Russia, Hyundai

Interview with RAO Energy System of East’s head, Sergei Tolstoguzov: “Market on the Far East region is impossible for reasons beyond control”

Against the background of a major intensification of projects on the development of the Far East region, RAO Energy System of East, which controls the isolated power system of the region, has offered the Government to abandon tariff regulation in the local energy sector and to switch to a new mechanism that takes into account the return on investments for 20 years. For a while, a number of structures of the holding company has not enough tariff revenues even to maintain their obsolete equipment and the repayment of their debt. But general director of RAO Energy System of East Sergei Tolstoguzov sees interest in the company from Asian investors, believes in the prospects of exports to Japan and doesn’t want to get rid of even the problematic network assets.
Q- the RAO Energy System of East still works in a lack of normal market conditions, these were canceled for the rest of Russia seven years ago. Do tariff the mechanisms of the return on investment into the construction of power generation and networks in such conditions exist?
A- With the reform of the electric power industry, most energy companies received the opportunity to use market instruments; almost the entire power generation sector was divided among private and public companies. But the Far East is a separate area, where market mechanisms don’t work - this is one big no-price zone with isolated energy systems, in which there is no differentiation by type of business. There are many reasons: the topology of networks, territorial restrictions, a lack of the development of energy sources, the sparse population. The Far East region occupies a third of the territory of Russia, but it has only 5% of the population. That’s why the full tariff regulation is maintained here and, as a consequence, there is a problem of the lack of mechanisms for the return on investment.
This seriously complicates the task of upgrading and the construction of new energy facilities. Today, we should include the profit in tariffs, but it is minimal and we can’t increase the prices sharply - the consumer can’t pay more. We have developed a number of proposals, which are based on long-term consolidation of the tariff. The FTS is now considering the introduction of regulation for three to five years. But the best period for us would be 20 years – this is the only way how we will be able to disclose adequate conditions of the return on investment to potential investors, a major station can’t be covered in five years. If we talk about specific tools, we would like to see RAB-regulation in the networks, and introduction of mechanisms that guarantee the return on capital and profit in generation. We actively work on all of these mechanisms, which will allow us to provide the return on investment in the energy sector of the Far East in the future, and plan to co-ordinate them with head of the Board of Directors (head of RusHydro, Evgeny Dod), the relevant Ministries and the presidential envoy to the Far Eastern Federal District Yuri Trutnev to submit them to the Government later.

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Rosneft and Exxon Mobil deliver the unique platform Berkut to Sakhalin’s shelf

Rosneft and Exxon Mobil in the consortium Exxon Neftegaz Limited have completed the transport operation on the delivery of a unique marine drilling platform Berkut with the largest upper part in the world to the Arkutun-Dagi field of the Sakhalin-1 project on the northeastern shelf of Sakhalin, the company’s press centre reports. In the coming days, the assembly and installation works will be completed. The topside was towed for about 2800 km from a shipyard in Korea without a single incident.
Progress on the installation of the platform’s equipment was inspected by the President, Chairman of the Rosneft’s Board, Igor Sechin and the Sakhalin Governor Alexander Khoroshavin on Monday.

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Industrial extraction start at Arkutun-Dagi is expected in December 2014

The companies-participants of “Sakhalin-1” are about to start drilling at the deposit Arkutun-Dagi within the framework of the project in August and produce the first oil in December 2014. The press-service of the Sakhalin region states summing up the results of the meeting of the regional governor. A.Khoroshavin with the federal authorities and the management of the operator Exxon Neftegas Ltd.
According to the governor of the region, start-up operations at the topside of the new drilling platform are almost finished. It will be delivered to the Arkutun-Dagi deposit from the republic of Korea.
The governor also stated that the production peak at Arkutun-Dagi will make up 4.5 million tons of oil. There was produced more than 7 million tons of oil and about 10 billion cubic meters of gas at “Sakhalin-1” in 2013.

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Production at Arkutun-Dagi within Sakhalin-1 may be started in December

Rosneft and American ExxonMobil may start drilling at the Arkutun-Dagi field within the Sakhalin-1 project in August and to extract the first oil by December, the press release of the Sakhalin region’s administration reports.
The drilling will be carried out from the platform Berkut. Currently, pre-commissioning activities at the upper construction of the new drilling platform is being completed at a shipyard in Korea; then it will be delivered to the Arkutun-Dagi field.

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Gazprom accepts the third liquefied gas tanker with dead weight in the amount of 155 thousand cubic meters for operation

Gazprom Marketing & Trading (GMT), the British subsidiary of Gazprom, has accepted a new liquefied gas tanker “Reka Lena”. The vessel was built by the company Hyundai Heavy Industries at the shipyard in Ulsan (South Korea), GMT reported today.

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“Gazprom” is approved with LNG carrier documentation

Russian Marine Registry of Shipping has completed an approval of the engineering documentations of liquefied natural gas tanker, which will become a basis of gas carrier fleet within the framework of the meeting of future requirements of the “Gazprom” Group. The press-service of the Maritime Registrar stated. Read more »

Eni postpones the launch of the Arctic project

One of the first oil deposits of the Arctic, being prepared for putting into industrial operation, will start working not earlier than Q1 2014, the company-operator Eni said initially it was planned to start the oil production at the deposit in Q4 2013.

The delay is due to the fact that the production platform is not ready, it is being constructed at the dry dock of Hyundai Heavy Industries, Eni reports.

The project has faced the difficulties, the company assumes.

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Gazprom plans to start gas supplies to South Korea in 2017

In 2008 Li Men Bak was entitled a Doctor of Science of the St. Petersburg State University. D.Medvedev has also graduated from this University.
Gas supplies via the pipeline from Russia to Korea may start in 2017, the head of Gazprom A.Miller said on Wednesday on the results of the negotiations of the Presidents of Russia and South Korea D.Medvedev and Li Men Bak.

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