UPI Energy Watch

By JOHN C.K. DALY, International Correspondent  |  Jan. 24, 2005 at 1:41 PM
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WASHINGTON, Jan. 24 (UPI) -- On Jan. 19 a Gazprom delegation led by CEO Alexei Miller arrived in North Korea on its first-ever visit. Gazprom refused to discuss the purpose of the company's two-day visit to North Korea, stating it was "a commercial secret." Miller, his team and Russian ambassador to the DPRK Andrei Karlov held negotiations at the Mansudae Assembly Hall with North Korean Premier Pak Pong Ju, Vice-Minister of Foreign Trade Kim Yong Jae, Vice-Premier for Industry Ro Tu Chol, Oil Minister Ko Ten Sik, Vice-Minister of Oil Industry Jong Chol Yun and other North Korean officials. Sources in Pyongyang speaking off the record think the negotiations centered on a large natural gas joint venture project, which if implemented would help settle the country's protracted energy crisis. While nearly all the state-run North Korea media reported on the visit, the reports focused on the delegation's laying of a wreath to the Liberation Monument and visiting the Juche Tower and the house where North Korean founder and first president Kim Il Sung was born. North Korea began prospecting for oil and gas in 1965. These activities were intensified in 1993, when the Department of Oil Operations became North Korea's oil ministry. In 1997 oil prospecting identified seven potential oil and gas bearing basins, among them are the West Korea Bay on the Yellow Sea and East Korea Bay in the Sea of Japan basins and the Pyongyang basin. North Korea's sole state oil and gas co. is the Korean Oil Corp., which is directly subordinated to the Oil Ministry. The Korean Oil Corp holds exclusive rights to exploration and development of hydrocarbons deposits in North Korea, with subdivisions engaged in oil and gas exploration, extraction, transportation and storage and research.

Pedram Navi, an Iranian soil and natural resource specialist, says a tsunami may occur on the Caspian. Navi noted, "Sharply differing relief of the seabed and deep waters make it possible for a tsunami to hit the Caspian. Iran is in a seismically active zone and is surrounded from the north and south by extensive closed and open water basins (the Caspian and Persian Gulf). This increases the possibility of an earthquake, and consequently, a tsunami." Iranian geophysicist Mirali Reza Khamadi agrees with Navi's assessment, stating that "an earthquake in the Indian Ocean led to the movement of the earth crust. Such changes in the shape-up of the seabed are possible at differing depths, for instance, on the Caspian. The calamity that hit the South-East Asia may replicate." Khamadi did not give a specific date or the precise location of the subterranean tremors that may lead to a tsunami. Director of the Ministry's of Ecology and Natural Resources hydrometeorology scientific research institute Professor Reza Mahmudov disagrees with Navi's and Khamadi's assessments, stating that there is no tsunami threat on the Caspian, noting that high waves there are mainly caused by high winds. While up to 30 feet high are periodically observed on the Caspian, their impact on coastal areas is insignificant. The highest recorded waves observed on the Caspian occurred in the Oil Rocks area of Azerbaijan in 1957.

On Jan. 20 Canada and China agreed to expand their energy cooperation, including oil and natural gas production, nuclear energy, energy efficiency and cleaner energy, "priority areas" of long-term mutual co-operation. A Chinese government Statement on Energy Co-operation in the 21st Century issued during the visit of Canadian Prime Minister Paul Martin to China said, "China and Canada have decided to work together to promote co-operation in the oil and gas sector, including Canada's oil sands, as well as in the uranium resources sector." Under a 2001 memorandum of understanding concerning co-operation in energy, China's National Development and Reform Commission and Natural Resources Canada will maintain regular dialogue and exchanges of views, cooperating through the Canada-China Joint Working Group on Energy Co-operation. A total of 13 statements, agreements and MOUs were signed between China and Canada, on co-operation in energy and minerals, culture, telecommunications and other sectors.

Georgian Fuel and Energy Minister Nika Gilauri said that renovations of the natural gas pipeline connecting Georgia and Azerbaijan are now complete. Gilauri said, "Over $500,000 has been spent on refurbishing the pipeline with an annual throughput capacity of 1.04 billion cubic yards of gas." Gilauri added that following the completion of the pipeline's rehabilitation his ministry will begin negotiations with Russian natural gas exporter Gazprom and its export subsidiary Gazexport on transporting gas from Russia to Azerbaijan via Georgia. The renovated pipeline may also be used to import gas from Iran. Gilauri is expected to visit Iran later in January for talks about Iranian natural gas supplies in exchange for exports of surplus Georgian electrical power. Iran is expected to allocate a grant to Georgia to increase the renovated gas pipeline's annual capacity to 3.9-5.2 billion cubic yards.

On Jan. 21 Azpetrol General Director, Huseynagha Rahimov, announced that his company signed a contract with the government of Moldova. Rahimov said that Azpetrol's energy activities in Moldova include constructing the Jurjulesht international port on the confluence of the Danube and Prut rivers. The port will include oil, cargo and passenger terminals. Azpetrol will lease the port construction site by for 99 years on condition that the company will purchase it afterwards. Under the contract Azpetrol will also construct an oil refinery and opening 50 gas stations. Azpetrol Vice President Thomas Mozer said that operations will last over seven years and cost $250 million. Azpetrol will partially fund the projects, with the remaining funding being loans from the European Bank for Reconstruction and Development.

Russia's Rosneft Vice-President Yuri Matveyev said that beginning on Feb. 1 Rosneft will begin supplying fuel to China. In 2005 Rosneft expected to sell four million tons of oil to China; Matveyeyv said, "But this is only the beginning. We'll expand our presence in Eastern Siberia and the Far East." Matveyev added that Rosneft is speeding up its renovation of its oil refinery complex in Komsomolsk-na-Amure. Rosnenft is also negotiating with Russian Railways to transport its oil exports to China on the Baikal-Amur railway line. Rosneft is also soliciting funding to modernize its facilities in Angarsk, where oil is pumped from Western Siberia, in anticipation of increased exports to China.

Closing oil prices, January 24, 3 p.m. London

Brent crude oil: $46.26

West Texas intermediate crude oil: $48.91

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