NLMK Audits For Nord Stream Participation

NLMK has successfully passed an audit conducted by Det Norske Veritas (DNV), a Norwegian certification agency, to become a potential supplier of slabs for large-diameter pipe manufacturing for the Nord Stream Extension Project (NEXT).

DNV audited NLMK’s production processes for heavy slabs 355 mm thick and 2,150 mm wide: scrap preparation – steelmaking, secondary metallurgy, and casting – and steel slab surface and macrostructure quality control. The auditors verified the Company’s process documentation for compliance with international standards, and audited the training and education programmes for staff in BOF Shop #2. 

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Nord Stream Pipeline Is Ready To Go

On Tuesday November 8, Federal Chancellor Angela Merkel together with President Dmitry Medvedev and the Prime Ministers of France François Fillon and the Netherlands Mark Rutte and EU Energy Commissioner Günther Oettinger  will formally inaugurate the first of Nord Stream's twin 1,224 kilometre gas pipelines through the Baltic Sea. 

When fully operational in late 2012, Nord Stream's two lines will have the capacity to transport 55 billion cubic metres of Russian gas a year to the EU for at least 50 years. 

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ExxonMobil Will Join Rosneft To Develop Russian Offshore Fields

After several rounds of speculations market finally got the news that Rosneft has found new strategic partner to develop its offshore deposits. British Petroleum will be replaced by US holding and world’s largest public oil company ExxonMobil.

Agreement with Exxon would be similar to the one Rosneft had planned to sign with BP in the beginning of this year, Russian newspaper Vedomosti reports in its article. Global mission for the cooperation is the development of Russian shelf deposits. For this companies has agreed to create Joint Venture with 66,7% stake of Rosneft and remaining 33,3% belonging to ExxonMobil. 

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Shell Can Become New Rosneft Partner For Development Of Arctic Shelf

Russian newspapers has recently reported from the briefing held by prime minister Vladimir Putin that Royal Dutch Shell can become Rosneft’s partner for development of Arctic shelf on the same terms as has been worked out previously with BP.

Prime minister has noted successful partnership between Shell and Russia, noting that government feels free about which foreign company would Rosneft pick as its partner, whether the partnering terms would be beneficial for Russia. 

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Gazprom reports in-line 3Q10 results

Gazprom reported in-line 3Q10 financial results yesterday, beating analyst’s sales forecast by 5% on the higher export volumes’ realized price, but failing to carry the gains through to EBITDA and net income due to higher-than-forecast operating costs. The results beat the consensus by 3% on revenue and 2% on EBITDA, but missed by 1% on earnings.

Another detail attracting attention in the results was the disclosure that Gazprom sold a 9.4% stake in Novatek in December. Gazprombank paid RUB 57.5bn for the stake, a roughly 31% discount from the market price at the time; Interfax cited Gazprom’s press service as saying that market prices were only one of the factors affecting transaction prices in such large sales. Gazprom continues to own a 10% stake in Novatek. 

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Rosneft releases positive 2010 US GAAP financials

On February 4, Rosneft released audited FY2010 consolidated financial results according to US GAAP. Revenue climbed 35% y-o-y to US$63 billion, with the upturn attributed to growth in the average Urals oil prices by 26%, from US$62 to US$78 per bbl, and a 6.4% oil production growth to 116 million tons. The production growth reported appeared the second highest in the industry. Oil refining volumes picked up 2% to 48 million tons, generally in line with the industry average. 

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TNK-BP to pay out generous 9M2010 interim dividends

The Board of Directors of TNK-BP Holding (TNBP:RU) has recommended paying out a 9M2010 interim dividend of RUB 8.04 per each common and preferred share, the company reported October 12. 

Shareholders are to affirm the decision at an EGM due November 18. Dividends are to be paid out in cash within 6 months after the EGM, i.e. by May 18. October 12 was the cutoff date.

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State commission approves export duty breaks on LUKoil Caspian fields

The Russian government sub-commission on customs and tariff policies approved export duty breaks for LUKoil’s Caspian fields, which seem to be the same as for East Siberian fields. It is unclear how long the breaks will last, and we are unlikely to receive any clarity soon. The decision was expected and communicated earlier this month.

We estimate that the Yuri Korchagin project, which already enjoys a MET holiday until 2015, has an IRR of 10%, i.e. it does not break LUKoil’s own cost of capital. A two-year export duty break would raise that return to 14%.

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Lukoil shows negative results for 2Q2010 under US GAAP

On August 31, Lukoil released unaudited consolidated interim US GAAP financials for 2Q2010. Revenue rose 29% y-o-y to USD 26 bn, with growth mainly driven by a 31% spike in the Urals oil price, from USD 59 per bbl in 2Q2009 to USD 77 per bbl in 2Q2010. The operating results showed negative dynamics, though. Oil production contracted 2%, largely due to production decline at depleted oilfields in Western Siberia. Oil refining stayed the same, despite the purchase of a 45% equity stake in the Netherlands-based TRN oil refinery in 3Q2009. Following the deal, the company saw its oil refining capacity rise by 3.6 mn tons per year.

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Rosneft may buy stakes in four German refineries

The Wall Street Journal reported on Friday that Rosneft is looking to buy Petroleos de Venezuela SA's 50% stake in Ruhr Oel, which controls a total capacity of 23.4 mln tpy via stakes in four German refineries. Other half of Ruhr company reportedly belongs to British Petroleum. The price tag would reportedly be somewhere between US$1-2 billion.

BP has the right of first refusal, and in exchange for giving up that right, it would be offered “a lucrative deal by Rosneft to explore for oil in the Arctic Ocean”, the Wall Street Journal said, citing unnamed sources.The price would come to $85-170/tonne of annual throughput. This compares, for instance, with LUKoil paying $270/tonne for a stake in the ISAB Refinery in Sicily. So, on first glance, this looks very interesting for Rosneft, especially as the experienced BP would likely remain in charge of operations.

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