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Sunday, July 5, 2009

Oil fun - the war is not over! june, 2007

Today:
  1. Russia builds Baltic oil pipeline to bypass Belarus
  2. Commission tables Baltic region blueprint
  3. Commission demands new powers in gas crises
  4. EU kicks off battle for billions of energy funds
Quote of the day: See, that's what the rotating Presidency is both cool and awful idea. Cool, because only a Baltic country can truly understand the problems of the region and the need to solve them. Why should France care about Latvia. On the other side, should all the money be focused on this project, when East-South Europe has similar problems?

Russia builds Baltic oil pipeline to bypass Belarus

11 June 2009

Russia started building a $4 billion oil pipeline on 10 June to cut Belarus from a key supply route to Europe, as tensions grow between the ex-Soviet allies over warming ties between Minsk and the European Union.

The new pipeline, which will skirt Belarus on its 1,000-km route to the Baltic, was first mooted after a transit dispute in 2006 and will tighten Kremlin control over energy supply routes, also giving it the option to divert flows from Ukraine.

"It's a very significant loss for Belarus, not only in economic terms but politically, as the country is losing its reputation as a reliable transit nation," Yaroslav Romanchuk, head of the Mizes think-tank in Belarus, said.

Russia, the world's second-largest oil exporter, is keen to bypass the countries that stand between its abundant oil and gas reserves and customers in Europe after arguing with both Ukraine and Belarus over transit conditions in recent years. The Baltic Pipeline System extension will carry 30 million tonnes a year, or 6% of Russia's output last year, to Ust-Luga port on the Baltic Sea. The route, known as BTS-2, is scheduled for completion in the third quarter of 2012.

Construction begins only weeks after Russia shelved a $500 million loan to ease Belarus through the financial slowdown, saying it was unhappy with the economic policies of Belarussian President Alexander Lukashenko.

With Minsk caught in a struggle for influence between Russia and the European Union, Moscow dealt a further blow to its neighbour's $1 billion dairy export business by banning almost all milk products in a market where it had a 4% share.

Russia's foremost energy official, Igor Sechin, said BTS-2 would afford Moscow the flexibility to re-route oil either from the Druzhba pipeline through Belarus or the Odessa-Brody route that carries Russian oil south to Ukrainian Black Sea ports.

Ukraine has said it might reverse flows through Odessa-Brody to deliver Caspian Sea region oil to Europe.

A 172-km (108-mile) link to the Kirishi refinery in northwest Russia, owned by Surgutneftegaz, will join the pipeline's first stage. source

My comment: (Here you can read about the billions that Ukraine needs to pay to Gazprom. No wonder Russia is trying so hard to avoid this route and similar ones). And here, you can read how the EU responds to the threat. Telling countries to fill up their reserves now, to be safe in the winter. Too bad some countries like mine doesn't have anything to fill up. Again, a very biased way to solve the problem. Because when the relations between Ukraine and Russia get rough again, we'll be screwed. Nothing new, but this obviously isn't the best solution. Not at all. I hope, at least, that the new pipes will be as clean as possible. Връзка

Commission tables Baltic region blueprint

11 June 2009

Anticipating the beginning of the Swedish EU Presidency, the European Commission yesterday (10 June) tabled a wide-ranging strategy for the Baltic region, focusing on an environmental clean-up of the sea and energy interconnections. The EU executive said the strategy may provide a blueprint for other regions, like the Danube or the Mediterranean.

The Commission adopted its proposal for an EU strategyPdf external for the Baltic Sea region and an accompanying action planPdf external on 10 June.

The strategy identifies four pillars for EU action: environmental sustainability, economic prosperity, geographical accessibility and attractiveness and making the area safe and secure.

Accordingly, the action plan identifies 15 priority areas and a number of horizontal actions on which some 80 flagship projects have been tagged for implementation. Examples of priority areas include reducing nutrient inputs into the sea, encouraging sustainable agriculture, forestry and fisheries, improving transport links and cooperation on transposing EU directives.

The strategy foresees no new funding for the proposed measures. Instead, the region's member states are encouraged to use €50 billion of EU cohesion policy funding, and other EU monies will be made available too.

According to the Commission, €27 billion will be allocated to improving accessibility, nearly €10 billion to the environment, €6.7 billion to competitiveness and €697 million to security and risk prevention.

The plan also aims to tackle the region's isolated electricity markets, which suffer from insufficient interconnections. A list of priority projects is being established in the framework of the Baltic Energy Market Interconnection Plan (BEMIPPdf external ).

One key project is the 350-kilometre long NordBalt power cable from Sweden to Lithuania, which could be completed by 2016. Another cable, the 800 megawatt Estlink-2, will be built between Finland and Estonia and could be brought online by 2013. Power grids will also be strengthened in Sweden, Lithuania and Latvia, EU diplomats said.

The absence of economies of scale and significant competition has lead to higher prices and few incentives or opportunities to invest in infrastructure, especially renewable energies, the Commission said. The EU strategy aims to integrate energy markets, particularly in Estonia, Latvia and Lithuania, so as to reduce prices, facilitate the diversification of energy sources and "enable the introduction of solidarity mechanisms".

All new power links would be backed by a common Baltic energy trading market, to be set up by 2013, which would probably be guided by existing rules for the Scandinavian Nord Pool market.

Asked whether the new strategy considers the environmental impact of the Nord Stream pipeline project, a planned 1,220-kilometre natural gas pipeline from Russia to Germany under the Baltic Sea, an EU official noted that the project had been left out of the strategy because "only issues that the EU could deal with" are included in the document. source

My comment: See, that's what the rotating Presidency is both cool and awful idea. Cool, because only a Baltic country can truly understand the problems of the region and the need to solve them. Why should France care about Latvia. On the other side, should all the money be focused on this project, when East-South Europe has similar problems? People from here would say "No" and that's why the idea is bad. I think that there should be a balanced approach, but this is extremely hard. Let's see how this Presidency will handle the problems in Eastern Europe. I don't want to blame them, before they had the chance to take a position. I just hope that the energy projects for here will stay high on the priorities, because it looks like it will be cold winter.

Commission demands new powers in gas crises

18 June 2009

European Union countries should hand the European Commission powers to coordinate gas flows in the 27-member bloc in the event of a gas crisis, according to a draft Commission report.

The proposal is the EU's main policy response to the supply disruption that occurred in January following a pricing dispute between Russia and transit country Ukraine.

Tension between Moscow and Kiev has mounted in recent weeks and many energy experts forecast a repeat in coming months.

"In a European emergency, the Commission may require member states [...] to release gas from strategic gas storage," said the draft report, seen by Reuters yesterday (17 June).

During such gas emergencies EU states would have to provide the Commission with daily updates of supply and demand forecasts for the following three days, with updates on withdrawals from stocks and the impact on their economies and power sectors.

EU states have asked the bloc's executive Commission for new rules to bolster energy security, but at the same time they have proved unwilling in recent negotiations to cede control of energy supplies.

Last week, EU energy ministers approved a similar proposal on oil stocks, having stripped it of its most important provisions - a move that Energy Commissioner Andris Piebalgs said he deeply regretted. EU states would also have to seek Commission approval before slowing gas flows to their neighbours during a crisis, as some countries were suspected of doing in January.

The proposal, which will be fine-tuned and then put before member states and the European Parliament for approval in coming weeks, would also establish a permanent gas monitoring force composed of industry and Commission experts.

EU states would have to prepare national emergency plans, outlining the potential for cooperating with neighbouring countries and detailing different levels of alert. source

My comment: Now this is serious! I hope you get the power of the idea. On last crisis, Italy stopped gas flowes to neighbours to keep up with its own gas demand. And that was bad. I so hope this one passes and people see the benefit of it. After all, should we go for pan-European gas and electricity grid, we'll have to surrender the regulation in European hands. This is a good first step towards it. And, this could really help in time of crisis, although this would work only if we had the grid on the first place. Grid that our part of Europe, unlike western Europe doesn't have. Well, again, we're screwed. But this is a wonderful and very brave idea!

EU kicks off battle for billions of energy funds

10 June 2009

Advanced green technologies such as superheated solar towers and gas from trees can compete with industry-backed carbon capture and storage technology for around €9 billion of European Union funding, an EU document shows.

Money could also go to giant wind turbines, made of space-age composites, nearly as tall as the 300-metre-high Eiffel Tower and three times more powerful than today's biggest.

The report lays out the principles the European Commission will use for dividing 300 million emissions permits to companies testing new technologies that slash CO2 emissions from power generation and gives the first list of eligible technologies.

Under the EU's emissions trading scheme (EU ETS), polluters must pay for allowances to be able to emit greenhouse gases. The free allocations under the reserve are therefore effectively a subsidy.

The report could kick off a battle between Europe's nascent green industries, backed by environmentalists, and the giant utilities that back carbon capture and storage (CCS).

"We think the majority should be earmarked for renewables," said Greenpeace renewables campaigner Frauke Thies. "CCS is risky and we don't know if they can deliver. But we know renewables can deliver and there is so much more potential."

British Prime Minister Gordon Brown played a key role in securing the funding during last year's EU climate negotiations, but the big winners from CCS are utilities such as Germany's E.ON and engineers like Alstom of France.

CCS, essentially burying harmful gases, is seen by some as a potential silver bullet to curb emissions from coal-fired power plants, which are multiplying rapidly worldwide and threaten to heat the atmosphere to dangerous levels.

Sharing the technology with China and India could also prove critical in securing their commitment to a new global deal on fighting climate change at talks in Copenhagen in December.

While the technologies exist, utilities are reluctant to build CCS power stations without public funding, because the CCS component adds about one billion euros to the cost of each plant.

The European Parliament last year proposed billions of euros to help kick-start CCS, but could only get member states to back the proposal if the money was shared with new green technologies such as geothermal energy and concentrated solar.

Environmentalists argue that the companies lobbying for CCS in the EU made profits of over 90 billion euros last year and support is unjustified.

The current drafts indicate that CCS projects would receive at least 75% of the New Entrants Reserve. This comes on top of the €1 billion allocated to the technology under the European Economic Recovery Plan (EurActiv 07/05/09), which has led the supporters of renewables to cry foul against the Commission's bias in favour of clean coal.

Many renewables on the list of eligible projects, obtained by Reuters on Tuesday, are at the very cutting edge, such as so-called concentrated solar power systems using lenses and mirrors to eke the most energy out of the sun's rays.

"The principle is that the extra funding is distributed proportionately between CCS and renewables, but departures from this can be justified by a lack of suitable candidate projects," said the report.

Environmentalists fear the fragmented renewables industry will fail to compete against utilities that have proposed clearly defined CCS projects, many of which received recognition in a recent EU economic recovery plan.

The EU plans 10-12 CCS demonstration projects by 2015 to kickstart the industry. Operators will not be able to keep the knowledge gained in the pilot projects for their own commercial advantage, but must share it freely. source

My comment: Another hint for the huge success of CCS in Europe might be found here. This is an article about Germany and its new regulation on CCS. I didn't know it, but obviously, Germany relies very heavily on coal-burning plants. Thus, without CCS (and no new nuclear powers), Germany will be doomed, because it won't be able to decrease its emissions. So...any wonders why the billions go to CCS?! And now we see that France benefits heavily from it too. Too bad. My heart hurts when I read that, because CCS is just a myth. Yes, it can be done, but the technology is far from being commercially doable-if it was, companies wouldn't need billions of funding. But this technology dooms us to the old ways-because CCS means more coal and oil. No investment into renewable, no diversifying energy sources, no energy independence. Is that what we want? It's not what I want for sure!

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