Iran, Energy hub for new Silk Road

http://www.irna.ir/en/News/82873343

Turkey targets peak in offshore wind power with world’s largest plant

https://www.dailysabah.com/energy/2018/02/23/turkey-targets-peak-in-offshore-wind-power-with-worlds-largest-plant

China’s $50 Trillion Plan to for a Global Energy Grid

Πηγή: The Diplomat
By Shannon Tiezzi
April 1 2016

Your Friday roundup of China links…

China’s State Grid Corp. has unveiled an ambitious blueprint for creating a global electricity network. As Wall Street Journal reports, on Wednesday State Grid chairman Liu Zhenya outlined the $50 trillion plan, which calls for long-range transmission lines to create a world grid that heavily incorporates wind and solar energy from the Arctic and the Equator regions, respectively. The project could come on line by 2050, but State Grid wants to begin pilot projects in the next 10 years. WSJ explains the plan:

In the near term, the focus will be on long-range interconnection domestically and on developing battery and other technology needed for better transmission of renewable power resources.

Then, over subsequent decades, China’s grid would be connected with others, starting with northeast Asian neighbors like Mongolia and South Korea. Construction of the huge solar power bases and Arctic wind farms, as well as long-range power lines to demand centers, would follow.

Elsewhere, the Asia Maritime Transparency Initiative takes a closer look at the rumors surrounding Scarborough Shoal. According to their satellite imagery, as of March 24 there was “no Chinese dredging or construction activity at Scarborough Shoal.” ATMI looks in detail at what the implications of (as yet hypothetical) Chinese reclamation at Scarborough Shoal would be – strategically, diplomatically, and environmentally.

Speaking of the South China Sea, Asahi Shimbun focused on that topic during a rare interview with a Chinese military official. Major General Qian Lihua told Asahi that China’s artificial island-building and construction “will continue in the future” – but he also said that Beijing was not yet discussing the idea of setting up an Air Defense Identification Zone in the South China Sea.

In other news, a week after Nepali Prime Minister Khadga Prasad Sharma Oli made his first visit to China, Nepal’s Chief of Army Staff General Rajendra Chhetri made his own trip to Beijing. China Military Online has more details on Chhetri’s meetings with two of China’s top military leaders, General Fang Fenghui and General Xu Qiliang, both vice chairs of China’s Central Military Commission. In both conversations, Nepal and China pledged to increase defense cooperation, particularly with regards to disaster relief and personnel training.

Meanwhile, China’s Ministry of National Defense announced on Thursday that Indian Defense Minister Manohar Parrikar will visit China in 2016, but did not confirm report that Parrikar will head to Beijing in the next few weeks.

Finally, Financial Review looks at Arthur Kroeber’s new book, China’s Economy: What Everyone Needs to Know. Reviewer Angus Grigg argues that “the book could be called China’s Economy: Banishing the popular myths,” as it lays out why concerns about an economic collapse in China are overblown. That doesn’t mean Kroeber is optimistic however; rather, as Grigg puts it, he foresees “a slow Japanese-style decline” — not an outright crash — ahead for China’s economy.

Greece stresses its role as EU’s energy hub

Πηγή: EurActiv
Jan 13 2014

Greece, holding the rotating presidency of the EU until June, said it would promote the enhancement of energy security in the 28-country bloc and fully support the European Commission’s approach to Russian energy giant Gazprom.

Speaking to the press in Athens last week, the Greek minister for energy, Yiannis Maniatis, said the first pillar for European energy security was the support of initiatives to diversify gas supply, including gas from the Caspian Sea and the gradual implementation of the Southern Corridor.

According to the minister, “interconnectors” for big pipelines were key contributor to Europe's energy security.

The Trans Adriatic Pipeline AG (TAP) and the Interconnector Greece-Bulgaria (ICGB) recently signed an agreement laying the foundations for linking the two projects and thus bringing gas from Azerbaijan to Bulgaria, a country which depends on Russia for almost 100% of its gas imports.

The two sides will work together on realising a possible interconnection point in the vicinity of Komotini, Greece. “These interconnectors are choices that objectively enforce the energy security of Europe,” Maniatis said.

The second pillar for European energy security, Maniatis said, was the recent developments in oil exploration in the eastern Mediterranean.

“I would like to highlight that the perfect cooperation between Greece, Cyprus and Israel, shapes new policies of energy supply in Europe and sends a quite hopeful message,” he noted.

The "Projects of Common Interest” (PCI) constitutes the third pillar and will be implemented with the participation of Greece, the minister said.

“This issue is a priority and is being shaped through Greece’s ambition to become an energy hub of the greater region ... we hope that the Informal Meeting of Energy Ministers will note that a new source of energy supply for Europe is being shaped,” Maniatis added.

Doubts about the future of South Stream

The European Commission said last month (4 December) that the bilateral agreements for the construction of the Gazprom-favoured South Stream gas pipeline – concluded between Russia, Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria – are all in breach of EU law and need to be renegotiated from scratch.

“We agree with the strategic plans of the European Commission, which we have supported for all these years, as it was the case with the Southern Corridor”, said the Greek deputy minister of environment, energy and climate change, Makis Papageorgiou.

But he conceded that there were conflicting signs from Gazprom’s side on the South Stream pipeline.

“As a plan, it has been around since 2007. The company has made many moves, and as you already know, Greece has signed an agreement with the Russian company. After that, Gazprom abolished the southern branch and made new agreements focusing on the northern branch.”

“It is still unclear what exactly will happen with South Stream,” he noted.

“The position of the European Commission on the issue is pretty clear: Gazprom has to make its plans clear, under what conditions it will operate in the EU,” he added.

Privatisations in energy sector

Even though debt-ridden Greece is on the recovery path, the country may need to accelerate privatisation, especially in the energy sector, namely the Hellenic Gas Transmission System Operator (DESFA) and the public Natural Gas Supply Corporation of Greece (DEPA).

The privatisation of the Hellenic Gas Transmission System Operator (DESFA) is in the process of final approval by Brussels.

“By the summer, this process will be finalised and Azeri company SOCAR will acquire 66% shares of the company while 34% will remain in the Greek state”, said Papageorgiou.

As for DEPA, the international bid was inconclusive since Gazprom pulled out, despite its initial interest.

According to the Greek deputy minister, Gazprom finally backed off as a result of EU conditions.

“Evidently, the reason for this, as stated by Russian PM Alexander Medvedev, is that the EU conditions at some point should change. As long as the conditions of the EU don’t change and Greece is a member of the EU and abides by its rules in the energy market, no more moves can be made”, the deputy minister noted.

He added that the privatisation of DEPA will happen later, as currently Greece holds discussions with the Commission about gas market reform.

BACKGROUND:

Crisis-hit Greece took over the reins of the EU Council of Ministers on Wednesday (1 January) with a record low budget of €50 million set aside as the “absolute maximum” to run the presidency during the next six months.

While analysts have predicted Greece will require more aid, albeit on a smaller scale than previous bailouts totalling about €240 billion, the troubled country has vowed to spend considerably less than other countries'
presidencies.

Greece takes the helm of the EU at a critical time, just months before the end of the current European Parliament. This means that Greece will have less than four months to deliver on complicated dossiers, rather than the full six months.

The main presidency priorities are the European Banking Union, growth and jobs, migration and a European maritime policy.

Editor's Note: At the same time Greece didn't reach an agreement with Gazprom over the natural gas price.

See (in Greek) : Δεν συμφώνησαν ΔΕΠΑ - Gazprom για το φυσικό αέριο

 

The Energy Industry is Not Safe in North Africa

Πηγή: Oilprice
jan 25 2013

Energy interests sector-wide should be prepared for the coming security nightmare that is the Sahel. At a time when even the juniors have become unaccountably brave in frontier regions, the hostage crisis in Algeria demonstrates just how vulnerable the industry is.

It is vulnerable both to the whims of Western military intervention and to Salafi jihadist moves to take advantage of a transnational opening that would have been unheard of with Gaddafi, Mubarak and Assad still in control in Libya, Egypt and Syria.

The hostage crisis at the BP-operated Amenas gas field in the Algerian Sahara was most interesting because it was the result of a militant leadership feud. It was a challenge from one leader to another, and that challenge will have to be met with something equally spectacular. It was also a message to the French about their unexpected intervention in Mali. More attacks on energy installations and Western personnel are likely to come elsewhere in the Sahel, and no amount of high-tech security will prevent them.

In total, we are talking about more than one million square kilometers of ungoverned desert in the Sahel and a French military intervention that will shift them away from Mali and toward other borders to refocus. French interests and citizens will be the primary (and already declared) targets, but Europeans in general will become increasingly profitable kidnapping victims.

Conflict in Mali

The Mali military staged a coup in March 2012--one month before presidential elections. They ousted President Amadou Toumani Toure on the pretext that his administration had failed to deal with the Tuareg, who have been pursuing independence for “Azawad” (Northern Mali) since the 1960s.

The coup leader was Pentagon favorite Amadou Haya Sanogo, who was trained in the US and by AFRICOM and was viewed in Washington as a strong ally in the fight against terrorism and particularly against the solidifying interests of AQIM (al-Qaeda in the Islamic Maghreb). The coup left a security vacuum that allowed the Tuareg room to make a power play.

This came at a good time for the Tuareg, who had lost a major support base with the death of Libyan leader Muammer Gaddafi. In March, on the heels of the coup, the National Movement for the Liberation of Azawad (MNLA—a secular Tuareg outfit) took over some key government buildings in Gao (in Northern Mali). In April, they announced the creation of independent Azawad. But their victory was elusive and they were soon sidelined by three Islamist groups: Ansar al-Din (an Islamist Tuareg outfit), MUJAW and AQIM, both foreign terrorist groups.

French Special Forces arrived on the scene in March and the UN sanctioned military action. North African nations failed to move on this, leaving any military effort up to the French, while the US monitored the situation from neighboring borders (Burkina Faso and Mauritania).

In June, the MNLA were forced out by MUJAW (whose fighters are almost all former AQIM), and MUJAW took over Gao and imposed an extremely hardline form of Sharia law.

In January 2013, the French sent an initial 1,400 troops into Mali to launch an offensive supported by air strikes. The French were warned that the offensive would push militants into Algeria.

The French intervened when Ansar al-Din seized control of the town of Konna in the second week of January 2013. The French justification was to stop the Islamists from taking control of the rest of Mali. Konna in technically in the north of Mali, but it lies in the central buffer zone between north and south.

This was a flawed justification. Ansar al-Din is interested in taking control of the north, not the south, and its move on Konna was most likely intended only to measure the Mali Army’s response. Ansar al-Din does not have the capability or support (even with the help of the foreign terrorist groups) to take over the south of the country. Nor is that a likely agenda.

These militant Islamist Tuareg are natural enemies of the foreign terrorist groups (AQIM and MUJAW) and their temporary alliance is one only of convenience. Once Ansar al-Din secures its northern territory, it will summarily reject AQIM and MUJAW and likely turn on them.

Ansar al-Din views itself as defending its own territory. They are Tuareg. They are Malians. AQIM and MUJAB are foreigners and they have no territory to defend and will find themselves boxed in in Northern Mali, when traditionally they rely on mobility for their cause. The premature French military action will push AQIM and MUJAW militants to areas of the Sahel/Sahara outside of Mali and thus the crisis will spread.

AQIM, MUJAW and Ansar al-Din cooperated with each other to seize control of northern Mali last year, but since then cooperation has only been sporadic. The only other demonstration of cooperation was on 10 January, when the three launched a joint offensive against the Malian Army. It is important that there is the illusion of a united front—but it will not last. Not only are AQIM and MUJAW struggling with an insurgency leadership question, Ansar al-Din is Tuareg and has an entirely different agenda.

AQIM and Ansar al-Din are at odds over AQIM’s smuggling activities, and these three groups—along with a number of other groups—are also suffering from racial infighting among Black Africans and Arabs. Already, Ansar al-Din is showing signs that it may rescind plans for Sharia law in the north, which is HIGHLY unpopular among the Tuareg.

The leader of Ansar al-Din—Iyad ag Ghali--is under a great deal of pressure from his own tribe, the Ifoghas, to cut all ties with AQIM and MUJAW. This pressure has risen exponentially since the imposition of Sharia law in some areas of Northern Mali. Ghali is also be courted heavily by the secular MNLA, of which he is a former member, as well as Algerian intelligence officials and meditators from Burkina Faso.

The Algerian Hostage Crisis

On 15 January, a group of militants (about 40-strong) entered the Algerian Sahara via Libya and attacked a BP-operated gas field (Amenas) some 100 kilometers from the Libyan border, in a very remote stretch of desert. They took some 700 hostages. On 15-16 January, some 600 hostages were freed, but many of those were believed to have been freed by the militants themselves shortly before a raid by the Algerian Special Forces. On 16 January, Algerian Special Forces launched a three-day rescue operation. At least 60 hostages were killed in the helicopter, including at least 7 Western nationals. A total of 6 militants were captured alive.

This spectacular attack was not about Algeria, and only secondarily about the French intervention in Mali. It was first and foremost about making a power play to resolve a simmering leadership dispute among the Salafi jihadists over the Sahel.

No ransoms were sought, no hostages were executed, nor were the BP-operated Amenas gas facilities wantonly destroyed or sabotaged. It was an extremely high-profile publicity stunt designed to send this message: Mokhtar Belmokhtar is the unquestionable leader of the Salafi jihadist movement. He has managed to launch a surprise attack on a high-security Western gas field and take hundreds of hostages on the territory of Algeria—which is, significantly, the stomping ground of his key leadership rival. The secondary message—which was also necessary for the overall, incontrovertibly united goals of the Salafi jihadists in the Sahel—was a warning to the French over their intervention in Mali.

It is this leadership struggle that will best help us to predict where the next attack might take place, and how these parallel objectives will affect security across the Sahel and beyond—to Egypt and Syria.

The media has tended to attribute the hostage incident to AQIM, as this is something the Western public is familiar with and it suits further “war on terror” ambitions. However, the attack was not conducted by AQIM, rather by MUJAW, a relatively new creation comprised of former AQIM fighters and a mix of Black African Islamists. More specifically still, the attack was led by Belmokhtar, the historical leader of AQIM who split from the group only in October 2012 over a leadership dispute.

What concerns us most urgently is that Belmokhtar’s leadership rival, Abdelmakbel Droukdel, must rise to the challenge and respond with an equally spectacular attack that is still in line with the message to the French.

Beware—Libya, Niger and Mauritania

While most attention is presently on the security situation in Algeria, this may be misplaced. Algeria is the most secure of all the Sahel countries and its security forces have significantly greater capabilities. We would be more inclined to expect another terrorist attack outside of Algeria—for instance, in Libya, Niger, or Mauritania.

Libya will be the most affected, and that is fitting as this is where it all began. Unilateral French intervention led to a NATO-level conflict that effectively destabilized the entire Sahel and opened up windows of opportunity for Islamic militant groups—opportunities that have never existed before.

Libya remains a security nightmare, awash with roving militias, some of them understood to be “friendly”, working for, but not controlled by the government, others waiting for another opportunity to regroup, such as the chaos in Mali may provide. Those “friendly” Islamic militias also comprised the security team protecting the US consulate in Benghazi when it came under attack on 11 September 2012.

The violence in Mali has already sparked off a string of threats in Libya, with security forces claiming to have intercepted vehicle-borne explosive devices at the Benghazi airport before they could be detonated. Militant threats in retaliation for the French intervention in Mali have specifically listed hotels catering to foreigners across the country, but to a higher degree in Benghazi. Western diplomats remain a specific target. The Italian consul in Benghazi narrowly survived a drive-by shooting on 12 January.

After Libya, Niger is the most vulnerable to what will now be a spread of Salafi jihadist activity and kidnapping across the Sahel. It is most vulnerable because it is the poorest and its government lacks structure. Corruption among the security forces is extremely high, and there is evidence of individual security force collusion in kidnappings of foreigners.

This is also another likely theater for direct intervention by France because of French uranium interests here. Niger provides a significant amount of the uranium France uses in its nuclear reactors, and these uranium facilities should be on high alert.

Particularly in Niger, the kidnapping networks are dangerous and kidnappings are often conducted by third parties interested only in selling foreigners to AQIM or MUJAW—the two key terrorist groups in the region. This makes the kidnapping network immediately larger, and recruitment irrelevant. There is no ideological requirement. Locals looking to profit from this business will note the renewed momentum of the Salafi jihadist movements due to events in Mali and Algeria, and they will be seeking to take advantage of that momentum.

Comment: Meeting Cyprus’s Interim Natural Gas Needs

It is striking to note that natural gas costs about one tenth of the price of a barrel of oil equivalent.

Πηγή: Famagusta Gazette
By Constantinos Hadjistassou Ph.D.
Nov 26 2012

Owing to its numerous uses natural gas is the most versatile hydrocarbon. Predominantly consisting of methane (CH4) natural gas can be used to power vehicles, generate electricity, produce fertilisers, heat homes, cook food or even be converted into diesel.

It is striking to note that natural gas costs about one tenth of the price of a barrel of oil equivalent.

How about using natural gas to lower atmospheric emissions and reduce the price of electricity?

These two reasons partly explain why natural gas power stations have recently gained considerable popularity in relation to coal fired power plants. Whatsmore natural gas resources are more geographically distributed than oil.

Yet the cost of developing natural gas fields and transporting the gas to the markets can be in several occasions prohibitively expensive.

According to statistics from Eurostat, during the first half of 2012, Cypriot domestic consumers incurred the highest electricity price tag in Europe amounting to 0.2338 euro per kilowatt hour (kWh).

To a large extent this is attributed to the high price of diesel used to generate electricity and the Mari levy.

As a direct consequence the high electricity prices exacerbate inflation and negatively impact the competitiveness of the country hence hampering economic recovery.

Paradoxically, Cyprus following the discovery of the Aphrodite natural gas field with an estimated 200 billion cubic meters (bcm) has abundant natural gas both for the domestic market and for exports.

With only one caveat: developing an ultra-deep water natural gas field is a capital intensive business hard to justify solely for Cyprus’s natural gas domestic needs.

If the Electricity Authority of Cyprus (EAC) were to meet all of the island’s electricity demands with natural gas then about 1.2 bcm of natural gas per annum will be sufficient.

Carrying out the appraisal work, installing the subsea equipment, procuring the floating platform (if chosen) and laying the subsea pipeline from the Aphrodite field is expected to cost about 1.6 billion euros and could take from 4 to 5 years at the earliest optimistic scenario.

In the meantime, is it economically sustainable and rational to continue to rely on diesel and heavy fuel oil given that alternatives exist?

This is not to say that renewable energy sources, such as wind and solar energy, cannot be incorporated into the energy mix.

Their intermittent nature though makes it necessary to maintain an installed capacity of power generation usually utilising fossil fuels should wind is not blowing and/or the sun is not glowing.

Recently, Cyprus’s Natural Gas Public Company (DEFA) invited bids regarding the supply of natural gas to the Vasilikos power station. The invitation did not specify the form at which the natural gas will be imported in Cyprus hence leaving all options open to suppliers.

More importantly, DEFA specified that the supply of natural gas was for the duration of five years ending on the 30th of September 2018. Given the low volume of the natural gas supply, the lack of infrastructure in Cyprus to permit the import of natural gas, and the short time window of the supply it is unlikely companies will pursue expensive investments.

As a matter of fact natural gas will be imported either in liquefied or in gaseous state. Subsequently, we explore the different options available for introducing natural gas to the island.

Compressed Natural Gas (CNG)

Compressed natural gas (CNG) constitutes an attractive technology for importing natural gas. Methane compression ranges from 130 to 275 bars.

Because the gas is transported in its gaseous form, CNG does not require an expensive regasification terminal. Only a jetty will be needed or a flexible submarine pipe (riser).

However, CNG is economical over short to medium range sea journeys in relation to liquefied natural gas (LNG) which becomes economically viable over longer sea routes.

If the CNG technology is selected it means that Cyprus (or the gas supplier) will need to build the first CNG ship in the world.

Currently no such ship has been constructed. To date, several CNG ship concepts have been proposed but none has yet to materialise.

The American Bureau of Shipping (ABS)– a classification society– has approved one such design but it remains to be seen if the ship will become a reality.

Nevertheless, three distinct designs namely the coiled pipelines and the vertical or horizontal steel pipes featuring also composite materials have been proposed as a way of storing onboard pressurised natural gas.

CNG ships will be very expensive to build and will absorb the majority of the costs of importing natural gas to Cyprus.

Developing the Aphrodite Gas Field or Importing Gas from Israel

The second option is to lay a submarine pipeline either from Israel’s Tamar field, expected to start producing natural gas in 2013, or from the Aphrodite gas discovery to Vasilikos.

This is an expensive engineering endeavour and it is highly unlikely for such a project to become a reality unless some of the gas is destined for export. Possibly a Cyprus-Israeli joined LNG export terminal will justify the cost of the Israel-Cyprus pipeline.

The submarine pipeline will be laid using a J-type semisubmersible platform. Before pumping natural gas from the Aphrodite gas field the discovery will need to be appraised, subsea wells completed, and either a floating platform or a subsea (wet) development will be used to pump the gas to shore.

Considering that the pipeline will be laid at a water depth at times reaching 2,200 m the project will take at best 3 to 4 years to complete. A detailed survey of the seabed will be necessary to identify the optimal path the pipeline will follow.

Geo-hazards such as highly corrosive sea areas or an unstable sea bottom will need to be addressed. An environmental study is also a critical part of the process.

The cost of the pipeline from the Aphrodite gas field to Vasilikos a distance of about 185 km ranges from 615 million euros to 1.76 billion euros. These estimates are based on existing pipelines laid at similar water depths.

Namely the Blue Stream siphoning gas from Russia to Turkey and the Green Stream exporting gas from Libya to Italy.

An alternative option will be to lay a pipeline from Israel’s Tamar gas field without developing the Aphrodite gas field. Such a plan will be faster to implement that developing Block’s 12 gas field but will require a longer pipeline of about 240 km in length which comes at a higher cost.

Floating, Storage and Regasification Vessel (FSRU)

A Floating, Storage and Regasification Vessel (FSRU) is an LNG ship temporarily or permanently moored on the sea or a jetty capable of storing LNG and converting it back to its gaseous form on demand.

Natural gas is stored in the cryogenically cooled ship containers therefore obviating the need to construct natural gas storage tanks onland.

This floating natural gas solution was shortlisted back in 2004 to supply Cyprus with natural gas but was later on ruled out. Although the technology existed at that time no such FSRU ship was ever constructed or converted then.

Since 2009 four FSRUs have entered operation while another three are under construction.

Gas replenishment of the FSRU is accomplished via feeder LNG carriers. Worth noting that current FRSUs can deliver up to 5 bcm per annum well above the 1.2 bcm maximum demand of the EAC.

Deploying an FSRU requires a much shorter time window of about 2 to 3 years versus an onland regasification facility which takes 5 to 7 years. Depending on whether the FSRU is a new building or converted from an existing LNG carrier the costs may range from 120 to 200 million euros.

Shuttle and Regasification Vessel (SRV)

The Shuttle and Regasification Vessel (SRV) is again an LNG vessel which unlike the FRSU is not permanently or temporarily moored. Instead the SRV can transport natural gas from a natural gas liquefaction plant to Vasilikos.

Onboard regasification equipment can be used to convert LNG into compressed natural gas prior to pumping it onshore for storage via a jetty or a submarine pipeline connected to a flexible marine (pipe) riser.

Thus an SRV will discharge her LNG cargo to the receiving terminal in gaseous form and then another ship could drop-by when natural gas is needed to refuel the tanks on land.

Like in the case of the FRSU, natural gas will need to be sourced from an LNG export plant necessitating the need to sign a premium priced short term contract or divert LNG from another supplier.

Given the short duration of the contract which DEFA alludes to, this will push the unit price of natural gas to a much higher price than that of traditional LNG 15 to 20 year contracts. Currently, Japan pays $10 to $12 per million BTU.

Provided that existing SRVs will be delivering natural gas to Cyprus this option will be the fastest to implement.

The subsea pipeline and marine riser are expected to take about a year to construct with estimated costs of 20 to 40 million euros.

The availability of SRV vessels is the major consideration here. On-land natural gas storage tanks will be used to store the gas and could take at most 2 years to erect. Because this is a temporary solution Cyprus consumers will pay a premium for the natural gas.

LNG Regasification Terminal

This is the most expensive and time consuming option unlikely to be completed within the five year time horizon which DEFA specifies. Typically, an LNG receiving terminal including the natural gas storage facilities takes 5 to 7 years to construct and costs about 500 million euros (for about 8 million tonnes per annum).

Cyprus needs do not conform to the preceding requirements and hence this is the least likely option to be selected.

What the Future Holds

Ironically, Cyprus (and Noble Energy) despite having discovered about 200 bcm Cypriots pay the most expensive domestic electricity in the EU.

Coupled with the small volume of about 1.2 bcm needed to meet Cyprus’s electricity demands economic considerations dictate most decisions of importing natural gas.

Several options are therefore ruled out in favour of temporary solutions which command a premium natural gas price. Nevertheless, estimating the costs of inaction and comparing them with the costs of the interim solutions can help reach the best solution possible under the prevailing circumstances.
--------------------------------------------------------------

Constantinos Hadjistassou Ph.D.is a researcher at the University of Cyprus specialising on hydrocarbons and low-carbon energy technologies. Website: www.energysequel.com

Europe’s fears over US energy gap

Πηγή: FT
By Gerrit Wiesmann
Nov 7 2012

Europe’s ability to compete against the US as a manufacturing centre is being damaged by rising energy costs as North America benefits from cheap natural shale gas, Germany’s biggest companies have warned.

The energy cost advantage for US companies is rising and is expected to persist until at least 2020, according to the BDI, the German industry lobby group.

German industrial companies such as Bayer and BASF are among the those alarmed over the gap.

Some executives fear a growing divide between European and US energy costs could see energy-intensive manufacturers divert investments that might have gone into Europe to the US instead.

Harald Schwager, the member of BASF’s executive board responsible for Europe, told the Financial Times: “We Europeans are currently paying up to four or five times more for natural gas than the Americans ... Of course that means increased competition for all the European manufacturing sites.”

BASF, the German chemicals company, recently converted its steam-cracker in Texas to run on shale gas and says its production complex in Louisiana – where it is building a formic acid plant – is very competitive.

Marijn Dekkers, the chief executive of Bayer, the German drugs and plastics maker, also told the Financial Times: “Energy costs in Europe and Germany in particular will continue to rise. That will have an effect on the competitiveness of several sectors.”

In a report to be published in coming days, the BDI forecast US natural gas prices would remain at €16 per ­megawatt hour (MWh) until 2020 – some 40 per cent less than the last peak, around €25 in 2008.

In contrast, German gas prices will rise from €48 per MWh to €61, an increase of 27 per cent by the end of the decade.

Compounding German industry’s fears is chancellor Angela Merkel’s plan to phase out nuclear power by 2022 and replace it with renewable energy sources, which companies say could drive a bigger transatlantic divergence in electricity prices.

The BDI’s projection, put together by BCG, the consultancy, says electricity prices for German industrial users will rise from €90 per kWh today to €98 or even €110 in 2020. US prices are expected to rise only from €48 to €54 in the same period.

“Europe’s politicians should be careful not to make already pricy energy even pricier by levying new taxes or surcharges,” Mr Schwager said in reference to the German renewable-energy surcharge from which big industry is excluded for now.

The BDI blames costly long-term gas contracts and a lack of US gas exports for Europe’s energy woes.

Russia, China and The Geopolitics Of Energy In Central Asia

ABOUT THE AUTHORS

Alexandros Petersen researches the intersection of energy and geopolitics. He is an advisor to the European Energy Security Initiative (EESI) at the Woodrow Wilson International Center for Scholars in Washington DC. His latest book is ‘The world island: Eurasian geopolitics and the fate of the West’, Praeger, 2011.

Katinka Barysch is deputy director of the Centre for European Reform, where she covers Russia, Turkey, energy questions and European economics. Among her recent CER publications are (as editor) ‘Green, safe, cheap: Where next for EU energy policy?’ (September 2011); ‘The EU and Russia: All smiles and no action?’ (April 2011); ‘Turkey and the EU: Can stalemate be avoided?’ (December 2010)

Energy has come to symbolise the geopolitics of the 21 st century, reflecting countries’ diminishing reliance on military and political power. Today, energy is an instrument of geopolitical competition, like nuclear weapons or large armies were during the Cold War. The means of international influence have become more diverse and sophisticated, but the goals remain much the same: national security, power projection, and control over resources and territory. In different ways energy is fundamental to the rise of Russia and China as great powers. For Russia, possession of vast oil and gas resources fulfils a function similar to its nuclear weapons in the Soviet era. The post-1999 boom in world oil prices has underpinned Russia’s re-emergence as a great power. The combination of the country’s abundant energy reserves and fast-growing world demand for such resources has given Russia the opportunity to play a more influential role in global politics.


When Kremlin officials speak of Russia being an ‘energy superpower’, they are really saying that it is back as a global, multi-dimensional power. Energy is seen not simply as an instrument of influence in itself, but as underpinning other forms of power: military, political, economic, technological, cultural and soft power.
Energy is no less vital to China, but from the opposite standpoint. China’s modernisation and rise as a superpower depends on securing reliable access to natural resources. Beijing has responded to this imperative by making the worldwide search for energy one of foreign policy priorities. Just as Russia will rely on energy exports for the foreseeable future, so China will remain a net importer of oil and other sources of energy, such as gas and nuclear fuel. Energy and geopolitics are as closely intertwined in China’s case as they are for Russia, except that for Beijing energy is not an instrument ofgeopolitical ambition, but a key driver of an ever more assertive foreign policy.


From an energy perspective, the relationship between Russia and China should be straightforward. Russia is the world’s biggest hydrocarbon producer. China is one of the world’s biggest and fastest growing energy markets. Moreover, the two are neighbours, which means that energy transport is relatively straightforward, without the need for either risky sea shipments or pipelines that transit several countries. A long-term strategic energy relationship between the two looks not only commercially viable but almost inevitable. European policy-makers have in the past reacted with concern whenever Russian leaders alluded to the option of ‘turning to the east’ by redirecting oil and gas flows away from Europe and towards emerging markets in Asia, principally China. For the EU, which relies on Russia for a third of its oil imports and some 40 per cent of its gas imports, such a shift could pose a threat to energy security. The US is equally concerned about an energy link between Russia and China, but for different reasons: it fears that energy could be at the heart of a strategic rapprochement between Beijing and Moscow.  However, as this report shows, the energy relationship between Russia and China is a lot more complex than their respective positions as producer and consumer would imply. In fact, the bilateral   energy  relationship between the two countries is remarkably underdeveloped. Their main energy interaction is an indirect one, through competition in Central Asia.

RUSSIA, CHINA AND THE GEOPOLITICS OF ENERGY IN CENTRAL ASIA