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Monday, August 11, 2008

The Devil Went Down to Georgia ~ Part I: Oilympics

PRIMUS ~ The Devil Went Down to Georgia


Georgia’s oil and gas potential

With its unique geographical location, Georgia is at the heart of the energy transportation projects in the region. As BTC and SCP pipelines have begun their operation, Caspian oil and gas are being transported to the Western markets via Georgia creating a new strategic alliance between many countries. Besides Georgia is exploring potential of becoming oil&gas producing country - new offshore fields have been discovered.

Georgia is a strategic crossroad for hydrocarbon transit in the Caspian region. The country has experienced significant growth since the new democratic government came into force. The main directions of the energy policy are energy security, diversification of gas supplies, reconstruction of hydropower plants, construction of underground gas storage facilities, attracting foreign investments and privatization.

The South Caucasus gas pipeline and the BTC (Baku-Tbilisi-Ceyhan) pipeline allow oil and gas to flow from Azerbaijan through Georgia to Europe. Over the last decade, $5 billion has been invested by BP and its partners into development of the major oil and gas pipelines that cross Georgia.

Reconstruction work on the Batumi Oil Terminal is now complete and reconstruction of the Poti port is currently underway. Construction of a new, Kulevi Oil Terminal, operated by SOCAR, will be completed this year.

There has been a great deal of interest in developing Georgia's own oil and gas fields. Oil exploration projects are being conducted in East and South-West Georgia. In 2007 several new license blocks were awarded to international oil companies.

Let's follow just ONE of those companies listed:

Frontera Resources is a Houston, Texas based international oil and gas company that was founded in 1996. The company was organized to pursue international exploration and production opportunities in emerging markets.

Specifically, Frontera's strategy is to seek opportunities in known hydrocarbon-bearing basins around the world where historical geopolitical and/or economic situations may have caused significant oil and gas plays to be overlooked or underdeveloped. Being among the first to enter these markets as they change and emerge from these historical situations is a primary objective in order to capture opportunity. Within this strategy, Frontera's current focus is targeted on exploiting a 'Greater Black Sea' initiative, with a primary focus on its core operations in the country of Georgia.

Tidelands Oil & Gas Corporation owns 20% of Frontera

Dig this:

Frontera Oil Fields, Caucasus

In 2001 the EBRD took possession of Frontera's stake in the project when the US company failed to repay a $ 60 mm loan from the bank. And year later the EBRD has decided to sell its 30 % stake to the Chinese National Petroleum Company.


JULY 2008 Chinese National Petroleum Company press release:

On July 26, CNPC President Jiang Jiemin had a talk with visiting Russian Deputy Prime Minister lgor Sechin on reinforcing cooperation between the two countries' energy sector.

Mr. Igor Sechin was visiting China at the invitation of his Chinese counterpart Wang Qishan to launch an energy resources negotiation mechanism in Beijing.


2005: CNPC Announced Official Partner Of 2008 Beijing Olympic Games

(Beijing, May 30, 2005) - The Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) announces that China National Petroleum Corporation has been selected an official partner of the 2008 Beijing Games after the two parties sign an agreement today.

The agreement entitles China National Petroleum Corporation (CNPC), China's largest producer and supplier of crude oil and natural gas, to provide funding and services to the Beijing Olympic Games, the Beijing Paralympic Games, BOCOG, the Chinese Olympic Committee and the Chinese sports delegations to the 2006 Winter Games in Torino, Italy and the 2008 Games in Beijing. CNC is the eighth company to join the elite club of the Beijing 2008 partners.

The partnership agreement was signed by Wang Wei, BOCOG's executive vice-president and secretary general, and Duan Wende, vice president of CNPC and vice president of the listed PetroChina, at a high-profile ceremony at the Diaoyutai State Guesthouse. Liu Jingmin, vice mayor of Beijing and BOCOG's executive vice-president, and Chen Geng, president of CNPC and chairman of PetroChina, exchanged souvenirs after the document-signing session.

"We are glad to see CNPC participating in the Beijing Olympic Games as an official partner in the category of crude oil and natural gas," Wang Wei said at the signing ceremony, witnessed by senior officials from the State-owned Assets Supervision and Administration Commission of the Chinese State Council, BOCOG, CNPC and representatives from the International Olympic Committee, China's General Administration of Sport and the Chinese Olympic Committee.


CNPC is one of the world's top 10 oil companies, ranking 52nd on Fortune's Global 500 list in 2004. In China, it is one of the leading companies in the energy sector. For years, CNPC has been the most profitable company in China, and a top contributor to the government's tax revenue.

AUGUST 9th: President of Turkmenistan receives CNPC Chairman

Cordially thanking the Turkmen leader for finding the time to arrive in Beijing that hosted the Olympic Games and the opportunity of a personal meeting the CNPC Chairman focused on the significance attached by China to co-operation with Turkmenistan which was brought up to a higher level nowadays. Mr. Jiang Jiemin said that the Chinese leadership paid special attention to the project on construction of the Turkmenistan-China gas pipeline of exceptional importance for intensifying intergovernmental collaboration. In this regard the CNPC Chairman said that he was glad to have an opportunity to report the President of Turkmenistan on the progress of this grandiose project and the works to extract oil and establish the relevant infrastructure in the gas fields on the right bank of the Amu Darya River under the Production Sharing Agreement. The Chinese businessmen informed Gurbanguly Berdimuhamedov that the works were carried out and the facilities would be put into service according to schedule. The construction of the section of the pipeline crossing the territory of China had been completed. Mr. Jiang Jiemin said that the gas pipeline from Turkmenistan to the People’s Republic of China would have been constructed by the end of 2009. The capacity of the gas pipeline would be 40 billion cubic metres.

Showing satisfaction at this information Gurbanguly Berdimuhamedov focused on the importance of this project for diversifying the development of Turkmenistan’s fuel and energy sector and exporting energy resources to the world markets as well as with regard to the significance that Turkmenistan attached to enhancing partnership with China, maintaining and developing the traditions of Turkmen-Chinese friendship. The Turkmen leader reaffirmed Turkmenistan’s adherence to the commitments undertaken noting that the country’s profound energy potential guaranteed the success of the agreement on natural gas export to the People’s Republic of China. The results of the audit of hydrocarbon resources carried on by the British company would be another guarantee of Turkmenistan’s competence as a dependable fuel exporter. The President suggested that the Chinese partners would purchase up to 10 billion cubic metres in addition to 30 billion cubic metres as stipulated by the intergovernmental agreement. The Turkmen leader also called for expanding co-operation with CNPC by implementing new projects, particularly construction gas processing facilities.

The Chinese partners showed keen interests in the President’s proposals and expressed sincere gratitude to the Turkmen leader for the constructive approach to co-operation. Mr. Jiang Jiemin said that the Turkmen leader’s initiatives would be taken into consideration and specified during the talks with the fuel and energy departments of Turkmenistan.

Which leads to THIS:

Putin Lands a Deal for Turkmen Gas

President Vladimir Putin scored a victory for access to Turkmen gas on Saturday, winning approval for a direct pipeline around the Caspian in a major setback to U.S.-backed plans for an alternative route that would bypass Russia.

The new pipeline is due to run from western Turkmenistan along the Caspian shore, pumping billions of cubic meters of gas through Kazakhstan before entering Russia, from where it will likely be exported at great profit.

A triumphant Putin announced the deal after a meeting with Turkmen President Gurbanguly Berdymukhammedov and Kazakh President Nursultan Nazarbayev in the Caspian port of Turkmenbashi.

The deal serves a big blow to U.S. and European Union interests. Washington and Brussels have been lobbying hard for a pipeline that would send Turkmen gas to Europe under the Caspian Sea, cutting Moscow out of the picture.

The new pipeline will come as a relief for Gazprom, which relies on Turkmen gas to fulfill its supply contracts as production at home stagnates and energy demand across Europe grows.

Competition for Turkmen gas reserves, estimated by BP's Statistical Review to stand at 2.9 trillion cubic meters, has intensified since the death of President Saparmurat Niyazov in December.

An official agreement would be signed by July, and construction could begin within one year of its signing, Putin said in remarks posted on the Kremlin web site.

Under an agreement signed with Niyazov in 2003, Turkmenistan was committed to ship 50 billion cubic meters of gas to Russia next year, a number due to rise to 80 bcm by the time the agreement runs out in 2028.

Putin said the new pipeline would pump at least 20 bcm of gas annually by 2012, and Industry and Energy Minister Viktor Khristenko said in Turkmenbashi that the number could eventually reach 30 bcm, Itar-Tass reported.

Officials failed to indicate how much it would cost to build the pipeline, but Itar-Tass cited 2003 estimates placing construction costs at $1 billion. The true cost of the pipeline would likely run much higher, as the prices of materials such as steel have risen drastically in recent years.

Russia, through state-run Gazprom, already imports about 42 bcm of gas per year from Turkmenistan at a price of $100 per 1,000 cubic meters.

It then exports the gas to Europe for an average price of $250 per 1,000 cubic meters, reaping tremendous profit while using domestic reserves to fulfill cheaper supply contracts at home.

Gazprom CEO Alexei Miller, who was accompanying Putin on his trip, said the $100 price for Turkmen gas would last through 2009 and that a new price would be negotiated by July of that year.

The three presidents said they would also expand the capacity of an existing pipeline that currently pumps Turkmen gas to Russia through Kazakhstan and Uzbekistan to 90 bcm. Uzbek President Islam Karimov signed off on the deal from Tashkent before the Turkmenbashi summit, Putin said.

Niyazov won key concessions from Putin on oil transit during talks in the Kazakh capital, Astana, on Thursday, prompting some analysts to speculate on a possible trade-off for Kazakhstan's approval of the Caspian pipeline project.

Putin said he would drop longstanding objections to expansion of the Caspian Pipeline Consortium, which carries oil from Kazakhstan's Tengiz field to the Russian Black Sea port of Novorossiisk. He also agreed to Kazakhstan's participation in the Russian-controlled pipeline from the Bulgarian Black Sea port of Burgas to Alexandroupolis on the Greek Adriatic.

"We will transport [oil and gas] by whichever route is profitable," Nazarbayev said in Turkmenbashi, news agencies reported.

Putin said the Turkmen leadership had initiated plans for the new Russia-backed Caspian pipeline. "We are opening the Caspian route at the request of Turkmenistan," Putin said, The Associated Press reported.

No other countries would be invited to participate in the pipeline's construction, he added. "It's enough to have three countries," he said.

The deal will likely further put off discussion of a trans-Caspian pipeline that would ship Turkmen gas under the Caspian Sea to Baku. Azerbaijan and then on to Europe, Russian officials and analysts said.

"Existing technical, legal, environmental and other risks relating to the trans-Caspian project are so great that it would be impossible to find an investor," Khristenko said, remarks posted on the Kremlin web site showed.

"Unless this is a political project, and then it does not matter what would be inside the pipeline as long as it exists," he said.

Berdymukhammedov said consideration of the alternative route was still "on the table," Russian news agencies reported.

The Turkmen leadership has promised to build a gas pipeline to China, and Berdymukhammedov said the country was also considering routes to Afghanistan and India.

"Don't worry, there is enough [gas]," he said, Reuters reported.

Turkmenistan, largely closed to the outside world during Niyazov's rule, has refused to allow any independent assessment of its gas reserves and claims closer to 10 times the figure put forward by BP.

"If these claims are substantiated and if the Turkmens find investors to produce this gas, the possibility of the trans-Caspian pipeline remains on the table," said Valery Nesterov, an analyst at Troika Dialog.

Both the Odessa-Brody pipeline in Ukraine and the Nabucco pipeline, planned to carry gas from the Caspian to Austria, were approved despite Russian objections, he noted.

The EU, supported by the United States, has been pushing to reduce its reliance on Russian gas amid concerns over Moscow's ability to wield its energy power for political ends.

Nesterov said politics would win out. "If politicians really have a strong desire to get more gas that would bypass Russia, they could offer to incur some financial losses and risks," he said.

Putin moved to reassure critics on Saturday, saying: "We take our responsibility in the world energy supply very seriously."

Putin wrapped up his three-day visit to Turkmenistan on Sunday, flying to the Caspian port of Aktau, the center of Kazakhstan's booming oil industry. He was due to hold further talks with Nazarbayev before flying back to Moscow on Tuesday.

(The Moscow Times 14.v.07)

There's about 666 TA DA's in here somewhere mah Ferals..... also notice in the below how they are only bombing the pipeline that British Petroleum is the major owner of:


War In Georgia: The Oil Angle

News reports indicate that Russia may have tried to bomb the Baku-Tbilisi-Ceyhan pipeline, which runs through Georgia. If so, the bombs missed, and flow of oil through the pipeline was not interrupted. The BTC pipeline runs from the Caspian Sea to the Mediterranean coast of Turkey; note Russia to the north and Iran to the south:

The BTC pipeline runs through Georgia, well south of South Ossetia:


The pipeline, in which British Petroleum is the lead partner, can carry up to one million barrels of oil per day. It is of considerable strategic significance, as it is the only means by which countries in the region like Azerbaijan can get their oil into the international market without relying on Russia. The Daily Mail writes:

It is crucial to the world’s volatile energy market and the only oil and gas route that bypasses Russia’s stranglehold on energy exports from the region.

In 2002, when the pipeline was being planned, the BBC reported:

BTC is said to be an effective alternative to Russia's pipeline network. ... [O]il experts believe political considerations played a major role in the choice of the route.

American officials prefer a route that would weaken Russia's stranglehold on regional pipeline network and leave Iran on the sidelines. Local governments want less dependency on big regional powers, too.

"This pipeline is of strategic importance not only to Azerbaijan, but to the other new independent states as well", says Ilham Shaban, oil analyst in Baku. "This is a reliable way to the world markets. Take Turkmenistan with its huge resources of natural gas and no access to the world markets. As a result, The Turkmens have to sell their gas 2.5 times cheaper than the world price."

Turkmenistan could join a gas pipeline which is likely to be built alongside BTC to the Turkish town of Erzurum.

That natural gas pipeline has now been built immediately adjacent to the BTC oil pipeline and is called the South Caucasus Pipeline. It has a capacity of 16 billion cubic meters per year. Plans are now being laid to connect Turkmenistan's vast natural gas reserves to the SCP:

Turkmenistan and Azerbaijan are central to the EU’s plans to reduce its energy reliance on Russia which supplies a quarter of Europe’s needs. ... Both the Azeri and Turkmen leaders said they wanted to improve relations and diversify their export routes — a natural move, analysts said. The vast majority of Turkmenistan’s gas currently travels north to Europe through Russia’s network of pipes.

Because the BTC pipeline gives the USSR's former breakaway republics a way to deliver their petroleum to the world market without relying on Russia, Russia "steadfastly opposed" its construction, recognizing that "the new conduit stands to severely weaken Russia’s grip on regional energy exports."

UPDATE: This report appears to confirm that Russia has targeted the pipeline:
Deep craters pockmark the landscape south of the Georgian capital Tblisi in a Y-shaped pattern straddling the British-operated pipeline. The attack left two deep holes less than 100 yards either side of a pressure vent on the pipeline. Shrapnel of highly engineered munitions litters the area.

There was no visible damage to the pipeline. ...

Local police recorded 51 strikes. "I have no doubt they wanted to target the pipeline, there is nothing else here," said Giorgi Abrahamisvili, a policeman who witnessed the attack.


Spleen Reader American Infidel provides this related item from JULY 24

TNK-BP chief is ‘forced out’ of Russia

By Catherine Belton in Moscow

Published: July 24 2008

The battle for BP’s Russian oil joint venture escalated on Thursday night as Robert Dudley, its beleaguered chief executive, abruptly left Russia, citing mounting uncertainties over his visa and “sustained harassment”.

BP said it would launch arbitration proceedings against its Russian partners in TNK-BP to recover “any and all losses” incurred as a result of a battle for control of the joint venture that has focused on Mr Dudley’s role as chief executive and led to “sustained attacks” on him.

The UK oil group believes these attacks were “orchestrated” by the Russian shareholders – a claim strongly rejected by them.

Tony Hayward, BP’s chief executive, said in a statement: “BP will use all means at its disposal, both inside and outside of Russia, to defend its interests and rights.”

Mr Dudley’s departure – which was kept tightly under wraps until he was safely on a plane out of the country – came just days before Russian authorities were due to decide whether to grant him a new visa following months of official pressure over his status.

Mr Dudley said in a statement that he would continue to lead the company as chief executive from outside Russia.

“In the light of uncertainties surrounding the status of my work visa and the sustained harassment of the company and myself, I have decided to leave and to work outside Russia temporarily,” he said.

Mr Dudley added: “In addition to the much-publicised dispute between shareholders, the company and I have faced unprecedented investigations, proceedings, inquiries and other burdens,” he said.

The Russian shareholders have denied any connection to the inquiries and investigations.

BP said Mr Dudley would continue as chief executive outside Russia and had all requisite powers to do so.

The pressure on Mr Dudley had been starting to take its toll as he was the target of numerous probes into alleged violations of labour laws and had been questioned by the interior ministry as part of an investigation into corporate tax evasion.

Mr Dudley lashed out at the Russian shareholders last week, claiming they had supported 16 senior Russian managers in filing a suit against him alleging discrimination and pressing for his dismissal. The Russian shareholders denied any connection to the lawsuit.

Mr Dudley said last week that the claims were threatening to “tear the company apart”.

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