UPI Energy Watch

ANDREA R. MIHAILESCU, UPI Energy Correspondent

EU still dependent on Russian energy

Decreasing the European Union's dependence on Russian energy supplies is unlikely, said an EU representative Friday.


"We do not have a choice," Francois Lamoureux, European Commission director general of energy and transport, told the Russian newspaper Zerkalo Nedeli. "We import large volumes of gas and oil from Russia."

Oil and gas production among EU member countries is decreasing and The North Sea continues to decline in output.

"Therefore, the EU does not have many alternatives at present," said Lamoureux. "There are political problems with Iran. The situation in Iraq is rather odd."

Although Caspian oil and gas resources are attractive, supplies are limited compared with import volumes coming out of Russia.

Lamoureux also expressed the EC's interest in seeing the Ukrainian-Polish Odessa-Brody oil pipeline expand to Plotsk to increase supplies from the Caspian and possibly decrease imports from Russia. The Baku-Tbilisi-Ceyhan oil pipeline is also expected to start pumping Caspian oil soon.

"In order to decrease our dependency, we work a lot on energy saving, and we achieved rather positive results," said Lamoureux. "The economy regime, the use of new technologies, anything that might increase the effectiveness of energy industry is a priority for the EU today."


Russia says it has most modern tankers

Russia has the world's most modern tanker fleets and meets all International Maritime Organization regulations, a Russian official said Thursday.

"The Russian fleet remains unaffected by the ban on single hull tankers," said Alexei Klyavin, deputy director of the Russian Transport Ministry's state policy department in the field of railroad, sea and river transport. "Russian ship-owners are moving to renew their tanker fleet."

Single hull tankers are to be phased out per amendments to the International Convention on the Prevention of Pollution from Ships entered into force April 5.

Ships 28 years old or more were scrapped; more than 700 tankers of 74 million dead weight tons are expected to be scrapped by 2010.

Russia's five shipping companies operating on the global oil market had only four large single hull tankers in 2004. All were phased out before the enactment of new regulations.

Russia has the world's 12th-largest fleet and plans to construct an additional 73 tankers by 2010.

Iraq, Syria to increase cooperation

Iraq and Syria plan to strengthen cooperation in the electric and water industries, Iraqi officials said Thursday.

In a ministerial meeting in Damascus last week, the two sides also discussed reviving the Syrian-Iraqi-Turkish joint committee, a hydrological working group.


"The Iraqi-Syrian fraternal ties are deep," said Iraqi Minister of Water Resources Abdul Latif Jamal Rashid and Iraqi Minister of Electricity Mushen Shlash.

"Syrian-Iraqi relations are on track again and they are in a continuous improvement," said Iraqi Irrigation Minister Nader al-Boni.

"Our visit is to discuss a number of joint issues and matters as well to exchange view points over nonstop cooperation in fields of water resources ad electrical energy as well projects elated to these two subjects," the ministers said.

Iraqi and Syrian officials discussed increasing the amount of electricity generated from al-Qadesia dam for June, July, August and September without affecting the level of water in the dams, and ways to supply Syria with water from the Tigris River.

British tycoon to buy Darfur oil rights?

Sudan Friday awarded British millionaire Friedhelm Eronat the right to purchase oil rights in the Darfur region.

Because Darfur is plagued by an ongoing humanitarian crisis, human rights groups expressed outrage.

"From a moral point of view these people are paying a government whose senior members may end up in front of the international criminal court for war crimes," Simon Taylor, director of Global Witness, told the Guardian newspaper.

Darfur rebel's representative in London called for oil exploration to cease until peace could be achieved between government-backed Arab militia, or Janjaweed, and the local black population.


Eronat is allegedly acting on behalf of China, according to documents obtained by the Guardian. Two Chinese companies were granted the option to purchase 50 percent of Eronat's new acquired share in the Darfur field. Whether Chinese companies seized the awards is unknown, the Guardian reported.

Eronat's attorney, Peter Felter, said his client "purchased no oil concessions in Sudan and Mr. Eronat has no interest" in the oil concession.

Shell, Gazprom look to sign off on Sakhalin-2

Gazprom said Friday it is close to concluding an agreement with Shell on the company's participation in the oil and gas project Sakhalin-2.

Alexander Medvedev, head of Gazprom's export unit, said the two companies are close to finalizing a long-awaited swap deal whereby Gazprom would assume 25 percent of the stakes in the Sakhalin-2 project.

Shell, meanwhile, would lose its majority holding in Sakhalin Energy, operator of Sakhalin-2, but acquire a stake in Gazprom's west Siberian Zapolyarnoye field, which produces 131 billion cubic yards of gas annually.

Shell leads the international consortium which develops the project that is off Sakhalin Island in Russia's Far East.

Sakhalin-2 thus far pre-sold more than 80 percent of its output for 20 years or more; Shell looks to expand capacity.


Japan's Mitsui and Mistubishi are other stakeholders in Sakhalin.

New England fights new federal power regulations

Connecticut leads New England's utility regulators in fighting new federal regulations that could significantly increase consumer costs.

The region is struggling to avoid premium charges to power generators for producing electricity in areas that import more power than they produce.

The New England Conference of Public Utilities Commissioners, which consists of heads of the utility regulatory bodies in the six New England states, said last week it filed a brief opposing Locational Installed Capacity Payments with the U.S. Federal Energy Regulatory Commission.

FERC is currently reviewing the brief but has conditionally approved a plan to put it in place Jan. 1, 2006. Connecticut's Department of Public Utility Control projected that LICAP could cost consumers an extra $190 annually on their electric bill.

ISO, which manages New England's power markets, said last week that wholesale electricity prices decreased 5.7 percent in 2004 compared to 2003, but only after unspecified adjustments for fuel costs, which actually drove up prices.


Closing oil prices, June 13, 3 p.m. London

Brent crude oil: $52.78

West Texas intermediate crude oil: $53.47


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