UPI Energy Watch

Putin gets tough on gas pollution

Russian President Vladimir Putin has imposed punitive fines to oil companies that continue to flare gas.

Pollution plagues the town of Nizhnevartovsk in Western Siberia due to intense pollution from oil wells burning gas at an alarming rate, according to In Western Siberia.

The flames are shrouded in clouds of smoke, which are dotted for miles around the small town.

Gas is an inevitable byproduct of drilling for oil. In most Western countries the gas is trapped and sold or turned into chemicals to make fertilizers, but in Russia the oil wells are so far from consumers and the cost of processing the gas so expensive that the oil companies have found it cheaper to burn off the gas.

BP’s Russian joint venture TNK-BP will spend more than $1 billion tackling pollution caused by flaring. It has teamed up with Sibur, the country’s largest chemical company, to process the gases.

Gazprom subsidiary Sibur, which has billions of dollars worth of sales and profits, plans to float on the London Stock Exchange next year.

Russia is one of the world’s top offenders in terms of emissions.

Dana Gas raises bond offer to $1B

Dana Gas PJSC, the Middle East’s first regional private-sector natural gas company, said its convertible bond offering, launched Oct. 4, has been increased again by $125 million to $1 billion.

This is the second increase from the initial issue size of $750 million following continuing strong demand, primarily from international investors.

JPMorgan acted as sole bookrunner and lead manager for the offering while Barclays Capital and Citi are acting as joint lead managers.

Hamid Jafar, executive chairman of Dana Gas, said: “We are delighted by the continued enthusiasm for our bond offering, which has encouraged us to increase the size of our issue for a second time. This clearly demonstrates the strength of international investor support for Dana Gas’s business and strategy, and for its unique position in the fast-growing Middle Eastern gas sector.”

Dana Gas has issued its innovative bond as part of its strategy to put in place the most optimal structure to fund its rapid growth and expansion in the natural gas business sector.

Worldwide Islamic banking assets currently total about $500 billion and are growing more than 15 percent annually, with Islamic banks and financial institutions managing more than $250 billion of assets and a further $200 billion to $300 billion managed by the Islamic subsidiaries of international banks.

Dana Gas’s bond is the first major accelerated convertible bond to be issued in the Middle East.

These bonds are the most sophisticated equity-linked structures to be issued in the region, due to their unique features combining a forward-start pricing structure and delayed settlement within a Sharia compliant instrument.

Crude oil prices too low, Iran says

Iran, OPEC's No. 2 exporter, hit out at the recent hike in oil prices, saying real prices were far lower than the $90-a-barrel level of last week.

“Oil is still cheap," acting Oil Minister Hossein Nozari" class="tpstyle">Gholam Hossein Nozari said in an interview with the Fars News Agency.

"The sweet taste of oil is not tangible because it is very far from the range that is expected by us (Iran and the Organization of Petroleum Exporting Countries)," Nozari said.

Nozari argued that calculations based on current inflation rates and depreciation of the dollar's value as well as high costs of oil and gas projects puts oil’s true price at less than $50 a barrel.

"Today's prices even at the level of $90 a barrel (in the market) are not effective because the real price of oil is currently about $47 per barrel (as profit)," he said.

Nozari also said political issues were casting a "shadow of threat" on the flow of investment into the oil-producing countries, especially Iraq, Nigeria and Venezuela.

"If the owners of financial sources do not make a meaningful investment in the oil-rich countries, oil prices will be uncontrollable in the near future," he warned.

Oil prices ended lower Friday after striking a record high above $90 in New York amid global supply jitters and lingering tensions between Turkey and Iraq.

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Closing oil prices, Oct. 23, 3 p.m. London

Brent crude oil: $83.53

West Texas Intermediate crude oil: $85.92

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(e-mail: energy@upi.com)