deniz deger's List: energy news, company news

• The company had been hoping to follow in the footsteps of fellow energy giant Eon, which last year acquired a controlling stake in Russian electricity supplier OGK-4.
• The TGK-2 deal was part of RWE’s expansion plan to invest about €30bn ($43.2bn) over the next five years as it seeks to boost its footprint abroad, particularly in eastern Europe and Russia.
• TGK-2, based in the north- west of Russia, owns 16 combined heat and power plants with an electricity capacity of 2,600MW, and would have given RWE access to 7m new customers.

• UES eventually sold a majority stake in TGK-2 to Sintez.

  The two companies planned to pool the shares in joint venture, with RWE taking a 51 cent stake.

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• EDF is preparing finally to seal a sweetened £12bn offer for British Energy, the nuclear operator.

• EDF currently owns 9.51 per cent of Constellation and was mulling a move to bring its stake up to 20 per cent.
• n a statement after the meeting, EDF said it decided against the move because the conditions for further investment were not met. It said it still intended to play a “major role” in the US nuclear energy market.
• EDF is in the throes of a bid for British Energy.

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• RWE, the German utility company, has made an indicative all-cash offer of close to 700p a share for British Energy, in a deal that could value the UK’s nuclear operator at up to £11bn ($21.7bn).
• EDF Energy, the UK arm of Electricité de France, is also conducting due diligence. It is understood to have initially made an offer to buy only part of British Energy, because it was reluctant to buy the nuclear generator’s ageing advanced gas-cooled reactors (AGRs).
• The government is considering the sale of part or all of its 35 per cent interest in British Energy. It has signalled it would be prepared to accept a foreign buyer, but stressed it wants to ensure there is a competitive mar­ket in developing new nuclear power stations in Britain.

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• decision of the Bank of China to invest €236m for a 20 per cent stake in the French financial services subsidiary of the Rothschild empire as a “little ray of sunshine” amid the global financial storm. The French government too applauded a deal it considers a vote of confidence in France and its economy.
• The deal indeed marks a breakthrough. It is the first time the Bank of China has taken a stake in a eurozone financial institution. It is all part of its strategy to expand abroad and develop the necessary expertise and products to serve its 130m depositors
• But to maintain this 20 per cent annual growth record, Mr Cicurel says the bank has needed to shift its centre of gravity increasingly to the Far East, especially China

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• Total SA, OAO Gazprom, and Yacimentos Petroliferos Fiscales Bolivianos (YPFB) have signed a cooperation agreement to explore for natural gas on Azero block, which lies in the Andes foothills in southeastern Bolivia

• This third block is closer to the Iraq border near the town of Cizre. Surface oil seeps indicate the existence of an active petroleum system in the area. Transatlantic is focused on deeper sub-thrust plays in the area similar to those found in the major Iraqi and Iranian Zagros fields further south.
• The licensing process in Turkey for oil and gas concessions occurs in three stages: Permit, License and Lease. Under a Permit, the Government grants the non-exclusive right to conduct a geological investigation over an area. The size of the area and the term of the Permit are subject to the discretion of the General Directorate of Petroleum Affairs ("GDPA"), the agency responsible for the regulation of oil and gas activities under the Ministry of Energy and Natural Resources.
  

• Announces Farm-In Of Turkey Exploration Licenses With Exploration Well To Be Drilled Later This Year

• TransAtlantic Petroleum Corp., Calgary, took a farmout from Incremental Petroleum Ltd., Perth, under which it plans to drill a well this year on License 4262 in southeastern Turkey

• Gholamhossein Nozari, energy minister, said: “This is our message: we will proceed with development with or without them.
• This meant Iran was unlikely to be able to significantly raise gas exports until late in the next decade at the soonest, they said.
• The decision by Total creates a problem for the wider world and not just Iran. The demise of Tehran’s LNG projects represent a loss of about 80bcm a year of potential gas supply, roughly equivalent to Germany’s needs, said analysts. That creates a huge hole in potential supply at a time when demand from Asia and the Middle East threatens to outpace the substantial capacity being built world wide.
• That leaves Iran with two large export possibilities and both face significant hurdles: the Iran-Pakistan-India gas pipeline and a possible link to Europe’s Nabucco pipeline
• Mr Ciszuk agreed with Mr de Margerie that politicians calling on the Opec cartel of oil-producing nations – of which Iraq and Iran are members – to boost production were also making decisions that rendered that almost impossible.

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• he Norwegian national oil company, has become the latest big western energy group to commit not to invest in Iran, following pressure from the US.
• We have been evaluating our investment decisions and having informed the authorities in Norway and the European Union and discussed the issue with the US, our view is that this position is in the best interests of shareholders and the company.”
• Statoil’s decision follows similar statements by Total of France and Royal Dutch Shell.
• The State Department announced last month that it would review Statoil’s activities in Iran to determine if it was in breach of the Iran Sanctions Act, which prohibits investments of more than $20m in the country’s oil and gas sector.
• The US is an important country for Statoil, which has ambitions to expand there, with increasing sales of liquefied natural gas and exploration in the Gulf of Mexico.

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• It also emerged on Monday that Iraq’s oil ministry had written to oil companies saying it had abandoned its controversial plan to award short-term technical support contracts to a small number of them to work on its oil fields.
• Europe is looking for supplies of gas from Iraq,” said Mr Jihad. “Security used to be a deterrent but now companies feel that security has improved and this will encourage others to come in.”
• He added that the project would be run as a joint venture, with Shell taking 49 per cent and the oil ministry 51 per cent. The length and value of the contract have yet to be determined but reports in Iraq suggested it could be worth $3bn-$4bn.
• The Shell deal follows news last month that Iraq had revived a big oil deal first negotiated between China and the government of Saddam Hussein, for China National Petroleum Corp to develop the al-Ahdab oilfield.
• Mr Assem said that after delays and differences with the companies over the length of contracts, the ministry was now inclined to bypass that stage and focus on longer-term development contracts.

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• Selling gas is generally less profitable than selling oil. Gas typically trades at a significant discount to oil for an equivalent energy content, and it is more expensive to deliver.
• As Nikos Tsafos of PFC Energy, the consultancy, puts it: “For international oil companies, having a good gas strategy is going to be critical. When the financial community looks at the international oil companies, it will have to ask: what is their gas strategy? Is it effective, will it be profitable?”

• Gas reserves, however, still offer IOCs the prospect of being able to exercise a competitive advantage, because of the greater complexity involved in getting the product to market.

  Integrated companies with gas transportation and marketing businesses, such as Conoco and Eni, can offer resource-rich countries something they need.
• PFC Energy, the consultancy, said this year that IOCs owned 49 per cent of the world’s capacity for liquefying gas to turn it into LNG, and 72 per cent of the capacity for regasifying it.

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• BE deal could put UK consumers out in cold
• British Energy is particularly important to Centrica because it can help solve the supplier’s fundamental strategic problem: lack of sufficient sources of gas and electricity. Centrica produces only about 30 per cent of the gas and 40 per cent of the electricity that it needs. That means it has to buy in the rest on wholesale markets, and when wholesale prices rise, its margins get squeezed.
• British Energy, on the other hand, benefits from high wholesale prices because the price of electricity tends to be set by the cost of gas, and it does not have any need for gas.
• Centrica has also argued that Britain needs a strong national energy company.
• So merging with, or taking a stake in, British Energy would cut Centrica’s exposure to the wholesale gas market, and give it a built-in hedge against higher prices.
• There are other ways to provide that hedge. Centrica is looking for new sources of gas in various places, such as by signing more deals to bring liquefied natural gas to Britain.

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• In 2005, Centrica and GDF formed a joint venture to acquire 51 per cent of SPE, Belgium’s second largest power generator. That valued the whole of SPE at €969m. The 49 per cent of SPE not held by the joint venture is controlled by Belgian banks and municipalities. GDF was required to dispose of its stake in SPE as a condition for European Commission approval of its merger with Suez.
• The group, owner of British Gas, has been trying to expand in continental Europe for some time in an effort to diversify away from the UK market, where its market share is in decline.

• With more than three-quarters of global oil reserves controlled by governments, the options for the oil groups are diminishing. In a world of high oil prices, Canada’s Athabasca oil sands look like a godsend. Covering an area larger than England, they are estimated to contain at least 1,700bn barrels, – equivalent to all the conventional oil reserves in the world.
• Oil sands are increasingly important for the oil majors’ future strategy, says Ms McGeveran, but they require so much energy to extract at a time of increasing regulation of energy and emissions that there is a lot of risk here for investors
• Environmental groups say oil from oil sands generates 80kg-135kg of CO2 per barrel, against an average of 28.6kg for a barrel of conventional oil.
• steam-assisted gravity drainage (SAGD), which it says
• A huge amount of natural gas is being used to produce the steam needed to release the oil sands – it makes no sense at all. We are taking a low-carbon product [natural gas] and using it to make a high-carbon product.”

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• Alexei Miller, the CEO of Gazprom, and his team of executives have been able, with the political support of the Kremlin, to acquire numerous gas distribution companies throughout the EU. They have also purchased a 50 % interest in the strategic gas hub in Baumgarten, Austria.
• Much criticism has been levelled at the EU for not having a common energy policy, which hinders its ability to negotiate with Gazprom as a block of importers. The EU cannot, however, have a united stance when it comes to energy dependence on Russia. Many EU countries are more dependent today on North Africa (Algeria and Egypt) and Qatar for liquefied natural gas (LNG) than on Russia.
  Non-Russian LNG is carving an important niche for itself in European markets. Spain, for example, is not importing any Russian gas, and it gets 60 % of its imports (the limit currently allowed by Spanish law) from Algeria. There simply cannot be a common EU-wide policy toward Russian gas imports as long as dependence on Russian energy is so widely varied.
• Russia's pressing need to rely on the sale of relatively small quantities of Central Asian gas to Europe (10 bn cm) in order to meet domestic needs and new export commitments.
• This quantity is bound to increase dramatically in the next few years. On July 7 the Russian daily Kommersant reported that Russian Deputy Prime Minister Igor Sechin had ordered Gazprom and the Federal Antimonopoly Service to expedite independent Russian gas producers' access to Gazprom's gas pipeline system. Sechin, widely regarded as the head of the siloviki or power clan in Russia, is also the chairman of the board of Rosneft, Russia's largest oil company.
  Rosneft produces some 6.6 bn cm of associated gas. Other independent gas producers (Novatek produces 15 bn cm, LUKoil and Surgutneftegaz 7 bn cm each, and TNK-BP 4.9 bn cm) account for a combined total of 14-16 % of all Russian gas production. All have faced obstacles from Gazprom in selling their gas, and many are flaring it off.
• These companies are currently being offered $ 46 per 1,000 cm by Gazprom for their gas, while the price on the Russian market is $ 71 per 1,000. At the same time, Gazprom sells gas for an average price of $ 400 per 1,000 cm in Europe.

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• Smaller players are less burdened by an established cost base and have the flexibility to explore smaller, frontier fields," Managing Director and Head of Oil and Gas Sector at Lloyds TSB Corporate Markets Andrew Moorfield said.
  "Larger players, however, continue to face the challenge of a long-term decline in production, which has so far been masked by the increase in oil prices, as there are fewerlarge fields producing bn-plus barrels in politically stable environments," he added.
• A sudden interest in one of BP's 25-year-old North Sea assets -- currently undergoing decommissioning -- prompted the oil major to put it up for sale in June. When oil fields reach the end of their useful lives -- typically around 40 years for fields in the North Sea -- redundant oil and gas installations are decommissioned.
  BP had already ceased production at its North West Hutton site in the North Sea after a combination of economic and technical factors led the company and its equity partners to determine that the field couldn't economically continue production beyond 2002, the company said. It started dismantling the facility five years ago.