Stories tagged with "Oil pipeline"

More on the Azerbaijan, Belarus, Russia oil and gas confrontations

Posted by Heading Out on January 11, 2007 - 9:49am
Topic: Supply/Production
Tags: azerbaijan, belarus, gas pipelines, georgia, oil pipeline, russia, shakh deniz, turkey, ukraine [list all tags]

Well the situation East of Georgia continues to evolve. I thought to begin there since, as mentioned in an earlier post, there are a number of small countries in the strip that runs south of Russia and over into China where oil and gas issues will make the nations a bit more internationally prominent. Consider, for example, Azerbaijan. It was only a couple of days ago that, in the face of Russia doubling the gas price that Azerbaijan cut off its oil flow to Russia. It shut down its oil exports in order to fuel some of the power stations that would no longer be supplied with the Russian gas. The original plan was to do this until the gas from the Shakh Deniz field becomes available in April (though that may now have slipped to June).

Interestingly gas from Shakh Deniz was also scheduled to be supplied to Georgia at a price of $120 per thousand cubic meters (tcm). This is just over half the price that the Russians have been asking. However, since Georgia needs about 2 billion cu m per year it will still need to buy 1.1 bcm from Russia at the higher price. Azerbaijan has been supplying around 80,000 bd of oil to Russia through the Baku-Novorossiysk oil pipeline which belongs to the Russian pipeline company Transneft. Part of the intent of the increase in price to Azerbaijan was, apparently, to reduce their ability to supply Georgia. Azerbaijan bought 4.5 bcm of natural gas from Russia last year at a cost of $500 million. Apparently the thought was that, at the higher price, Azerbaijan would have to cut back on imports, and thus have less to make available to Georgia. However, by switching their power stations to oil-burning, they appear to have thwarted this idea.

Natural gas from Shakh Deniz will be fed into the Baku-Tbilisi-Erzerum pipeline, which is almost ready to receive and deliver the gas. Note that this is a different pipeline to the recently completed Baku-Tbilisi-Ceyhan pipeline, which carries oil and which, between January and October carried some 4.8 million (though it does not say if this is tonnes or barrels).

There's more… (956 words) | Comments (14) | | Permalink | Without comments

The Evolving situation between Russia, Belarus and Azerbaijan

Posted by Heading Out on January 9, 2007 - 11:00am
Topic: Supply/Production
Tags: azerbaijan, belarus, druzhpa, germany, oil pipeline, poland, russia [list all tags]

It hardly seems any time at all since we heard that Belarus and Russia had signed an agreement that had set the price per thousand cu meters at $100, Gazprom was going to use part of the money, over time, to purchase a 50% share in the Belarus pipeline company, and another crisis had been averted.

Except that the story dealt only with natural gas, and there is a second fuel, oil, that also makes its way from Russia, through Belarus, to places like Germany and Poland. It carries about 20% of the total supply. (The photo on Robert Amsterdam’s site shows you how large the diameter of the Druzhpa pipe is, large enough, he notes, to carry 1.2 mbd of oil to Germany and Poland. It is thus one of the highest capacity pipelines in the world . And on Monday Russia turned that tap off. For much the same reasons as, last year, they closed the tap on the natural gas pipeline feeding through Ukraine. Large volumes of the fuel headed west were being siphoned off. It is not, in fact, the Russian government that is directly involved in this dispute, at least superficially and at this point, but rather the Russian oil pipeline company Transneft. Their story is that, as with Ukraine, Belarus did not want to pay the new duty on the oil, that Russia was now demanding .

Last month, Russia imposed an export duty of $180 per ton of oil sold to Belarus, a severe blow to the country's reprocessing industry and government revenue. Belarus responded by imposing an import duty of $45 per ton of Russian oil that crossed its territory.

UPDATE: When I said that most countries had reserves that would get them through the crisis I forgot to look at Belarus, and they apparently only have a week's worth. And the second point is that without customers for their oil, Russia might have to cut back production by up to 1 mbd, since it will run out of places to store the oil, and has only a very limited means of alternate shipping (which includes a lot of railcars.)

UPDATE 2 It now appears that Russia refused to meet with the Belarus delegation today.

However, a quick resolution to the dispute seemed distant after the Russian government refused to meet a Belarussian delegation that arrived in Moscow on Tuesday.

Andrei Kabyakov, the Belarussian deputy prime minister, flew there for talks with his Russian counterpart but failed to start negotiations.

"The Russian side told us... they are not yet ready for talks," Vladimir Naidunov, Belarus's first deputy economy minister, told reporters in Moscow.

The same source also mentions that President Putin has warned Russian oil companies to consider cutting production.

There's more… (784 words) | Comments (39) | | Permalink | Without comments