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Gazprom continues to deny Itera access for Beregovoye

13 Feb 2004 00:00:00

Russian gas trader/producer Itera has still not managed to move any gas from its Beregovoye field in the Pur region of the Yamal-Nenetsk which was supposed to start production at the end of last year. Full production is likely to reach 11 billion cubic metres/year (Gm3/yr). The problem has been getting access to the Zapolyarnoye-Urengoy pipeline running near Beregovoye to take gas to the main trunkline at Urengoy. Last year Gazprom maintained that it could not grant access to Itera for this stretch of the line because they needed the capacity for increased production coming out of Zapolyarnoye.

Since last autumn Gazprom have been saying that Itera should build its own line from Beregovoye to Urengoy if it wants to move its own gas. Itera however said that Gazprom had made provision to take the gas in its annual gas balance for 2003, implying that the real reason behind Gazprom’s access refusal was not a lack of capacity. Given that Zapolyarnoye is currently producing 70 Gm3 which should soon plateau at 100 Gm3/yr, Itera may have had a point in doubting Gazprom’s reasons for refusing access to 2 Gm3 gas at the end of 2003.

Itera has confirmed to EGM that it has taken a 5 year $200 million credit from the biggest Russian bank Sberbank but the company would not comment on Russian press reports that the guarantee for the loan was a 51% stake in Sibneft, the production company at Beregovoye in which Itera has 72%. Gas reserves at Beregovoye are 325 Gm3. Itera told EGM that the credit was taken out to principally to finance general development at Beregovoye, including drilling, and not just to finance the building of a new pipeline to carry the gas to Urengoy, as was reported in Russia.

Regarding the construction of a new pipeline from Beregovoye, Itera said while it was willing to develop investment in gas infrastructure to supply consumers it wanted to see some profit from its activities at Beregovoye and not just an increase in costs. Looking at Itera’s problems at Beregovoye it should not be forgotten that Sibneft was one of the production assets Gazprom let go during the Vyachirev era. There are now rumours in Russia that Gazprom would not be averse to retrieving those assets and that is the reason for its putting pressure on Itera. In any case even if Itera spent money on a pipeline to Urengoy there would be no guarantee that Gazprom would allow access into the trunklines coming out of Urengoy.

Gazprom’s distancing itself from Itera is having a significant effect on production and Itera’s gas sales. Itera’s production in 2003 came only to 15 Gm3 following projected volumes of up to 30 Gm3. The main reason behind the drop was Itera’s sale of 32% its production affiliate Purgaz to Gazprom during 2002. Purgaz is the production company at the Gubkinsky field in the Yamal- Nenetsk - Itera’s stake in Purgaz has now been reduced to 49% while Gazprom owns the rest. For 2004 Itera wants to produce 19 Gm3 including 5.8 Gm3 from Beregovoye - if the problem of pipeline access is solved.

The removal of Itera’s operatorship for Turkmen gas exports into the Ukraine last year halved the company’s total gas sales. In 2003 Itera sold 31.4 Gm3 compared with 62.4 Gm3 in 2002. Russian sales remained fairly steady and were prinicipally the Sverdlovsk area. What is interesting is that Itera is still allowed by Gazprom to retain its role as a supplier of problem markets where Gazprom has experienced payment or other difficulties. At the moment Itera is supplying gas to Belarus on a very short –term basis (516 million cu me for this week) because Gazprom has still not reinstated supply due to disagreements over price and other matters.

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