• Natural Gas News

    Week 11 Overview



Iran and Turkmenistan signed 17 cooperation deals; BP announced its intention to invest in TANAP and Egypt; Russia and China reinforced cooperation.

by: Sergio

Posted in:

Top Stories, Weekly Overviews

Week 11 Overview

The 11th week of the year registered five apparently marginal changes that may turn the tables in the gas industry.  

First, Russia and China reinforced their cooperation. It is now clearer that the recurring comment “Beijing is pragmatic, and it just wants Russian resources” is partially wrong. 

Second, BP announced its intention to invest in TANAP, throwing its political weight behind the project. The deal paves the way to a stronger cooperation with Azerbaijan, and Turkey. Logically, this might have repercussions on BP's ties with Russia. It is still unclear how.  

Third, on Friday, ENI became the first oil major to suspend its buyback program and substantially cut dividends (28%). A day after, the company signed a $5 billion contract with Egyptian Minister of Petroleum and Mineral Resources, Sherif Ismail, hinting at a growing focus on Egyptian resources. 

Fourth, Iran and Turkmenistan signed 17 cooperation deals over the last days. The countries - that hold the second and fourth largest natural gas proven reserves in the world - are slowly moving closer, and this might have some impact on Russia too. Will majors try to support cooperation projects?

Finally, German dominance on Europe’s energy panorama is becoming clear. The relative small dimension of German energy companies could help (most of) them to aptly change, adapting to new market dynamics and geopolitical frameworks. 


Moscow and Beijing will sign an agreement on the pipeline shipping gas from Western Siberia to China by the end of the year, Foreign Minister Wang Yi said on Monday. He added that his government will intensify trade ties with Russia in the coming months.  

Central Asia will play an important role in the relation between Russia and China. Gazprom announced company’s plan to continue reducing volumes of imported gas from Turkmenistan and Uzbekistan. The decision opens new market opportunities for the two countries, which are  showing interest in cooperation with China, EU, Iran and Turkey. 

According to European companies, Turkmenistan’s gas is one of the cheapest gas sources in the world

The possible routes of Turkmen gas via Turkey to Europe may pass through Azerbaijan or through Iran. Given the increasing clout of Turkey in European gas markets, we tried to understand whether Ankara’s involvement will help bringing Turkmeni gas to Europe.

On Wednesday, Iran and Turkmenistan signed 17 cooperation deals, possibly paving the way to Turkmen gas exports to third countries via Iran 

Against this backdrop, recent declarations of Turkish officials suggest that Ankara will probably slow down the Russia-led project to avoid a negative effect on the TANAP pipeline from Azerbaijan. Energy Minister Taner Yildiz asked the Kremlin to be patient

On Friday, BP signed deals to become a partner in the Trans Anatolian Natural Gas Pipeline (TANAP). The final deal has to be signed yet after “resolving all technical issues”. 


Gazprom’s blustering tone reflects little more than the twilight of Gazprom’s heavy-handed pipeline politics; the fact is that the Russian energy giant’s grip on prices and distribution is weakening, writes Alan Riley.

Other academics and analysts have a different stance on the relation with Russia. Europe should, in the short-term, try to limit the damage caused by the current application of Russian grand strategy; in the long-term, it should find out how to influence it, to its benefit, reads one analysis.

Still, the Council of the EU prolonged the application of EU restrictive measures against Russia. It extended asset freeze and travel bans for 150 person and 37 entities accused to interfere with Ukraine’s sovereignty. 


Ukraine said that it will held negotiation with Europe and Russia to discuss the summer package on March 20, adding that the country should store as much gas as possible over the next months to get ready for the coming winter.

Due to the need to find financial resources to pay back the forthcoming International Monetary Fund’s $17 billion loan, Ukraine could soon commit hydrocarbon hara-kiri. First, there is a royalty, which taxes output sales, not just profits.  Second, the rates are 70% for state-owned production companies; 55% on wells under 5,000 meters depth, and 35% on wells over 5,000 meters. 

Meanwhile, Naftogaz has selected Ryder Scott Company, LP  to undertake an independent analysis of the company’s hydrocarbon reserves and prospective resources.

Royal Dutch Shell and Naftogaz’ subsidiary are withdrawing from their campaign in Kharkiv region. They agreed that the follow-up project is not economically viable. They agreed solution to the terminate the contract.

Russian billionaires are on the move to maintain and increase their clout in Europe. Russia’s Stroytransgaz, controlled by Gennady Timchenko, said that the company will start building a gas pipeline in Macedonia.


The Bulgarian Government reportedly launched a tender for the offshore section of the South Stream project. Sofia wants to better understand some financial implications of the project

But Energy Minister Temenuzhka Petkova said that there are no construction activities going on in the country to build the South Stream gas pipeline. In this sense, the Russian saga continues also in Sofia

Hopes for a renewed Nabucco-West appear to have been resurrected by the Prime Minister of Bulgaria earlier this month. A revival of Nabucco-West is not only focused on increasing Azerbaijan’s gas export capacity. Turkmen and even Russian gas could be added to the flow of Azeri natural gas to Europe.


Germany will increase its influence in Europe’s energy sector over the next years, as a mix of external diplomatic activities and strong political cooperation with the industry are hinting at a growing role of Berlin in South-East Europe. 

For instance, Wintershall is intentioned to step up cooperation opportunities with United Arab Emirates, betting on the natural gas and condensate field Shuwaihat. It is trying to increase its presence in the Gulf region.

Germany’s Foreign Minister Frank-Walter Steinmeier visited Romania and Bulgaria to also strengthen ties there. "The number of German companies seeking to invest here can continue to grow", Bulgaria’s Prime Minister Boyko Borissov commented

At the same time, Spain and Portugal may no longer be an energy island in Europe. Officials of the two Iberian countries met with a French delegation and the European Commission President Jean-Claude Juncker. The parts signed a series of commitments to step up electricity and gas interconnections. 

Meanwhile, in the UK, IGas signed a Farm Out and Purchase Agreement (FOPA) with INEOS on seven shale licences in England and Scotland for £30 million cash. INEOS will also fund a £138 million programme to appraise and develop the sites. 

In West Sussex, Celtique Energie Weald registered several setbacks and decided not to lodge an appeal against the refusal of planning permission by South Downs National Park Authority for exploration activities in Linchmere, West Sussex. The company also withdraw the appeal against West Sussex County Council’s decision not to grant planning permission to explore for shale hydrocarbons in Wisborough Green.

Finally, ENI announced on Friday a 17% decrease in investments over the next four years, and a simultaneous 13% CAPEX cut in the Upstream segment. It is the first oil major to take such a drastic step.   


Chevron Corporation confirmed its commitment to LNG and deepwater developments during the company’s annual security meeting in New YorkThe company said that the fundamental of the oil and gas business remain attractive, adding it expects a 20% production growth by 2017. 

In this sense, it is only a matter of time before the United States will be influential in global markets. Should oil prices begin to rise, the linkage between LNG and oil prices in Asia will make the United States more competitive. 

Also Russia gave proof of vitality in the LNG business. Russian Yamal LNG and Belgian Fluxys LNG signed a 20-year contract for transhipment of up to 8 million tons of LNG per year at the LNG-terminal in the Belgian port of Zeebrugge. The deal supports year-round LNG deliveries from the Yamal Peninsula in the Arctic part of Russia to markets in Asia and the Pacific Ocean. 


BP announced its second gas discovery in Egypt, saying that prospects for the region are getting better. The company estimates the potential of its concession in the East Nile Delta at over 5 tcf

BP also announced a major gas discovery and confirmed a new $12 billion project in the North African country.

Similarly, on Saturday, ENI signed a $5 billion contract for projects over the next 4 years, aimed at developing 200 million barrels of oil and 1.3 TCF of gas. 


Greek Minister for Energy Panayiotis Lafazanis reiterated the engrained positions of the European Left with regards to energy policy - it prioritises gas’ social aspect over commercial interests. He confirmed the Greek government's support for the Trans Adriatic Pipeline (TAP) and the Interconnector Greece-Bulgaria (IGB). 

Lafazanis also expressed his governments opposition to the new initiative by the EU's Commission regarding the proposed Energy Union clauses that will oblige member states to submit for approval all of their bilateral energy agreements. Athens does not want EU’s intervention in its relations with Russia, Azerbaijan. 


Total to extend its presence in Cyprus

Lebanon: the next eastern Mediterranean gas producer?

Poland could take a page from Norway’s energy policy as it develops its shale gas industry 

Norway February gas production above expectations

Whatever happened to the great European fracking boom?

Verisk Analytics buys Wood Mackenzie for $2.8 billion

On the Energy Union package

Sergio Matalucci 

Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci