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Friday, September 18, 2009

Energy in Europe, August, 2009 - Nabucco won't fail!

  1. EU countries sign geopolitical Nabucco agreement
  2. EU cracks down on gas dominance of E.ON, GDF Sue
  3. Energy technology financing plan 'due in autumn'
  4. EU ministers endorse final energy project list
Quote of the day: ""Nord Stream will strengthen our security of supply. It will not weaken it," Piebalgs said. "Well, my question is why Nord Stream will strengthen our security of supply, but South Stream would weaken it? Isn't it kind of weird, when both supplies come from the same country.

EU countries sign geopolitical Nabucco agreement

14 July 2009

Four EU countries and Turkey signed an agreement yesterday (13 July) on the legal framework for the Nabucco gas pipeline, which is expected to decrease Europe's dependence on Russian gas. Iraq has pledged to supply the pipeline with half of its capacity, without giving a detailed timeframe.

After months of heavy negotiations, the signature was hailed as a significant step towards the construction of the pipeline, which will run from Turkey's eastern border through Bulgaria, Romania and Hungary to a gas hub in Austria.

Nabucco, with its capacity of 31 billion cubic metres, should provide Europe with an alternative to Russian gas after the January gas crisis between Russia and Ukraine.

"The pipeline now has a stable legal basis, and can guarantee gas transit under equal and transparent conditions for all customers," said Reinhard Mitschek, managing director of Nabucco Pipeline International, the company managing the consortium.

The European Commission believes that Nabucco will eventually supply as much as 5-10% of Europe's gas demand. Moreover, it will bring instant relief to countries that are entirely dependent on Russian gas, mainly on the EU's eastern borders.

The transit agreement does not include many details but provides the necessary legal certainty to conclude supply contracts. Up till now, insufficient amounts of gas have been committed to fill the pipeline. Azerbaijan is seen as the first supplier, but Middle Eastern countries are expected to follow.

The intergovernmental deal enables the EU to invest the €200 million set aside for the project as part of its €5 billion economic recovery package. It was agreed that the subsidised energy projects would have to take off before the end of 2010 if the money is to make a difference in stimulating Europe's economy, which is facing a severe recession.

At least half of Nabucco's capacity has to be sold on the open market. The companies that own the pipeline will have the first option on 50%, but any remaining capacity will be placed on the market.

In order to simplify the process of shipping gas across multiple jurisdictions, a single operator, the Nabucco International Company, has been designated as the interlocutor for all companies wishing to use the pipeline.

Furthermore, the EU's gas market rules state that the pipeline must be open to third-parties within the EU unless a derogation is obtained. Moreover, a connection to a third country requires that country to apply a regime which is compatible with EU energy market rules.

The Nabucco consortium will now spend the remainder of the year trying to attract capacity contracts. The European Commission says companies in Azerbaijan and Iran have shown a strong interest in concluding immediate deals.

Reuters reported US special envoy Richard Morningstar as saying that Russia is free to supply gas to the Nabucco pipeline, but reiterated Washington's opposition to the use of Iranian gas.

Morningstar said the option had looked viable prior to the Iranian elections, but the 'de facto' coup in Iran "makes the immediate commercial goals dimmer for Nabucco".

Recep Tayyip Erdogan, Turkey's prime minister, reiterated his desire for Iran to become a supplier "when conditions allow".

. source

My comment:More info here:

""After the singing ceremony, it will not be possible to say 'Nabucco is done'," Pamir said, adding that signing the agreement is a good move but that further steps are needed.

Stressing that not enough gas had been committed to fill the Nabucco pipe for the time being, Pamir said Turkey's main objective was to reduce its dependence on Russian sources by acquring eight billion cubic metres more Azeri gas. "

You know I follow this for a long time now. I must admit, some of the decisions are kind of odd to me. For example, what should mean that the company that own Nabucco own 50% of the gas?! I'm not sure who are the share holders of Nabucco, but that's quite much - if they are not offered on the free market, then how will they be sold? Ok, I'm not familiar with the issue, but it sounds kind of odd.

So, let's say currently, I'm very confused about this story. And I think it will get really bad before it can get better. For example, Iraq will supply 50% of the pipe, but it's unclear when? Am...hello! Ok, it's odd. I really think that Europe needs a diversity of the supplies, but I would like to see clear answers. Mystery in legal world equal misery in real world.

And a side note - why USA decides whether we may or may not use Iranian gas? I'm not exactly a supporter of ANY religious monarchy or any other regime that suppress women, but this is European decision and it's Europe that should make it. Hmmm.

And yeah, check out this statement: ""Nord Stream will strengthen our security of supply. It will not weaken it," Piebalgs said. "Well, my question is why Nord Stream will strengthen our security of supply, but South Stream would weaken it? Isn't it kind of weird, when both supplies come from the same country.

EU cracks down on gas dominance of E.ON, GDF Suez

9 July 2009

The antitrust watchdog of the European Union is cracking down on the dominance of E.ON and GDF-Suez in the gas markets in their home countries, as it tries to open former monopolies to competition.

The European Commission imposed a fine of 553 million euros each on Germany's E.ON and France's GDF Suez, Europe's largest utilities, for agreeing to not compete on respective gas markets in the first antitrust fine ever slapped on utilities in the EU.

In a separate case, GDF Suez agreed to limit the gas it imports into France to less than half by 2014 from two-thirds, after the Commission found the group had reserved most of the country's import capacity for the long term.

Since the beginning of the century, the Commission has been seeking to get more utilities active in regions which used to have only one supplier for decades.

While millions of customers are able to choose between several suppliers, former monopoly providers were able to best exploit their new freedom and become even larger, while prices for households have been rising for years.

The gas agreement between GDF Suez and E.ON refers to the 600-kilometre MEGALexternal pipeline which crosses Germany from the Czech Republic to France.

When the companies built the pipeline they - legally - agreed to not sell gas in each other's markets, but maintained that agreement after 2000 when an EU directive opened markets to competition, the Commission said.

"This decision sends a strong signal to energy incumbents that the Commission will not tolerate any form of anticompetitive behaviour," EU Competition Commissioner Neelie Kroes said. "Market sharing is one of the worst types of antitrust infringement. This agreement deprived customers of more price competition and more choice of supplier in two of the largest gas markets in the EU. The Commission has no alternative but to impose high fines," she added.

The firms denied any wrongdoing and said they would appeal at the European Union's Court of First Instance. E.ON said the alleged anti-competitive practices were linked to agreements that expired in 2004 and that the business had been competitive for years.

The Commission would have been able to fine the companies a maximum of 10% of their annual sales, which amounted to more than 80 billion euros for each of them.

E.ON settled separate EU antitrust charges last year by agreeing to sell its power grid and some generation plants. RWE agreed to dispose of its gas transmission network to settle another antitrust case.

France's energy regulator CRE welcomed GDF Suez' offer to cut its share of long-term gas import capacity to 50%, down from two-thirds. The import capacity GDF Suez is proposing to free up is equivalent to around 60 terawatt hours of gas consumption.

The French utility said it would immediately start the handover of significant market capacities at the Montoir-de-Bretagne and Fos Cavaou tanker terminals and at the Taisnieres and Obergailbach gas entry points in France. source

My comment: Read here, how the same nice guys claim they need more government support for infrastructure and new grids! And yeah, this article is sooo fun. I mean seriously, they are monopolists, everybody knows that. And they continue to deny. Oh, well. I think the fine should have been even higher. Let them suffer. I don't know if you remember an article that explained the misery of small energy operators in France - it was very sad, that when we speak of such a democratic country, we see it as a place where monopolists thrive.

Energy technology financing plan 'due in autumn'

9 July 2009

Long-awaited funding proposals for the EU's Strategic Energy Technology Plan (SET Plan) are now expected to emerge from the European Commission in the autumn.

The EU executive's communication on financing low-carbon technologies was originally foreseen for the end of 2008. But after postponing the release date several times, the Commission now says it will be published in September or early October.

The Commission proposed the SET Plan in November 2007 in an attempt to stimulate energy research in the EU. It was concerned that Europe was only going to fall further behind the US and other major economies in the race to win a stake in the growing global market for low-carbon technologies, particularly as EU research budgets kept declining and businesses were unable to attract venture capital (EurActiv 23/11/07).

The SET Plan brings together a patchwork of EU energy research policies in renewables, clean coal, smart grids and nuclear energy in order to encourage more cooperation and increase resources. But the accompanying proposal on how to finance all the initiatives has been delayed several times.

Prepared by three Commission DGs – energy, research, and economic and financial affairs – the document has become mired in the EU executive's bureaucracy. Sources following the drafting told EurActiv that Janez Potočnik had been keen to publish the paper before his departure as research commissioner, while DG Energy would be interested in consulting stakeholders over the summer on so-called 'Technology Roadmaps'.

These documents, developed by the Joint Research Centre, will form the backbone of assessments of financing needs. They describe the current status of key low-carbon energy technologies and their future prospects, including emissions reduction potential and barriers to market penetration.

Energy research will be under the spotlight this autumn, as the Swedish EU Presidency will organise a SET Plan conference in Stockholm on 21-22 October.

The meeting, bringing together policymakers, industry, researchers and the financial community, will discuss how to move forward with the plan's objectives and consider financing. A separate session will be devoted to each of the technologies set out in the plan: wind, solar, bioenergy, carbon capture and storage (CCS), nuclear and smart grids.

Moreover, a website concentrating specifically on the technology roadmaps will be launched around the same time as the financing communication comes out. source

My comment: Yeah, I love articles with so many "will"s. If we had a will, we would have cut emissions by know. But we don't have it. I know, I know, anyway. Now it's September. Let's see how those promises will deliver.

EU ministers endorse final energy project list

8 July 2009

The EU's Council of Ministers yesterday (7 July) approved a list of 47 projects for building more gas and electricity interconnections, allocating €3.98 billion of EU funding under a broader economic recovery plan.

The adopted economic recovery programme includes all the European Parliament's proposed amendments, following months of squabbling between the two EU co-legislators over the plan's priorities.

The EU executive had hoped for the swift adoption of the programme to give Europe a headstart in the drive for greener growth.

But its adoption dragged on for months as member states argued over the size of their allocations (EurActiv 04/02/09). Many governments were also considering returning money to their national budgets instead of spending it at EU level.

An agreement on the project list was finally clinched at the March European summit (EurActiv 20/03/09). The EU institutions agreed on funding in April, opting to increase the budget for agricultural and environmental measures and to use remaining margins from the 2009 and 2010 budgets (EurActiv 05/05/09).

The Parliament's biggest bone of contention was lack of money for boosting renewable energies and efficiency, and the removal of 'smart cities' from the list. To seal the deal, member states allowed MEPs to insert a provision that unspent money can be used for energy efficiency and renewable energy projects should the Commission report in March 2010 that the priority projects have not been implemented (EurActiv 07/05/09).

The final list of 47 projects includes:

  • 18 gas infrastructure projects worth €1,440 million;
  • Nine electricity infrastructure projects worth €910m;
  • Two small island projects worth €15m;
  • Five offshore wind-energy projects worth €565m;
  • 13 carbon capture and storage projects worth €1,050m.

The lion's share of the money thus goes on building more interconnections to help avoid a repeat of the January gas crisis, when a dispute between Russia and Ukraine cut off gas supplies to many Eastern European countries. To the disappointment of environmentalists and the renewables industry, carbon capture and storage demonstration projects are also set for a major boost, on the grounds that the fledgling technology needs substantial public backing if it is to take off on a commercial scale.

To ensure that the package serves its purpose as an emergency stimulus, all the money must be committed by the end of 2010. If funding remains, the Commission will propose that they be used for renewables and other green projects. source

My comment: 1 00o millions = 1 billion, no? Very smart way to hide actual numbers. I'm not going to comment, since I've said it so many times. When you don't have insight and knowledge, you have to have a deep pocket. And obviously, European taxpayers have very deep pockets. Oh, wait, I'm one of them. Then why my pocket is so empty?Yeah, because I'll have to fund research which oil companies need so badly. And as we know, they are so poor. All of them.

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