UK energy security - FCUKED even more as Gazprom moves unchecked

Gazprom has announced a deal with Gaz de France today to supply French domestic users directly from next July with 1.5BN cubic metres of gas a year , this is part of a larger deal agreed to extend a long-term supply contract from 2012 to 2030, under which GdF will buy 12 Bn. cubic metres of gas per year. In another announcement LUKoil have taken over from Philips Conoco 376 petrol stations across western Europe - Conoco Philips are majpor shareholders (17.9%) in LUKoil..

EU debutante, Bulgaria agreed a Gazprom deal (very reluctantly) on Monday, that means Bulgarians will pay up to 45% more for its gas imports over the next five years. Initially prices will rise 20% by the middle of next year and increase further by 2012.

In Belarus, talks are stalled as Putin (who met President Lukashenko on Friday) insists on re-pricing gas from US$50 per to US$200 if agreement cannot be made on Gazprom buying up the Belarussian pipeline and distribution networks for US$4Bn - which Lukashenko cliams is worth 4 times that.

Bigger deals have however been cooking - the Shtokman gas field was discovered in 1988 to the east of Murmansk 555km from land, in 350m of water that sees 1 million ton ucebergs drifting at up to 0.25m/s, and 1.2m drift ice moving at up to 1m/s.

Development costs of an estimated US$20BN involved 4 main platforms with a staggering four 42in x 565 Km pipelines to be laid to onshore facilities at Teriberka, 565km away. From here it will progress via ten pumping stations to Vyborg on the Baltic. Gazprom hopes to put Shtokman on stream as early as 2010.

The licensee is Sevmorneftegaz, jointly owned by Russian state owned Rosneft and state controlled Gazprom . In late 2004 and early 2005, preliminary agreements (as part of a so called beauty parade) were signed with ChevronTexaco, ConocoPhillips, ExxonMobil, Statoil and Norsk Hydro. At this stage there were plans for export of LNG to the US but this has been shelved for the moment and most of the gas is destined for Europe through the Nord Stream pipeline from Vyborg on the Baltic to Greifswald in Germany.

This pipeline is a joint project of Nord Stream AG, jointly owned by Gazprom (51% ), German BASF and E.ON (both 24.5%). Ex Chancellor gerhard Schroeder is the chairman and was instrumental in developing the pipeline with President Putin whilst Chancellor. N.V. Nederlandse Gasunie now also have a shareholding , after taking 9% as a direct exchange for the 9% of shares in the BBL Company - Bacton / Balgzand pipeline on October 9th 2006.

Simultaneously in October Gazprom CEO Alexei Miller , in a move that emphasised Moscow's efforts to consolidate ownership of Russia's oil and gas resources by state-controlled energy giants Gazprom and Rosneft said,"The foreign companies could not offer assets that compare to the volume and quality of Shtokman's reserves," (Ho.Ho.)and announced they would develop the field alone.

It is against this backdrop that the massive merger of Norway's - Statoil and Norsk Hydro's oil and gas interests by a share swap, announced today must be judged.

This new (and as yet un-named company) will jointly produce 1.9 million barrels of oil per day, and its oil and gas reserves should be in the region of 6.3 billion barrels of oil equivalent.

In a small but significant announcement for the UK Statoil and Norsk Hydro have detailed plans for developing the oil reserves in the North Sea Gjoa fields, which are said to be 60 million barrels, which will be piped to a connection in the Troll II trunkline to Norway’s Mongstad refinery. The field’s 35 billion cubic metres of gas will be exported via the Flags pipeline to St Fergus, Scotland to augment UK gas supplies.

Drilling will commence spring 2009, with production is scheduled for 2010, at which time Gaz de France will take over operations from Statoil and expect to reach 50,000 barrels per day. Production from Gjoa is expected to last until 2020-2025, though additional adjacent fields may be susceptibel to further development.

Unlike the UK where oil and gas revenues have been sadly pissed up against the wall by successive Chancellors (not least the latest) Norway have since 1966 been prudently squirreling away reserves in the State run Government Pension Fund - which has grown to NOK 1.71 trillion (US$ 266 billion); equivalent to pensions savings of some 300,000 NOK (US$48K £26K) for every man, woman and child in Norway (4.6 Mn at last count).

The joint company will employ 58,000 in over 40 countries, with revenues of over US$90Bn. It is expected that the merger will be completed in second half of 2007. Mr Lund of Statoil is destined to become the chief executive of the new company, while Hydro's chief executive, Eivind Reiten, will become chairman - he will also remain as CEO of Norsk Hydro's aluminium smelting interests.

Morgan Stanley advised Statoil, Goldman Sachs advised Hydro, and Lehman Brothers advised the Norwegian government who will no doubt all be carrying home large bags of money after arranging the 3rd biggest oil merger deal this decade.

It migth be noticed that the winners in this are the Dutch / Norwegian / German / companies and citizens. The possible losers are the US through less control over Arctic LNG supplies - cf Sakhalin where Shell have formally announced being shafted by Gazprom today.

We now wait for the move on Centrica - as the wholly fucking Blairite foreign policy displays the underbelly of the state and the rampant financiers (yet again the London end of US based gangs) waltz off with the loot ...... and fuck the UK citizen.

This my children is called UK energy security