ODAC News

Sunday 03 June

The Oil Depletion Analysis Centre

1/   Giant Oil Fields - The Highway to Oil: Giant Oil Fields and their Importance for Future Oil Production      (ODAC, Sun 27 May)

2a/ Saudi Electricity says has Aramco support    (Arabian Business, Thu 31 May)

2b/ Power outage hits Qatar       (Arabian Business, Thu 31 May)

2c/ Kuwait must spend $27bn on power              (Arabian Business, Tue 29 May)

3/   Is the story of ‘massive untapped oil reserves’ fact or fictions? [Iraqi oil reserves]            (uruknet.info, Wed 30 May)

4/   Report: China finds major gas field in Sichuan (Spero News, Mon 28 May)

5/   KNOC confirms huge oil field off Russia's Kamchatka peninsula           (Platts, Thu 31 May)

6/   Gas Market Adopts Limits    (Kommersant, Thu 31 May)

7a/ Russia in talks to build China gas pipeline     (Reuters AlterNet, Thu 31 May)

7b/ Pipeline to China Would Give Turkmenistan Options   (Institute for War and Peace, Fri 11 May)

7c/ Natural Gas: Uzbekistan Tilts to China          (Business Week [Transitions Online], Tue 29 May)

8a/ Chile Natural Gas Shortage May Worsen in 2007, GasAtacama Says  (Bloomberg, Tue 29 May)

8b/ Argentina petchems skirt gas shortages with costlier contracts           (Platts, Thu 31 May)

9a/ Russian regulators postpone decision on BP's license for Kovykta gas field      (IHT, Fri 01 Jun)

9b/ Kovykta Project       (TNK-BP, 2007)

9c/ Oil groups can still gain from a new era in Russia       (Financial Times, Thu 31 May)

10/ Rate rises and high lending take toll on property market [UK]  (The Independent, Fri 01 Jun)

**********************************************************************************************************

1/         Giant Oil Fields - The Highway to Oil: Giant Oil Fields and their Importance for Future Oil Production   (ODAC, Sun 27 May)

http://www.odac-info.org/            Bulletin Board

Article: The study of giant oil fields began with Matthew Simmons' paper The World's Giant Oilfields (PDF 260 Kb) published in 2002. A more detailed analysis was therefore long overdue. At the end of March, 2007, Swede Fredrik Robelius defended his PhD, Giant Oil Fields - The Highway to Oil: Giant Oil Fields and their Importance for Future Oil Production, with Robert Hirsch. The sections likely to be of most interest to those already familiar with Peak Oil are chapter 6, Giant Oil Fields - The Important Parameter, and Chapter 7, Contributions to Future Oil Production, in which Robelius reviews the size and location of giant oil fields, and future production from them, respectively. These two chapters are a mine of useful information. In Peak Oil articles, the world's top four oil fields are often quoted as Ghawar (Saudi Arabia), Burgan (Kuwait), Cantarell (Mexico) and Daqing (China). In Table 6.1, Ghawar and Burgan are ranked first and second, Cantarell is twelfth and Daqing sixteenth.

According to a review in Energy Bulletin: "In all scenarios, peak oil occurs at about the same time as the giant fields peak. The worst-case scenario sees a peak in 2008 and the best-case scenario, following a 1.4 % demand growth, peaks in 2018." ASPO Sweden notes some of Hirsch's concluding remarks: "In the final remarks Dr Hirsch concluded that the peak oil debate now reached a new level. The fact that the forecast openly can be studied in detail and that limits are given it’s now up to CERA and other to explain in details why they end up in other forecasts. If not, the forecast from Uppsala Hydrocarbon Depletion Study Group is the on that the world should use for future planning." Robelius' work was reported by Fox News, Study: 'Peak Oil' Will Be Reached by 2018.

**********************************************************************************************************

2a/        Saudi Electricity says has Aramco support    (Arabian Business, Thu 31 May)

http://www.arabianbusiness.com/index.php?option=com_content&view=article&id=13575:saudi-electricity-says-has-aramco-support&Itemid=0

Comment:    This article forwarded with comment from an ODAC contact, see Feedback below. Arabian Business reported three weeks ago, Saudi to boost gas reserves by 40%, that “Saudi Arabia is stepping up exploration to boost its natural gas reserves by around 40% in the next 10 years as it prepares to meet rising domestic demand”. This article makes it clear why: “… Aramco needed to invest in more gas exploration and fuel pipelines to avoid power outages”. It is somewhat ironic that Saudi Arabia and the UAE are both desperate for more natural gas, with Iran and Qatar, number two and three respectively for natural gas reserves, on their doorstep.

Feedback:    From an ODAC contact in the Middle East:

“Saudi Electricity said on Wednesday it was getting the support it required from Aramco, in response to a report that the utility needed the oil firm's help to avoid a repetition of last year's power cuts.”

Think this is important as summer power cuts in this part of the world hurt as temperatures break 50C.

A number of states here (Arabian Peninsula) burn "Light Sweet Crude" directly in "Peaking" power plants to meet massive summer air-conditioning demand which has been reported as high as 82% electricity consumption in summer. (Why virtually no insulation and the continuous mushrooming of "Glass Clad, towers or Solar ovens in the Sky" as I refer to them.)

As I mentioned before, I believe Saudi and other AGCC [AGCC = GCC] states will have to reduce exports over summer to meet local demand - which this year coincides with record low gasoline inventory levels in USA [and Europe].

I expect "Fireworks Ahead" this summer, especially if any hurricanes hit Gulf of Mexico production and refining.

Article:    Saudi Electricity said on Wednesday it was getting the support it required from Aramco, in response to a report that the utility needed the oil firm's help to avoid a repetition of last year's power cuts.

A document, authored by a Saudi Electricity technical committee and obtained by Reuters, said state-owned Aramco needed to invest in more gas exploration and fuel pipelines to avoid power outages.

The document said the transport of fuel on trucks from Aramco's refineries to power plants during the summer peak demand season was one of the biggest challenges facing the struggling utility firm.

... The state-run Saudi Electricity, the Gulf's largest utility by market value, had to ration power last summer to firms in the Riyadh and Eastern provinces, the kingdom's main industrial hubs.

2b/        Power outage hits Qatar              (Arabian Business, Thu 31 May)

http://www.arabianbusiness.com/index.php?option=com_content&view=article&id=13621

Feedback:    From an ODAC contact in the Middle East:

"Much of Qatar was forced to cope with sweltering heat and humidity yesterday when a problems with a number of the state’s power plants left residents without electricity for hours.....It is thought low pressure of gas supplied to some turbines was the cause of the problem."

Summer Air-Con demand due to recent construction boom will stretch power systems throughout gulf to the limit. Hottest and most humid months are yet to come - its only late May.

Article:    Much of Qatar was forced to cope with sweltering heat and humidity yesterday when a problems with a number of the state’s power plants left residents without electricity for hours.

Problems with the power plants belonging to Ras Laffan Power Company, Qatar Power Company and Qatar Electricity and Water Company (Kahraba) triggered a power outage that lasted for up to eight hours in some parts the country, reported the Qatar Peninsula.

… It is thought low pressure of gas supplied to some turbines was the cause of the problem.

Electricity was restored in phases starting from 1.54pm, Kahramaa said, and by 3.31pm supplies were back to normal, except for in a few areas.

2c/        Kuwait must spend $27bn on power                (Arabian Business, Tue 29 May)

http://www.arabianbusiness.com/index.php?option=com_content&view=article&id=13386:kuwait-must-spend-27bn-on-power&Itemid=90

Comment:    “… another summer of power cuts and water shortages”. The article also states: “The government said in March it was considering an import terminal for liquefied natural gas from Iraq and Iran.” Given that Iraq and Iran are on Kuwait’s doorstep, any gas is likely to be imported by pipe, not ship (LNG). But first Kuwait would have to wait until either country started exporting gas, whenever that is, and then join the end of the queue.

Article: Kuwait needs to spend $27 billion on water and power projects over the next eight years to meet growing demand, the state’s electricity and water minister revealed yesterday.

Speaking during a special National Assembly debate on power consumption, Mohammad Al-Olaim said the country’s economic growth, coupled with wasteful consumption, was causing demand to outstrip capacity.

The minister’s comments come as Kuwait prepares for another summer of electricity cuts and water shortages as the use of air conditioning reaches its peak.

Al-Olaim said a two-and-a-half month programme of power cuts would begin in June, lasting for around one hour a day, especially during peak hours of consumption.

However, the outages could be for longer periods of time if the state experiences any problems with its six water and electricity plants, he said.

The power cuts will likely cause water shortages as well, as five of power plants are used for desalination...

**********************************************************************************************************

3/         Is the story of ‘massive untapped oil reserves’ fact or fictions? [Iraqi oil reserves]    (uruknet.info, Wed 30 May)

http://uruknet.info/?p=m33277&s1=h1

Comment:    Another article that puts doubt on the IHS report that there might be 100B barrels of oil to find in the Western Desert of Iraq. (The previous was Petroleum Resources Of The Western Desert of Iraq)

Article:    ... Iraq Petroleum Company (IPC) carried out seismic surveys of the province and dug numerous oil wells between 1955 and 1[9]61.

The National oil Company made its own surveys which continued for over two decades and only came to a halt after the imposition of punitive U.N. trade sanctions in 1990.

During the same period major oil firms like ExxonMobil, Japex (Japan Petroleum Exploration), Ascom, Petronas and Repsol made extensive surveys through joint agreements signed with the Ministry of Oil.

The reports of all these surveys, which are part of the Oil Ministry’s archives, were discouraging and could not come up with categorical results that the western desert, that is the area falling within the provincial borders of Anbar, holds substantial oil or gas reserves.

That conclusion was substantiated by an article in MEES, the authoritative Middle East Economic Survey, in a report about the results of 2004 surveys by American geological groups which said the area’s oil reserves run between half a billion and one billion and a half of proven reserves.

Brushing all these findings aside, the U.S. energy analysts I.H.S., for reasons yet to be uncovered, reveals surprising and shocking figures of estimates totaling 100 billion barrels.

Who are we to believe? Is it logical and sane to doubt the surveys by IPC, the National Oil Company, giant foreign oil firms and recent surveys by U.S. groups and believe the I.H.S?...

**********************************************************************************************************

4/         Report: China finds major gas field in Sichuan         (Spero News, Mon 28 May)

http://www.speroforum.com/site/article.asp?idarticle=9681

Comment:    If this new field in China contained 3.8 trillion cubic meters of extractable natural gas then it would be roughly the same size as Russia’s Shtokman, if not bigger. But it doesn’t. “The article said the field includes proven exploitable reserves of newly-discovered 244 billion cubic meters, as well as the already-announced 356 billion cubic meters in Puguang gas field.” 244 bcm is still pretty big, the equivalent of about 2.5 years UK gas consumption.

Article:    A total of 3.8 trillion cubic meters of natural gas deposits have been found in the western part of the Sichuan Basin, said officials in Dazhou, according to China Daily

A major gas field has been discovered in Southwest China's Sichuan Province, it was announced over the weekend, according to China Daily.

Telephone calls to verify the story to Dazhou, as well as to China National Petroleum Corporation and Sinopec Corporation went unanswered.

According to China Daily, citing Dazhoua officials, a total of 3.8 trillion cubic meters of natural gas deposits have been found in the western part of the Sichuan Basin. The article said the field includes proven exploitable reserves of newly-discovered 244 billion cubic meters, as well as the already-announced 356 billion cubic meters in Puguang gas field.

Till the latest discovery, amounting to a total of 600 billion cubic meters of exploitable reserves, the largest gas field was in Sulige, Inner Mongolia Autonomous Region, said Daily China.

China Daily said that just last Wednesday, a large gas field with reserves of nearly 30 billion cubic meters was discovered in Karamay, the Xinjiang Uygur Autonomous Region.

China had about 2.4 trillion cubic meters of economically-viable natural gas reserves at the end of 2006, the Ministry of Land and Resources said in March, according to China Daily, adding that "According to the energy development plan released by the National Development and Reform Commission - the country's top economic planner - China plans to nearly double its annual natural gas production from 49.3 billion cubic meters in 2005 to 92 billion cubic meters by 2010."

China's natural gas consumption is projected to double to 100 billion cubic meters by 2010 from the 50 billion cubic meters it registered in 2005.

**********************************************************************************************************

5/         KNOC confirms huge oil field off Russia's Kamchatka peninsula           (Platts, Thu 31 May)

http://www.platts.com/Oil/News/8077001.xml?p=Oil/News&sub=Oil?src=energybulletin

Comment:    One billion barrel fields are rare these days, never mind 10 billion barrels. On the other hand, this will probably take this year’s total amount of oil discovered to about 20 billion barrels, while we consume over 30 billion.

Article:    A South Korean consortium led by state-run Korea National Oil Corp. has confirmed its field in Russia's Kamchatka has an estimated 10 billion barrels of crude reserves, company officials said Thursday.

The consortium has a 40% stake in the field off the Kamchatka peninsula, while the remaining 60% interest is controlled by Russia's state-run oil company Rosneft.

"The estimated oil reserves are much bigger than previously expected," a KNOC official said. The field was previously estimated to hold up to 3.7 billion barrels of crude.

The size of the deposit was confirmed by an internationally accredited petroleum exploration company, the official said.

KNOC controls a 50% stake in the South Korean consortium that also includes state-run Korea Gas Corp. with a 10% interest, GS-Caltex Corp with a 10% stake, SK Corp. with a 10% stake and Daewoo International Corp. with a 10% interest. Kumho Petrochemical and Hyundai Corp. has a 5% stake, respectively.

KNOC signed a memorandum of understanding on joint development of the block in Kamchatka in September 2004 when President Roh Moo-Hyun made a state visit to Russia. In February 2005, KNOC signed an interim finance agreement for the project, and the consortium acquired the stake ten months later.

KNOC is spearheading upstream oil projects abroad for South Korea. The country imports all of its crude oil requirements overseas, with more than 80% of the supplies comes from the Middle East. The state oil company has designated Kamchatka as the upstream oil development hub in Northeast Asia.

The South Korean government has provided benefits to local companies involved upstream oil projects in countries other than the Middle East, in an effort to diversify oil supply sources.

**********************************************************************************************************

6/         Gas Market Adopts Limits            (Kommersant, Thu 31 May)

http://www.kommersant.com/p770126/Gazrom_export_cartel/

Comment:    This has been well-reported in the Russian media, but not in the western media. Gazprom is cutting back gas production this year due to the very warm winter just past, it says. Some commentators are sceptical. Gazprom’s reasoning is that its European customers are well stocked so will require less next winter.

Article:    Gazprom and independent natural gas producers decided yesterday to limit gas production limits proportionately due to the unseasonably warm weather. Gazprom will reduce its production from 561 billion cu. m. to 557 cu. m. for the year. LUKOIL president Vagit Alekperov said that independent producers will reduce production by no more than 8 percent of their annual output before the third quarter of the year. Executives from TNK-BP, Intera and NOVATEK were also present at the decisive meeting.

Deputy director of the Gazprom information policy department Sergey Kupriyanov said that the reductions were related to the weather and reduced usage of gas from overfilled underground reservoirs. Unofficially, Gazprom sources say that they are developing the mechanisms of a “gas OPEC.”

... In any case, the volume of gas sales in Russia will not be reduced. “Growth of consumption because of economic growth and new electricity generating plants may exceed the reduction of gas usage for heating,” noted Mikhail Korchemkin of East European Gas Analysis...

**********************************************************************************************************

7a/        Russia in talks to build China gas pipeline     (Reuters AlterNet, Thu 31 May)

http://www.alertnet.org/thenews/newsdesk/L31232208.htm

Comment:    This time a year ago, Russia and China were in talks about two gas pipelines, and at least one was definite, so the Russians said. One year later and even one is looking iffy, and more distant even if it does go ahead. One problem Russia has is that China has a track record of paying low prices for its gas imports. It is more likely to sell to Europe where it is guaranteed top prices.

Article: Russia is in talks to build a gas pipeline to China which should be partially completed in the next five to six years and is interested in investing further in the country's energy sector, Russia's energy minister said on Thursday.

"We will go about developing infrastructure for supplies of natural gas and crude oil to China," Viktor Khristenko, Russian minister of industry and energy, told Reuters in an interview.

... Khristenko said talks were underway and that progress on at least one pipeline was expected in the next five to six years.

"Volumes, capacities and timeframe for such gas transport distribution systems are being discussed," he said.

"That's midterm. We're not talking about 20 years from now. Rather five to six years."...

7b/        Pipeline to China Would Give Turkmenistan Options          (Institute for War and Peace, Fri 11 May)

http://www.iwpr.net/?p=btm&s=b&o=335490&apc_state=henh

Comment:    The prospect for the new Nabucco gas pipeline will get grimmer if Turkmenistan exports 30 bcm of gas per year to China.

Article:    Constructing a gas pipeline to China will help Turkmenistan diversify its export options and place it in a stronger position to dictate it sells its gas at, NBCentralAsia analysts say.

On May 7, Kazakstan’s energy and mineral resources minister, Baktykoja Izmukhambetov, announced that his country is both interested in building the Turkmen-Chinese pipeline, which would go through its territory, and the technology to do so.

A precise route is still being discussed, but according to current plans, it will run through Uzbekistan and then Kazakstan, supplying China with around 30 billion cubic metres of gas each year.

At the beginning of May, China reached agreement with Uzbekistan on building the section of the pipeline through that country.

Turkmenistan and Uzbekistan are the largest exporters of gas in Central Asia. The Turkmen extracts over 65 billion cu m of gas a year, 40 billion of which is exported via a pipeline controlled by the Russian gas giant Gazprom. Uzbekistan produces around 60 billion cu m, exporting 10 to Russia.

The debate on laying a gas route to China coincided with talks between the Turkmen, Russian and Kazak presidents at an energy summit in Ashgabat this week, at which the top agenda item was a planned pipeline route from Turkmenistan via Kazakstan’s Caspian coastline to Russia.

Analysts say that if the Chinese pipeline project goes ahead, it will consolidate Turkmenistan’s position and give it the confidence to be firmer about insisting on gas prices when it talks to Russia.

... According to some estimates, Turkmenistan has gas reserves of nine trillion cu m.

Rovshan Ibrahimov, another expert on Caspian energy, acknowledges that the Chinese pipeline might mean Turkmenistan loses the option of selling gas to Europe at a large profit in the future. At the same time, he doubts that Chinese purchase will pose a serious threat to long-term Turkmen-Russian contracts. Turkmenistan is contracted to increase sales to Russia from 50 to 90 billion cu m a year by 2028.

7c/        Natural Gas: Uzbekistan Tilts to China            (Business Week [Transitions Online], Tue 29 May)

http://www.businessweek.com/globalbiz/content/may2007/gb20070529_845977.htm?chan=globalbiz_europe+index+page_top+stories

Comment:    The prospect for the new Nabucco gas pipeline will get grimmer if Uzbekistan exports 30 bcm of gas per year to China. According to this article, both Turkmenistan and Uzbekistan are negotiating to send 30 bcm of gas to China, via pipeline.

Article: Uzbekistan's fresh agreement with the Chinese to build a 530-kilometer natural gas pipeline to China shows that the Central Asian nation is trying to break Russia's dominance over natural gas exports and boost revenue.

The pipeline is planned to have a capacity of 30 billion cubic meters a year, half of the nation's current annual production. Sitting on huge reserves of natural gas, the country annually produces more than 60 billion cubic meters of gas, nearly a quarter of which is exported to Russia, Kazakhstan, Kyrgyzstan, and Tajikistan. Nine and a half billion cubic meters was exported to Russia in 2006 and even more is expected this year. Most of the remainder of the nation's natural gas production is consumed domestically.

... Uzbekistan and China still must agree on a 25-year pricing formula and repayment schedule that must be approved by the two governments. Also uncertain is whether China would commit to one or two pipelines: Beijing has also signed a deal with Turkmenistan that provides for China to buy 30 billion cubic meters of Turkmen gas each year for 30 years, starting in 2009, through a pipeline that would cross Uzbekistan.

**********************************************************************************************************

8a/        Chile Natural Gas Shortage May Worsen in 2007, GasAtacama Says     (Bloomberg, Tue 29 May)

http://www.bloomberg.com/apps/news?pid=20601086&sid=abkxQcO0a5RM&refer=news

Comment: Chile imports gas from Argentina, which is short on gas itself, so Chile gets less, in fact none at all as from 28 May apparently.  “The company and Suez SA, a French energy producer, late last year announced that they were considering a plan to build a $350 million liquefied natural gas plant in northern Chile.” – a bit late.

Article: GasAtacama SA, a Chilean utility and gas pipeline company that supplies electricity to the world's biggest copper miners, expects increased cuts of natural gas from neighboring Argentina this year.

The company now receives about one-tenth of the natural gas needed to run its power plants, and switching to more expensive diesel fuel this year may lead to losses of as much as $300 million, Chief Executive Officer Rudolf Araneda said.

Chile's natural gas shortages began in 2004 as Argentina, which supplies almost all of the country's gas, started reducing shipments to meet domestic demand. Argentina yesterday halted gas exports, forcing Chile to use backup fuel stored in a pipeline between the two countries to provide heating and cooking fuel to Chilean homes.

``We are confronting a structural change, and it means there will be very little gas for Chile for the rest of the year,'' Araneda said in a phone interview yesterday from Santiago. ``Next year, it will probably be even worse.'' 

... The company and Suez SA, a French energy producer, late last year announced that they were considering a plan to build a $350 million liquefied natural gas plant in northern Chile.

8b/        Argentina petchems skirt gas shortages with costlier contracts (Platts, Thu 31 May)

http://www.platts.com/Petrochemicals/News/6389938.xml?p=Petrochemicals/News&sub=Petrochemicals?src=energybulletin

Comment:    The gas shortages, from the Argentinean point of view. Falling production, under-investment.

Article: Argentina's petrochemical producers this week largely averted a nationwide shortage of natural gas, a main feedstock for polymers and other

products, thanks to higher-priced supply contracts, an industry insider said Thursday.

There is a shortage of gas in Argentina, so those that don't pay more for gas suffer cuts in supply, Reinaldo Marguliz, president of formaldehyde, uric resins and urea maker Proarmet, told Platts in a telephone interview.

Temperatures fell as low as 0 degrees C (32 degrees F) in Buenos Aires this week, driving up heating demand in a metropolitan area that is home to a third of the 36 million people and much of its commerce and industry. This forced the government to order restrictions in gas deliveries to export markets, where producers sell an  average of 20 million cu m/d, mostly to Chile. The government, too, restricted deliveries to factories, power plants and vehicles that run on compressed gas. By law, authorities must ensure gas supply to homes and commerce, which account for up to a quarter of the nation's 125 million cu m/d average demand at times of peak heating use.

The country is running a gas deficit for the fourth successive winter (June to August) because of serious under-investment to boost production and expand pipeline capacity. With the economy in its fifth successive year of 8% expansion, demand for gas, which provides half the nation's energy, is surging.

Yet production is falling. It dropped 2.2% to 135.4 million cu m/d in the first quarter of 2007 from 138.4 million cu m/d a year earlier, according to the Argentine Oil and Gas Institute, an industry group. Gas pipeline capacity is only 135 million cu m/d, limiting the possibilities of getting more production to market.

The higher-priced contracts, however, are not readily accessible to all companies in the petrochemical industry and related businesses.

**********************************************************************************************************

9a/        Russian regulators postpone decision on BP's license for Kovykta gas field (IHT, Fri 01 Jun)

http://www.iht.com/articles/2007/06/01/business/bp.php

Comment:    The Russian regulators are expected to revoke TNK-BP’s (a joint venture between Russian group TNK, and BP) license for the huge Kovykta gas field in Siberia, in other words, transfer it to Gazprom. They were supposed to make the decision on Friday, but postponed it for two weeks, until after the G8 summit.

Article:    A Russian committee delayed a decision Friday on whether to revoke the license for a major natural gas field held by a BP joint venture, TNK-BP, for two weeks. The delay should allow President Vladimir Putin to sidestep potentially embarrassing criticism at the upcoming Group of 8 summit meeting and a high-profile economic conference.

Draft minutes for the meeting reportedly included a recommendation to cancel the license. That did not bode well for BP, a company that bet heavily on Russia four years ago when it set up the venture in what was the largest foreign investment in Russia at the time.

... Russia is scheduled to host an economic forum next weekend intended to highlight the investment case for the country as an emerging market - a theme that could be undermined by stripping the big BP license. The field is estimated to hold the equivalent of enough natural gas to meet the entire world's demand for one year…

9b/        Kovykta Project      (TNK-BP, 2007)

http://www.tnk-bp.com/operations/exploration-production/projects/kovykta/

Comment:    Further info on the Kovykta gas field from the TNK-BP website.

9c/        Oil groups can still gain from a new era in Russia    (Financial Times, Thu 31 May)

http://www.ft.com/cms/s/ecb7d296-0f91-11dc-a66f-000b5df10621,_i_nbePage=ceecf842-3b01-11da-a2fe-00000e2511c8,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2Fecb7d296-0f91-11dc-a66f-000b5df10621%2C_i_nbePage%3Dceecf842-3b01-11da-a2fe-00000e2511c8.html&_i_referer=

Comment:    Login required. From the Comment section of the FT. The gist of the article is that the TNK-BP Kovykta gas field is the last of the big oil and gas projects in Russia more or less owned/managed by foreign companies. In future, foreign oil and gas companies should do well in Russia, if they can get a contract, but never amounting to more than 49% of the project i.e. Moscow will always be in control.

Article:    TNK-BP, the joint venture between the British oil company and Russia’s Alfa Access Renova, is likely to have its licence for the giant Kovytka field in Siberia revoked in the next few days. The move is a prelude to Gazprom, the Russian state-owned oil and gas giant, taking a majority stake in the gas field and possibly in TNK-BP itself.

Paradoxically, while this change is not good news for TNK-BP it is a sign of progress for Russia and for other foreign oil companies seeking to do business in the country.

**********************************************************************************************************

10/        Rate rises and high lending take toll on property market [UK]      (The Independent, Fr i01 Jun)

http://news.independent.co.uk/business/news/article2600761.ece

Comment:    Another warning from The Independent that incredibly high property prices and now increasing interest rates, may be beginning to bite.

Article:    House prices rose again last month, Britain's biggest building society said yesterday, but there are mounting signs the market is finally cooling in response to stretched affordability and higher interest rates.

Nationwide said the average price of a UK home rose by 0.5 per cent in May, pushing the year-on-year rate of increase up from 10.2 to 10.3 per cent. The price of a typical house now stands at £181,584, almost £17,000 higher than a year ago. However, the three-month on three-month growth rate eased to 1.8 per cent. Nationwide said a further weakening could be expected in the months ahead.

... With prices soaring to dangerous levels, some warned the market is heading for a Nineties-style crash. But Fionnuala Earley, Nationwide's chief economist, said: "We now expect there is a strong chance that [interest] rates will be increased once more this year, to 5.75 per cent. Higher rates clearly present risks to the housing market, but providing the economy, and particularly the labour market, remain in good shape, we should still be able to expect a measured cooling.

... The Bank of England data also revealed a dramatic waning in the appetite for unsecured debt. Consumer credit - borrowing on credit cards, store cards and personal loans - rose by just £498m in April, a 58 per cent fall on last April and the weakest for 10 years.

**********************************************************************************************************