Gazprom cutting gas supplies to Turkey by nearly a quarter.

Gazprom cutting gas supplies to Turkey by nearly a quarter. (RT).

The already strained relations between Moscow and Ankara have taken a turn for the worse. Gazprom has cut gas supplies by nearly a quarter after failing to reach an agreement with Turkish importers on discounts for Russian natural gas.

Delivery is down 23 percent, compared to the same period last year, Interfax reports, quoting data from Bulgarian gas operator Bulgartransgaz that processes about 50 percent of Russian gas going to Turkey.

According to the news agency sources, the reduction is linked to a price dispute between Gazprom and Turkey's private gas importers.

Business daily Kommersant’s sources say Gazprom stopped giving the discount at the beginning of the year. For January deliveries, Turkish companies had to pay at a higher price, but on the payment date of February 21 they only paid the discounted price.

As a result, Gazprom has cut the volume delivered by the size of the underpayment. Read the full story here.

New Russian gas deals are "enough to make even a seasoned energy observer's head spin"

New Russian gas deals are "enough to make even a seasoned energy observer's head spin". (csis).

In the twelve months since the collapse of global oil prices and the imposition of Western economic sanctions against Russia, the number of new Russian gas export project announcements has skyrocketed.

Only last month, Gazprom signed a memorandum of understanding (MOU) with three European companies to build a second large gas pipeline system under the Baltic Sea called Nord Stream II.

This was preceded by the announcement in December by President Vladimir Putin himself of the cancellation of the ambitious South Stream gas pipeline under the Black Sea to be replaced by an equally grandiose project, soon to be dubbed Turkish Stream.

In Kurdish a donkey is called: 'Kerdogan'

Both Nord Stream II and Turkish Stream are designed to bypass the critical transit route through Ukraine utilized by 40 to 50 percent of Russia’s current gas exports to Europe.

Russia and Gazprom’s position on whether gas transit through Ukraine will continue after the current agreement expires in the not-too-distant future flip-flopped within a matter of weeks recently – first proclaiming that all transit will cease after 2019, then declaring that negotiation of a new deal has been ordered by President Putin.

In the past year, we have also seen the supposed conclusion of not one but two large gas deals with China. Together with numerous previously proposed liquefied natural gas (LNG) and export pipeline projects, this picture is enough to make even a seasoned energy observer’s head spin.

To make matters worse, the mainstream press tends to report each one of these announcements, no matter how fanciful, as if they are all realistic projects that will be completed by the notional target dates even as Russia’s financial position continues to deteriorate.

The total cost of these projects is somewhere between $150 and $200 billion, and it is unlikely that Russia (even together with its prospective partners) could muster the necessary capital to complete most of them amidst Russia’s low oil revenue, budget deficits, and falling GDP.

Instead, the raft of announcements, postponements, and cancellations in June and July of 2015 suggest that Russia is groping for a viable gas export strategy. Read the full comprehensive report here.

Gazprom signs key Nord Stream-2 deal with EU companies, avoids need for gas transit through Ukraine.

Gazprom signs key Nord Stream-2 deal with EU companies, avoids need for gas transit through Ukraine. (RBTH).

Russia’s gas giant Gazprom has signed a binding shareholders’ agreement with European energy companies for the construction of the Nord Stream-2 pipeline from Russia to Germany. The landmark deal was inked at the Eastern Economic Forum, held in Russia’s far eastern city of Vladivostok on Sept. 3-5.

Gazprom will own a controlling stake, while Germany’s E.ON and BASF/Wintershall, Austria’s OMV and Royal Dutch Shell will receive 10 percent each, while France’s Engie will receive 9 percent.

Economic interests take priority

In itself, the signing of the shareholders’ agreement for Nord Stream-2 is already evidence that the EU, as before, has no common position either on relations with Gazprom as a whole or on today’s most pressing issue – that of gas transit through Ukraine.

The largest power companies in the UK, France, Germany and Austria signed the project, whose implementation will minimize the transit of gas through Ukraine, which all these states continue to support politically. However, the agreement is contrary to the position of Brussels; according to Vice-President of the European Commission Maroš Šefčovič, there is no need for any gas pipelines bypassing Ukraine.

“Germany believes that Ukraine should be supported, but the path to democracy and reform is very long, and we are losing time; the Ukrainian gas transportation system must be modernized, but no one is ready to invest,” said Alexander Rahr, research director of the German-Russian Forum, adding that plans for Nord Stream-2 do not violate EU law, including the Third Energy Package.

Southern Europe left high and dry

The shareholders’ agreement is a serious blow to the south-eastern countries of the EU, which were prevented by the United States and the European Commission last year from building the South Stream pipeline, intended to supply Russian gas to Southeast Europe via an undersea pipeline and a distribution hub in Turkey.

Now it is proposed to build a gas pipeline which, with a capacity of 55 billion cubic meters a year, which will bring billions of dollars in transit fees not to Bulgaria and Hungary, but to Germany and the Czech Republic. In addition, virtually all Russian gas will reach Europe through Germany, providing German gas pipeline companies with stable income for decades.

“The participants of South Stream – Bulgaria, Greece and Italy – are the countries that do not have enough weight to make decisions contrary to the general political line, but Germany will be able to,” said Fyodor Lukyanov, head of the Council for Foreign and Defense Policy, an independent Moscow-based think tank. Hmmm.......Guesss the Turkish stream will remain a 'Turkish dream'? Read the full story here.

Minority shareholding: The shares which gives potentially power to Gazprom and Rosneft over the EU energy market.

Minority shareholding: The shares which gives potentially power to Gazprom and Rosneft over the EU energy market.(delfi). A Must read! Read the full story here.

Russia's main gas companies to invest in Iran's gas industry.

Russia's main gas companies to invest in Iran's gas industry.(Taz).

The National Iranian Gas Company has signed agreement with two Russian companies on the implementation of the projects in Iran's gas infrastructure and investment in this field.

The officials of the Russian companies will pay a visit to Iran to become familar with the project in the near future, Iranian Deputy Oil Minister Hamidreza Araqi said, according to the Shana agency.

The agreements have been reached with the two largest gas companies of Russia within the last "World Petroleum" conference which was held in Moscow, Araqi said.

"Both sides are interested in cooperation in major projects in Iran," the deputy minister said.
He did not name the Russian companies and did not disclose the details of the agreement.

Note that Iran`s Oil Minister Bijan Namdar Zanganeh gave instructions to change the terms of the agreement on Iran's oil to increase foreign investment in the oil and gas sector last year. At the moment, the special commission is reviewing terms of the agreement and proposes to change some of them to increase investment in oil and gas sector of the country by foreign countries.

Ukraine - Russia Gas talks stall - Europeans better get ready for a 'Russian Winter".

Ukraine - Russia Gas talks stall - Europeans better get ready for a 'Russian Winter" (RT).

Kiev has not been paying for gas it imports from Russia for months, resulting in a multibillion dollar debt mounting. Russia says that it would invoke the prepay option of the standing contract and would only deliver as much gas as Kiev pays for in advance starting Monday. With Ukraine not willing to pay, this would mean an effective cut-off.

Russia offered a $100 discount to gas price roughly to the level that the Europeans pay. The offer includes recalculation of the current debt, which would revalue gas supplied since April with the discount applied, but Kiev rejected this plan, saying it’s not good enough.

“Ukraine has been offered a very generous discount and yet they still want more. It really is quite incredible – the nerve and the chutzpah of the Ukrainian government in all this. I don’t think any amount of discount would really satisfy Ukraine. They are spoiling for a fight here,” believes journalist Neil Clark.

Instead of compromising and settling the debt, Kiev seems to be preparing to raise the stakes. Over the past few months it has been pumping as much unpaid Russian gas into its underground gas storages as it could and now says it has enough to last till autumn.

Kiev’s desire to dictate the terms to Russia may have an irrational basis underneath, international law expert Alexander Mercouris told RT.
“It is difficult for the Ukrainians at this time to negotiate with Russians about anything. There are many people in Kiev who don’t like that,” he said.

“One of the fundamental problems with the way in which the Ukrainian authorities have been dealing with their multiple crises since they took power in February is that they don’t seem to show very much grasp of reality,” he added.

There are also concerns that Kiev would eventually simply siphon off gas it transits from Russia to European consumers, as was the case during previous rounds of gas stand-offs.

A more distant problem will arise in winter. Normally Ukraine would accumulate gas intended for Europe in summertime and deliver it in winter, because that’s how the Ukrainian gas pipeline system is designed. With gas from the storages use for Ukraine’s own consumption, there would simply not be enough for Europe next winter.

“The Ukrainian government has been intransigent and putting the people of Europe at risk. That’s why the EU is actually cautiously supporting Russia’s position at this time,” political analyst Bill Dores told RT.

Ukraine has for years enjoyed a politically motivated preferred treatment by Russia in terms of gas price discounts, he added. Now there is a government in Kiev hostile towards Russia, and Moscow has no reason to support it.

An escalating conflict would hurt all the three parties involved. But the Ukrainian government may be tempted to raise the stakes now, said Mercouris.

“There is an expectation that once things are deteriorating in Ukraine, it could be blamed on the Russians,” he explained.


With Ukrainian economy already in peril, painful austerity measures demanded by international creditors in exchange for loans and a political turmoil in the eastern provinces, Kiev has loads of blame to apportion in the future. Hmmmm.....Better stock up on Wooleys, Cause Europe can't deliver much Hydro power either !! You heard it first at MFS.


Updates:

2.Russia and Ukraine fail to reach gas deal ahead of cut-off deadline


1. Russian Foreign Minister Sergei Lavrov expressed concern in telephone talks with German Foreign Minister Frank-Walter Steinmeier about Saturday's attack on the Russian embassy in Kiev and about the Western partners' refusal to condemn it in the UN Security Council. 

"Telephone talks were held on June 15 between Russian Foreign Minister Sergei Lavrov and German Foreign Minster Frank-Walter Steinmeier. Continuing the discussion held in trilateral talks on Saturday between Russian President Vladimir Putin, German Chancellor Angela Merkel and French President Francois Hollande, the Russian and German foreign ministers discussed the Russia-Ukraine-European Union gas agenda and the situation surrounding the planned signing of an association agreement between Ukraine and the European Union," the Russian Foreign Ministry said in a statement in Moscow on Sunday.

Source: Russia Beyond the Headlines - http://rbth.com/news/2014/06/15/lavrov_concerned_about_western_partners_refusal_to_condemn_attack_on_rus_37443.html)

Ukraine - Kiev preparing for shutdown of Russian gas on Monday.

Ukraine - Kiev preparing for shutdown of Russian gas on Monday. (RT) [Googletranslate].

Ukrainian Prime Minister Yatsenyuk ordered to begin preparing for an end to fuel supplies from Russia. Chairman of "Naftogaz Ukraine" Andrew Kobolev said in turn that Kiev does not repay its debt by Monday, "Gazprom", because he believes the price assigned to Moscow, controversial.

Prime Minister of Ukraine Yatsenyuk said that the country should prepare for shutdown of Russian gas on Monday.

Head of the Ukrainian gas company "Naftogaz" states that a compromise with Russia is still possible, and that his company is ready to sign a contract, writes InoTV .

 According to Andrew Koboleva, Ukraine's debts for gas will not be paid, because the position of "Gazprom" is "so not constructive, and I would even say aggressive, that Ukraine sees no reason to pay the disputed unpaid bills."

"In fact, we have already paid the entire amount, which we consider certain, for delivery at a price that is not in doubt. It was the first thing we did to the negotiations became possible. As requested Russia ", - said the head of" Naftogaz Ukraine "in an interview with U.S. television channel CNN.

Kobolev noted that Russian and Ukrainian sides have been negotiating for weeks. "We achieved market prices. And at the end of the week the Russian Federation told us: "No. We do not agree to conduct trade negotiations, we are ready to discuss some discount. "

And with this discount Ukraine, in fact, never agree. I think European countries too, "- said the businessman. Hmmmm.....Without gas hard to get another Michelin Star, even for the French.

Update:  

Ukraine expects new gas talks with Russia: government source

European Union regulators to charge Russia’s Gazprom over anti-trust case.

European Union regulators to charge Russia’s Gazprom over anti-trust case. (PressTv).

  'Smart Move' with a once in a Century Winter offensive at the frontdoor of Europe.

EU Competition Commissioner Joaquin Almunia said on Thursday that the EU's executive was preparing a charge sheet against the Russian energy giant.

“It would be premature to anticipate when the next steps would be taken in this investigation, but we have now moved to the phase of preparing a statement of objections,” said the EU's anti-trust chief.

Gazprom is accused of hindering the free flow of gas across the EU and imposing high prices by linking the price of its gas to oil prices.

The EU's anti-trust chief said that if found guilty, the Russian energy giant may pay a fine of up to USD 15 billion (11 billion euros).

The decision came after a year-long probe and raids of several Gazprom units and its clients in central and eastern Europe.

The investigation covered Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary and Bulgaria.

The Russian company supplies a quarter of Europe's gas consumption needs, with annual revenues of up to 150 billion dollars (110 billion euros).

Experts warned that the European Commission's allegation against Gazprom is likely to ratchet up the tension between Europe and Russia.

Russia criticized EU attempts to boost energy market competition and end its over-reliance on Russian supplies.

Gazprom, Russia's fourth-largest oil company, produced 30.6 million tons of oil equivalent in the first six months of this year, and is aiming to increase its annual output to 100 million tons of oil equivalent by 2020.


Hmmm.....'Smart Move' with a once in a Century Winter offensive at the frontdoor of Europe.

Germany warns Cyprus its banks may NEVER reopen as Russia 'offers to write off debt if Gazprom get access to untapped oil fields'.

Germany warns Cyprus its banks may NEVER reopen as Russia 'offers to write off debt if Gazprom get access to untapped oil fields'.(DM).Germany's warning came after Cyprus's parliament overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout of 10 billion euros (£8.6bn) last night.

German Chancellor Angela Merkel said it was up to the Cypriot government to come up with an alternative proposal but it was fair to expect savers with deposits over 100,000 euros (£86,000) to contribute to the bailout.

Moscow is now a massive ally for Cyprus - Cypriot Finance Minister Michael Sarris said he had not reached a deal at a first meeting today with his Russian counterpart Anton Siluanov, but talks there would continue.

... Russia's finance ministry said Nicosia had sought a further 5 billion euros, on top of a five-year extension and lower interest on an existing 2.5 billion euro loan.

Moscow was angered that the European Union did not consult it over the proposed levy.

President Vladimir Putin called the decision to seize money from savers’ bank accounts as ‘unfair, unprofessional and dangerous’.

Representatives of the Russian energy giant submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening.

Even the Church of Cyprus offered to help. 'The entire wealth of the Church is at the disposal of the country ... so that we can stand on our own two feet and not on those of foreigners,' Archbishop Chrysostomos said after meeting Anastasiades early today. The Church of Cyprus is a major shareholder in Cyprus's third-largest domestic lender, Hellenic Bank.

It is also rumoured that the Kremlin is privately offering to help bail out Cyprus in exchange for the right to use a naval base in the Greek part of the island.Hmmmm.......Would be very welcome now that Tartus is 'sinking'.Read the full story here.


Update: Cyprus Fails to Obtain Kremlin Aid.(MT).

Sarris did not manage to negotiate a Russian bailout despite a 1 1/2 hour meeting with his counterpart, Anton Siluanov.

"We had a very good first meeting, very constructive, very honest discussion," he told journalists afterward, Bloomberg reported.

Sarris subsequently attended a second meeting with Deputy Prime Minister Igor Shuvalov, Siluanov and Deputy Finance Minister Sergei Storchak. An undisclosed source told Russian newswires that negotiations had not yielded any results and would continue Thursday.

European Commission President Jose Manuel Barroso is due to visit Moscow on Thursday for scheduled talks.

"We understand how difficult the situation is, and we'll continue negotiations to find the solutions that will help us obtain Russia's support," Sarris said, adding that the Cypriot delegation would remain in Moscow "until we reach any agreement." Read the full story here.

Russia warns Turkey over Cypriot gas plans.

Russia warns Turkey over Cypriot gas plans.(AN).By Vladimir Socor.On May 3, Moscow criticized Turkey's plans to explore natural gas deposits around the divided island of Cyprus, under the protection of Turkish naval and air power. Russian Foreign Affairs Ministry's chief spokesman, Aleksandr Lukashevich, cautioned Turkey that its actions "may exacerbate the situation on the territory of Cyprus".
The Greek Cypriots and Israel are coordinating their plans to develop offshore gas deposits and export the product in partnerships with international companies. One export route under consideration would run via mainland Greece into Europe. The Republic of Cyprus, Greece and, recently, Israel are all involved in disputes with Turkey in the Eastern Mediterranean. Explicitly siding with the Greek Cypriots (and implicitly with Israel and Greece), Moscow is positioning to bid for offshore gas exploration licenses, also hoping for control of the delivery route.
These gas projects and potential exports to Europe are creating an economic basis to the geopolitical alignment among Israel, Cyprus and Greece. The swing factor in this development is Israel, now turning toward these historic opponents of Turkey, after Ankara's reversal of the Turkish-Israeli strategic partnership. Israel, Cyprus and Greece have been holding intensive talks in recent months at the prime minister, ministerial, and chiefs-of-staff levels, about offshore gas projects and regional security. Greek and Greek Cypriot observers commonly suggest that a Greece-Cyprus-Israel triangle is necessary to counter-balance the increasingly assertive Turkey. The official consultations within this triangle are developing, however, in bilateral formats, carefully avoiding the appearance of a tripartite grouping, although the agenda is largely a shared one.
Turkish naval and air force activities around Cyprus are perceived as intending to discourage offshore exploration and development. Potentially, this affects Russian interests there no less than Western interests. The Republic of Cyprus (Greek Cypriot government in Nicosia) holds that it is fully entitled to develop offshore mineral resources within the state's internationally recognized borders and exclusive economic zone (as delineated by agreement with Israel). According to Nicosia, the Turkish Republic of Northern Cyprus (TRNC, which Turkey alone recognizes) could share the benefits of such development, if and when a federal solution reunifies the divided island. Ankara and the TRNC argue, however, that Nicosia may not unilaterally initiate exploration and development at offshore deposits, including those off the island's southern coast. Turkey does not recognize Cyprus as a sovereign country with an exclusive economic zone, opposes mineral projects there in the absence of a political settlement, and deems such activity prejudicial to the island's reunification.
Turkey initiated seismic research and exploration drilling for gas and oil off the island's southern coast in September 2011 and off the northern coast in April 2012. Ankara has warned the Greek Cypriots and Israel that Turkish warships and planes based in the TRNC are on hand to escort Turkish exploration vessels. The Greek Cypriot government has hinted via the press repeatedly that it would allow Israeli warships and planes to operate in its waters and air space. Israel, however, shows no appetite in becoming involved even indirectly in the Cyprus dispute, or otherwise "containing" Turkey. The process of demarcating exclusive economic zones in the Eastern Mediterranean is far from complete. The Lebanese government officially claims a portion of Israel's Leviathan gas deposit, the richest in Israel's exclusive economic zone. The Hezbollah movement threatens unspecified "asymmetrical" actions from Lebanon to back up that claim. Syrian claims would likely overlap with Israeli and Cypriot claims, but the Syrian government is currently too distracted by internal unrest to act in the maritime area. Russia seems willing to put its friendship with Turkey at risk by endorsing the "triangle's" position on zoning and exploration rights, against Turkey's position. Moscow's minimal objective is access to Cypriot offshore gas deposits for Gazprom and Novatek, in the framework of the Greek Cypriot government's international tender for 12 offshore blocks. Russia's maximal goal is to aggregate Cypriot and Israeli offshore gas volumes for transportation and reselling via Gazprom on international markets. Toward that goal, Gazprom recently concluded a preliminary (non-binding) agreement to purchase liquefied gas volumes from Israel's Leviathan project. Meanwhile, Gazprom is one of the bidders for DEPA, the gas transmission pipelines in mainland Greece. If successful in that bid, Gazprom would undoubtedly strive to increase its intake of Cypriot and Israeli offshore gas, transport it (probably in liquefied form) to mainland Greece, and use DEPA pipelines to re-sell it on European markets. Read the full story here.

Vladimir Socor is a Senior Fellow of the Washington-based Jamestown Foundation and its flagship publication, Eurasia Daily Monitor, and is an internationally recognized expert on the former Soviet-ruled countries in Eastern Europe, the South Caucasus and Central Asia. Socor is a regular guest lecturer at the NATO Defense College and at Harvard University’s National Security Program’s Black Sea Program. He is a Romanian-born citizen of the United States based in Munich, Germany.