EU makes concrete energy cooperation progress as Iran oil import sanctions come into force

Πηγή: DiploNews
By Shawnna Robert
July 6 2012

In the joint conclusion of the ninth Ministerial-level meeting of the energy dialogue between the European Union (EU) and the Organization of the Petroleum Exporting Countries (OPEC), the participants recognized the challenging economic developments and their implications for the global energy sector. Oil price volatilityreinforces the need for market monitoring and closer consumer-producer cooperation through energy dialogues.

The EU outlined a need to move towards a broader energy base by 2050. The EU cited tensions in global sovereign-debt markets and high oil prices as contributing to a loss of confidence towards the end of 2011 and the EU's subsequent output contraction. OPEC showed that oil demand in the world is set to grow, with much of the new demand coming from developing countries. It views policies aimed at alternative fuels, efficiency, and higher taxes as a significant demand risk. OPEC is investing in accordance with perceived demand for its crude.

Both parties agree that EU-OPEC dialogue has enabled them to remain focused on fostering market stability through constructive exchanges. Advances have been made in assessing the drivers behind oil, gas, and fuel market developments. There have been more frequent contacts between both groups. They agreed on the importance of sharing information and data covering all time frames. They also agreed to organize an international round table on offshore safety in November, a study assessing potential human resource demand bottlenecks early next year, and to continue a study on the impact of energy efficiency on energy demand. The 10th ministerial meeting will be held in Vienna, Austria in 2013.

EU Energy Commissioner Günther Oettinger welcomed this week the agreement to implement the Trans-Anatolia Gas Pipeline (TANAP), bringing Europe closer to sourcing gas directly from Azerbaijan and other countries in the Caspian region. The aim is to implement the pipeline no later than 2018. The gas will travel from the Eastern Turkish border to the Western Turkish border. Pipelines will link to the soon to be expanded Southern Caucasus pipeline starting in Azerbaijan through Georgia to a variety of proposed pipelines in Europe. The Shah Deniz Gas field is the largest natural gas field in Azerbaijan with an anticipated production of 16 bcm/year. The new pipeline connections will contribute to supply security for the EU and Turkey.

Nabucco West, the South East Europe Pipeline (SEEP) and the Trans-Adriatic Pipeline (TAP) were all in competition to deliver gas to Europe from the Turkish border. The Nabucco West pipeline was pre-selected by Azerbaijan this week as the preferred partner for the distribution of gas to Central Europe, bringing oil from the Turkish border to Vienna, Austria. The European Union took the lead in developing the Southern Gas Corridor and developed the concepts that have led to this decision. A decision by Azerbaijani authorities on the final route is planned for June 2013.

While Europe has been looking to expand energy cooperation with its international partners, the renewed sanctions on Iranian oil came into force. The EU is traditionally a major importer of Iranian oil, accounting for 23% of Iran's oil exports. These are the toughest ever EU sanctions, which are targeted at intensifying pressure in the Iranian Government over its perceived lack of transparency in its nuclear program. The sanctions include a ban on Iranian oil, financial services related to Iranian oil sales, and the purchase and transport of Iranian oil. The aggregate impact of the reduction of Iranian oil sales world wide due toincreased sanctions globally amounts to almost $32 billion in lost revenues every year. China, India, Japan, South Korea, South Africa, Turkey, Taiwan, Sri Lanka, Singapore and Malaysia have already reduced Iranian oil imports significantly.

US urges Bulgaria to end energy dependence on Russia

President Rosen Plevneliev

Πηγή: Reuters
Feb 9 2012

* Bulgaria should diversify in nuclear, gas supply-US envoy

* Needs to persue renewable energy, unconventional sources

The United States urged Bulgaria on Thursday to work harder to diversify its energy sources to put an end to its energy dependence on Russia.

U.S. special envoy for Eurasian Energy, Richard Morningstar, said the European Union country should seek diversification in nuclear energy, natural gas supplies and also focus on renewable and unconventional energy sources to boost energy security.

"We discussed how important it is for Bulgaria to have transparency in the energy sector as well as diversification," he said after meeting with President Rosen Plevneliev.

"That diversification includes in the nuclear area, and in the area of gas supply, as well as renewables and other areas and unconventional areas as well," he said.

The Balkan country gets over 95 percent of its natural gas needs from Russia's Gazrpom. Its only operational oil refinery, which provides more than 70 percent of the petrol in the country, is fully owned by Russia's LUKOIL.

Its Kozloduy's nuclear plant has two 1,000 megawatt Soviet-made reactors and Sofia is in talks with Russia to build a new, 2,000 MW nuclear power plant in the Danube River town of Belene.

Washington has long expressed its concerns that a new Russian-made nuclear plant will lock Bulgaria's dependence on Moscow, which may use its energy might for political pressure.

The centre-right government has been delaying decision on the Belene plant since 2009, and Finance Minister Simeon Djankov said recently a decision whether or not to go ahead with the project is to be delayed again for the second half of the year.

Analysts say the recent U.S. concerns over Bulgaria's energy stance arose after parliament banned exploration for shale gas over environmental concerns.

The decision also effectively revoked U.S. Chevron's permit to carry out test for the unconventional gas in the northeastern part of the country.

The issue was also been discussed during the visit of U.S. Secretary of State Hillary Clinton on Sunday.

Bulgarian Prime Minister Boiko Borisov said then the ban will be effective until leading experts can show tangible proof the shale gas drilling method, fracking, is not harmful to the environment.

Morningstar pledged the United States will present to Bulgaria the newest studies on shale gas, and U.S. experience in shale gas extracting, the energy ministry said in a statement.

The Balkan country has also approved laws to limit the fast growth of wind and solar energy power parks, saying they will increase power prices in the EU's poorest member state and overwhelm its ageing power grid.

Focus of Russia's resource diplomacy may shift to Far East

Πηγή: Asia News Network
By The Yomiuri Shimbun

Jan 28 2012

The Republic of Sakha, also known as Yakutia, in eastern Siberia is the coldest inhabited area on Earth, with the mercury sometimes dropping to minus 50 deg C.

It also is home to the gigantic Chayanda gas field, located within the taiga biome of coniferous forests. The field has an estimated 1.24 trillion cubic metres of recoverable gas reserves, equal to 13 years of Japan's imports of natural gas.

A project will get under way this year to lay a 3,000-kilometer pipeline from the Chayanda field to Vladivostok in the Russian Far East.

"When the pipeline is completed, we'll be able to meet any supply requirements for gas from Japan, China and South Korea," Vladimir Vasilyev, deputy executive director of a subsidiary of state-run gas corporation Gazprom, said proudly.

In preparation for the full-scale start of gas exports from Siberia to Asian countries, a Japan-Russia joint project is under way to construct a liquefied natural gas plant in Vladivostok.

Following feasibility studies scheduled to be completed this month, work will begin on basic design of the plant, with an eye to beginning operations around 2020.

A senior Gazprom official said the plant will "serve as an LNG supply center for not only Japan but all of Asia".

Construction of the huge pipeline extending to Vladivostok from the gas field is a national project promoted by Prime Minister Vladimir Putin as an embodiment of his Asian strategy. Putin is considered certain to win Russia's upcoming presidential election in March, returning him to his former post.

Putin will try to maintain economic growth, an indispensable element in achieving a stable administration. So there is a strong possibility he will shift the focus of his diplomacy to Asia, a growth center of the world. The best weapon in this regard is natural resources.

"It sounds like an interesting idea," Putin reportedly said last August when he was briefed by an executive of the country's oil and gas industry about a plan to build a pipeline linking Sakhalin in the Russian Far East with Japan, where there were concerns about energy shortages in the aftermath of the Great East Japan Earthquake.

The president of a Japanese development company involved in the pipeline plan said, "We think Russia will surely go ahead with the project if arrangements are made by the Japanese side."

Putin is calling for Japan to also participate in the Chayanda development project.

Russia has been edging into the Japanese energy market in recent years. Russia accounted for 4.3 per cent of Japan's gas imports in 2009, but this percentage doubled to 8.6 per cent in 2010. Russia also provided 7 per cent of Japan's crude oil imports in 2010.

Putin will pursue natural resource diplomacy toward Tokyo. Joining Russian projects would provide a good chance for Japan to acquire resources and development rights, but there is also the danger that its energy security will be influenced by Russia.

Many in Japan have a strong aversion to relying too much on Russia, as the two countries have long been at odds over four Russian-held islands off Hokkaido.

According to diplomatic sources, opinions are divided on the matter within the Japanese government, with some favouring more cooperation with Russia to break away from its heavy reliance on the Middle East. Others feel Japan should not rely on Russia for more than 15 percent of its energy imports. Hence Japan's stance on the matter has not been decided.

Gazprom's head office in Moscow has a control centre to supervise all its pipelines. On a map of the Eurasian continent displayed on a huge screen, the European portion glitters with brilliant fluorescent colours indicating its extensive network of pipelines. The Far East and Siberian side remains dark.

Putin's ambition is to brighten the entire map.

EU set to act on Caspian pipeline plan

Πηγή: Financial Times
By Joshua Chaffin

September 11, 2011

European governments are attempting to revive a stalled effort to beat Russia’s effort to bring central Asia’s vast natural gas reserves to Europe.

A move to give Brussels the power to negotiate a pipeline deal with Azerbaijan and Turkmenistan is expected to be agreed at a meeting of European Union ministers on Monday.

If approved, it will be the first time the bloc’s 27 member states have given the European Commission the power to agree an external energy treaty on their behalf.

The unprecedented ceding of power is the latest sign of how concerned the EU has become over its reliance on Russia, which supplies about a quarter of its gas.

The scheme is the cornerstone of the EU’s strategy to break that dependence and has long been one of the highest priorities of José Manuel Barroso, the Commission president.

The Commission has been holding informal talks with Turkmenistan for two years in the hope of convincing the country to commit some of its gas reserves to the west.

Doing so would require the construction of a pipeline under the Caspian Sea to Azerbaijan, which has already pledged to send gas to Europe.

Previous efforts to develop a trans-Caspian link have been frustrated by territorial disputes between the two central Asian countries as well as Russian objections.

The EU’s members, who have traditionally cut their own deals with the Kremlin and other energy exporters, have long been wary of ceding authority to Brussels on energy policy. Yet they appear willing to do so now in order to demonstrate to Turkmenistan, which is also being courted by Russia and China, that Europe is committed to a closer partnership.

Günther Oettinger, the EU’s energy commissioner, called the member states’ decision a “milestone”, adding: “After all, it is Europe and not only one single country that will benefit from Caspian gas.”

If the project advances, then it could provide a much-needed boost to Nabucco, a 3,900-kilometre pipeline that aims to carry gas from Azerbaijan to Austria via Turkey, intentionally skirting Russian territory. Gazprom, Russia’s state-controlled gas export monopoly, has been charging ahead with a rival pipeline, called South Stream.

In spite of the Commission’s backing, Nabucco has been plagued by doubts about whether its backers will be able to win access to enough gas to make it commercially viable – particularly in its early years. It boasts an annual capacity of 31bn cubic metres.

Two smaller and less-expensive projects – the Trans-Adriatic Pipeline and the Interconnector-Turkey-Greece-Italy – are also vying for a share of roughly 20bcm that Azerbaijan has pledged to direct to a southern corridor of European pipelines.

That contest is intensifying as an October 1 deadline draws near for the parties to submit tariff proposals to the consortium developing the second phase of Azerbaijan’s Shah Deniz field. The group, which includes Britain’s BP, Norway’s Statoil, France’s Total and the Azeri-owned Socar, could make its decision before the end of the year. .

Nabucco’s backers believe that an additional 10bcm per year from Turkmenistan would brighten the project’s outlook. That is a fraction of the central Asian country’s 8,000bcm in proved reserves, according to BP estimates.

Commission officials believe that the trans-Caspian link could eventually carry supplies from other parts of the region.