Translated material
And in Russia we have gas
Vladimir Putin demands that governors look for backup fuel for power plants
On the eve of a meeting on the problems of the electric power industry, which will be held in the Kremlin in early October, Vladimir Putin expressed his position regarding the fuel supply to Russian power plants. Yesterday, at a meeting at the Sochi residence with the Governor of the Khabarovsk Territory, Viktor Ishaev, the head of state called on all regions to comply with the approved energy balance: “In the country as a whole and in the regions in particular, we must think about the energy balance. It’s impossible to hang everything on one gas, even from a safety point of view.” According to the president, it is necessary to use different energy sources, with an emphasis on primary energy: “It is imperative to use peat and coal where it is available. And you in your region will also pay attention,” he concluded, although this call concerns Mr. Ishaev in the last place. The President was obviously talking about the European part of Russia, where most of the electricity is produced using gas. And the head of RAO UES of Russia, Anatoly Chubais, is fighting for an increase in Gazprom’s limits on the volume of fuel at state prices and additional permits for purchases from independent producers.As you know, last week, meetings were held between the head of the Kremlin administration, Sergei Sobyanin, and the First Deputy Prime Minister and Chairman of the Board of Directors of Gazprom, Dmitry Medvedev, on the issue of developing the electric power industry. Between these meetings, Mr. Chubais came for additional gas to Nametkina, but received a decisive refusal in the form of Alexey Miller’s promise to supply gas to power engineers strictly within the framework of the balance approved by the Federal Tariff Service and advice to actively stock up on coal and fuel oil before the cold weather set in. That is, do not count on additional gas supplies.
It is unlikely that the president will change his mind until October, when he will have a decisive meeting on the problems of supplying the electric power industry with raw materials. This means that Anatoly Chubais will have to look for internal reserves in order not to disrupt the heating season. And do not count on the lobbying efforts of the governors, who during September are literally storming Gazprom in order to “knock out” additional volumes of gas for their regions (including for the needs of power plants). The consequence of this, apparently, will be battles next year over electricity tariffs - after all, it is obvious that the energy holding has nothing more to cover costs. We will be talking about 2008, when the Russian presidential elections will take place, so electricity tariffs can become a bargaining chip in a big political game.
In addition, yesterday the president dispelled the dreams of the operator of the Sakhalin-1 project about independently exporting gas to China through the Khabarovsk Territory. Mr. Ishaev's region is about to begin receiving a small amount of Sakhalin gas (1 billion cubic meters per year) from the Exxon Neftegas Ltd consortium under a contract signed last fall. Actually, Mr. Ishaev reported to the president that the Sakhalin-Komsomolsk-on-Amur gas pipeline had finally been completed and the region would receive gas this winter. “We came by pipe here, to Khabarovsk, to the Khabarovsk Territory. This is gas for domestic consumption,” said Vladimir Putin. -- In accordance with current legislation, Russia has a single export window. This is the Gazprom company. It is important that neither shareholders nor all interested parties are tempted to send abroad what is intended for domestic consumption.” Mr. Ishaev, who previously actively supported the idea of transit of Sakhalin gas through the territory of the region to China, had no choice but to agree. “There will not be and cannot be any extensions of the gas pipeline,” he promised.
A consortium consisting of the American Exxon (30%), Japanese Sodeco (30%), Indian ONGC (20%) and Rosneft (20%) is implementing the Sakhalin-1 project under the terms of a PSA. Gas production is planned at 10 billion cubic meters per year, of which up to 3 billion is planned to be supplied to the Khabarovsk Territory. The rest was supposed to be exported to Japan via an undersea pipeline. However, Japanese consumers preferred Sakhalin-2 liquefied gas, and for the last couple of years Exxon Neftegaz, the operator of Sakhalin-1, has been negotiating supplies to China. Let us remind you that the recently adopted law “On Gas Export”, which fixes Gazprom’s complete monopoly on gas supplies outside the country, does not apply to projects implemented under the terms of a PSA, including Sakhalin-1. But after the president’s words, “the project’s shareholders,” obviously, the last illusions regarding who will sell Sakhalin gas for export should evaporate.
In addition, Gazprom is close to purchasing part of the Okha (Sakhalin) - Komsomolsk-on-Amur - Khabarovsk gas pipeline system. The investment program for 2006 provides for its acquisition from Daltransgaz for 7.7 billion rubles. ($290 million). The deal should be completed by the end of the year.
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The head of Italian Enel, Fulfio Conti, arrived in Moscow yesterday and met with the Chairman of the Board of RAO UES of Russia, Anatoly Chubais. At the meeting, as reported by the press service of RAO, the progress of reforming the Russian electric power industry was discussed. In particular, Anatoly Chubais informed his colleague about the planned timing of IPOs of generating companies and other mechanisms for investing in generation. Mr. Conti expressed interest in Enel coming as a strategic investor in generation and acquiring at least a blocking stake (25% plus one share) in any of the generating companies. "TIME FOR NEWS"