Week 48 Overview
The last week has turned the spotlight on Eastern Europe and on some major companies, as it is increasingly clear that countries like Romania, Slovakia and Hungary, and companies like Eni and Total will be determinant for the final result of the confrontation between Russia and the “West”. Greece could soon be a key actor too.
For what concerns the gas industry, the Baltic area is not anymore as central as a few weeks ago. The recent “expensive” LNG investments in the region freed Lithuania, Latvia, Estonia and Finland. The four countries are not anymore completely dependent on Russian gas.
On the other hand, the Baltic states and Poland are increasingly becoming important on a military level. After several rounds of consultation between the countries and US/Nato, Washington said it will send about 150 tanks and armoured vehicles in the area.
Against this backdrop, additional doubts over shale gas in the United Kingdom arose from the government.
EASTERN EUROPE
The surprise second-round election victory of Klaus Iohannis in Romania is of great importance for Brussels. According to Radu Dudau, Director of Energy Policy Group, the election proves the stability of the country and its pro-Western orientation.
Iohannis will be called to solve several problems in Romania. He will have to answer the European Commission’s call to comply with EU rules on security of gas supply.
On the other hand, Hungary is moving closer to Russia. Budapest-based MOL continues its tug of war with the Croatian Government and it could sell its stake in INA to Russian companies.
THE BALTIC
Lithuania has been listed among the countries that can ensure gas supply for their needs for 9 months without Russian gas. Klaipėda LNG terminal is a game-changer for the country, says Minister Masilius. The terminal will start offering LNG reloading services in January.
The country now wants to increase its cooperation with Ukraine. Vilnius pledged to support Kiev with its strains to comply with European standards during a meeting between the two Heads of State.
Similarly, Skangass renewed its interest to foster LNG growth in the Baltic area. It clinched a two-year deal with Eni for LNG supplies to the Fluxys LNG terminal in Zeebrugge to be then transported to Skangass’ terminal in Lysekil, Sweden.
RUSSIAN STRATEGY: WESTERN COMPANIES AND SOUTH STREAM
Russia and the West are moving closer to a dangerous escalation. The two “blocks” are stepping up military investments.
Russia remains committed to its main project. The South Stream project is continuing as planned, an official of the Russian Energy Ministry's pool and gas department said on Monday.
After signing a memorandum of understanding with Turkmenistan, Eni reinforced its position in the Caspian. It was awarded a $1-billion contract for engineering and constriction operations in the Caspian region. It is not clear the name of the company, the consortium or the country that awarded the contract.
Almost simultaneously, Gazprom met the six-legged dog to address prospects for increasing bilateral cooperation. The Russian company said that the two parts discussed the issues of Russian natural gas supply to Italy.
Russia also see Total as a key partner. “Total has been one of our priority partners for many years now” Putin said.
TURKEY, ISRAEL, CYPRUS, AZERBAIJAN
Ankara could receive gas from Genel’s Miran and Ban Nawi fields in Iraqi KRG from winter 2017. Turkish companies may benefit from the expanding the natural gas industry of the Iraqi Kurdish Regional Government.
Indeed, Turkey became a regional hub for oil exports and it is not stopping. In the near future, the country will also become a natural gas hub, said US Vice-President Joe Biden.
But to do so, Ankara has to invest or find a reliable cooperation model. About USD $100-120 billion should be invested in the energy sector to reach Turkey’s aims for 2023, SOCAR said referring to the TANAP project and to the Turkish energy sector.
Azerbaijan is moving forward with its plans to bring gas to Europe through its Southern Corridor, progressing with its pipeline from Turkey to Europe. TAP has launched two tenders for two compressor stations, one in Greece and the second in Albania.
Greece is taking careful steps to capitalise on the current developments. Belgium’s Creg and Fluxys agreed to foster cooperation with Greek counterparts Rae and Desfa. They will exchange best practices.
The interest in the area is heating up and Tel Aviv is determined not to miss the opportunity. Israel Proposed an East Med gas pipeline from fields in Israel and Cyprus to Greece.
It comes as no surprise that Delek Group confirmed its focus on the upstream segment. Delek also confirmed its commitment to additional listing of shares.
GAS IN THE UK: SHALE OR NOT SHALE?
While protesters and authorities remain at loggerheads over shale gas in the UK, the Government Chief Scientific Advisor slammed fracking. Professor Sir Mark Walport warns that the government has not given proper consideration to the potential risks of the process of hydraulic fracturing or “fracking" used in shale gas extraction.
This is coherent with results of a previous study. UKERC reports already derided UK Government rhetoric as out of touch with reality.
It comes as no surprise that some other UK players are seeking assets abroad. British companies eyes opportunities in other countries like Italy and Ireland.
OTHER STORIES
Germany Plans to Stop Short of Ban on Shale Gas
Interest in Turkmen Natural Gas Heats Up
Woodside Enters Into Contract for Offshore Licence in Morocco
PetroMaroc Seeks Partner for Sidi Moktar
China receives 100 BCM of Central Asian Gas
This Winter Needn't Be a Cold One in Ukraine
European Organisations Call 22 Member States to Implement EU Anti-Vat-Fraud Package
Oil Indexation and the Falling Oil Price: The Beginning of the End for Indexation in Europe?
Gazprom Executive Discusses Proposals for Tariff Network Code
Sergio Matalucci
Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci