Weekly Overview: Nord Stream 2; Energean; Norway's Carbon Goal
With the tailing-off of the financial reporting season, last week saw the European gas industry settle down to its summer lull, compounded this year by the Olympic Games.
Something that will occupy the Israeli parliament when it returns in early September is Energean’s bid for the Tanin and Karish fields. Some of its members may regard the solution to Delek and Noble’s monopoly offshore – namely the forced sale of their stakes in these two relatively minor fields – as being no better than the problem. Energean is a very small player in the scheme of things. Ahead of the licensing round planned later this year, the government might have hoped for a bigger trophy, but if it is approved the deal will end the Leviathan deadlock.
To the northwest, the Polish anti-monopoly agency UOKiK explained its reasons for blocking the formation of the Gazprom-led Nord Stream joint venture, following an "an extensive market study, concerning among other things the views of firms in the natural gas sector in Poland on the envisaged concentration." The energy regulator (URE) also did a study that confirmed the agency’s concerns. “Gazprom has a dominant position on the market when it comes to supplying gas to Poland, and the deal could strengthen further the company’s negotiating position with regard to users in Poland,” UOKiK said.
Poland receives gas from a number of sources, including Norway where it has equity production; and it has a contract to buy liquefied natural gas from Qatar for its new terminal. Suppliers may also buy LNG from elsewhere. The major gas company is the state-owned PGNiG. The anti-monopoly agency did not answer NGW's query if it was happy with the level of competition in Poland’s gas market; or whether consumers were happy with the prices and the range of choice. Last month the European Federation of Energy Traders was critical of the Polish government's plans to create expensive strategic storage, to the detriment of competition.
Ukraine is continuing to progress its plans to unbundle its transmission and storage sectors from trade and supply. The corporate governance action plan for the transmission system operator (TSO) was due to be submitted for the consideration of the cabinet August 15; by September 1, the energy ministry is to establish the Gas Transmission System of Ukraine and run it as a wholly state-owned company. Further down the road, storage is also to be separated from trade and supply, once its future has been decided: privatisation, partnership or state control, for example.
A problem is that the parent company, state-owned Naftogaz Ukrainy will not be able to fulfil the transit contract it has with Gazprom as the resources it needs, including access to the gas transmission system, will not be at its full disposal, under non-discriminatory third party access rules. Amendments to the contract in order to solve this difficulty are the subject-matter of arbitration proceedings between Naftogaz and Gazprom. Naftogaz needs to be able to assign the contract to a designated TSO before the TSO may be spun off completely.
Also last week Norway became the first world’s first oil country to promise emission cuts beyond the ambitious claims authorities already imposed on industry, which has already undertaken to implement CO2 reduction measures equivalent to 1.4mn mt/yr by 2020.
State-controlled Statoil will account for 2mn mt/yr of the new 2020-30 target, having already set itself a target of cutting CO2 from Norway by 1.2mn mt/yr by 2020 against the 2008 benchmark.Gas will be an essential part of the mix, according to a report by consultancy Thema.
In the North Sea, the talks between Wood Group and representatives of the trade unions Unite and RMT have been constructive so far, but no the parties have made no further announcements. For the time being, the strikes have been suspended and so have the new terms and conditions that prompted the strike. Wood Group says none of the employees were being offered terms and conditions below the Offshore Partnership Agreement, which the unions accepted earlier in the year; nor will they be. The majority of our employees will still be paid significantly above these terms and conditions.”
William Powell