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Thursday, April 3, 2008

Europe in Energy, February

Energy news this week (for comments, check the bottom)

  1. Russia-Ukraine gas deal
  2. Caspian oil export disaster
  3. Turkey joins EU programs
  4. Turkey vs. France in Nabuccu

Confusion surrounds Russia-Ukraine gas deal

14 February 2008

Andris Piebalgs, the European Union's energy commissioner, has welcomed an announcement that Ukraine and Russia have resolved a dispute over gas trade. But recent comments from Moscow and Kyiv have thrown the details of the agreement into confusion.

The deal, announced on Tuesday (12 February), displaces RosUkrEnergo as the sole trade intermediary between the two countries and replaces it with a 50-50 joint venture by Gazprom and Naftogaz, the gas monopolies of Russia and Ukraine respectively.

The agreement aimed to settle a dispute over the payment of natural gas arrears by Ukraine with Gazprom threatening to cut deliveries if Kyiv failed to settle its debt before Tuesday. The dispute was reminiscent of a January 2006 row that saw deliveries to Western Europe briefly interrupted, highlighting the EU's dependency on Russian gas imports (EurActiv 18/01/06).

But subsequent comments from Moscow and Kyiv have blurred the lines. On Wednesday, Gazprom's chairman Dmitry Medvedev suggested that intermediaries will need to be retained to ensure a smooth transition to the new system. And one prominent Ukrainian politician, Anatoliy Hrytsenko, one of the leading figures in the 'Orange Revolution', said the deal will not help improve transparency in gas trade between the two countries.

The companies involved in the agreement - Gazprom, Naftogaz and RosUkrEnergo - have so far refused to divulge the full details of the deal, further adding to the confusion in Brussels.
sourceMy comment: Hmmm, that doesn't sound like a deal, more likely like Russia making sure it won't have to deal with Ukraina anymore. Oh, well...

The Caspian oil export puzzle

20 February 200

The Caspian region is on the verge of becoming a "significant" source of oil supply to rival Iran and further developments in the area are "eagerly awaited" by Western and Asian consumers, argues Julia Nanay of PFC Energy in an analysis for Total Energies magazine.

But while investors see the region as "one of the last frontiers," it is "pipeline politics" that will determine its future role as an energy supplier, Nanay warns.

The construction of three major oil export pipelines "outside Russia's sphere of influence" over the last decade put the Caspian in this promising position, the author recalls. But despite such progress, "shifting domestic priorities, geopolitics and regional rivalries could delay the increased flow of oil," she warns, pointing to the "unparalleled political influence" being exerted in the region by Russia.

Western consortiums will export over two million barrels per day from the Caspian region in 2008, the author predicts – a figure which "could double by 2020" as significant increases in production in Azerbaijan and Kazakhstan are foreseen.

Meanwhile, a sizeable US and EU oil company presence in the area is being complemented by Russian, Chinese, Japanese, Korean and Indian companies which are "flocking to the region," says Nanay.

Regarding Kazakhstan, a lack of agreement over pipeline expansion "could lead to production slowdowns," she cautions, warning that the country "will be reliant on Russian routes for a significant portion of its oil and gas exports for the foreseeable future" and "old rivalries fester" between the two countries when it comes to oil and gas.

Another pressing issue is that the northern Caspian is "not deep enough to be accessible by tankers and remains frozen in winter," requiring new pipeline construction, she says.

Meanwhile, "China has begun to make its mark on the Caspian region," while Iran's role as an outlet for Kazakh and Russian Caspian oil exports remains "marginal" due to a US policy "which seeks to isolate Iran," believes Nanay.

The analysis concludes that current pipeline developments have given Azerbaijan "increased political flexibility," as the "clarity" of its export infrastructure means that it can "estimate its production outlook." Moreover, it can "anchor its exports to Turkey and the West" while relying "much less" on Russia. source

Turkey joins EU competitiveness programme

13 February 2008

Enterprise Commissioner Günther Verheugen and Turkish Ambassador to the EU Volkan Bozkir yesterday sealed Turkey's entry to the Union's 'Competitiveness and Innovation Programme' (CIP) by signing a memorandum of understanding.

The CIP programme, provided with a budget of €3.6 billion until 2013, mainly aims to promote entrepreneurship and growth of SMEs, which form the "backbone" of the Turkish economy, Bozkir pointed out. It will allow Turkey to participate in joint EU projects and accrue the full benefit of best practice exchange, according to the Commission.

The CIP consists of the following three pillars:

  • An 'Entrepreneurship and Innovation Framework Programme' (EIP), created to foster the competitiveness of enterprises;
  • an 'Information and Innovation Framework Technologies Policy Support Programme', which aims to speed up the development of a "sustainanle, competitive, innovative and inclusive information society," and;
  • an 'Intelligent Energy-Europe Programme' (IEE), which promotes energy efficient and renewable energy sources in all sectors.

Turkey has already participated actively in innovation-related activities under the EU's 6th Framework "Research and innovation" programme, which have been further extended under the CIP.

Turkey is the third candidate country, after Croatia and the former Yugoslav Republic of Macedonia, to join the CIP. source

Franco-Turkish dispute overshadows Nabucco project

20 February 2008

Gaz de France's intention to become the seventh partner in the Nabucco pipeline project has been thwarted by Turkey's decision to block the participation of the company following a motion by the French Parliament to outlaw denial of the Armenian genocide.

The decision to withdraw the application of Gaz de France (GDF) for participation in the Nabucco project was announced on 18 February by France's Minister of Trade Hervé Novelli during a visit to Istanbul.

“We have recalled our application because we think that the decision of the Turkish authorities was dictated by political reasons," Novelli said.

GDF is the second French company, following Total, to have its bid to become a partner in Nabucco blocked for political reasons by Turkey, a key transit country for the pipeline.

There are also growing concerns that disputes between Paris and Ankara could harm business ties between the two countries. French President Nicolas Sarkozy has made no secret of his opposition to Turkish EU membership and has declared that "Turkey has no place in Europe" (EurActiv 11/12/07).

In an apparent effort to downplay the situation, Novelli said that the French government had not endorsed a bill, approved by the country's national parliament and passed to the Senate, outlawing public denials that the massacre of Armenian civilians by Turkish (Ottoman) troops in 1915 was an act of genocide.

The Nabucco pipeline project is to span 3400 kilometres, bringing 31 billion cubic metres of natural gas per year from the eastern end of Turkey across Romania, Bulgaria and Hungary into Austria.

Nabucco is geopolitically significant because it will bypass Russia, but the project, scheduled to be completed by 2013, has encountered financing problems and a lack of political will from some member states. source

My comment: Lol! I still can't understand why we should play "All against Russia". If you ask me the soonest Europe accepts Russia as an equal partner and vice versa, all our problems will start getting solved easier and less painfully. I can simply laugh at the Turkey-French quarrel, though I back Sarkozy in this that Turkey has no place in EU as well as Albania and Kossovo. Not on religious ground, of course, but they pledged their allegiance to USA and I think can't be trusted into the Union.


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