Statoil in talks about potential pipeline projects in Shah Deniz gas field

Statoil is to begin talks with prospective customers over the supply of around 10 billion m³ of gas per year, from the Shah Deniz gas field in Azerbaijan.

"We're planning bilateral negotiations with potential customers...," said a spokeswoman for Statoil, before adding that the customers include three "potential pipeline projects". She also denied claims that Shah Deniz 2 consortium is planning a tender process, as reported in the Turkish media.

A second development phase of the Shah Deniz gas field, located in the south Caspian Basin, plays an integral role in the European Union's plan to expand its gas supply away from Russia, and offers the best potential for an easy export to the 27-country bloc. The European Commission has been strongly pushing to build a pipeline to carry that gas through Turkey to its countries.

The second development stage of Shah Deniz is expected to reach output of 16 billion m³ a year from 2016 or possibly as early as 2014.

Source: The Wall Street Journal

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2010 Menas Associates

Section of CPC expansion completed

As it embarks on its step-by-step plan to double its throughput capacity to 1.4 million b/d by 2014, the Caspian Pipeline Consortiumhas completed a new 130km section of its pipeline that runs from Kazakhstan's Tengiz field to the Russian Black Sea port of Novorossiysk. The new segment, in the Atyrau region near Tengiz, will replace a 116km spur that was built in 1991 and was considered unsafe.

Phase 1 of CPC's expansion, due to be implemented by 2012, will enable 500,000 b/dof Kazakh crude to flow through the pipeline; Phase 2, for completion by 2013, will raise Kazakh throughput to 700,000 b/d, while the third and final phase would enable Kazakhstan to pump up to 1 million b/d of crude. Russian producers can inject crude into the pipeline at a rail loading facility at Tikhoretsk, which is operated by Dublin-based Trumpet, a fullyowned subsidiary of state giant Rosneft.

Rosneft, meanwhile, could increase its stake in CPC by buying part of the 12.5% stake held by Lukarco, a 100%-owned vehicle for Lukoil. Both companies have confirmed that discussions are being held, but no decision has been reached. Rosneft holds a 7.5% stake in CPC jointly with Shell. On top of this the Russian government holds a 31% stake – 24% held directly and 7% via Caspian Pipeline Company, which handles the equity purchased from Oman more than two years ago. The government's share is managed by state pipeline monopoly Transneft.

CPC is now effectively a Russian-controlled company, which is exactly how Moscow wants it to be. On 1 May, a new Russian chief executive took the helm: Alexander Tarakanov, previously a senior manager at state-owned Zarubezhneft. Tarakanov took over from another ex- Zarubezhneft man, Vladimir Razdukhov.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2010 Menas Associates