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Monday, March 15, 2010

Energy in Europe, 03, 2010 - Nabucco and company

Today:
  1. World's largest solar project set to gain new partners
  2. All obstacles cleared for undersea Baltic pipe
  3. Gazprom’s South Stream: Romania in, Bulgaria out?
  4. France inks deal with Russia's Gazprom
  5. EU throws €2.3bn at gas, power connections
Quote of the day:"Nabucco is not just a possible new pipeline. It's a European project," he said, adding that the fact that talks about funding had started makes the project more credible.

World's largest solar project set to gain new partners

Published: 23 February 2010

The Desertec project, which aims to power Europe with solar energy from the deserts of North Africa and the Middle East, is to go truly international next month as five new companies from Spain, Italy, France, Morocco and Tunisia join the scheme.

The project aims to cover 15% of Europe's electricity needs by 2050 by importing renewable energy, primarily solar power (see EurActiv LinksDossier on 'Solar power') via a high voltage cable. It utilises concentrating solar thermal power (CSP), which collects sunlight via mirrors to produce steam, which then drives turbines to generate electricity.

Paul van Son, chief executive of the Desertec Industrial Initiative (DII), told journalists last week that many companies had expressed an interest in joining the consortium of 12 companies that was established in July 2009 to devise financing plans for the project (EurActiv 22/07/09).

The joint venture is currently dominated by German companies, including E.ON, RWE and Siemens. The group of 12 companies already has one Algerian member, Cevital, but the arrival of other Northern African companies is expected to win support for the project in the region.

He said the €400 billion long-term plan would start delivering within a decade with its first projects.

The initiative is now finding locations for early projects, Mohanty added, citing Morocco as a potential host.

Another crucial issue the partnership is working on is securing a beneficial legal framework that stimulates investment in North African countries, the spokesperson said. He added that this could take the form of feed-in tariffs. source

My comment: It's amazing how this almost impossible project is coming to life. I'm not sure about their predicted electricity output - 15% of what Europe requires is quite a lot. Especially if they have to account for the environmental impact of the project, which I hope they will. But in any case, I think it's great to see such big international projects develop, because it wasn't that long ago, when such projects were completely unbelievable. Time when we saw enemies everywhere and we were ready to destroy any country that threatened our economical or physical existence. I know it's weird me saying this here, but recently I've been reading a lot about WWII and I think none of the younger people can imagine how ugly that time was. And I hope that such big international projects will give us one more reason, to stay friends instead of foes.

All obstacles cleared for undersea Baltic pipe

12 February 2010
The Nord Stream gas pipeline, which aims to bring Siberian gas directly to Germany, bypassing all "problematic" Russian neighbours, was awarded its final building permit today (12 February). Construction is due to begin in April, the consortium announced.

A Finnish 'water permit' was the final authorisation required before construction can begin of the 1,223-kilometre pipeline, which will stretch under the Baltic Sea.

The project had already received all the permits required from the four other countries whose territorial waters or exclusive economic zones the pipeline will cross: Russia, Sweden, Denmark and Germany.

The first gas will be transported through the pipeline at the end of 2011, the statement said.

Warnig thanked the authorities and stakeholders for their contribution to helping find solutions to the many environmental challenges posed by the pipeline to the Baltic Sea ecosystem.

Sebastian Sass, head of Nord Stream's EU representation, recently told EurActiv that the safety standards of the project were sound, as demonstrated by the green light given by countries like Denmark, which is very sensitive to environmental issues (EurActiv 22/10/09).

Nord Stream was happy to be able to have produced the largest Baltic Sea environmental study in history, he said.

According to the official, Sweden and Finland will benefit from the fact that this form of gas transportation is much more secure than others. If the same amount were to be transported in LNG tankers, it would fill 600 tankers a year, he said.

Paradoxically, no permission is needed for LNG tankers, despite the fact that the risks posed by such transport are higher, he explained.

Germany, Denmark and Russia will also benefit from transit fees, as the pipe runs through their territorial waters. Sweden and Finland will not, as in their cases the pipe runs through their exclusive economic zones. According to international law no transit duties can be imposed there. source

My comment: Very nice. I'm sure some countries may claim that Nord Stream can be a significant environmental threat, but if we must be honest if constructed properly, it should be quite safe. Much safer than any other way of transportation. So I support it, just as I support South Stream. If we don't have the political will to develop renewable energy, then we have to at least make sure we have other sources of energy. Russia, Africa - it's all the same. As long as it's not home made, it doesn't matter.

Gazprom’s South Stream: Romania in, Bulgaria out?

22 February 2010
Bucharest has given Russian gas monopoly Gazprom all the documentation relevant for building the South Stream pipeline through Romanian territory, it was announced yesterday (18 February). The move appears to give flesh to a recent Russian threat to eliminate Bulgaria from the project.

Few details have emerged and it remains unclear if the pipeline would now simply feature an extension from Bulgaria to Romania, or if plans to move the pipe north exclude Bulgaria. In recent weeks, Romania has been under strong pressure from Gazprom to join the pipeline project, as a possible alternative to Bulgaria. Sofia is indeed seen by Moscow as a problematic partner under the new centre-right government of Prime Minister Boyko Borissov (EurActiv 14/07/09).

Gazprom's executive director for exports, Alexander Medvedev, recently told the Romanian press "Romania has a wonderful strategic location on the Black Sea and could be the point of departure for the European section of the pipeline," he added. Until now, planned the point of departure had been the Bulgarian port of Varna (see 'Background').

Asked by EurActiv if the latest move to bring Romania into the project meant that Bulgaria would be sidelined, a Gazprom spokesperson declined to comment.

Over the last few days, the Russian press has been fuming about Bulgaria's pipeline strategies. In particular, Russia took very badly the Bulgarian parliament's ratification on 3 February of an agreement to build Nabucco, seen by Moscow as a rival pipeline designed to decrease the dependence of several EU countries on Russian gas. Bulgaria became the second country after Hungary to ratify the Nabucco agreement.

"Bulgaria will try to delay as much as possible negotiations with Russia on South Stream, while following up the developments regarding Nabucco," Alexey Makarkin, director-general of the Centre for Political Technologies (CPT), told the Russian press.

"If everything with Nabucco were fine, then Bulgaria would just forget about the Russian pipeline, but if Nabucco gets stuck, for example, if its stakeholders cannot find financing, Bulgaria will come back to South Stream," Makarkin continued.

The expert did not rule out the possibility that the Russian authorities, tired of Bulgaria's procrastination, could modify the pipeline route, leaving Sofia empty-handed.

Bulgaria is also demanding that Overgaz, a private company with 50% Gazprom participation, must no longer be the intermediary for buying Russian gas. source

My comment: I sincerely hope that Bulgaria stays on South Stream. But one of the main problem is the requirement there are no intermediaries in the contract between Russia and Bulgaria and I think this must stay even if the other conditions are more flexible. Why? Because during the last gas crisis, Bulgaria was unable to seek compensation, because of that intermediary. And thus, we didn't get anything for all the losses of the business in Bulgaria. So if Romania is willing to agree with a contract with intermediary, then they are simply being stupid. Even though this pipe is direct, there's nothing preventing Russia from stopping the gas for everyone, if they have a problem with any of the countries on the line. And what happens then? Who's going to pay for that? Sure, Russia will lose money from such act too, but is this enough? I don't know. I'm also sick of our government procrastination, you don't do business like that. But if Russia abandon us as a partner, that would be very ugly. And I don't know of any other EU country that support Russia so much, so if Russia kick us in the ass with South Stream, they might lose a good friend. People might not admit it, but we're wired to love Russia, because of our liberation from Turkey. Even if the motives for it were wrong, still, the blood were spilled and we can't forget that. So we will support Russia in reasonable for everyone and profitable initiatives. Romania's loyalty lays with France.

France inks deal with Russia's Gazprom

02 March 2010

In the presence of French President Nicolas Sarkozy and his Russian counterpart Dmitry Medvedev, GDF Suez and Gazprom signed an agreement in Paris yesterday (1 March) formalising the entry of the French utility to the Nord Stream pipeline project.

The memorandum was signed by Gazprom's management committee chairman Alexey Miller and GDF Suez chief Gérard Mestrallet, according to a statement from the companies.

The two parties agreed to start discussions on supplying up to 1.5 billion cubic metres of additional gas per year to GDF Suez from 2015. The supplies will be shipped via the planned Nord Stream pipeline.

Under the deal, GDF Suez will become a shareholder of Nord Stream AG and hold 9% of the company's capital before construction of the Baltic Sea pipeline starts next month.

"By entering Nord Stream and increasing its gas purchase from Russia, GDF Suez aims at contributing to Europe's security of supply, including North West Europe, where the group is one the major power producers and holds a large portfolio of final power and gas customers," Mestrallet said in the statement.

However, the Russian press reveals difficulties at GDF during the negotiations in acquiring shares in Nord Stream. The French utility is expected to buy 4.5% of the shares of each of the pipeline's German partners, BASF/Wintershall and E.ON Ruhrgas. However, according to a source quoted by Moscow daily Kommersant, no agreement has been reached with Ruhrgas regarding the price of the package.

Additionally, GDF Suez is reportedly requesting that its Russian partners have more say in the Nord Stream project than Gasunie. In particular, the French utility wants to participate in decision-making on smaller gas sale contracts than previously envisaged for 9% participation in the consortium, the source adds. source

My comment: Yeah, they're doing it for the security of European energy market. I also believed it. But anyone - as I said before - the more international the project, the higher probability it will succeed and everyone will be satisfied. What I find quite curious is that a) Romania got in South Stream in the same time that France did and b) Bulgaria is waiting for the EC approval of our participation in South Stream (even though it sounds quite ridiculous since we're sovereign country) . Very suspicious I think.

EU throws €2.3bn at gas, power connections

06 March 2010
The European Commission yesterday (4 March) cleared €2.3 billion from the EU's five-billion euro economic stimulus package to help finance 43 pipeline and electricity projects.

The decision granted €0.91 billion for 12 electricity interconnection projects and €1.390 billion for 31 gas pipeline projects.

The funding decision followed the approval last December of a series of offshore wind and carbon capture and storage projects that will receive €1.565 billion from the EU's €5bn stimulus package (EurActiv 10/12/09).

Energy Commissioner Günther Oettinger described the funding as "a milestone in the history of EU energy policy".

Among the projects are key interconnectors linking up the currently isolated Baltic States and neighbouring Finland, Sweden and Poland. Others include an array of reserve flow projects to bring flexibility to responses in crisis situations.

The total sum dispatched is lower than the 2.365 billion originally allocated to gas and electricity infrastructure in the regulation on the economic recovery package.

A Commission official explained that this was due to the fact that there was no proposal for a Slovakia-Poland interconnection, adding that some projects did not request the full amount allocated.

The energy commissioner was quizzed about the EU executive's decision to allocate €200 million to the construction of the planned Nabucco pipeline, which is scheduled to bring gas from the Caspian region to European markets.

Critics say the pipeline, which has yet to secure gas supplies, does not fill the criteria of a mature project, which is the prerequisite for funding under the stimulus package. The plan requires that all funds are committed by the year's end in order for the projects to contribute to economic recovery.

Oettinger dismissed the claims, stressing the importance of Nabucco in diversifying the sources of gas away from dependence on Russia.

"Nabucco is not just a possible new pipeline. It's a European project," he said, adding that the fact that talks about funding had started makes the project more credible.

A Commission official said the final decision was expected this autumn, when the EU executive could assess whether it would slightly extend the deadline or terminate the funding.

source

My comment: Additional info: Power upgrade 'will cost Europe €28bn by 2015'. Nabucco is not just a pipe, it's also an opera. And a European project. Rofl :) It's quite funny actually. While most countries hurry up to get on the boats of South and North Stream, the EU officials still try to convince us how important Nabucco is. Oh, well, I guess they are right. But as you can see in the "More" links, Italy is already planning to merge the two pipes. Is this diversification of gas or diversification of money?

More:
Italy's Eni wants rival gas pipelines to collaborate "South Stream and Nabucco, the two competing gas pipeline projects supported by Russia and the EU respectively, should combine efforts in a joint cost-cutting drive, according to Eni, an Italian oil company with a stake in South Stream." - yeah, I think it's diversification of money after all.
Commission wants EU capital for new Bulgarian nuclear plant - No comment here since I don't think the EC has the right to requires anything about our own nuclear plant, but our government seems to disagree with me. Not that I mind European capital, what I mind is all that time of procrastination and our behavior of little children requesting permission to do anything from their parents. It's pathetic.

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