Russia Nearing Creation of a Gas OPEC, Kalmykia Remains Optimistic on Hydrocarbon Potential

Excerpts from Russian Petroleum Investor

Russia Nearing Creation of a Gas OPEC
by Inna Gaiduk
On October 21, Russia, Iran and Qatar declared creation of a “big gas troika” and indicated that the Gas Exporting Countries Forum (GECF) will soon become a permanently operating organization. The charter is subject to approval by the members in a December 23 Moscow meeting. In the interim, Gazprom has become more active in two directions. First, it is strengthening its presence and assets in those countries likely to become part of the future gas cartel. Second, it is beginning to form a pool of potential buyers and, simultaneously, strategic partners in the countries of the Asian-Pacific region. Both approaches are to offset the possibility of Europe taking a pro-American position and attempting to reduce the Russian presence in the European market.

Kalmykia Remains Optimistic on Hydrocarbon Potential
By Elena Kirillova
In 2007, the president of Kalmykia Kirsan Ilyumzhinov promised to transform the republic into “a second Kuwait” with annual crude oil production increasing to 5 million tons by 2020 (currently, it is almost 200,000 tons a year). However, few geologists share that conviction. Only foreign majors can handle the complex development and investment requirements. Nonetheless, Kalmykian authorities continue to express the opinion that discoveries of large deposits are not far off. Despite an abundance of investors searching for oil in the republic, nothing significant has yet emerged.

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Why Indonesia Left OPEC

Excerpt from Russian Petroleum Investor by Inna Gaiduk, Editor-in-Chief

Recently, Indonesian President Susilo Bambang Yudhoyono declared that his country had pulled out of OPEC. The president said that Indonesia would concentrate on increasing oil production on its own. Daily production has currently declined to below 1 million barrels (136,425 tons). Increasing the extraction volume could take 1-3 years. In the mid 1990s, Indonesia daily production reached between 1.5 and 1.6 million barrels. By April of this year, that had declined to 860,000 barrels.

Indonesia imports about a third of its oil and production has slumped 49 percent from a peak in 1977, partly as disputes with ExxonMobil (US) delayed field developments and deterred investments. The nation, a member of OPEC since 1962, has considered leaving for the past three years as it failed to meet output targets stipulated within the producer group. “It was long overdue for Indonesia to step out because as a net importer it didn’t make sense to stay on,’’ said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. “And since they could not even make the quota, there was not much to gain anyway.”

The withdrawal from OPEC will help the nation save 2 million euros ($2.8 million) in membership fees a year, according to Indonesian Energy Minister Purnomo Yusgiantoro. Indonesia’s plan to leave OPEC became more pressing as crude prices in New York reached $147.27 a barrel on July 11.

OPEC includes 13 countries overseeing two-thirds of all oil global reserves. Indonesia was the only country of the Asian-Pacific region in the organization.

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