Week 46 Overview
The image of the week is the one depicting Russia’s President Vladimir Putin eating by himself at the G20 meeting in Brisbane. Putin then left, as US President Barack Obama accused Russia of invading Ukraine. Countries warned of further sanctions.
It comes as no surprise that Natural Gas Europe focused on gas issues related to Moscow and new pipelines that might have an impact on Russian gas strategy: the Trans-Caspian and the South Stream.
Meanwhile, important researches about British shale gas and the World Energy Outlook have been published. The last days also turned the spotlight on the East Mediterranean and on Turkey, which is obviously expected to play a significant role in the coming months.
RUSSIA: SANCTIONS AND CHINA
What is the impact of the sanctions? How long can Russia survive under the current pressures? Russia might deal with its induced financial imbalances in 12-18 months, says experts.
In this context, Russia can only strengthen ties with China. Rosneft sold 10% share stake in ZAO Vankorneft to China National Oil & Gas Exploration and Development Corporation (CNPC subsidiary).
Despite the deal, Russia is not abandoning Europe for Chinese gas revenue - it is not possible. Just as Russia’s state symbol depicts a double-headed eagle that looks both west and east, so its energy strategy has long sought to develop an eastern pivot to create new markets in Asia to balance trade with Europe.
Power of Siberia is a particularly important project. We discussed it in an interview with Andrey Konoplyanik, Professor at the Oil and Gas Gubkin Russian State University, Adviser to Director General of Gazprom Export LLC.
The most pressing issues for Moscow remains how Western countries see its role in Ukraine. The country is getting ready to a deepening rout in oil prices, but tensions remain.
As a consequence, Germany-based RWE said that regulatory issues might delay the sale of its Dea oil and gas unit to a group led by Russian tycoon Mikhail Fridman, some weeks after the reassuring comments released by the German Economy Ministry.
Some European countries are just waiting to see what is going to happen. Gazprom and Moldovagaz clinched a deal to extend gas supply and transit contracts until late 2015, in a meeting focused on gas cooperation between Russia and Moldova.
That is why, cooperation with Kazakhstan and Belarus is a central pillar of Russian strategy. KazMunayGas, the largest Oil & Gas company in Kazakhstan, is listing new bonds on both the London stock exchange (LSE) and Kazakhstan stock exchange (KASE).
UK: STRONGEST EUROPEAN VOICE AGAINST RUSSIA, WEAK DOMESTIC RESULTS
The British government tried to play its card to create momentum for domestic shale gas. It announced plans to establish a sovereign wealth fund which would benefit potentially affected regions in the North of England.
Companies expressed enthusiasm over the last days. Cuadrilla Resources said that the Environmental Agency expects to grant the environmental permits for the shale gas exploration site at Preston New Road.
Despite this optimism, researchers pulled expectations down. Research released by the respected UK Energy Research Centre did indeed indicate that the UK government has "overhyped" the potential of potential of the shale gas industry.
ROMANIA: SHALE GAS PROSPECTS? WHICH ONES, WOULD ASK PONTA
If British experts called the national government to be more prudent, Romania’s PM Victor Ponta was quite straightforward. He said that the country has not significant reserves of shale gas.
Nonetheless, some companies still see some room for production in Romania. Serinus Energy commenced drilling in its Satu Mare Concession in Romania.
TURKEY, EGYPT, GREECE AND CYPRUS
There is room for cooperation between Egypt, Greece and Cyprus. The countries are moving in this direction. Egypt, Greece and Cyprus announced the beginning of a tripartite cooperation by the signing of the Cairo Declaration which includes mentions of the Cyprus’ problem and Turkey’s recent intervention in the island’s EEZ.
Greek delegations also met with officials from Azerbaijan. SOCAR President Rovnag Abdullayev met with Antonis Samaras, Prime Minister of Greece, on Monday to discuss issues related to TAP and DESFA.
But challenges for DESFA’s privatisation arose in the last days. The privatization of Greece’s DEFSA faces an obstacle from the European Commission, with the launch of an investigation into SOCAR’s successful bid of €400 million bid to acquire a 66% holding in the Greek gas transmission system operator.
Meanwhile, EU voted on a resolution against Turkey. The European Parliament urged Turkey to show restraint and act in accordance with international law.
We also explored what’s Turkey’s energy strategy. Turkey’s energy dilemma has been a significant driver for deepening its energy relationship with Kurdistan.This development has come at the expense of alienating Turkey’s longstanding relationship with Baghdad.
OTHER ARTICLES INCLUDE VIEWS ON:
Algeria’s attempt to increase its regional clout
International pipeline projects in East Africa
Bulgaria’s new government and the future of the South Stream project
Feasibility of the Trans-Caspian pipeline
Room for cooperation between Turkmenistan and Azerbaijan on the Southern Gas Corridor
Noble Energy’s pipeline strategy in the East Med
Lotos strategy in the Baltic Sea
Spanish leadership in tanker loading, in an interview with Marcelino Oreja, CEO of Enagás
We did not forget about Azerbaijan’s role. We will soon write about Azerbaijani plans to supply gas to Hungary. The ties between Turkey and Cyprus will be under our radar too, as they might have significant consequences on Europe and not only.
Sergio Matalucci
Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci