UPI Energy Watch

Eni inks deal with Kazakhstan, ends spat

Italian Prime Minister Romano Prodi and Kazakh President Nursultan Nazarbayev secured an oil agreement after long negotiations and disputes over the contract’s terms, Itar-Tass reported.

Paolo Scaroni, Eni’s chief executive, said he is satisfied with the agreements.

The two sides met as part of the 63rd session of the U.N. General Assembly in New York on Wednesday.

According ANSA, Scaroni made a statement to this effect when he got information that the leaders of the two countries agreed not to politicize the problem related to the Kashagan oil field. Kazakhstan wanted Eni to revise the conditions on the oil field.

Kashagan, located in the northern part of the Caspian, has oil reserves of 4.8 billion tons.

Earlier, Kazakh Prime Minister Karim Masimov said talks between Kazakhstan's government and the leadership of Italy's Eni would last till Oct. 22.

The talks will focus on the Kashagan oil project, the prime minister added.

"I met the Eni leadership. Mr. Paolo Scaroni and I discussed different issues related to the Kashagan oil project. We voiced our concern. Mr. Scaroni exposed his view on this problem," Masimov said.

"Under the contract, we have time to discuss all issues till October 22. We'll sum up the results of our talks later," he said.

SOCAR acquires Azerbaijani segment of pipeline

The State Oil Co. of the Azerbaijani Republic has secured Azerbaijan’s segment of the Baku-Novorossiisk oil pipeline, SOCAR Vice President Elshad Nasirov told reporters.

"We are now undertaking the legal and commercial work with Azerbaijan International Operating Company on receipt of the Baku-Novorossiisk oil pipeline on SOCAR's balance sheet. We hope the work will be completed by mid-October," Nasirov said.

Azerbaijan has been transporting oil on the Baku-Novorossiisk pipeline since 1997. The pipeline was restored under the Azeri-Chirag-Gunashli project, being operated by AIOC. After the Baku-Tbilisi-Ceyhan pipeline became operational, AIOC stopped shipping oil from the Azeri-Chirag-Gunashli project on Baku-Novorossiisk and surrendered its role as operator of the pipeline.

A total of 4.4 million tons of oil was shipped on the pipeline in 2006, including 2.883 million tons of oil from AIOC and 1.233 million tons from SOCAR. In January-August, SOCAR exported 817,000 tons of oil on Baku-Novorossiisk and AIOC exported 696,800 tons. AIOC has not shipped any oil on the pipeline since April.

Sakhalin Energy to build pipeline fault crossings

Gazprom-led Sakhalin Energy is preparing to build the onshore pipeline segments that cross tectonic faults this winter, the chief engineer for the pipeline construction told a conference, according to local reports.

The pipeline route crosses the Garomai and Klyuchevsky faults at 19 points. Work is currently under way at a number of them. The pipeline project is unique, given that the pipeline is designed to withstand powerful earthquakes and difficult climatic and geological conditions.

The pipeline is designed to withstand a shift of 5.5 meters at the Garomai fault and 4.2 meters at the Klyuchevsky fault, with an earthquake measuring 6.1-6.2 on the Richter scale.

The pipeline design was modeled in laboratories at leading universities and various trench designs were tested, as were the reactions of the pipeline under various scenarios: in the strength-level earthquake that can be expected once every thousand years, in torrential water flows, etc. Various materials to be used in the given segments were also tested.

The majority of the fault crossings will be built in waterproof trenches. The trench segments will be wrapped in geo-membrane to prevent water from entering the trench where the pipeline is located, embedded in a mixture of large-grain sand and clay pellets. This arrangement will prevent the bottom of these segments from freezing. The clay/sand mixture will allow the pipe to "float" in any direction along the trench, without resisting the motion. The width of the trenches will be 13.5 meters for the gas pipeline and 7.5 meters for the oil pipeline.

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Closing oil prices, Sept. 27, 3 p.m. London

Brent crude oil: $78.40

West Texas Intermediate crude oil: $82.97

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(e-mail: energy@upi.com)