CNGVC Senate
Recognition NGV in Highway Bill
May 19, 2005
Senators Grassley, Baucus, Inhofe and Jeffords Seek to Increase
Resources for the Highway Trust Fund, Encourage Wider Use of Natural
Gas as a Vehicular Fuel
SACRAMENTO, Calif., May 19 /PRNewswire/ -- The California Natural Gas
Vehicle Coalition (CNGVC) today praised the United States Senate's
decision to pass a Highway Bill that includes recognition of natural
gas as an important alternative transportation fuel.
In the bill's Volumetric Energy Excise Tax Credit (VEETC) provision,
Senators Charles Grassley (R-IA) and Max Baucus (D-MT) seek to
significantly increase resources for the Highway Trust Fund by
increasing taxes on compressed natural gas (CNG) and liquefied natural
gas (LNG) to a level equivalent to that of gasoline and diesel fuel. In
addition, the Senators encourage the wider use of natural gas as a
vehicular fuel through an excise tax incentive.
In response to the Senate Highway Bill, Mike Eaves, president of the
CNGVC, affirmed the Senate's commitment to environmental standards and
praised its decision to support a proven alternative -- natural gas.
"By passing this Highway Bill, the Senate has demonstrated its
commitment to reducing the amount of petroleum we have to import from
unstable foreign sources. Further, the natural gas vehicles supported
by the Senate -- vehicles like the dedicated natural gas Honda Civic GX
-- have significantly less harmful emissions than their gasoline or
diesel counterparts," noted Eaves.
"The Senate has shown a sincere attempt to uphold domestic energy
security while paving the way for vehicles that will help alleviate
urban air pollution," said Eaves. "The good news is people will
actually feel the forward motion created by this legislation across the
board -- security, environment and economy."
Andrew Littlefair, President and CEO of one of the largest providers of
natural gas, Clean Energy, said the Highway Bill provides a great
incentive for the use of clean, domestic fuels for transportation.
"Fuel diversity not only gives American consumers options, it also puts
us on the path to reducing our dangerous dependence on foreign oil,"
Littlefair said.
About Natural Gas Vehicles and The California Natural Gas Vehicle
Coalition
Natural gas is the cleanest burning alternative transportation fuel
available today, and natural gas vehicles (NGVs) have been certified as
meeting some of the nation's most demanding environmental standards.
NGVs look like any other vehicle and they operate on natural gas as
opposed to traditional gasoline. They also reduce emissions of carbon
dioxide, the principal "greenhouse" gas that contributes to global
warming. Therefore, NGVs are an existing solution to high fuel prices,
unstable energy supplies and air pollution.
There are almost 130,000 NGVs on U.S. roads today and more than 2
million are in use worldwide. There are more than 30,000 NGVs in use in
California, most of them serving the public in transit, refuse, school
bus, shuttle, taxi, municipal, and utility fleets. The California
Natural Gas Vehicle Coalition represents companies, organizations and
individuals who are committed to expanding the use of this safe,
affordable and environmentally friendly technology.
CONTACT: Katie Romans 916.930.3134
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Senate Energy Draft
Gives FERC LNG Siting Authority
Intelligence Press 5/23/2005 URL:
http://www.rigzone.com/news/article.asp?a_id=22703
The oil and gas title of the Senate omnibus energy bill would spur
development of natural gas storage, accelerate interstate pipeline
projects, give sole siting authority over liquefied natural gas (LNG)
facilities to FERC and promote the sharing of Outer Continental Shelf
(OCS ) revenues with coastal states. The title was released by the
Senate Energy and Natural Resources Committee late Friday and is
expected to go through the mark-up process this week.
As expected, the chairman's mark of the 112-page title would give
"exclusive authority" to the Federal Energy Regulatory Commission over
the siting, construction, expansion or operation of LNG facilities
located onshore or in state waters. It undoubtedly will draw fire from
a lot of Senate Democats, who object to Republicans overlooking the
role of the states in this area. The Senate draft appears to offer
clearer siting authorization for FERC than a provision in the House
energy bill, which was passed in late April.
The measure by the Senate energy panel, which is chaired by Sen. Pete
Domenici (R-NM), does not take any action to overturn the congressional
moratorium on oil and natural gas drilling on the federal OCS. This is
a big disappointment for the energy industry, but hardly surprising.
The bill, however, does make it more financially enticing for coastal
states to allow exploration and production (E&P) off their shores.
Specifically, it calls for the Interior Department secretary to
distribute $500 million between fiscal years 2006 and 2010 to producing
states and coastal political subdivisions (counties, parishes and
boroughs).
Revenues would only flow to those states that have approved coastal
impact assistance plans. Currently, the federal government shares half
of the royalty revenues from onshore production with the states.
Coastal states receive 27% of the royalties from offshore production in
what is known as the 8(g) zone, which lies between the boundaries of
state and federal waters, but they don't get any revenues from
production in federal OCS waters off their coasts, with the exception
of monies from special-purpose funds. Only five states now have oil and
gas production offshore -- Texas, Louisiana, Alabama, Mississippi and
Alaska.
In order to tempt other coastal states to open up their waters to
drilling, proponents have argued that the states could use the offshore
revenues to pay down their debt, but the Senate bill places
restrictions on how the funds can be used. The money can only be spent
on: 1) conservation, protection or restoration of coastal areas,
including wetland; 2) mitigation of damage to fish, wildlife or natural
resources; 3) planning assistance and the administrative costs of
complying with these requirements; 4) implementation of a federally
approved marine, coastal or comprehensive conservation management plan;
or 5) mitigation of the impact of OCS activities through funding of
onshore infrastructure projects and public service needs.
The Senate measure also allows FERC to award storage companies
market-based rates for new storage and storage-related services that
are placed in service after the enactment of the energy bill, even if
the company is unable to demonstrate that it lacks market power. The
Commission first would have to determine that market-based rates are in
the public interest and are necessary for the construction of storage
capacity in areas that need storage services, and that customers would
be adequately protected.
In addition, the bill would set a specific deadline for the secretary
of the Department of Commerce to decide the appeals of energy companies
seeking to overturn state rulings blocking energy projects under the
Coastal Zone Management Act (CZMA). It would allow the secretary to
receive filings in a particular proceeding during a 270-day period, at
the end of which a notice would be published in the Federal Register
that the administrative record has been closed. The bill would allow
the secretary to stay the 270-day period for no more than 60 days. Not
later than 90 days after publication of the notice in the Federal
Register, the secretary would be required to either issue a decision or
publish a notice in the Federal Register explaining why a decision
could not be issued at that time.
The inclusion of this language in the Senate bill is a big win for
pipelines, which contend that the lack of a deadline on CZMA appeals
has allowed states to hold up energy projects for years on end.
The bill further establishes FERC as the lead agency in carrying out
reviews of energy projects to determine whether they comply with the
National Environmental Policy Act of 1969 (NEPA). As the lead agency,
the Commission, in consultation with other agencies, would prepare a
single environmental review document, which would be used as the basis
for all decisions (including CZMA appeals) under federal law, the
Senate draft said. It also gives the Commission the green light to
establish a schedule for all federal authorizations.
The measure would allow FERC to establish an electronic information
system to provide the agency and the public with information to
"facilitate price transparency and participation in markets for the
sale or transportation of natural gas in interstate commerce." The
system would provide "on a timely basis information about the
availability and prices of natural gas sold at wholesale and in
interstate commerce to the Commission, state commissions, buyers and
sellers of wholesale natural gas, and the public."
But FERC shall not: 1) compete with, or displace from the marketplace,
any price publisher (including any electronic price publisher); 2)
regulate price publishers; or 3) impose any requirements on the
publication of information by price publishers, the Senate bill said.
The Senate bill would increase the Commission's criminal and civil
penalty authority under the Natural Gas Act (NGA) and Natural Gas
Policy Act of 1978 (NGPA), something the agency has been requesting for
years. Specifically, criminal penalties under the NGA and the NGPA
would increase to $1 million and five years in prison, while maximum
civil penalties under the NGA would increase to $1 million per day per
violation. Violators of the NGPA also could become subject to maximum
penalties of up to $1 million.
The measure also amends the NGA to prohibit market manipulation. It
said it would be "unlawful for any entity, directly or indirectly, to
use or employ, in connection with the purchase and sale of
transportation services subject to the jurisdiction of the Commission,
any manipulative or deceptive device or contrivance...in contravention
of such rules and regulations as the Commission may prescribe as
necessary in the public interest or for the protection of natural gas
ratepayers."
Senate negotiators inserted a number of incentives to further promote
oil and gas drilling offshore and onshore. Specifically, it calls for
the Interior secretary to issue regulations granting royalty relief
suspension for volumes of up to 35 Bcf with respect to the production
of natural gas from ultra deep wells on leases issued in shallow waters
located in the Gulf of Mexico wholly west of 87 degrees, 30 minutes
West longitude. The affected leases would have to be issued within 180
days of the enactment of the bill. The secretary shall not grant
royalty incentives if the average annual gas price on the New York
Mercantile Exchange exceeds a threshold price specified, and adjusted
for inflation, by the secretary.
The measure also would provide royalty relief for oil and gas
production from blocks located in water depths of more than 400 meters
in the Western and Central Planning Areas of the Gulf (including the
portion of the Eastern Planning Area of the Gulf encompassing whole
lease blocks lying west of 87 degrees, 30 minutes West longitude)
occurring during the five-year period following the enactment of the
bill.
The suspension of royalties would apply to volumes of not less than: 1)
five million barrels of oil equivalent (boe) for each lease in water
depths of 400 meters or more, but less than 800 meters; 2) nine million
boe for each lease in water depths of 800 meters or more, but not
greater than 1,600 meters; and 3) 12 million boe for each lease in
water depths greater than 1,600 meters.
Moreover, the bill calls for the Interior secretary to carry out an
expeditious program of competitive leasing of oil and gas in the
National Petroleum Reserve in Alaska. Each lease shall be issued for an
initial period of not more than 10 years, and shall be extended for as
long as oil or natural gas is produced from the lease, according to the
Senate measure.
It would provide incentives for marginal oil and gas wells when oil
prices fall below $15 per barrel for 90 consecutive days and when gas
prices fall to approximately $2 Mcf/d for 90 consecutive days, both of
which are unlikely to happen, at least not anytime soon. The measure
also gives the Interior secretary the authority to expand the
royalty-in-kind program, allowing producers to use their production to
pay off their royalty debt as opposed to making cash payments.
The bill further calls on the Interior secretary to arrange for the
National Academy of Public Administration to conduct a review of
federal onshore oil and gas leasing practices, focusing on the process
by which federal land managers accept or reject an offer to lease; the
process for applications for permits to drill; the process for
considering surface use of operations; the process for administrative
appeals of decisions or orders of officers or employees of the Bureau
of Land Management (BLM) with respect to federal oil or gas leases; the
process by which federal land managers identify stipulations to address
site-specific concerns and conditions; and how federal land management
agencies coordinate planning and analysis with federal, state and local
agencies.
The Interior Department and National Academy are required to report the
findings to the Senate Energy Committee and House Resources Committee
within 18 months after the enactment of the bill.
For faster permitting of oil and gas production, the bill calls for the
Interior Department to ensure expeditious compliance with NEPA; improve
consultation and coordination with the states and the public; and
improve the collection, storage and retrieval of information related to
oil and gas leasing activities. It also called for the Agriculture
Department to focus on more timely action for oil and gas lease
applications.
Eighteen months following enactment of the bill, the Interior secretary
would be required to develop and implement best management practices to
improve the administration of onshore oil and gas leasing. Within 180
days of the development of the best management practices, the secretary
is required to publish for comment proposed regulations that spell out
specific timetables for processing leases and application.
The BLM would be appropriated an additional $60,000 in fiscal years
2006 through 2010 to carry out these activities, while the Fish and
Wildlife Service would receive $5 million and the Agriculture
Department would get $5 million in each of the fiscal years. The
departments of Interior and Agriculture also are required to enter into
a memorandum of understanding (within 180 days of enactment of bill) to
establish administrative procedures and lines of authority to ensure
timely processing of oil and gas lease applications, surface-use plans
of operation, and applications for permits to drill.
Lastly, the bill calls on the Interior secretary to establish a
"Federal Permit Streamlining Pilot Project." Toward this aim, the
secretary is required to enter into a memorandum of understanding with
the secretary of Agriculture, the administrator of the Environmental
Protection Agency, and the Chief of Engineers. The Interior secretary
also may request that the governors of Wyoming, Montana, Colorado, Utah
and New Mexico be signatories to the memorandum.
Six BLM offices would serve as pilot project offices: Rawlins, WY;
Buffalo, WY; Miles City, MT; Farmington, NM; Carlsbad, NM; and Grand
Junction/Glenwood Springs, CO. Within three years of the enactment of
the energy bill, the Interior secretary will submit a report to
Congress on the results of the pilot project, and make recommendations
to the president on whether the pilot should be implemented throughout
the United States.
|
Today's inauguration of the Baku-Tbilisi-Ceyhan
(BTC) oil pipeline
marks a major step in BP's continuing long-term strategy of delivering
growing volumes of oil and gas from new hydrocarbon provinces around
the world.
The 1770-kilometre pipeline will carry one million barrels of oil a day
from the BP-operated Azeri Chirag Gunashli (ACG) oilfield in the
Caspian Sea to the eastern Mediterranean port of Ceyhan, bypassing the
sensitive and heavily used Bosphorous Straits.
The pipeline was officially inaugurated at the Sangachal terminal, near
Baku, by President Ilham Aliyev of the Azerbaijan Republic, President
Mikhail Saakashvilli of Georgia and President Ahmet Sezer of Turkey,
joined by President Nursaltan Nazarbayev of Kazakhstan. Speaking at the
ceremony, BP chief executive Lord Browne described the project as "an
heroic engineering achievement, as ground-breaking in today's context
as Prudhoe Bay and the Trans-Alaskan pipeline were 30 years ago.
"The pipeline opens up massive new fields in the Caspian Sea to world
markets, enhancing security of supply for decades to come. And it does
so in a way that avoids the transit of large numbers of tankers through
the narrow and congested Bosphorous."
BP is operating four major projects in the Caspian region on behalf of
its consortium partners which already add up to more than $20 billion
of investment, with a further $10 billion likely to be spent mainly on
offshore development by the end of the decade.
As well as the Azeri Chirag Gunashli (ACG) oil field and BTC pipeline,
the projects include the Shah Deniz gas field and associated South
Caucasus pipeline, which will be completed in 2006. Once fully on
stream by 2008, ACG will provide approximately one million barrels of
oil a day to world markets.
The BTC partners have contributed more than $100 million to community
investment, environmental and cultural heritage protection programmes
among 454 communities along the pipeline's route. At current oil
prices the major oil and gas fields and pipelines will provide revenues
to Azerbaijan, Georgia and Turkey of more than $150 billion between
2005 and 2024.
The Caspian is one of BP's major new profit centres, along with the
deepwater Gulf of Mexico, offshore Angola, Trinidad, Egypt, Indonesia
and Russia.
|
The pipeline that will change
the world It is 42 inches wide, 1,090 miles long and is intended to
save the West from relying on Middle Eastern oil. Nothing has been
allowed to stand in its way - and it finally opens today By Daniel
Howden and Philip Thornton 25 May 2005 The first drops of crude will
snake their way along a pipeline that traverses some of the most
unstable and war-ravaged countries on earth. This is the oil flow that
was meant to save the West, and this morning the taps were turned on.
Only 42 inches wide, the Baku-Tbilisi-Ceyhan was supposed to alter
global oil markets forever. The 1,000-mile project has transformed the
geopolitics of the Caucasus and its impact is now being felt in the
vastness of central Asia.
Output is supposed to reach one million barrels a day - more than 1 per
cent of world production - from an underground reserve that could hold
as many as 220 billion barrels.
Its architects and investors claimed the pipeline would shore up energy
supplies in the US and Europe for 50 years, protecting our gas-guzzling
way of life and easing our reliance on the House of Saud.
The goal of the ambitious project, which makes its tortuous way from
the Caspian in Azerbaijan, through Georgia to the Mediterranean coast
of Turkey, is to ease the reliance of the West on the Organisation of
Petroleum Exporting Countries (Opec) and bring cheaper fuel to our
filling stations. The pipe threads its way through the region in a
seemingly modest private corridor only 50 yards wide but nothing has
been allowed to stand in its way. From forests to labour laws and
endangered species to democracy protesters: all have given way to the
costliest and most significant pipeline ever built.
The project, known as BTC, has driven a wedge between the US and
Russia, triggered political unrest in the countries it passes through
and their neighbours and sparked concern at extensive damage to the
environment.
Since the 11 September 2001 terrorist attacks in the US, concern at the
West's dependence on Persian Gulf oil has intensified. For Washington,
the opening is a cause for celebration. "We view this as a significant
step forward in the energy security of that region," said Samuel
Bodman, the American energy secretary, who stood next to the three
heads of state at today's ceremony.
With him at the pumping station controls was the president of the tiny
former Soviet republic of Azerbaijan. The BTC has allowed Ilham Aliev
to become a firm friend of the West while overseeing a government
condemned for human rights abuses and sitting at the head of an
administration placed 140 out of 146 in Transparency International's
global corruption index.
The politics of the pipeline have also changed the face of Georgia,
where the battle for control with Russia saw immense US influence
deployed in support of the so-called "Rose Revolution". The popular
protest ushered the American-educated Mikhail Saakashvili into power
two years ago. Washington's new ties with Tbilisi were amply
demonstrated when George Bush became the first US president to visit
the country earlier this month.
In the long-term US ally Turkey, where the pipeline crucially delivers
its oil direct to the Mediterranean - bypassing the tanker-clogged
Bosphorus straits, it is no accident that it does so right next to the
American airbase at Incirlik.
When big oil companies turned their attentions to the potential Caspian
energy reserves released from behind the collapsing walls of the Soviet
Union, the region was billed as the "new Middle East". If only the
reserves could be securely transported from the landlocked sea to the
Mediterranean, the West would be gifted a vital alternative to the
volatile Persian Gulf and the region would be freed from the iron grip
of Russia, which had previously monopolised the export routes of their
former Soviet satellites.
Once the Soviet empire fell, the Caspian found itself surrounded by
five nation states - Azerbaijan, Iran, Kazakhstan, Russia and
Turkmenistan.
The region's supply of cheap oil and key position on the historic
border between the West and the East meant that countries quickly moved
into position like pieces on a chessboard.
Three rival plans were drawn up - a northern route through Russia, a
southern alternative through Iran and the central option through the
Caucasus to the Mediterranean.
The winner could be in little doubt: the middle road was the only one
which guaranteed Washington and its corporate allies a corridor of
control.
The US Vice-President Dick Cheney, who was then chief executive of oil
services giant Halliburton, was among the first to be swept away in the
excitement.
"I cannot think of a time when we have had a region emerge as suddenly
to become as strategically significant as the Caspian," he said in 1998.
Now, more than a decade and $4bn (£2.2bn) later, almost three quarters
of which came from bank loans which were underwritten by government
agencies and £320m in taxpayers' money, the pipeline is open. But this
chapter of what Rudyard Kipling called the "Great Game" - the secret
battle to dominate central Asia - has only reached the end of its first
phase.
The fanfare at the British oil giant BP's gleaming new terminal at
Sangachal in Azerbaijan may yet prove to be premature.
Stripped of the American hype of the 1990s, the crude that began a very
modest flow this morning is the first instalment of a reserve many
analysts are now convinced is actually only 32 billion barrels -
equivalent to that of a small Gulf player such as Qatar.
The game now moves to the transCaspian pipeline and to the immense
plains of Turkmenistan and the political cauldron of Uzbekistan,
Afghanistan and beyond.
|
Presidents inaugurate
BTC oil export pipeline --of Azerbaijan, Georgia and Turkey
25 May 2005
The Azerbaijan section of the Baku-Tbilisi-Ceyhan (BTC) oil export
pipeline was inaugurated today by the Presidents of Azerbaijan, Georgia
and Turkey in an official ceremony, which was held at the BTC head pump
station in the Sangachal Terminal near Baku. This event marks the
official celebration of first oil into the Heydar Aliyev BTC main
export pipeline.
HE President Ilham Aliyev of the Azerbaijan Republic hosted the event,
in which he was joined by the President of Turkey Ahmet Necdet Sezer,
the President of Georgia Mikheil Saakasvili, the President of
Kazakhstan Nursultan Nazarbayev, a large group of visiting senior
government and state officials, senior executives of BTC owner
companies and business representatives.
The inauguration of BTC follows the commissioning of the BTC head pump
station at the Sangachal terminal earlier this month and officially
marks the commencement of the first linefill phase of the
Baku-Tbilisi-Ceyhan (BTC) oil export pipeline.
A total of 10 million barrels of crude oil is required to fill the 1770
kilometre pipeline running from the Sangachal terminal near Baku via
Georgia to the Ceyhan terminal on the Mediterranean coast of Turkey.
The oil comes from the Azeri-Chirag-Gunashli (ACG) field in the
Azerbaijan sector of the Caspian Sea. The staged filling of the
pipeline along its entire route could take over six months and the
loading of the first tanker at Ceyhan is expected in the fourth quarter
of 2005. Natig Aliyev, President of the State Oil Company
of the Azerbaijan Republic (SOCAR), said: "Today's event marks the
beginning of the long journey Azerbaijan's oil will take through three
countries to world markets benefiting the people of the three countries
on its route. We are putting first oil into the pipeline with a sense
of pride that we take in Azerbaijan's leading role in the realization
of one of the world's longest and, we believe, safest pipelines. The
event also marks the realization of the dream of the people of
Azerbaijan and our national leader Heydar Aliyev to realize a pipeline
that would bridge the nations of the region and enable Azerbaijan to
regain its important role in regional and international economic
developments. I wish to congratulate all the citizens of Azerbaijan and
all our partners who contributed to the fulfillment of this dream."
David Woodward, BP Azerbaijan Associate President, said: "This is a
great moment as it marks Azerbaijan's rebirth as an important country
for the industry just as it was more than a century ago. It is also a
symbol of what can be achieved through cooperation - between different
countries, nation states and national companies and international
business. None of us could have done this on our own. Ten years ago
many people said that this was an impossible project. Thanks to many
people the impossible was made possible.
"Over the last decade nearly $10 billion have been invested in this
country's oil and gas developments in the Caspian, and over the next
decade that will make the Caspian region one of the major sources of
incremental supply to the world market. Today marks the beginning of a
new chapter for both Azerbaijan and BP".
The BTC Co. shareholders are: BP (30.1%); AzBTC (25.00%); Unocal
(8.90%); Statoil (8.71%); TPAO (6.53%); Eni (5.00%); Total (5.00%),
Itochu (3.40%); INPEX (2.50%), ConocoPhillips (2.50%) and Amerada Hess
(2.36%). Notes to Editors: The 1770-km BTC pipeline will
allow one million barrels of oil a day to be exported safely and
responsibly from the Caspian without increasing tanker traffic through
the Turkish Straits. It is buried for its entire length and following
construction land is being fully re-instated.
In addition, the project's community investment programme (CIP) is up
and running in all three countries. Overall BTC together with the South
Caucasus Pipeline (SCP), being built to carry Shah Deniz gas from the
Caspian to Georgia and Turkey, will spend some $30 million on community
and environmental investment in Azerbaijan, Georgia and Turkey during
the construction phase. As we move into the operations phase, we are
also developing a Regional Sustainable Development Programme (RSDP),
which will build upon the best practice of existing CIP projects as
well as addressing some of the regional and national challenges posed
by the development of large-scale oil and gas businesses.
|
Siberia TNK-BP
Major Gas Field Funds to Develop
Interfax Information Services, B.V. 5/24/2005 URL:
http://www.rigzone.com/news/article.asp?a_id=22731
TNK-BP's board of directors approved expenditure of $136 million for
the design and construction of the "Early Gas" phase of the Kovykta
Project in East Siberia, TNK-BP said in a press release.
The "Early Gas" phase is part of a $1.1 billion gasification project to
deliver Kovykta gas to a number of industrial customers in Sayansk,
Usolie-Sibirsk, Angarsk, and Irkutsk, and other consumers in
settlements and villages of the Irkutsk region, the release said.
Most of the investment will be made between 2005 and 2008.
Specifically the funds will be used to construct a gas pipeline from
the Kovykta gas condensate field to supply customers in the Zhigalovo
region of the Irkutsk region as early as 2006, in compliance with the
current Kovykta license terms. It is estimated that the regional
gasification project will be supplying 2.8 billion cubic meters of gas
per annum by 2010.
TNK-BP affiliate companies, RUSIA Petroleum and the East Siberian Gas
Company will implement the project, and are working closely with
potential gas consumers such as SayanskChimPlast, Russia's largest PVC
producer. The support provided by the Irkutsk region's administration
has also been a major factor in the progress of the project.
The board's decision is an important first step for development of the
gas industry in East Siberia as a whole. Future full field development
of the Kovykta field and the associated pipeline infrastructure will be
a catalyst in the development of other gas resources in East Siberia
and the Republic of Sakha (Yakutia). It will also attract contractors
and related industries from all over Russia and create an estimated
40,000 jobs.
Commenting on the decision, TNK-BP President and Chief Executive
Officer, Robert Dudley said: "We are delighted to now be taking
significant and concrete steps to develop Kovykta's gas for Russia."
TNK-BP's Executive Director for Gas Development, Viktor Vekselberg
added: "The Board's decision demonstrates our continuing commitment to
develop Kovykta, and the Irkutsk region. The regional gasification
project will underpin social and economic development, potentially
doubling the gross regional product (GRP) of East Siberia and almost
trebling the GRP of the Irkutsk region."
The board's decision to proceed with investment in the gasification of
Irkutsk region could soon be followed by plans to supply gas from
Kovykta to Chita region and the Republic of Buryatia.
The Kovykta Project is a major East Siberian gas project comprising two
principal components; a domestic project to deliver regional
gasification, and a proposed export development.
RUSIA Petroleum, in which TNK-BP holds a 62% interest, is the license
holder for the Kovykta field. RUSIA's other shareholders are Interros
(26%) and the Irkutsk region's administration (12%).
East Siberian Gas Company is a gas transportation and marketing company
formed as a 50:50 joint venture between TNK-BP and the Irkutsk region's
administration.
|
Turkmenistan
Wintershall PSAgreements
Interfax Information Services, B.V. 5/24/2005 URL:
http://www.rigzone.com/news/article.asp?a_id=22732
Germany's Wintershall intends to participate in developing gas fields
in the northern part of the Turkmen section of the Caspian Sea on a
production-sharing basis soon, Bernhard Schmidt, a senior company
official, said during a meeting with Turkmen President Saparmurat
Niyazov on Monday.
President Niyazov welcomed the desire of this well-known Germany
company, which ranks among the largest European oil and gas firms, to
establish full-fledged and mutually profitable cooperation with
Turkmenistan, the presidential press service said after the meeting.
Gas extraction at sea is a priority trend in Turkmenistan?s oil and gas
complex, considering the enormous resources of hydrocarbons hidden
under the sea floor, the press service quoted Niyazov as saying.
Wintershall intends to drill test holes in the coming months, Schmidt
said.
The company would also like to participate in developing promising gas
fields on the right bank of the Amu Darya, he said.
|
Bolivian Law's Impact on
Petrobras
Bilateral Workgroup to Study (BNamericas.com) 5/24/2005 URL:
http://www.rigzone.com/news/article.asp?a_id=22735
Brazil and Bolivia have created a workgroup to study the impact of the
new hydrocarbons law approved by Bolivia's congress on May 17 on the
former's federal energy company Petrobras (NYSE: PBR), Brazil's mines
and energy ministry said in a statement.
The workgroup will study the changes in Petrobras' oil and gas
exploration and production contracts under the new legislation, which
will raise taxes and royalties to up to 50% on hydrocarbons production.
Petrobras' natural gas sales contracts with Bolivia's state oil company
YPFB will not be affected by the changes, the ministry said. A second
workgroup, which will also include Argentina, will discuss regional
energy integration.
The two workgroups were announced after a Friday meeting in Brazil's
capital Brasilia between mines and energy minister Dilma Rousseff,
Petrobras CEO José Dutra and Bolivia's mines and hydrocarbon minister
Guillermo Torres.
Rousseff and Torres declared their intention to continue the current
relationship between the two countries, while the Brazilian government
and Petrobras said they would continue to study the repercussions of
the new law.
On May 18, the day after the law was approved by Bolivia's congress,
Rousseff announced that Petrobras would continue to operate in Bolivia,
where it is reported to have invested US$1.5bn, but said the company
would have to reduce or postpone some investments in the country.
|
Long Beach Postpones
Decision on LNG Supply Talks
IIntelligence Press 5/25/2005 URL:
http://www.rigzone.com/news/article.asp?a_id=22770
IIn a move that drew widespread local news media attention, the Long
Beach, CA, City Council Tuesday evening at the last minute postponed
until late next month a decision on whether to break off two years of
negotiations on behalf of its municipal energy department with the
sponsors of a proposed liquefied natural gas (LNG) receiving terminal
in its harbor.
Although these talks are separate from Port of Long Beach's siting
decisions, the prospect of a rejection of even a peripheral issue to
the siting question drew major local interest. At stake is an agreement
that the city entered into two years ago with Mitsubishi's U.S.-based
subsidiary, Sound Energy Solutions (SES), to negotiate a possible
supply contract. SES has since added 50-50 partner ConocoPhillips to
the LNG project. This is separate from the ultimate question of whether
the proponents will get a permit from the Port and the Federal Energy
Regulatory Commission to allow construction to begin.
However, the city talks with SES do involve added energy
infrastructure, including a 2.5-mile natural gas transmission pipeline
to bring supplies into Long Beach's municipal natural gas network.
A meeting of city officials, including the city attorney's office,
prior to the late afternoon council meeting prompted the delay.
However, a spokesperson for the city said the council members gave no
reason publicly for delaying a vote on a resolution that read. "...to
authorize the city manager to terminate negotiations with
SES/Mitsubishi regarding a long-term natural gas supply and the
feasibility of constructing and operating interconnecting natural gas
pipelines to the proposed LNG facility, pursuant to a memorandum of
understanding approved by the city council May 13, 2003."
In advance of the agenda item Tuesday, the Los Angeles Times published
a major "Q&A" feature raising basic questions about LNG along the
California coast -- noting there are two onshore and two offshore
receiving terminal proposals. Under the headline, "Debate Over
Concentrated Fuel Comes to Long Beach," a Times environmental reporter
who covers Long Beach-Los Angeles Harbor developments answered generic
questions, such as "What is LNG? Why is it controversial? What are its
effects on the environment?"
In answer to the "controversial" question, the Times' report called
LNG's highly concentrated nature "both a benefit and a curse," siting
the shipping convenience, but also safety risks of a "massive fire." It
added that in Long Beach, beyond the normal safety concerns with
hazardous cargoes, residents are concerned about an LNG terminal being
a target for terrorism.
|
Russian LNG
Supplies to U.S. Expected in 7-10 Years
Interfax Information Services, B.V. 5/25/2005 URL:
http://www.rigzone.com/news/article.asp?a_id=22763
Supplies of liquefied natural gas from Russia to the U.S. are expected
not sooner than in seven to 10 years, U.S. Energy Secretary Sam Bodman
said at a press conference in Moscow on Tuesday.
He said that LNG projects, as a rule, take a lot of time, therefore a
project to supply LNG from Russia to the U.S. would be implemented in
about seven-10 years.
Bodman said that the aim of his current visit to Russia is to develop
Russian-U.S. energy dialogue. He said that yesterday he met with
Industry and Energy Minister Viktor Khristenko, Economic Development
and Trade Minister German Gref and Foreign Minister Sergei Lavrov and
that he plans to meet with Russian Prime Minister Mikhail Fradkov today.
He said that working relations with Russia are developing very
successfully. At the meeting with Khristenko he discussed the Northern
pipeline project, joint projects to develop Eastern Siberia, the Timan-
Pechora oil province and also Sakhalin projects being jointly developed
by Russian and U.S. companies.
The U.S. currently imports most of its LNG from Qatar, Trinidad,
Tobago, Algeria, Malaysia, Nigeria and Oman.
The U.S. currently has four LNG terminals: Everett (Massachusetts,
capacity - 1.035 billion cubic feet per day), Cove Point (Maryland - 1
bcf per day), Elba Island (Georgia - 680 million cubic feet per day),
and Lake Charles in Louisiana. In addition, five new projects have been
approved to build LNG terminals in North America, including the Energia
Costa Azul terminal in Mexico, to which Sakhalin-2 LNG will be supplied.
Russian gas monopoly Gazprom plans to supply LNG from the Shtokman
field to North America and is holding talks with ExxonMobil,
ConocoPhillips, ChevronTexaco, RD/Shell and Norway's Statoil and Hydro.
Gazprom is also holding talks with Exxon and BP to supply LNG to the
U.S. in exchange for supplies of grid gas from Russia to Europe. The
first swap supplies of LNG to the U.S. are planned for this year.
Gazprom plans to become a shareholder or to rent on a long-term basis a
re-gasification terminal in the U.S. or Canada in 2006-2009.
|
New Pipeline Gives
Caspian Oil Access to World Markets
BP 5/25/2005 URL: http://www.rigzone.com/news/article.asp?a_id=22750
Today's inauguration of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline
marks a major step in BP's continuing long-term strategy of delivering
growing volumes of oil and gas from new hydrocarbon provinces around
the world.
The 1770-kilometer pipeline will carry one million barrels of oil a day
from the BP-operated Azeri Chirag Gunashli (ACG) oilfield in the
Caspian Sea to the eastern Mediterranean port of Ceyhan, bypassing the
sensitive and heavily used Bosphorous Straits.
The pipeline was officially inaugurated at the Sangachal terminal, near
Baku, by President Ilham Aliyev of the Azerbaijan Republic, President
Mikhail Saakashvilli of Georgia and President Ahmet Sezer of Turkey,
joined by President Nursaltan Nazarbayev of Kazakhstan. Speaking at the
ceremony, BP chief executive Lord Browne described the project as "an
heroic engineering achievement, as ground-breaking in today's context
as Prudhoe Bay and the Trans-Alaskan pipeline were 30 years ago.
"The pipeline opens up massive new fields in the Caspian Sea to world
markets, enhancing security of supply for decades to come. And it does
so in a way that avoids the transit of large numbers of tankers through
the narrow and congested Bosphorous."
BP is operating four major projects in the Caspian region on behalf of
its consortium partners which already add up to more than $20 billion
of investment, with a further $10 billion likely to be spent mainly on
offshore development by the end of the decade.
As well as the Azeri Chirag Gunashli (ACG) oil field and BTC pipeline,
the projects include the Shah Deniz gas field and associated South
Caucasus pipeline, which will be completed in 2006. Once fully on
stream by 2008, ACG will provide approximately one million barrels of
oil a day to world markets.
The BTC partners have contributed more than $100 million to community
investment, environmental and cultural heritage protection programs
among 454 communities along the pipeline's route. At current oil prices
the major oil and gas fields and pipelines will provide revenues to
Azerbaijan, Georgia and Turkey of more than $150 billion between 2005
and 2024.
The Caspian is one of BP's major new profit centers, along with the
deepwater Gulf of Mexico, offshore Angola, Trinidad, Egypt, Indonesia
and Russia.
|
PetroChina, Shell plan
Changbei development
By OGJ editors HOUSTON, May 19
PetroChina Co. Ltd. and Shell China Exploration & Production Co.
Ltd. have signed letters of intent for development of Changbei natural
gas field in Shaanxi Province and the Inner Mongolia Autonomous Region
in China.
The joint venture expects to invest about $600 million in development
work including construction of central processing facilities,
interfield pipelines, and drilling of about 50 horizontal and
multilateral wells over 10 years.
Shell, which will be operator under a production-sharing contract with
PetroChina, awarded a 4-year directional drilling contract to
Halliburton Energy Services (Tianjin) Ltd. and a 3-year contract for
drilling fluids and associated services to the Engineering Technology
Institute of Changqing Petroleum Exploration Bureau.
The contract for drilling rigs and associated services covering the
drilling of about 30 wells over the next 6 years was awarded to a
drilling company affiliated with Liaohe Petroleum Exploration Bureau.
The joint venture also signed a letter of intent (LOI) to award
engineering, procurement, and construction (EPC) of the central gas
processing facility to a consortium of China Petroleum Engineering Co.
Ltd, Southwest Co., and Sichuan Petroleum Engineering Construction Co.
Ltd.
China Liaohe Petroleum Engineering Co. Ltd. received an LOI for an EPC
contract to develop the field gathering pipeline infrastructure.
The field is expected to begin delivering 1.5 billion cu m/year of
natural gas to Beijing, Shandong, Hebei, and Tianjin by 2007 and as
much as 3 billion cu m/year by 2008. Shell will receive 50% of the gas
volumes during the 20-year project.
PetroChina's second Shaan-Jing gas pipeline to Beijing is under
construction and scheduled to go online by midyear.
|
Uzbekistan oil,
condensate output down
Eric Watkins Senior Correspondent LOS ANGELES, May 23 2005
Uzbekistan's state-run Uzneftegaz has reduced production of oil,
including gas condensate, by 16.7% to 1.948 million tonnes and natural
gas by 1.2% to 20.219 billion cu m in the first quarter of 2005
compared with the same period of 2004.
For all of last year, Uzneftegaz reduced production of oil and
condensate by 7.8% to 6.85 million tonnes.
|
Pakistan signs 6
deals with UK for O/G exploration
Source: GEO Business News http://www.gasandoil.com 02-05-05
Pakistan has signed six agreements worth $ 40.20 mm with multinational
companies in Britain for the exploration of oil and gas in the
potential areas of North West Frontier (NWFP), Balochistan and Sindh
provinces.
These agreements materialized in a two-day conference held under the
aegis of Pakistan ministry of petroleum and natural resources (MPNR).
Secretary, MPNR, Ahmad Waqar signed these agreements on behalf of the
government of Pakistan.
The agreements envisage phase-wise exploration of oil and gas by these
companies in Jhangar area of Sindh, Huramzai and Laogasht of
Balochistan besides Kohat and Bannu areas of NWFP.
Later, Federal Minister for petroleum and natural resources, Amanullah
Jadoon told that the talks on the proposed import of gas from
Turkmenistan, Iran and Qatar were in progress and if India showed its
intention of gas import from Iran via Pakistan, it would be welcomed.
He told that the prices of oil in Pakistan were determined on the basis
of variations in Gulf oil rates.
Pakistan's High Commissioner in Britain, Dr Maleeha Lodhi was also
present on this occasion.
|
Yemen Indian oil
firms keen on exploring O/G in
Source: Zee Telefilms http://www.gasandoil.com 12-05-05
Indian state-run oil firms are keen on exploring oil and gas in Yemen
and have evinced interest in modernisation of Aden refinery, Petroleum
Minister Mani Shankar Aiyar said. "Indian public sector oil companies
have shown interest in exploration and production blocks in Yemen,
modernization of Aden refinery and the proposed hydrocracker project,
sourcing of natural gas from Yemen and LNG liquefaction plants there,"
he said. It has been decided to form a joint technical committee to
discuss cooperation in all sectors of hydrocarbons, he said.
To another question, he said public sector firms imported 3.87 mm tons
of petroleum products worth Rs 7,238.78 crore in 2004-05 while the
private sector companies imported 8.87 mm tons of products worth Rs
14,949.65 crore. The mainstay imports of public sector companies were
LPG (2.138 mm tons for Rs 4,055.12 crore) and diesel (703,408 tons for
Rs 1,422.289 crore). The same for private companies was naphtha (1.96
mm tons for Rs 3,559.331 crore) and LSWR (844,590 tons for Rs 1,012.02
crore).
|
Turkmenistan to Pakistan Gas
pipelineclose to reality
Source: Christian Science Monitor by Scott Baldauf 13-05-05
http://www.gasandoil.com
Back in the days of the Taliban, Mir Sediq was an engineer for Unocal,
working on a pipe dream: bringing natural gas from Turkmenistan down
through Afghanistan to Pakistani ports on the Arabian Sea.
Today, Mr Sediq is minister for Afghanistan's energy, mining, and
industrial sector, and he's confident that the pipeline is coming close
to reality.
Driven by a Pakistani economy growing at nearly 7 % a year and higher
energy prices, the pipeline, on paper, is the closest thing to a
win-win scenario as one can find in Central Asia. For Pakistan,
expected to run out of its own reserves in five years, the pipeline
will help sustain growth.
For Turkmenistan, it helps to provide a market for its substantial gas
reserves.
For Afghanistan, it could mean from $ 200 mm to $ 350 mm per year in
transit fees.
In the rough parlance of oil industry executives, that beats a kick in
the head. "This pipeline is an opportunity for Afghanistan, and we
would like to keep Afghanistan a place that is open and attractive for
foreign investment," says Sediq. "The foreign investment rate of return
is 17.5 %, based on the assumptions that the gas reserves in
Turkmenistan are enough and the consumption rate in Pakistan remains
high. Only security of the pipeline is left, and the government of
Afghanistan is capable of providing security."
It wasn't so long ago that the pipeline was thought to be dead. Taliban
attacks in the south appeared to be on the increase, and other sources
of energy, such as Iran or Qatar, were more attractive. But growing
Pakistani demand, increased Afghan stability, and higher energy prices
for Turkmenistan have made the pipeline increasingly feasible.
President Hamid Karzai told donor countries the project was a top
priority -- on a par with the war on terror and opium eradication. As
yet, there are no foreign investors vying for the project, but talks
between Turkmenistan, Afghanistan, and Pakistan are proceeding. In
mid-April, the three countries and the Asia Development Bank held their
eighth round of meetings to hammer out details of what Turkmenistan
has, how much gas Pakistan needs, and whether Afghanistan is safe
enough. The next round comes in July, but Sediq is expected to travel
to the Turkmen capital of Ashgabat to see if the government's survey of
reserves will be finished in time.
"The biggest question is certification of gas reserves in
Turkmenistan," says Mary Louise Vittelli, an adviser to the Afghan
Ministry of Mines and Industry. "We need to know if there is enough gas
for the next 30 years. There are lots of pipelines in countries where
there is war, so security is a question, but not a deal breaker. You
can have all the security you want, but if the price is five times
higher than getting gas from Qatar, then the deal is broken."
When first proposed back in the early 1990s, the
Turkmenistan-Afghan-Pakistan pipeline (nicknamed TAP), was planned to
be roughly 1,100 miles long. The Afghan portion would have been 466
miles long, much of it following the Herat-Kandahar road. Now, Afghan
officials and foreign engineers are exploring a possible route across
the northern provinces and through Kabul. If started today, the
pipeline could be completed in seven years. That comes two years too
late for Pakistan, which is running out of reserves. While Pakistan has
doubled its energy output since 1999 -- to 4 bn cfpd -- its roaring
economy is expected to deplete gas reserves by 2010. By 2015, it will
need to buy 2.5 bn cfpd from abroad. "We cannot sustain our economic
growth if we don't get additional energy," says Ahmad Waqar, Pakistan's
secretary for petroleum and natural resources. "We need gas."
In all likelihood, Pakistan will need more than one pipeline project.
Pakistan is negotiating with Qatar and Iran over separate projects. The
Qatari pipeline is the most politically stable, but it has technical
problems. The Iranian pipeline -- which would distribute gas to both
India and Pakistan -- is technically the simplest. But it faces
substantial US opposition, as US law precludes giving a government
contract to a US company doing business with Indian or Pakistani firms
working on the Iranian pipeline. Both India and Pakistan are so
desperate to find gas that they are working together as joint customers
on the Iranian pipeline.
The TAP pipeline is expected to cost $ 3.8 bn, and create hundreds if
not thousands of jobs for Afghans. Afghan officials say that it might
be one of the first projects to generate revenue for the state. "There
is the opportunity to create 3,000 Afghan jobs for 30 years," says
Sediq. Hiring local labour will help increase security, he adds. "When
they are the part of the project, they will not let anyone attack it."
|
Kuril Islands Creative
thinking
Source: Asia Times Online http://www.gasandoil.com by Kosuke Takahashi
16-05-05
Japan's strained diplomatic relationship with China and South Korea
should not eclipse a key player whose relationship with Tokyo could set
the tone in balance-of-power politics and economic integration in East
Asia over the next decades. That player is Russia, and the overarching,
festering issue between Japan and Russia is sovereignty over the four
Russian-held Kuril Islands. Recently, some Japanese experts on Russia
have been calling for greater flexibility and compromise by Tokyo,
which has always demanded the return of all four islands. There's no
sign yet of official acceptance, but pressures are building for Japan
to strike a deal and accept what is called a "two islands plus alpha"
solution -- still to be hammered out. Some of the latest thinking is
that Japan should give up demanding the return of all four islands and
instead accept the two smaller islands and a portion of the two larger
ones.
Locked in a diplomatic dispute over the islands, called the Northern
Territories by the Japanese and the Southern Kurils by the Russians,
conciliatory approaches are beginning to crop up among Russia experts
in Japan. While the majority remain determined to wage a long,
drawn-out contest with Russia and support Japan's official demand for
the return of all four islands, an increasing number of experts have
begun to float the possibility of compromise, arguing that better
relations with Moscow are essential at a time when Japan's relations
with China and South Korea have plummeted. They argue that Japan and
Russia need to find common ground, a point of compromise on the Kurils.
Their approach, the two islands plus alpha solution, is something less
than a 50:50 split of the total area, more like 37:63, with the smaller
part going to Japan. "Two" refers to the two smaller islands Russia
promised to return to Japan in 1956 and that Russian President Vladimir
Putin suggested last November Moscow could relinquish -- they represent
just 7 % of the entire disputed area. "Alpha" refers to some portion of
the remaining two bigger islands.
The Southern Kurils, or Northern Territories, consist of three islands
-- Kunashiri, Etorofu and Shikotan -- and the uninhabited Habomai group
of islets, also termed an island. The islands are believed to be rich
in natural resources, such as oil and gas, and the area is a major
fishing grounds. Russia has offered to return the two smaller
territories -- Shikotan Island and the uninhabited Habomai group of
islets, while retaining the larger, more valuable islands. Tokyo has
rejected the offer and has sought the return of all four territories.
Moscow has never accepted the return of more than two islands, while
Tokyo has never accepted the return of less than four islands.
Island Name Area (sq km) Etorofu Island 3,184.0 Kunashiri Island
1,498.8 Shikotan Island 253.3 Habomai islets 99.9 Total 5036.0 Source:
The Geographical Survey Institute
Japan and Russia have not concluded a peace treaty since the end of
World War II, 60 years ago, due to this unsolved territorial dispute.
Currently, the two sides are engaged in a covert but fierce war of
diplomatic nerves over President Putin's hoped-for but deliberately
unscheduled visit to Tokyo. The delay is attributed by Japan to
Russia's foot-dragging over the Kurils. Putin told Prime Minister
Junichiro Koizumi last November on the sidelines of the annual
Asia-Pacific Economic Cooperation (APEC) forum summit in Santiago,
Chile, that he would visit Japan in early 2005, but the trip has yet to
be scheduled, due apparently to differences between Moscow and Tokyo
over the territorial dispute. Experts in Tokyo are now watching to see
whether Koizumi will visit Russia during the celebration of the 60th
anniversary of victory in World War II, to be held in Moscow on May 9
-- that could be an indicator of Japanese flexibility. Since Koizumi is
currently facing severe criticism in the Diet, or parliament, over his
top priority, reform of the postal system, whether he could spare time
to visit Moscow remains to be seen. If he does go, this would be
indicative of Tokyo's serious intention to resolve the territorial
issue and improve ties between the two countries.
Russian Foreign Minister Sergei Lavrov will be in Japan on May 30-31 to
lay the groundwork for Putin's promised trip later this year. "There is
an invitation [from Japan] and the visit cannot be postponed," Lavrov
was quoted as telling. Analysts believe Lavrov made the remarks to
indicate to Japan that Russia is ready to make Putin's visit to Japan a
reality if Koizumi attends the Moscow ceremony. Koizumi indicated on
April 8 that he is considering visiting Russia around May 9 if
parliamentary circumstances allow him to do so. "We are considering
it... I would like to visit if possible but it is a weekday," Koizumi
told in response to questions about attending the Russian ceremony.
Conservative Japanese media, such as The Sankei Shimbun, staunchly
oppose such a visit to Russia, which they say might be viewed by both
the Japanese and Russian public as Tokyo's weak-kneed diplomacy in the
territorial dispute with Moscow. "Nothing but the political shutdown by
the two countries' top leaders can solve this long-standing territorial
dispute," Shigeki Hakamada, a professor at Aoyama Gakuin University
professor in Tokyo and an expert on Russian affairs, said. "Both sides
need to make some concessions." Nobuo Shimotomai, professor of law at
Hosei University and an expert on Russian politics and history, holds
similar views. He noted that calls for the two islands plus alpha
formula are growing steadily among Russia experts in Tokyo. "President
Putin has played a diplomatic card suggesting the return of two of the
four islands, and this year will be a decisive time for the
Japan-Russia talks on the Northern Territories and future ties,"
Shimotomai told.
Akihiro Iwashita, a professor at Hokkaido University's Slavic Research
Centre, echoed their views. "Solving this issue will be accompanied by
painin the two countries' domestic politics," Iwashita told. "But
Koizumi and Putin have leadership ability to make a breakthrough on
this territorial dispute." As examples of such leadership, Iwashita
cited Koizumi's two surprise visits to North Korea, and Putin's visit
to Beijing last October that solved the final settlement of Russia's
long-standing border disputes with China. Putin and Chinese President
Hu Jintao put an end to their remaining territorial disputes over three
islands, reaching a 50:50 agreement in their negotiations over borders.
A bitter legacy of World War II For Japan, the dispute over the
Northern Territories/Southern Kurils is a bitter legacy of World War
II. On August 9, 1945, three days after the atomic bomb was dropped on
Hiroshima and the day on which Nagasaki suffered from the bombing, the
Soviet Union declared war on Japan, in violation of the Neutrality Pact
that Tokyo signed in 1941. Four days after Japan accepted the Potsdam
Declaration announcing Japan's surrender to the Allied powers, Soviet
troops undertook aggressive action, moving on the Kuril Islands, which
then belonged to Japan. By September 5, Soviets troops had occupied the
four islands now in dispute. History never accepts what-ifs. But if
Japan had accepted the Potsdam Declaration right after the August 6
bombing of Hiroshima, there could have been no Nagasaki bombing and
Soviet leader Joseph V. Stalin might not have declared war on Tokyo.
Then, there would not have been the island dispute today, nor would
there have been nearly 600,000 Japanese soldiers held in Siberian
labour camps where about 60,000 were said to have died under cruel
working conditions. From a Japanese perspective, Japanese leaders at
that time made a serious and terrible misjudgement of the situation.
Meanwhile, for Russia, this territorial dispute has also been a symbol
of diplomatic frustration. Princeton University Professor Gilbert
Rozman points out in his article in the book, The International
Relations of NortheastAsia, for Russia, "Japan's demand for four
islands meant overturning the Yalta Agreement and yielding to
nationalist pressure". At the February 1945 Yalta Conference involving
Stalin, United States president Franklin D. Roosevelt and British prime
minister Winston S. Churchill, the US and Britain are said to have
allowed the Soviet Union to unjustly invade and occupy these Japanese
lands in the post-World War II period -- a reward for Soviet
participation in the war.
In 1960, Moscow unilaterally abrogated the 1956 Japan-Soviet
communique, the treaty promising to return to Japan the smaller
Shikotan Island and the uninhabited Habomai group of islets - two of
the four territories. Not until the early 1990s, shortly after the
collapse of the Soviet Union, did Moscow officially admit the existence
of any territorial dispute with Tokyo, largely due to the Cold War. In
1993 the two countries finally issued the Tokyo Declaration that
committed them to tackle the issue of sovereignty over all four
islands, including the two bigger islands Kunashiri and Etorofu. This
is the reason most intellectuals here still are willing to stick to
Japan's traditional demand for the return of all four islands. Although
since last November Putin has offered Koizumi hard choices for ending
this territorial dispute by suggesting the return of the two smaller
islands, Japanese experts on Russia say the more time and effort that
is put into this issue, the more Russia might and could compromise in
the near future.
Experts have many views and interpretations of this issue, depending on
how they see the historical records. Those who focus on the Soviet
Union's violation of the Neutrality Pact with Japan in August 1945 tend
to buy Tokyo's views and case for the islands. Those who stress the
1956 Japan-Soviet communique clearly accept Russia's case for
sovereignty over the islands. How one interprets the language of
historical documents also matters. Japan's 1951 San Francisco Peace
Treaty with the Allied Powers stipulated in Article 2(c) that Japan
would renounce all rights, title and claim to the Chishima Retto,
literally meaning the Kuril islands chain in Japanese. But amid
criticism from domestic and foreign observers, the Japanese government
has never recognized those four islands to be included in those
renounced as the Chishima Retto, claiming those islands have always
been inside traditional Japanese territory. This is the major reason
why Japan has refused to call those four islands the Southern Kurils
and calls them the Northern Territories instead.
Last September, Koizumi stepped up the pressure on Putin over this
territorial dispute by setting out on a tour of the Northern
Territories by an offshore patrol vessel. Many foreign observers said
out Koizumi intentionally increased the tension and even strained
relations between the two nations. But Japanese experts such as
professor Hakamada of Aoyama Gakuin University said that tour was only
intended to correct a possible erroneous perception in Russia that
Tokyo was to focus on promoting full economic corporation by shelving
the territorial issue. This is because, prior to the tour, the two
countries' economic corporation had been emphasized by the
Japan-Russian Action Plan, adopted by Koizumi and Putin in January 2003
when Koizumi visited Russia. In any case, the Kurils jaunt seems to
have sent the wrong signals to Russia and to foreign observers,
regardless of its true intentions.
Return of three islands the best solution For Japan, the best
politically feasible remedy to settling this long-standing and
festering territorial dispute could be the return of the three smaller
islands -- Kunashiri, Shikotan and Habomai -- to Japan. This solution
could be an alternative to Putin's offer to return the two smallest
islands -- Habomai and Shikotan -- and might help bring Japan and
Russia closer to a resolution on the territories issue. At a meeting in
Tokyo of Japanese and Russian experts on February 2, a Japanese
participant suggested a 50:50 splitof the entire area of the Northern
Territories. The two islands that Russia has proposed to return
constitute just 7 % of the total area of the four islands. A 50:50
split of all four islands would give Japan Kunashiri, Shikotan and
Habomai islands and a portion of the remaining Etorofu. The three
islands actually only constitute 37 % of the total, but Japan could
give up Etorofu as a bitter legacy of World War II and a reminder of
earlier leaders' serious political misjudgement -- a lesson for future
Japanese politicians and the public.
This 37:63 split of the entire area of the disputed islands could be a
win-win international resolution as well as a lose-lose result in the
two countries' domestic politics, since giving up perceived sovereignty
always goes against national sentiment. But Tokyo should allow Russia
to run the administration of Kunashiri in the near- and mid-term,
permitting Russian residents to live on the island and waiting for some
of them to move to Etorofu in the long term. The Japanese government
repeatedly has said Tokyo would flexibly respond to the timing and
manner of the return of the administration over the Northern
Territories, if the islands were to return to Japan. Another reason in
support of this kind of solution is that since those smaller three
islands -- Habomai, Shikotan and Kunashiri -- and the largest island --
Etorofu -- are administered by different local government
organizations, it must be easier to redraw a national boundary between
Kunashiri and Etorofu. Specifically, Habomai, Shikotan and Kunashiri
have been administrated by the "Southern Kuril" local government of the
Sakhalin provincial government, while Etorofu has been under the
administration of the "Kuril" local government of Russia's Sakhalin
Island.
In addition, while Etorofu is known for its self-sustaining economy,
supported by one major monopolistic fish processing firm called
Gidrostroy, Kunashiri and Shikotan, both closer to Hokkaido, have been
suffering from economic woes and are more dependant on the Japanese
economy, especially Hokkaido Nemuro's local fishery industries.
Further, given the shifting balance of power in Asia due to the rapid
rise of China as a major political and economic power and the
implications of North Korean problems and energy resources in Russia,
cooperation between Japan and Russia is strategically very important.
Experts here have pointed out that many, if not all, "silovikis", or
ex-KGB and intelligence types surrounding Putin, are said to be wary of
China's rapid economic rise accompanied by a "demographic threat" to
Russia's Far East and East Siberia -- these silovikis were educated and
trained in the 1970s when the confrontation between the Soviet Union
and China was fierce.
Japan is eager to make deals giving it access to Russia's massive oil
and gas reserves in Siberia, and Russia would welcome Japan's
investment. Tokyo and Moscow have a clear interest in solving the
territorial row, which has been the principal obstacle to putting the
bilateral relations on a better standing. Moreover, for Japan, solving
this territorial dispute with Russia would give enormous momentum to
settling the country's other border issues with China, South Korea and
Taiwan. To the south, Japan is engaged in a sovereignty dispute over
the Senkaku Islands (known in China as the Diaoyu Islands) and
competing development of offshore gas fields in the East China Sea. In
the west, it faces the thorny issue of the South Korean-held Takeshima,
known in South Korea as Tokdo or Dokto. For Japan, the Northern
Territories issue can leave more room for compromise with its northern
neighbour Russia than other territorial disputes.
For Russia and Japan, the year 2005 is a symbolic year representing an
opportunity that may not arise again. Not only does it mark the 150th
anniversary of the treaty of commerce and friendship between Moscow and
Tokyo, but it also marks the 100th anniversary of the peace treaty of
Portsmouth, New Hampshire, signed in 1905, at the conclusion of the
1904-05 Russo-Japanese War. Further, it commemorates the 60th
anniversary of the end of World War II. History will look kindly on
Koizumi and Putin, if they can resolve this long-standing and festering
territorial dispute once and for all. The two leaders need to hammer
out a proper road map for settlement of the territorial issue if they
wish to securing their places in history. The four islands are not
worth a long destabilizing battle in a potentially volatile region.
Kosuke Takahashi, a former staff writer at the Asahi Shimbun, is a
freelance correspondent based in Tokyo. He can be contacted at
letters@kosuke.net.
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