Oil and Gas Pipeline Watch

By DANIEL GRAEBER, UPI Correspondent  |  Sept. 29, 2008 at 11:52 AM
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Gazprom to build in North Korea.

Russian energy giant Gazprom agreed to construct a pipeline through North Korea to deliver natural gas to markets in South Korea, officials said.

Korea Gas Corp. agreed to develop the pipeline with Gazprom beginning in 2015. Gazprom will supply about 20 percent of the energy demands of South Korea, The Korea Times said.

South Korean President Lee Myung-bak met with his Russian counterpart, Dmitry Medvedev, during the weekend to discuss terms of the deal. Both parties agreed to ratify the agreement in 2010.

Seoul and Moscow also agreed to move forward on cooperation in the uranium-processing sector.

A consortium of major South Korean energy firms signed a memorandum of understanding with the Russian Atomredmetzoloto Uranium Holdings to explore uranium reserves for the 20 nuclear reactors in South Korea.

Iran proposes IPI price mechanism.

Iran stated it would sell natural gas to Pakistan through the Iran-Pakistan-India pipeline at a price established by market conditions, officials said.

Iranian Oil Minister Gholamhossein Nozari said during the weekend Tehran would deliver a market-based natural gas price mechanism during an upcoming visit by Pakistani officials to the Iranian capital, Press TV said.

Nozari said financing for the 1,724-mile pipeline from the Iranian South Pars gas field east would begin in the next five years. The funding would go toward construction of the pipe sections.

Several countries made moves in New York on the deal last week at the 63rd annual U.N. General Assembly meeting. For their part, Iran and Pakistan agreed to establish a joint firm to generate revenue.

Speaking on the sidelines of the U.N. meeting, Russian Foreign Minister Sergei Lavrov said Moscow was interested in broader talks with the new Pakistani government.

"These included energy, communications, gas pipeline projects, steel production and provision of defense equipment to Pakistan," he said.

Hopes for Nabucco high.

Statements and pressures from the parties to the proposed Nabucco natural gas pipeline to Europe put the potential for project realization high, analysts say.

Critics of the planned pipeline, meant to bring natural gas primarily from Central Asia through to Turkey and on to Europe, point to the $12 billion price tag, but promising statements, notably from Turkish President Abdullah Gul, suggest the project will be realized, Trend Capital News said.

Meanwhile, supply concerns through the 2,000-mile pipeline alarm other critics, who say the first order of business is meeting the estimated 1.1 trillion cubic feet per year capacity planned for the project.

The output from the Shah Deniz gas field in Azerbaijan is not sufficient to supply Nabucco, and bringing gas from Turkmenistan fields would require an additional pipeline across the Caspian Sea. Iran said that while it supports the move to bring gas from Turkmenistan for Nabucco, it also would look to other options, notably the Iran-Pakistan-India project, if talks on Nabucco continue to falter.

With Europe looking to move away from dependence on Russia for energy supplies, especially after the conflict in Georgia, political and economic developments in the region are likely to accelerate progress on the Nabucco pipeline.

Politics, supplies haunt Odessa-Brody.

Plans to extend the Odessa-Brody oil pipeline in Ukraine westward to Poland may be limited by political and supply concerns, analysts say.

Ukrainian President Viktor Yushchenko backed a 2007 proposal from Poland, Georgia, Azerbaijan and Lithuania to develop a joint firm to develop plans to extend the 419-mile pipeline to Plock in central Poland. However, there has been no significant progress on the plans as cost arrangements and doubts over supplies linger, European weekly New Europe said.

"Actually, the proposal at the time didn't go anywhere; it stalled because there was no agreement on costs or oil, and I really don't see that anything has changed," said Chris Weafer with the Russian UralSib Bank.

Ukraine in 2004 reversed the direction of Odessa-Brody to bring Russian oil to the port city of Odessa. For her part, Ukrainian Prime Minister Yulia Tymoshenko has opposed Yushchenko's pro-Western overtures and compared any moves on Odessa-Brody to treason.

"Given their political problems, I wouldn't expect decisive action from Ukraine in any front like that for a while," said Ron Smith with Moscow's Alfa Bank.

Balkans call for energy security.

Representatives from the Balkan states called on the United Nations to increase its political pressure in the region to maintain political and energy security.

Bulgarian Prime Minister Sergei Stanishev told the U.N. General Assembly the conflict between Russia and Georgia over the breakaway republic of South Ossetia provided "ample evidence" the political situation in the region was growing dire, the news service of the United Nations said.

His comments were echoed by Romanian Foreign Minister Lazar Comanescu, and Croatian Prime Minister Ivo Sanader said it was imperative the United Nations maintain its observation in the region, considering several destabilizing factors.

Stanishev met with former U.S. Secretary of State Madeleine Albright on the sidelines of the U.N. meeting to discuss Georgia and Bulgaria's role in European energy policy.

"(Albright) expressed her satisfaction with Bulgaria's pragmatic stand on energy security of the EU and Europe," a statement from the Bulgarian government said.

Stanishev also discussed moving forward on the Nabucco pipeline to Europe as well as the potential effects of a planned pipeline, South Stream, to bring Russian natural gas to Italy.


(e-mail: energy@upi.com)

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