MOSCOW (MRC) - Russia's top gas producer Gazprom (GAZP.MM) and China's CNPC agreed on Thursday on basic terms of long-awaited gas supplies to China, paving the way for the final deal, which would cement Moscow's footing in the world's second largest economy, said Reuters.
The pressure on Gazprom to venture into the Chinese market is rising as its Russian rivals, such as Novatek, have already secured deals to supply China with gas from yet-to-build liquefied gas plants and are lobbying for limiting Gazprom's export monopoly.
The former Soviet Union launched gas supplies to Western Europe in 1968 and the European Union has remained Gazprom's key market, where the company generates 55 percent of its profit by covering a quarter of the bloc's gas needs.
But cash-strapped European firms are increasingly seeking to wean off their energy dependence on the former cold war foe, looking for cheaper fuel, such as liquefied natural gas. Gazprom, on the other hand, has been involved in painstaking and so far fruitless talks about gas supplies to China, to diversify its deliveries away from Europe.
The basic terms, signed by heads of Gazprom and CNPC in the presence of presidents Vladimir Putin and Xi Jinping "define the volumes, start of deliveries, payments, 'take-or-pay' amendment" and other issues, Gazprom said in a statement. It gave no further details.
Gazprom first signed a memorandum of understanding with China in 2006 to ship up to 68 billion cubic meters of gas per year via two routes to the Asian country, later prioritizing the route which would take 38 bcm per year.
However, talks on finalizing a deal have been repeatedly delayed over numerous differences, including pricing. Gazprom has said it aims to supply China with 38 bcm per year from its fields in East Siberia. That compares with 152 bcm it aims to supply to Europe this year.
In a statement on Thursday, Gazprom's Chief Executive Alexei Miller said both companies now plan to sign the final supply deal by year-end, as it has been planned in the latest schedule.
Gazprom added that the price formula, usually linked to oil prices but may include a spot part to reflect more flexible liquefied gas market's prices, would not be connected to the U.S. Henry Hub prices, which are typically lower than in the rest of the world.
In an interview with Reuters in June, Gazprom's export Chief Alexander Medvedev said the company favored the regional oil-linked benchmark, the Japanese Crude Cocktail, for Chinese or other Asian gas deliveries.
As MRC wrote before, Russian gas giant OAO Gazprom will soon announce another "fundamentally new" liquefied natural gas (LNG) project. Gazprom is already building a gas liquefaction plant in Vladivostok, eastern Russia, to supply the Asia-Pacific region. Companies from Japan, a large consumer of LNG, are in talks on purchasing supplies from the facility.
MOSCOW (MRC) -- The future of PEMEX (Petroleos Mexicanos ), the country's petroleum monopoly is being debated in Mexico. The issue is very important economically, but it's more than an economic question, said Americanthinker.
The question of how to handle PEMEX is closely tied to national sovereignty and Mexican identity. Any politician who wants to reform it had better take that into consideration.
PEMEX is Mexico's state oil monopoly. PEMEX is protected from competition in Mexico, where it enjoys a legal monopoly on the exploration, processing and sale of petroleum. Its privileged status in national mythology affords it certain immunity from criticism.
Nevertheless, PEMEX is in deep trouble. It's heavily indebted, in fact it's one of the world's most indebted oil companies. It's not really managed as an oil company, but as a cash cow of the Mexican government, which makes it difficult to function as a normal oil company.
PEMEX is the source of a third of the Mexican government's revenue. Any reform that substantially reduces that share is going to be difficult to bring about.
Petroleum is Mexico's biggest revenue earner, but production is dropping. If present trends continue, Mexico will be an oil importer by 2020.
The Mexican Constitution (Article 27) guarantees PEMEX's privileged position, a monopoly over the oil industry, from exploration to the sale of gasoline at the pump.
PEMEX lacks sufficient refineries. The United States has 139 operable oil refineries. Mexico, with less than half of U.S. production, has only seven!
PEMEX is prohibited from partnering with foreign companies within Mexico, but not abroad. So Mexican crude is shipped to Houston, Texas, where it is refined (in partnership with Shell) and then re-imported to Mexico.
As MRC wrote before, PEMEX signed a noncommercial agreement with Exxon Mobil to share technical and scientific information of mutual interest. PEMEX said in a press release that the five-year agreement renews the two oil companies' relations in matters of cooperation.
Pemex, Mexican Petroleum, is a Mexican state-owned petroleum company. Pemex has a total asset worth of USD415.75 billion, and is the world"s second largest non-publicly listed company by total market value, and Latin America's second largest enterprise by annual revenue as of 2009. Company produces such polymers, as polyethylene (PE), polypropylene (PP), polystyrene (PS).
MOSCOW (MRC) -- INEOS ChlorVinyls has announced it has completed the sale of its UK packed chlorine business to 2M Group Limited, reported the company on its site.
The value of the deal is not disclosed.
The sale consists of the packed chlorine assets at ChlorVinyls’ Runcorn Site, Cheshire, together with the associated commercial goodwill of this business.
Employees associated with the packed chlorine business will remain with INEOS and will provide dedicated packing services to 2M Group under a service contract.
The sale is part of INEOS ChlorVinyls’ ongoing review of its product portfolio and the desire to focus on its core businesses.
Comments Keith Metcalfe, INEOS ChlorVinyls Business Director: "Packed chlorine is an excellent strategic fit with the existing businesses operated by 2M Group and they have the necessary expertise to maximise the full potential of this business."
More recently, the Group agreed exclusive manufacturing and marketing rights for the TRIKLONE and PERKLONE branded business of INEOS ChlorVinyls.
As MRC informed previously, in May 2013, two Europe’s biggest chemical companies agreed a joint venture that will create one of the world’s largest producers of PVC plastics by revenues. Solvay, the Franco-Belgian chemicals company, will pool its European business that creates chlorvinyls - the base materials for PVC plastics - with that of privately owned rival INEOS Group , in a move that will eventually result in the Anglo-Swiss company taking full control of the joint venture.
INEOS ChlorVinyls is one of the major chlor-alkali producers in Europe, a global leader in chlorine derivatives and Europe's largest PVC manufacturer.