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Energy Blast – June 16, 2008

In response to Group of Eight nations urging oil producers to boost output, Saudi Arabia is planning to increase its output next month by about a half-million barrels a day, or 6%. The news caused the price of crude to fall for the second day running. TNK-BP’s Russian shareholders have apparently confirmed their readiness to dispose of their 50% share of the company, reportedly offering to swap their 50% share in TNK-BP for 7.6% of shares in BP. One report says the situation has descended into “outright mudslinging”. Meanwhile Mikhail Fridman, one of the Russian shareholders, said it was unwise of the oil company to “preach at” the Kremlin, referring to last week’s comments by Peter Sutherland. “We find Mr. Sutherland’s comment unhelpful and, frankly, insulting to the Russian leadership,” he said. Gazprom’s Chief Executive Officer Alexei Miller believes that his company’s market value will triple to $1 trillion by 2015. Russia’s foreign ministry demanded that Ukraine halt oil exploration in parts of the Black Sea because of a territorial dispute. Finance Minister Alexei Kudrin partly blames the weakening dollar for high oil prices. “The U.S. dollar depreciation was actually one of the reasons oil prices went up,” he said. The rising price of airplane fuel in Russia is putting dozens of smaller airlines at risk of bankruptcy. Unified Energy System has begun construction of a new production unit at the Novy Urengoi power station.