Caspian Brief: June 5, 2017
BP’s Russian deal opens door to vast gas exports; Oil major strengthens partnership with Rosneft
BP has struck a deal that could lead to it becoming a key player in importing Russian gas to Europe.
It reached agreement yesterday to deepen its partnership with Rosneft, the state-controlled energy giant, signing a memorandum of understanding under which it could deliver “additional Russian gas supplies to European markets starting from 2019”.
The deal will depend on the Kremlin agreeing to break the monopoly on pipeline gas exports enjoyed by Gazprom, which supplies about a third of European gas needs. It has already agreed, however, that other companies should be allowed to export gas in the form of liquefied natural gas.
BP and Rosneft also struck an agreement on “strategic co-operation” in gas that could see them work together both in Russia and around the world on “gas exploration and production, liquefied natural gas production, supply and marketing”. The companies plan to “enter into a long-term sales and purchase agreement for the supply of natural gas produced by Rosneft” from 2019.
Although Rosneft is best known as Russia’s state oil group, it is also one of the country’s biggest gas producers, with substantial production in Siberia and central Russia, as well as longer term ambitions to export gas reserves in the Arctic. BP has a near-20 per cent stake in Rosneft, making it the second biggest shareholder behind the Russian state.
Gazprom and Edison highlight progress in setting up southern route for Russian gas supplies to Europe
A working meeting between Alexey Miller, Chairman of the Management Committee of Gazprom, and Marc Benayoun, CEO of Edison and Executive Vice President of the EDF Group, took place today at the St. Petersburg International Economic Forum 2017.
The meeting participants highlighted the progress achieved in setting up a southern route for Russian gas supplies to Europe and discussed issues related to the implementation of the Cooperation Agreement inked by Gazprom, DEPA and Edison on June 2, 2017. Among other things, the parties touched upon the TurkStream and Poseidon gas pipelines. It was noted that the pipelaying within TurkStream’s offshore section had commenced on May 7, 2017, and that the construction of the gas pipeline’s second string would make it possible to annually deliver 15.75 billion cubic meters of gas to the border with Europe. In that regard, the parties stressed the importance of the Poseidon project for timely creating the relevant receiving infrastructure in Europe.
In addition, the meeting participants reviewed the potential for deeper cooperation in the gas sector.
Edison SpA (part of the EDF Group) is a leading Italian and European player in the procurement, production and sale of electricity, in the provision of energy and environmental services and in the E&P sector.
On June 2, 2017, Gazprom, DEPA, and Edison inked the Cooperation Agreement aimed at establishing a southern route for Russian gas supplies from Russia to Europe, which would run across Turkey to Greece and further to Italy. Pursuant to the document, the companies will also coordinate the implementation of the TurkStream project and the Poseidon project in the area from the Turkish-Greek border to Italy.
TurkStream is the project for a transit-free export gas pipeline stretching across the Black Sea from Russia to Turkey and further to Turkey’s border with neighboring countries. The first string of the gas pipeline is intended for Turkish consumers, while the second string will deliver gas to southern and southeastern Europe.
EBRD could decide on TANAP financing in coming months
The European Bank for Reconstruction and Development (EBRD) is expected to make a decision on approval of loan allocation for the Trans Anatolian Natural Gas Pipeline (TANAP) project in coming months, a source in EBRD told Trend.
EBRD is expected to approve $500 million loan for the project.
“All EBRD projects have to meet a whole series of important criteria. In the case of TANAP, these also include reviews of environmental and social standards and other condition, including assessments: resettlement, health and safety, biodiversity, habitat,” said the source.
In Azerbaijan, EBRD focuses on supporting local corporates with direct financing, while helping partner banks in on-lending to MSMEs (micro, small and medium enterprises); supporting partner banks in the development of new financial instruments to target improved access to finance for women-owned and -run businesses; promoting competition and improving the business environment to deepen reforms; pursuing investments in energy projects that improve efficiency and energy security, added the source.
TANAP project envisages transportation of gas from Azerbaijan’s Shah Deniz field to the western borders of Turkey. The gas will be delivered to Turkey in 2018 and after completion of the Trans Adriatic Pipeline’s construction the gas will be delivered to Europe in early 2020.
Russia nears deal to sell air-defense system to Turkey
Russia is closing in on a deal with Turkey to supply its latest S-400 air-defence system to Ankara, Moscow said Saturday, in the latest sign of restored ties.
“Moscow and Ankara have almost finished discussing the technical side of the contract for S-400,” Russian state giant Rostec said in a statement.
The firm said the finance ministries from the two countries were “discussing the possibility of providing Ankara a loan for the purchase”.
Rostec CEO Sergei Chemezov said he did not know the outcome of the financial negotiations and refused to give any more details on the sale as the “contract is not yet signed”.
The potential sale of the hi-tech system by Russia to NATO-member Turkey marks the latest step in a dramatic turnaround in relations since the two fell out after Ankara downed a Russian warplane on the Syrian border in 2015.
Leaders Vladimir Putin and Recep Tayyip Erdogan eventually managed to patch up ties and Russia has since rolled back most of the retaliatory sanctions it slapped on Turkey, except for a ban on tomatoes and scrapping of visa-free travel.
Russia moved the S-400 to Syria after Turkey shot down its warplane to protect its jets flying a bombing campaign in support of President Bashar al-Assad.
Ankara and Moscow are on opposing sides of the Syrian conflict with Moscow backing Assad and Turkey arming rebels, but have made a joint push to end fighting since late last year.
Turkish contractors hopeful as Russia relaxes sanctions
Russia’s further relaxing of trade sanctions against Turkey is expected to boost bilateral relations to pre-crisis level, according to leading representatives of Turkish contractors on Friday.
“We have been waiting for this development since Aug. 9, 2016. We had good relations but we experienced problems as a result of an accident,” Mithat Yenigun, the president of Turkish Contractors Association, told Anadolu Agency.
Turkish and Russian presidents met for first time in August in St. Petersburg since ties deteriorated with the downing of a Russian fighter jet in 2015 over airspace violation.
Russia’s Prime Minister Dmitry Medvedev Friday signed a decree lifting the ban on some agricultural produce and Turkish companies involved in construction, engineering and tourism.
Yenigun reminded that Russia stands out as home to the highest number of construction works undertaken by Turkish contractors.
Turkish contractors have been working in Russian market with high quality and reasonable price, he said.
“There are Russian construction companies as well but they obviously need us and that’s why they are still working with us. We know that some Chinese companies entered the Russian market after restrictions on Turkish companies but we are not afraid of this as Turkish Eximbank will support our financial needs in foreign countries,” he explained.
Yenigun said that they need to “wait and see” as to how Russia will implement the decree.
Kazakhstan ready to invest in regional security, development
Today Kazakhstan is ready to invest in the stability of Central Asia, a Kazinform news agency correspondent has quoted Maulen Ashimbayev, chairman of the Kazakh parliament’s lower house committee on foreign affairs, defence and security, as saying.
“We clearly understand that Kazakhstan’s prosperity and development is impossible without Central Asia. That is why, today Kazakhstan is ready to invest in the stability of the region. A decision has already been taken and agreements signed to this effect. We, in the Majilis, recently approved an agreement on giving 100m-dollar aid to Kyrgyzstan. The aid will be provided mainly in money, as well as goods and services. Other types of assistance is also being provided to countries in the region,” the expert said today. He was speaking at the 15th annual conference on Central Asia security, organised by the Kazakhstan Institute for Strategic Studies.
He recalled that a few years ago, Kazakhstan adopted the law “On official assistance for development”. The law established a legal basis for providing assistance to countries and investing in various social or infrastructure projects which Kazakhstan deems important in terms of regional and global development.
“One indication that Kazakhstan is ready to invest in the stability of Central Asia is that the region is identified among the country’s top priorities as part of its non-permanent membership in the UN Security Council for 2017-2018. Kazakhstan plans to initiate extensive discussions at the UNSC on security problems in Afghanistan, in Central Asia and its development, as well as on providing aid to regional development. Our country and our diplomats at the UNSC will constantly raise these topics and much has been already done in this regard,” Ashimbayev added.
The MP said that today Kazakhstan was improving its policies in Central Asia and was ready to play an active and constructive role for the development of the region.
IAEA Verifies Iran’s Compliance with JCPOA Commitments
The International Atomic Energy Agency (IAEA) once again confirmed that Iran has been living up to its commitments within the framework of the nuclear agreement reached between Tehran and the six world countries (the US, China, Russia, France, Britain and Germany). “Iran’s stock of low-enriched uranium as of May 27 was 79.8 kilograms, well below the agreed limit of 300 kilograms,” the IAEA said in its report.
The report went on to say that the level of uranium enrichment did not exceed a 3.67 percent cap – well under the maximum five percent regarded as suitable for civilian energy uses.
United States: USAID Acting Assistant Administrator Margot Ellis Travels to Azerbaijan and Georgia
In Baku, Ellis will meet donor organizations and civil society partners to discuss the role and impact of foreign assistance in responding to Azerbaijan’s development and economic challenges. She will also meet with government officials to discuss shared development priorities.
In Georgia, Ellis will co-chair a Democracy Working Group meeting with Deputy Assistant Secretary of State for European and Eurasian Affairs Bridget Brink and Deputy Assistant Secretary of State for Democracy, Human Rights, and Labor Scott Busby. The Working Group provides a forum to advance the broad and ongoing strategic partnership between the U.S. and Georgia. The Working Group will focus on political and media pluralism, responsive and accountable governance, and rule of law. In addition to the Working Group, Ellis will meet with government officials, civil society, and media.