down all four pipelines and siphoning off gas for itself. The impact has been felt most acutely in Bulgaria, Romania, Greece, Macedonia, Croatia, Serbia, Bosnia and Turkey, although it is now affecting France, Germany, Italy, Austria, Poland, Hungary and the Czech republic. Britain, which imports only 3% of its gas from Russia, compared with the EU's 25% average, is unaffected.

Are people beginning to suffer?

With sub-zero temperatures continuing throughout mainland Europe, tens of thousands of people, mainly in eastern Europe, have no heating in their homes. Countries are urging citizens to switch to alternative fuels and are trying to import gas and other fuels by other routes. Ukraine has enough gas in storage until the spring.

Are there alternative routes?

Yes. Gazprom, which shipped 300-350m cubic metres a day to Europe via Ukraine, claims it is now providing 150m cubic metres via the Yamal pipeline to Europe and about 50m cubic metres via the Blue Stream pipeline to Turkey.

Russia's Gas War Gets Credit-Crunched

Gazprom has economic incentives to do a deal with Ukraine.http://online.wsj.com/article/SB123136742359262291.html

JANUARY 7, 2009, 5:38 P.M. ET

By ALAN RILEY | From today's Wall Street Journal Europe

Another January, another Gazprom dispute: Once again the gas has been cut off to Ukraine. Allegations of nonpayment, gas theft and political interference are traded between Moscow and Kiev. So far so familiar, but is the economic crisis going to end this annual fight between the two largest ex-Soviet states?

The gas disputes with Ukraine, together with more longstanding Russian allegations of gas theft and demands for access to gas stored on Ukrainian territory, have contributed to the development of a "Ukraine-free" strategy. Gazprom plans to build two new major pipelines, Nord Stream and South Stream, which will provide an alternative route for Russian gas to reach Gazprom's most valuable European markets.

However, these pipelines are very expensive to build. Gazprom and its joint venture partners in Nord Stream have already faced a doubling in estimated construction costs to $12 billion. The project also still faces substantial additional costs in preparing the route underneath the Baltic Sea and dealing with environmental concerns, as well as undersea weapons and explosive dumps.

South Stream could be even more expensive. As the International Energy Agency diplomatically says in its 2008 World Energy Outlook "South Stream is a challenging project, both because of its offshore length of 900 kilometers, and depth (2,200 meters compared to an average of 200 meters in the Baltic Sea for Nord Stream). It will also be a costly venture, with estimates reaching $20 billion."

Gazprom so far resolutely maintains that both pipelines will be built. However, the financial crisis has put a massive strain on both the resources of the company and the Russian state. For the state, tax revenues will in all likelihood tumble following the

collapse in energy prices. Even the massive reserves that Russia has built up, which should have given the Kremlin an economic cushion, are being burned through at a scary rate. The cost of defending the ruble, bailing out banks and protecting key economic sectors has cost at least $163 billion since August. Official figures put Russian reserves now at some $435 billion, though private analysts have put the total at closer to $300 billion -- which would mean the reserves have been halved in the last five months. The danger for Moscow is that over 2009 the cost of currency defense and bailouts will rapidly run down these remaining reserves. In such circumstances it will be difficult for the state to easily fund Nord Stream and South Stream.

Equally, Gazprom's finances have come under real strain. Its market capitalization has fallen 69% in the past year. In 2007 -- at the height of the energy boom and the last year for which we have full figures -- Gazprom reported $28 billion of debt on its books. And because of the fall in energy prices, in the second half of 2009 (given the time lag in gas contracts) it faces a fall to $250-300 per thousand cubic meters of gas from around $500.

Gazprom is not about to go bust: In 2007 Gazprom made $14 billion on revenues of $70 billion. While those figures will take a hit this year, Gazprom will still generate significant profits.

However, those profits won't be enough to finance Nord Stream, South Stream and the crucial development of new gas fields necessary to keep the gas flowing as the existing supergiant fields in the Nadym Pur Taz region begin to wind down by next year.

The economic realities that Gazprom and the Kremlin face will push them during 2009 to sort out the company's rights to transport gas over Ukrainian territory. The Ukrainian export pipeline capacity, at almost 180 billion cubic meters per year, is more than enough to carry all of Russia's current European exports.

If it is to avoid the costly Nord Stream and South Stream projects, Gazprom needs a deal with Ukraine and the European Union to establish a comprehensive, tough and transparent transit regime which will ensure the safe delivery of Russian gas to European markets, as well as an arbitration system to sort out disputes. This would suggest finally hammering out a deal on the draft Transit Protocol of the Energy Charter Treaty (ECT), which Russia and the EU have come close on several occasions to agreeing.

This transit argument is likely to be reinforced by the realization in Moscow that, even if Nord Stream and South Stream are abandoned, Russia is still going to need huge amounts of capital to develop its gas fields, a lot of which must come from foreign investors. Those investors will also want stronger guarantees that gas will actually be delivered into European markets, a deal on the Transit Protocol would give them that security.

More broadly, Russia has to recognize that in straitened economic circumstances it is going to need foreign investment to develop its gas fields. This involves taking a long hard look at its protected sectors law, which limits foreign investment in the energy sector. It also means making a strong statement on investor protection. This means not

only honoring its legal obligations regarding the investor-protection provisions of the ECT, but ratifying the treaty. While Russia is already bound by the ECT, ratification would send a very valuable message as to Russian intentions and effectively end an era of energy-asset expropriation in Russia.

It is of course true that, because of Chinese structural demand, the oil price will rebound toward $100 a barrel once the global economy recovers. The Kremlin and Gazprom will then be flooded again with cash and able to afford its "Ukraine Free" pipeline strategy. Unfortunately for them, the global oil price is not going to recover soon. The world is facing a deep recession, and 2009 may be the first negative year of growth in the global economy since 1945. Well before the oil price recovers, the Kremlin and Gazprom will face very intense economic pressures.

Under these intense pressures there will have to be a reassessment of strategy. In the credit-crunch era Ukraine cannot afford this game, and increasingly neither can Gazprom. There is a deal that can be done to ensure safe passage of gas through Ukrainian territory to ensure continued substantial revenues to Gazprom and Russia. It would better for Moscow and Kiev to recognize the impact of the credit crunch and do a deal sooner rather than later.

Mr. Riley is a professor at City Law School, City University, in London and an associate research fellow at the Center for European Policy Studies in Brussels.

Vladimir Putin - speedy implementation of North Stream Project Become More Urgenthttp://www.geotimes.ge/index.php?m=home&newsid=14503

According to the statement of Vladimir Putin, PM of the Russian Federation, developed events on gas issue made the implementation of North Stream project more urgent. RIA Novosti reports regarding this.

‘I appeal to you to hold a detailed negotiation on this project. Today our European partners finally are convinced in importance of the project. ‘- Vladimir Putin remarked at the meeting with the head of the pipeline shareholders' committee Gerhard  Schroeder  In turn Gerhard Schroeder said; ‘by now all European Union countries have given their consent to the Nord Stream project and we should support it’.    

 The 1,200-kilometer Nord Stream pipeline will link the Baltic coast of Russia near Vyborg with  the Baltic coast of Germany. At the first stage a pipeline with an annual throughput capacity of 27.5 bcm will be built. At the second stage the capacity is expected to double to about55 bcm a year.

Interpressnews 2009.01.08 11:01

Mr. Putin's Cold War

The Russian leader orders the suspension of gas deliveries to Europe. Is Ukraine really to blame?http://www.washingtonpost.com/wp-dyn/content/article/2009/01/07/AR2009010703412.html

Thursday, January 8, 2009; Page A14

RUSSIA HAS been piously insisting that its latest midwinter cutoff of gas deliveries to Ukraine -- and now the rest of Europe -- is the result of a commercial dispute and not a part of Moscow's long-standing campaign to undermine Ukraine's pro-Western government. So why, then, would Russian state television have devoted prime time on both Monday and Tuesday to broadcasting staged meetings at which Prime Minister Vladimir Putin ostentatiously vilified Ukraine's president and ordered the state gas company to cut off deliveries?

Mr. Putin's televised "working sessions" with Alexei Miller, the chairman of the state gas monopoly Gazprom, were scripted with ludicrous heavy-handedness. In each, Mr. Putin disingenuously inquired about details of Russia's dispute with Ukraine, and Mr. Miller replied by portraying the Ukrainian government as thieving, deceptive and unreliable. On Monday, Mr. Putin cynically sympathized with the consumers of Ukraine, then ordered a reduction in the gas that transits Ukraine to other European countries. On Tuesday, he decreed that the pipeline be shut down altogether -- a measure that left not just Ukraine but a dozen other countries without energy deliveries.

Is this really the way to resolve what has been a byzantine bilateral argument over prices and transit fees? Of course not -- but that's not Mr. Putin's objective. The real aim is to advance Russia's aggressive strategy of using its energy exports to divide Europe and undermine those states it still considers its rightful subjects, beginning with Ukraine. Listen to Mr. Putin's ambassador to NATO, Dmitry Rogozin: "It's clear that if Europe wants to have guaranteed natural gas supplies, as well as oil in its pipelines, then it cannot fully rely on its wonderful ally, Mr. Yushchenko." Viktor Yushchenko was democratically elected Ukraine's president in 2004 after a Moscow-backed vote-rigging operation backfired. Like Georgian President Mikheil Saakashvili, the Ukrainian leader strongly favors the entry of his country into NATO. Mr. Putin responded to Mr. Saakashvili with an invasion last August; now he has launched an offensive against Mr. Yushchenko.

Some in Europe will no doubt buy Mr. Rogozin's argument, just as they blame Mr. Saakashvili for the Russian troops still entrenched on Georgian territory. Like its Georgian counterpart, Ukraine's government has many weaknesses, which Mr. Putin has ruthlessly exploited. But the real message of this cold week is the same that European governments have repeatedly received -- and largely ignored -- in recent years. Mr. Putin's regime plainly intends to use Europe's dependence on Russian energy to advance an imperialist and anti-Western geopolitical agenda. The only rational response is a

dramatic acceleration of the European Union's search for alternative sources of energy -- and greater support for those countries that Russia seeks to subjugate.

FACTBOX-18 countries affected by Russia-Ukraine gas rowhttp://www.reuters.com/article/ELECTU/idUSL54629920090108

Thu Jan 8, 2009 3:35am EST Jan 8 (Reuters) - Russian gas flows via Ukraine were haltedfor a second straight day on Thursday, hitting 18 countriesranging from large European Union members such as Germany tosmall ex Soviet Moldova. For stories on the dispute, please click on [nLV634765] AUSTRIA - About 60 pct of gas for domestic use from Russia* Gas flows stopped on Jan. 7. No rationing of supply to Austrian firms before next Monday. Oil and gas group OMV (OMVV.VI: Quote, Profile, Research, Stock Buzz) was drawing on reserves,domestic production and other imports to guarantee supply. GERMANY - About 42 pct of gas for domestic use from Russia* German energy groups E.ON AG (EONGn.DE: Quote, Profile, Research, Stock Buzz) and Wingas (BASF.DE: Quote, Profile, Research, Stock Buzz)are relying on gas stores and a transit route via Poland. Gasshipments to Europe via Ukraine have been massively reducedsince early on Tuesday, and no Russian gas has arrived intoGermany via Czech Waidhaus border point for a second day. Energy firms warned of gas shortages if the dispute lastedmuch longer and sub-zero temperatures endured. TURKEY -- About 67 pct of gas for domestic use from Russia* Production at three Turkish power stations stopped onThursday. Russian gas supplies from a western pipeline passingthrough Ukraine were cut on Tuesday. The country has raisedsupplies of Russian gas delivered via a pipeline under the BlackSea. Gazprom's Blue Stream pipeline to Turkey is working at fullcapacity of 45 million cubic metres (mcm). GREECE -- About 82 pct of gas for domestic use from Russia* All Russian gas supplies via Ukraine to Greece were haltedon Tuesday. Turkey's gas exports to Greece were below thecontract level on Wednesday with low pressure on the pipeline. ITALY -- About 28 pct of gas for domestic use from Russia* Russian gas imports via the TAG pipeline were substantially

interrupted from 1 a.m. on Wednesday, with supplies reduced by90 percent. Italy has tapped its gas reserves. FRANCE -- About 24 pct of gas for domestic use from Russia* Russian shipments dropped by more than 70 percent on Jan. 6.French Energy group GDF Suez (GSZ.PA: Quote, Profile, Research, Stock Buzz) guaranteed supplies. France does not rely on gas in the same way as Germany orItaly because 80 percent of its electricity is produced bynuclear energy. HUNGARY -- About 60 pct of gas for domestic use from Russia* E.ON Ruhrgas is to supply Hungary with 2.5 mcm of naturalgas per day via a pipeline from Austria. Hungary limited natural gas consumption by industrial users. CZECH REPUBLIC - About 80 pct of gas for domestic use fromRussia* Russian supplies halted on Jan. 7. The Czech Republic hastapped reserves and imported gas via an alternative pipeline. SLOVAKIA - About 100 pct of gas for domestic use fromRussia* Slovakia declared a state of emergency after Russiansupplies stopped on Jan. 7. It may restart a nuclear power plantit shut down to comply with the EU accession agreement ifRussian gas supplies remain halted for a longer time. The Slovak gas transit and distribution company SPP said ithad reduced supplies to around 1,000 Slovak companies. BOSNIA - Nearly 100 pct of gas for domestic use from Russia* Russian deliveries stopped on Jan. 6. Bosnia uses around 350million cubic metres of gas annually. It has no gas reserves. Consumption in the past two days rose to 1.6 million cubicmetres because of low temperatures. SERBIA - About 87 pct of gas for domestic use from Russia** Supply from Russia was cut off on Jan. 6. Serbia has gasreserves of 100 million cubic metres, which could last for about10 days under normal daily consumption of about 10 cubic metres. BULGARIA - About 96 pct of gas for domestic use fromRussia** Russian supplies via Ukraine, halted on Tuesday, have forceddozens of Bulgarian industrial companies to cut production. The Neftochim Burgas refinery, controlled by Russia's LUKOIL

(LKOH.MM: Quote, Profile, Research, Stock Buzz), halted all exports of heavy fuel after a cut inRussian gas supplies prompted a switch to oil. POLAND -- About 47 pct of gas for domestic use from Russia** Russian deliveries via Ukraine halted on Jan. 7. Importscontinue via Belarus. The government has approved a motion tocut gas supplies to industrial clients, the deputy primeminister said. Its gas distributor PGNiG said on Wednesday Poland wasreceiving 84 percent of contracted Russian gas in spite of thehalt in deliveries. SLOVENIA - About 64 pct of gas for domestic use fromRussia** Russian supplies stopped from Jan. 7. Deliveries tocustomers have not been disrupted. CROATIA - About 37 pct of gas for domestic use from Russia** Russian flows halted again late on Jan. 6. Croatia declareda crisis on Wednesday, making distributors cut gas flows toindustry and give priority to homes, schools and hospitals. Croatia consumes about 12 million cubic metres of gas eachday during winter. It produces 4.8 million cubic metres andimports the remainder from Russia. MACEDONIA - About 100 pct of gas for domestic use fromRussia* Russian gas supplies to Macedonia halted on Tuesday. ROMANIA -- About 28 pct of gas for domestic use from Russia* Russian supplies to Romania were cut early on Jan. 7.Underground storage and gas production by Romgaz and Petrom(SNPP.BX: Quote, Profile, Research, Stock Buzz)(OMVV.VI: Quote, Profile, Research, Stock Buzz) were being used to make up the shortfall.Romania, less reliant on Russian gas than other ex-communistcounterparts, produces around 65 pct of domestic consumption. MOLDOVA Moldova is no longer receiving Russian gas via Ukraine, thecountry's government said in a statement on Wednesday. Northern regions of Moldova had adequate gas reserves onlyfor 48 hours, while southern regions could last for seven dayson existing reserves.

* Figures calculated using the BP Statistical Review

** Figures from the U.S. Energy Information Administration.

January 7, 2009, 13:56

Chronology of Russia-Ukraine gas warhttp://www.russiatoday.com/news/news/35641

The current gas cuts are the culmination of a long gas war between Russia and Ukraine, RT looks back at its latest chapter, starting back in October 2007 and the ongoing crisis, the effect of which is now being felt all around Europe.

January, 2009

Ukraine has shut all gas pipelines to Europe – Gazprom

Gas cuts hit much of Europe

Ukraine demands more for gas transit

Gazprom threatens Ukraine with extreme measures

Ukraine steals European gas

Europe braces itself over Ukrainian gas theft

Ukraine gas dispute moves into post cutoff stage

Russia stops gas supplies to Ukraine completely

Russia to cut off gas supplies to Ukraine – Gazprom

December, 2008

Gazprom and Naftogas of Ukraine take talks to 11th hour

‘They don’t want to pay’ – Putin on Ukraine gas row

Time ticks down for Ukraine on Gazprom payment and supply for coming year

Ukraine and Gazprom square off for annual gas row

Ukraine stalls on gas debt

Christmas Holiday cold snap for Ukraine?

Gazprom warns on Ukraine gas debt

November, 2008

Medvedev orders Gazprom to collect Ukraine debt

No money, no gas – Gazprom may cut supplies to Ukraine

Ukraine - time to pay gas bills

October, 2008

Putin and Timoshenko step on gas in Moscow

August, 2008

Ukraine promises to return stolen Russian gas

Ukraine admits stealing European gas

July, 2008

Ukraine expecting final price agreement on gas within a month

Ukraine and Gazprom reach agreement on gas

Gazprom's Miller heads to Kiev for gas talks

May, 2008

Russia & Ukraine pledge to end gas disputes

April, 2008

Ukraine pays off gas debt to Russia

March, 2008

Gazprom, Ukraine agree on gas deal

EU not affected by Russia-Ukraine gas row

Gazprom turns Ukraine's gas back on

Ukrainian PM announces end of gas row

Ukraine fails to rule out EU gas cuts

Gazprom cuts gas to Ukraine by 25%

February, 2008

Gazprom unhappy with Ukraine's gas debt 'settlement'

Ukraine pays debt, avoids Russian gas cuts

Ukraine's indecision risks another gas cut

Ukrainian ‘gas princess’ in Moscow to settle dispute

Deal reached in Ukraine gas row

Ukraine gas cuts averted

Ukrainian ‘gas princess’ in Moscow to settle dispute

Gas talks bring no results - for now

Gazprom urges Ukraine’s President to solve gas crisis

January, 2008

Europeans needn’t worry about gas supplies - Ukrainian PM

December, 2007

Gazprom and Ukraine reach deal on 2008 gas price

November, 2007

Gas divides Russia & Ukraine again

October, 2007

Gazprom warns about Ukrainian gas debts

Russia arms to Iran: A mistimed gambit?http://www.atimes.com/atimes/Central_Asia/KA09Ag01.html

By Roger N McDermott

Reports originating from within Iran, alleging an agreement by Russia to supply Tehran

with modern air defense systems, have sparked mixed reactions from official sources in Moscow.

Russia and Iran, according to those initial reports on December 21, were holding talks on supplying medium-range air defense systems - specifically, S-300 surface-to-air missile systems - and Esma’il Kowsari, the deputy head of the Iranian parliament’s National Security and Foreign Policy Commission, stated that Tehran had reached an agreement with Moscow on the future delivery of S-300 missile systems.

The following day, Russia’s Ministry of Foreign Affairs said it was ”checking” these reports. A spokesman for Russia’s state arms exporter was tight-lipped, saying only they could make no public comment on an agreement with its partners.

Yet, the signals are conflicting and were perhaps deliberately confusing. For example, sources within the Russian Defense Ministry (MoD) displayed an entirely different attitude, not only assuming that the S-300 system would be supplied to Iran in due course, but concentrating on the domestic implications; denying this would have any implications for the combat readiness of Russia’s Air Defense Forces.

It is planned, according to the Russian MoD, to deliver the S-300 systems to Iran from Russian Defense Ministry warehouses. The systems for Iran had been removed from active duty and placed in storage. “It is expected that S-300 systems will be supplied to Iran from Defense Ministry storage bases. At the moment S-300 systems are being prepared for their handover to Rosoboronexport to be later shipped to the customer,” the source said.

In fact, despite the highly controversial nature of supplying such weapons systems to Iran, compounded by the increased tension in the Middle East, unofficial sources in Russia’s MoD failed to see what the stir could be about. Instead, it was emphasized that the planned supply to Iran with S-300PMU1 systems was merely defensive: aimed at protecting “important facilities” from aerial attack.

Neither the Russian MoD nor Rosoboronexport has officially confirmed the sales.

This theme of supplying only defensive arms to Iran was soon mirrored in statements by the press service of Rosoboronexport. Vyacheslav Davydenko, the head of the press service of Rosoboronexport, was emphatic about the defensive nature of any arms sales from Russia to Iran. “At present only defensive arms systems, which include air defense systems, are being supplied to Iran,” Davydenko said.

Earlier Tor-M1 (short-range) air defense missile systems were supplied to Iran, to which Davydenko may have been referring. However, he was unapologetic about Russian arms sales to Iran, saying, “The prospects of further cooperation with Iran as well as with other countries can only be discussed with the clients themselves for obvious reasons. At the same time it is noteworthy that Russia’s military and technical cooperation with Iran is implemented in strict compliance with the international obligations of the Russian

Federation under the current regulations on non-proliferation and cannot be a cause of concern for other countries.”

Needless to say, such arms supplies are vehemently opposed by the United States, Israel and Russia’s European partners. Apologists in Russia fail to offer any convincing argument in favor of such arms sales. It is questionable whether the funds from the sale of the strategically important arms would rescue the Russian budget, or more to the point, an arms industry which is already receiving capital injections from the Russian government to prevent its demise.

The trouble for Moscow is that it has consistently shrouded its military-technical cooperation with Tehran with self-perpetuating secrecy, which in turn fuels speculation in the West that Russia may be pursuing questionable defense diplomacy.

Some argue it is the Iranians themselves who want to shift the issue of Iran’s military cooperation with Russia away from purely technical matters, such as seeking sources to procure weaponry cheaply, into the political sphere. This bilateral military cooperation is further complicated by its possible impact on Russia’s relations with the US and Israel. Arguably, sales of the S-300 system would most immediately affect Israel, since Iran’s procurement plans are often calibrated in relation to the capabilities of the Israeli air force.

The S-300 saga has been developing for more than a year. Iran’s Defense Minister Mostapha Mohammad-Najar first said on February 26, 2007, that Iran and Russia had signed a contract for the delivery of the S-300 systems; by December 28, 2007, Russia had refuted this. The contractual delays, since the negotiations can hardly be denied, have largely resulted from the Russians feeling themselves “found out” and perhaps hoping the controversy would die down. The delays have been caused by the political pressures against the deal from Washington, Tel Aviv and Brussels.

In reality, Moscow is engaging in a diplomatic game with the West linked to its opposition to US Ballistic Missile Defense (BMD) plans and sees the need to enhance as many possible bargaining chips. In this sense, it is not surprising that the issue of such “sales” should re-emerge just before the US presidential inauguration on January 20.

Opposition to Iran acquiring the S-300 system is also related to its military effectiveness because the system has high anti-jam protection and is capable of firing at 24 targets simultaneously; guiding to each target two missiles from one launcher or four missiles from two launchers. And the S-300 can hit any air targets - including planes and missiles.

There are some factors the Kremlin underestimates. After Russia’s war in the breakaway Georgian region of South Ossetia last year, Israel effectively guaranteed that it would no longer supply strategically important arms to Russia’s area of interests. The whole business of the supply of weapons to Georgia was a source of embarrassment to the Israeli government. Will Russia risk Israel’s chagrin, and the possible upgrading of

Georgia’s air defense systems that could ensue?

It seems that Russia’s interest in suppling such sensitive systems to Iran sends a strong and possibly miscalculated signal to Washington - one that is open to misinterpretation - in order to “promote” compromise over the BMD. The move comes even as Russian President Dmitry Medvedev has said that he hopes improved relations with the US will be developed with US president-elect Barack Obama.

The Kremlin’s eagerness to promote the image of a “resurgent Russia”, despite its present financial crisis, and its ambition to become another “pole” in a multipolar world order, may be the reasons behind its move to reactivate the “frozen” issue of arms sales to Iran.

Yet, in the context of the latest confrontation between Israel and Hamas in Gaza, its timing could prove ill-fated. Washington will likely continue to oppose such “sales” to Iran, especially with the Middle East being so fragile, while seeking reassurances from Moscow about its commitment to building enduring peace in the Middle East.

As some diplomats within the European Union note, “Russia is an interesting enemy.”

Roger N McDermott is an honorary senior fellow, Department of Politics and International Relations, University of Kent at Canterbury (UK) specializing in defense and security issues in Russia, Central Asia and the South Caucasus.

National Economic Trends

Business, Energy or Environmental regulations or discussions

Russia’s Ruble, Ukraine’s Hryvnia Climb After Gas Talks Resumehttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA0YU_8rbdXo

By Laura Cochrane

Jan. 8 (Bloomberg) -- Russia’s ruble climbed the most in five days against the euro and Ukraine’s hryvnia rose after the countries resumed talks over a gas-price dispute that has disrupted shipments to Europe.

The ruble gained 4.95 percent to 39.5476 per euro in limited holiday trading, from 41.6079 yesterday, at 11:22 a.m. in Moscow. Russian markets are closed and the country’s central bank, which manages the ruble to protect exports, won’t set a new official exchange rate until Jan. 11.

OAO Gazprom Chief Executive Officer Alexei Miller held talks overnight with NAK Naftogaz Ukrainy’s Oleh Dubina, Naftogaz spokesman Valentyn Zemlyanskyi said in a

telephone interview. Both were due in Brussels later today to meet European Union officials.

The ruble was 2.43 percent stronger versus the central bank’s basket of 55 percent dollars and the rest euros. The currency lost 0.33 percent against the dollar.

Ukraine’s hryvnia climbed 1.46 percent per euro to 11.2484, from 11.4155 yesterday. It rose 0.57 percent against the dollar.

To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.net

Last Updated: January 8, 2009 04:05 EST

UPDATE 1-Alcoa says cuts to affect 18 pct of Russia workforcehttp://www.reuters.com/article/marketsNews/idUSL770433720090107

Wed Jan 7, 2009 11:20am EST

By Robin Paxton

MOSCOW, Jan 7 (Reuters) - Alcoa Inc (AA.N: Quote, Profile, Research, Stock Buzz), which is cutting aluminium production and jobs in the face of the global economic downturn, plans measures in Russia that will affect 18 percent of its workforce in the country, the company said on Wednesday. Alcoa, which employs 7,900 people in Russia, said it aimed to align production at its two aluminium fabrication plants with demand and to reduce costs. The measures will be executed gradually throughout 2009.

"We will have to make a number of very tough decisions, but such is the requirement of the current economic situation which we can't ignore," Alcoa Russia President Andrei Donets said in a statement.

Pittsburgh-based Alcoa said on Tuesday it would slash more than 15,000 jobs worldwide, halve capital spending and sell four businesses as it reduces aluminium production by 18 percent as the global economic downturn takes its toll. [ID:nN06444898] Aluminium, used in aircraft and auto bodies and products such as kitchen foil and drinks cans, has lost over half of its value since peaking at $3,380 a tonne in July. Stocks in London Metal Exchange warehouses are at their highest in 14 years.

In Russia, the company owns the Samara Metallurgical Plant -- which was the Soviet Union's largest aluminium fabrication plant -- and Alcoa Metallurg Rus in the southern town of Belaya Kalitva. Neither plant is profitable.

Alcoa said job cuts were among the measures to be taken to reduce its losses in Russia. "Where possible, we will try to minimise the number of cuts through such measures as introducing a shorter working week," the company's press service said.

The company said it would redeploy and retrain employees affected by the restructuring, which will affect its Moscow office as well as the two plants.

"The restructuring plan details, including the numbers of necessary lay-offs, is being developed," the press service said.

Alcoa declined to give details about its production plans.

Alcoa bought its two Russian plants in 2005 and has invested $768 million in their development, including the $257.5 million acquisition price. Donets said Russia remained a "strategic" market for Alcoa.

Per capita aluminium consumption in Russia, at 5-6 kg per year, is about seven times lower than in the United States, where the average person uses between 35 kg and 40 kg.

Alcoa Russia, which supplies products to the aerospace, automotive and shipbuilding sectors, was last year selling 60 percent of its products to domestic consumers, up from 50 percent in 2007. (Reporting by Robin Paxton; editing by Sue Thomas)

Norwegian Ministry of the Environment supports projects in Russiahttp://www.barentsobserver.com/norwegian-ministry-of-the-environment-supports-projects-in-russia.4541915-16176.html

2009-01-07 The Norwegian Ministry of the Environment administers funds to support environmental projects in Russia. The support is primarily intended for projects in the Russian part of the Barents region.

The objective of the project cooperation with Russia is reduction and prevention of pollution in the region, better solving of common environmental problems and development of expertise within environmental management and business, the ministry informs on its web site.

Projects on preservation of marine environment, cross-border environmental cooperation, preservation of cultural monuments, reduction of pollution, environmental monitoring and preservation of biological diversity will be given priority.

The funds can also be given to support cooperation between voluntary environmental organizations.

Nikel plant pollution increasinghttp://www.barentsobserver.com/nikel-plant-pollution-increasing.4541896-16175.html

2009-01-07 Recent studies show increased downfall of heavy metals from the melting plant in the Russian border town of Nikel. Norwegian authorities will now intensify monitoring of the emissions.

Studies performed by the Norwegian Pollution Control Authority (SFT) have shown that the downfall of copper, nickel and arsenic has been between four to seven times higher in the 2004-2008-period, than in the previous 15 years. The increase is both on the Russian and the Norwegian side of the border.

The polluting Nikel melting plant and its owner the Norilsk Nickel company have been criticised  by Norwegian authorities for more than 20 years. The Norwegian government has also granted money which can be used to rebuild the smelter to stop the emissions, but so far no improvements have been done at the plant in Nikel.

Ellen Hambro at SFT says in a press release that it is very unfortunate that the pollution from the Nikel plant continues. While waiting for the Russians to solve the problem, the SFT will intensify their monitoring, and make sure that all consequences of the pollution is thoroughly documented. SFT will now focus their studies on why the emissions have increased.

Activity in the Oil and Gas sector (including regulatory)

Russian Petroleum Product Exports to Heat Up in Future, RNCOShttp://www.emailwire.com/release/18681-Russian-Petroleum-Product-Exports-to-Heat-Up-in-Future-RNCOS.html

As the global energy needs are rising and refineries capabilities improving, exports of petroleum products from Russia are projected to grow at a CAGR of 4.26% between 2008 and 2012.(EMAILWIRE.COM, January 08, 2009 ) New Delhi, India - According to our new research report “Russian Oil and Gas Industry Analysis”, exports of petroleum products from Russia are expected to grow at a CAGR of 4.26% from 2008 to 2012. Exports of petroleum products have traditionally been a major determinant of Russian economic growth, particularly during the period 2002-2006, as Russian oil production is directly correlated with global oil prices.

Russia has strong oil reserves of around 79.5 Billion Barrels, mainly concentrated in the Caspian Sea and Siberia. Moreover, Russia has the world’s seventh largest oil reserve and in terms of output, it comes second behind Saudi Arabia.

Besides production, Russia is also one of the leading countries in refining capabilities, with the third largest refining industry after the US and China in 2006. So the country

exports a large volume of bunker oil and diesel, says the report.

Another major reason for tremendous growth in the petroleum products exports from Russia is its geographical location; the country surrounded by the oil deficit countries such as China and many European countries that give it an edge. Russia uses a long network of pipelines to export oil to Europe and it is now planning to export oil to the Asian region through China. This plan is a result of rising energy demand in the Asian countries where the domestic production is not sufficient to meet their requirements. Thus, the future prospects of Russia as a leading petroleum product exporter seem bright.

“Russian Oil and Gas Industry Analysis” provides thorough analysis on the past and current performance of the oil and gas industry of Russia. It also gives an insight into the industry by discussing driving forces, future prospects and issues associated with it.

The research report also presents forecast on key areas of the industry, such as natural gas production, natural production by independent producers, import of natural gas from Central Asia, natural gas consumption, natural gas transportation to Asia & Europe, and domestic natural gas prices.

Italy-Russia deal threatens U.S. business goals in Libya

Agreement aims at oil marketshttp://www.washingtontimes.com/news/2009/jan/08/italy-russia-deal-threatens-us-business-goals-in-l/

John Phillips (Contact)Thursday, January 8, 2009

A proposed joint venture in Libya between two energy giants, Italy's Eni and Russia's Gazprom, is posing an immediate headache for the first U.S. ambassador to take up residence in Tripoli in 36 years.

Ambassador Gene A. Cretz took his post last month in the Libyan capital, at a time when U.S. oil companies are battling to re-establish a presence in the oil-rich North African nation.

Mr. Cretz, a 58-year-old career diplomat, said before departing that serving as ambassador was "a chance to reintroduce America to Libya and a chance to reintroduce Libya to America."

His appointment as the first U.S. ambassador to Libya in 36 years marked the normalization of Libyan-U.S. relations after Libya in October paid $1.5 billion to settle claims by the families of U.S. citizens killed in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland, the 1986 attack on a West Berlin disco and other terrorist acts.

Secretary of State Condoleezza Rice met Libyan leader Col. Moammar Gadhafi in Tripoli in September, after Libya and the United States settled the outstanding lawsuits.

Mr. Cretz cited business and tourism among his priorities for expanded cooperation when he landed at Tripoli airport on Dec. 27.

Because sanctions on the country were lifted after it abandoned its weapons-of-mass-destruction program five years ago, Libya has attracted a growing number of international oil companies.

U.S. oil companies won several contracts to explore the untapped and potentially vast oil fields after sanctions were lifted, but the deals were threatened by the terror lawsuits and the possibility that the plaintiffs could seize profits as part of a judgment against Libya.

Those obstacles were removed when ties between the two countries were normalized. Now, however, U.S. officials are irked by what they see as unfriendly maneuvering in Libya by longtime U.S. ally Italy, whose Eni energy concern has given Moscow a potential advantage in the Libyan market by signing an asset-swap deal with Gazprom, diplomatic sources say.

If the agreement is finalized, Gazprom will receive part or all of Eni's stake in Libya's Elephant oil field in return for Eni being allowed to acquire Russian assets.

Gas crisis could speed Russian pipeline projects http://www.chron.com/disp/story.mpl/ap/business/6198426.html

By DOUGLAS BIRCH and MATT MOORE Associated Press Writers © 2009 The Associated Press

Jan. 7, 2009, 10:10AM

MOSCOW — The crisis triggered by Russia's natural gas dispute with Ukraine could accelerate the Kremlin's efforts to build alternative pipelines, but any project faces big financial and political hurdles.

The two former Soviet republics have been at odds for years, and once again Europe's energy supplies hang in the balance. Russia supplies over one-quarter of Europe's gas, and 80 percent of that moves over Ukraine's pipelines.

A key issue, analysts say, is to what extent Russia and its state-controlled gas giant Gazprom are blamed for the natural gas cutoff and reductions of gas shipments to a dozen countries.

If Europe holds Russia responsible, that could scuttle Gazprom's plans for new pipelines that bypass Ukraine and other former Eastern bloc nations. But if Europeans hold

Ukraine accountable, they could be ready to set aside doubts over hardwiring the continent to Russia's gas exports.

"Russian gas is not the problem," said Andrew Neff, an analyst with IHS Global Insight. "The transit routes are the problem."

Construction of any of pipeline could take several years. The most advanced is Nord Stream, a 750-mile (1,200-kilometer) offshore pipeline through the Baltic Sea that is supposed to connect Vyborg, Russia, with Greifswald, Germany. Russia is pushing hard for its construction.

"This situation underlines the inevitability and very strong necessity for urgent completion of big projects like Nord Stream to insure the stability, predictability of energy sources to European customers," said Dmitry Peskov, spokesman for Russian Prime Minister Vladimir Putin.

German Economy Minister Michael Glos agreed, saying this week that "if we already had the Nord Stream pipeline, then we in Germany, at least, would be a little more reassured."

So far, the $15 billion project is intended to bypass former Soviet states — including Ukraine — that have developed frosty relations with the Kremlin since the 1991 Soviet collapse.

Plans call for Nord Stream to carry 55 billion cubic meters of gas from Russian fields to Western Europe, about one-third of what Russia now ships to Europe. The pipeline is a joint venture between Gazprom, Germany's BASF AG and E.ON AG, and Dutch company Nederlandse Gasunie. Gazprom owns 51 percent of the project.

But the project, proposed more than a decade ago, has faced numerous hurdles.

Some European critics worry that it would increase the continent's reliance on Russian gas. Poland and other former Soviet and Soviet-bloc countries — traditional transit routes for Russian gas — also worry the pipeline could permit Russia to threaten their gas supplies without cutting off customers in Western Europe.

Russia proposed another pipeline in June 2007, called South Stream, which would ship about 30 billion cubic meters of the gas through Bulgaria and onto Austria, Greece and Italy.

The Black Sea project could be difficult to finance at a time when credit is tight and energy prices have fallen, said Chris Weafer, chief strategist at Uralsib bank in Moscow. The cost could reach $20 billion.

"Avoiding Ukraine comes at a great price," Weafer noted.

The EU, backed by the United States, has proposed a $5.8 billion, 2,050-mile (3,300 kilometer) pipeline to transport gas from Azerbaijan and Turkmenistan, through Turkey and across the Balkans to Central Europe, called Nabucco.

But there are concerns that Russia and China have already locked up most Central Asian gas supplies. And Nabucco would have to cross Iran.

Securing that route, Neff said, could prove vexing at a time when the West is pressuring Tehran to abandon its nuclear program.

Even if Europe could secure a route for Nabucco and fill it with gas, it would still carry only about six to eight percent of Europe's gas demands by 2020, experts say.

Rosneft to spend 30 bln dollars on Russian offshore field developmentThursday, 8 january 2009 - 09:24http://www.portalino.it/nuke/modules.php?name=News&file=article&sid=34469

Russia's largest oil company Rosneft [RTS: ROSN] plans to invest around $30 billion on the development of Russian offshore deposits, a top company official said.

"The development of Russian shelf is a strategic goal of Rosneft. The company has full potential to realize this project. We have years of experience at northern latitudes, and of cooperation with major global operators working on the shelf," Mars Khasanov, Rosneft science director, told the 12th Annual Sakhalin Oil & Gas Conference in Yuzhno-Sakhalinsk, in Russia's Far East.

He also said Rosneft has set out a program for Russia's continental shelf through 2030, envisaging the drilling of 75 exploratory wells. Rosneft is Russia's largest oil company. Its US GAAP net profit for the first half of 2008 was $6.876 billion, a year-on-year increase of 187%.

Gazprom

Gazprom battles to restore its reputationhttp://www.ft.com/cms/s/0/c3c0c5ce-dd25-11dd-a2a9-000077b07658.html

By Ed Crooks

Published: January 8 2009 02:00 | Last updated: January 8 2009 02:00

As the dispute between Russia and Ukraine appeared to be edging towards resolution, the cost of the showdown for Gazprom, Russia's state-controlled gas company, was already apparent.

Gazprom has been caught in a very difficult position.

In the short term, it needs to extract as much revenue as possible from Ukraine. In the long term, its tactics in the crisis could stand in the way of its ambition of becoming a leading global energy business.

Last summer Gazprom was riding high. Already the world's third-largest company by market capitalisation, valued at about $350bn (€255bn, £230bn), it was taken seriously when it predicted a $1,000bn valuation by 2015.

Alexei Miller, its chief executive, predicted that oil would soon rise to $250 per barrel. Today, with oil below $50, Gazprom is valued at just $86bn, and is down to 46th place in the international rankings.

Financial market indicators of the company's health, such as its share price and the cost of insuring its debt against default, have improved from their low point last October, but Gazprom still faces a very difficult outlook.

The price of its gas in European markets is tied to the price of oil, with a six-to- nine-month lag. So the steep fall in oil prices in the second half of last year means the price of Gazprom's gas will also fall sharply.

Gas cost more than $530 per thousand cubic metres towards the end of last year, but if oil stays at about $40-$50 a barrel it will end the year at about $250-$300.

Meanwhile, the price Gazprom pays for gas from central Asian countries such as Turkmenistan, an important supplement to its own production, has been rising to reflect European market prices.

Gazprom paid just $100 per thousand cubic metres for Turkmen gas in the first half of 2007 and is paying about $365 today, although that will fall under the oil-linked formula as the year goes on.

As a result, Gazprom's profits are being squeezed at a time when it faces a massive demand for investment to sustain Russia's crumbling infrastructure and open up new sources of production, particularly the vast gas fields of the Yamal peninsula in north-west Russia.

Chris Weafer of Uralsib, a Russian bank, estimates that Gazprom will have to invest at least $20bn a year in the coming years.

It is also hampered by a debt burden that was about $61bn at the end of 2007, at a time when raising funds is difficult for the most credit-worthy borrowers, let alone a company from an emerging economy that defaulted on its debts a decade ago.

Mr Weafer argues that to reassure investors Gazprom has to make Ukraine pay significantly more than the below-market gas price it has been paying until now.

"This is a critical juncture for the company, where it really needs to raise more money," he says. "So it has to get rid of the legacy of the Soviet Union where it was selling gas to Ukraine at a price that would mean it is making a loss."

The cost of that action, however, has been to wipe out much of the progress that Gazprom has made since the 2006 dispute with Ukraine in establishing its reputation in the European Union.

As Colette Lewiner of Capgemini, the consultancy, puts it: "Gazprom has tried to be a normal company and to expand its footprint in other countries. It has been holding press conferences and talking nicely. But this crisis has shown another image: a facet of Gazprom that is not so good."

Katinka Barysch of the Centre for European Reform, a think-tank, argues that European reactions to the current dispute are different from the instinctive support for Ukrainian democracy that was the dominant feeling in 2006. "Now Ukraine's squabbling, self-serving leaders attract little sympathy," she says.

Nevertheless, for many Europeans the apportioning of blame is less important than the sense that Russia is no longer a reliable supplier.

Alexander Medvedev, Gazprom's deputy chief executive, told reporters in London this week: "We are very seriously thinking about our reputation as a company. because we have a lot to be proud of. We have 40 years of supply in some very difficult times."

Attempts to use the 2006 confrontation to galvanise a common European energy security policy may have been ineffective, but the disruption to supplies left a legacy of mistrust of Gazprom that was not easy to dispel.

After this more serious conflict, Europe's wariness of Gazprom will run even deeper.