Thursday, March 5, 2015

RE-AFFIRMING THE GREEK ENERGY STRATEGY ON ENERGY UNION | Natural Gas Europe




RE-AFFIRMING THE GREEK ENERGY STRATEGY ON ENERGY UNION

Within the framework of the event organised by the Greek Energy Forum (GEF) in Brussels on “EU 2030: the Prospects of the South East Mediterranean”, Greece’s role as a key transit country for Europe’s energy security was highlighted.
In particular, the event analysed EU energy diversification efforts and the impact of these policies on the energy markets of South East Europe.  
A number of government officials, representatives of EU institutions and the oil and gas industry reiterated the importance of interconnectors to catalyse the realisation of an integrated and fully functioning EU internal energy market.
Investments in infrastructure will represent a step towards the establishment of regional solidarity mechanisms and the enabling of bidirectional gas flows that the EU has been promoting for years. They will also contribute towards the concept of a Union that is energy interdependent and less at risk from single source dependency; an issue that is of significant importance, particularly for Member States in South East Europe.
Following the publication of the EU’s new flagship initiative, Energy Union, the new Greek government has to clearly define the role that it aspires to play in the region. The government’s priority thus far has been to tackle issues related to the economy and relations with its creditors.
Energy policy has until now been a secondary objective; the new administration has to undergo a steep learning curve. If the new Government wants to maintain the strategic positioning of Greece as a Mediterranean gas hub in the making, quick and decisive actions are necessary.
The first opportunity for the Greek government to test its credentials on the international energy scene were mired by a lack of know-how and inexperience. Greece’s new energy team met with Azeri officials from the State Oil Company of Azerbaijan Republic (SOCAR) to reaffirm their support for the Southern Gas Corridor and discuss three requests which were subsequently brushed aside:
Firstly, the request for transit fees from the Trans Adriatic Pipeline (TAP) was rejected as transit fees do not apply within the EU.
Secondly, Greece’s request to renegotiate Shah Deniz II gas prices was premature considering that volumes will not be received prior to 2020. When gas deliveries begin, renegotiations can take place, but only in the case of proven significant market developments – e.g. US shale revolution.
Lastly, Greece’s involvement as a shareholder in the TAP project was not ruled out. However, one has to contribute financially in order to become a shareholder. Despite these initial setbacks for the Greek government, what they lacked in experience was made up for by a willingness to listen and engage with international investors in a cordial manner.
The Final Investment Decision (FID) in favour of the TAP project in December 2013 put Greece on the EU energy security map last year as the gateway for Caspian gas to Europe. Greece should not limit itself to becoming a gateway country for new energy supplies to Europe. Instead, it should be more ambitious about the role it can play in the region and leverage the potential that TAP will provide. It must view TAP as an opportunity for increasing its regional significance rather than as a mere opportunity to increase state revenues.
The next pivotal step towards enhancing Greece’s role in the region is through the realisation of the Greece-Bulgaria Interconnector (IGB) which is the starting point of the vertical corridors which were referred to in the Joint Statement signed by the Energy Ministers of Greece, Bulgaria and Romania on December 9th in Brussels.
IGB’s completion will represent a crucial milestone in the EU’s efforts to build a regional energy market in South East Europe, as it will enable gas flow from TAP and a new LNG facility in Northern Greece to filter into Bulgaria, extending onwards to Central Europe, through the Balkans and South Eastern Europe.
After the inaugural meeting of the newly formed Central Eastern South Europe High level working group (CESEC) in Sofia on the 9th February, the Energy Ministers of Greece and Bulgaria agreed to accelerate works related to IGB and set a goal of arriving to a final investment decision in May 2015, ahead of the next CESEC meeting in June.
The projected cost of the IGB currently amounts to €220 million. The project has been awarded the status of a project of common interest, and features in the short term priorities of the EU’s energy security strategy published in May 2014. As such, it has already received €45 million in financing from the European Economic Programme for Recovery, while it has significant potential for further financing - Connecting Europe Facility, Juncker Plan.  
However straightforward this project might seem, significant forces have been delaying its development. Notably, the loss of the Nabucco and the South Stream projects has alienated the Bulgarian authorities, making the next steps in their energy policy unclear.
Bulgaria’s ambiguity is emphasised by the recent agreement of Bulgargaz with Botas on the Turkey-Bulgaria Interconnector (ITB), as well as the Prime Minister’s request to have Turkey participate in the CESEC meeting, only to be rejected by the EU Vice President for Energy Union.
The situation becomes more complex if we consider that the ‘Eastring’ project - originally planned as a counter balance to South Stream that would link Bulgaria to Romania, Hungary and Slovakia - has been touted as a possible link to Gazprom’s new Turkish Stream concept, which would include the building of a gas hub in Turkey.
Such developments would be at odds with the Greek energy policy as mapped out by the former government. Turkish analysts in Botas have stated that if Greece were to develop newly planned LNG capacity in Alexandroupoli and Kavala, there would be no added value offered by ITB given the relatively small size of the regional gas markets in South East Europe.
The Greek government needs to act swiftly in re-affirming its energy strategy and capitalise on the current willingness from the EU to fund Greek projects – e.g. IGB, Aegean LNG. Greece should build on the political momentum achieved at the EU level following the signing of the vertical corridors declaration on December 9th 2014.
Simultaneously, it also has to address the Bulgarian question at the highest political level, ensuring that alignment is achieved. The current polyphony and ambiguity may result in a zero sum game in which the EU goals of energy diversification, regional development and energy market integration will be the losers. 
By: Constantine Levoyannis and Dr. Angelos Gkanoutas-Leventis
Constantine Levoyannis is deputy head of Greek Energy Forum in Brussels, and Dr. Angelos Gkanoutas-Leventis is Vice Chairman of the Greek Energy Forum. The opinions expressed in the article are personal and do not reflect the views of the entire Forum or the companies that employ them.



Source: http://www.naturalgaseurope.com/re-affirming-the-greek-energy-strategy-on-energy-union-22487

Wednesday, March 4, 2015

EC recognises need for CCS in its Energy Union Strategy | Bellona

Energy Union Strategy

EC recognises need for CCS in its Energy Union Strategy

On 25 February 2015 the EU adopted its Communication for an Energy Union, setting out a strategy for the establishment of a resilient Energy Union with a forward-looking climate change policy. The Communication features an annexed action plan listing fifteen ‘action points’ for the coming years, including electricity market legislation, enhanced regional cooperation and increasing funding for low-carbon technologies. Bellona welcomes in particular the explicit reference to the need for enhanced support to Carbon Capture and Storage (CCS) technology in meeting climate change objectives, and calls for these words to be matched by concrete actions, for instance through meaningful reform of the ETS and its related funding mechanisms for CCS.

The recently released Communication of the EC sets out that the Energy Union will adopt a number of inter-related policies, among which will be new pieces of legislation with the ambition to secure supplies of electricity and gas as well as increased funding channeled towards energy efficiency and renewable energy generation.
The Strategy notes that if Europe’s Energy Union is to be the world number one in renewable energies, it must lead on the next generation of renewable technologies as well as to energy storage solutions. The Communication seeks the establishment of a new Research and Innovation (R&I) strategy. This new European energy R&I approach will seek to accelerate energy system transformation.
The Energy Union Communication highlights the importance of a forward-looking approach to CCS and Carbon Capture and Use (CCU) for the power and industrial sectors, arguing that it will be critical in reaching the 2050 climate objectives in a cost-effective way. The text acknowledges that the deployment of this key technology will necessitate the creation of an enabling policy framework. This in turn will require a comprehensive reform of the EU Emission Trading System (ETS) and the implementation of the new Innovation Fund, in order to increase business and investor certainty.
CCS is crucial to ensure the decarbonisation of energy-intensive industries as well as of the European electricity supply system. Bellona is, therefore, pleased to see the acknowledgement of CCS technology as key to meeting climate change objectives.
For over two decades, Bellona has been actively working on fostering the creation of a CCS-conducive policy framework. One important next step would be to ensure the smooth and timely operationalisation of the planned Innovation Fund. To this end it should build on lessons learnt from its predecessor, the NER300. Bellona will be publishing a response to the ETS consultation in the coming week, including detailed recommendations for the design of the Fund.
The Energy Union strategy is set to be approved later this year. EU Energy Ministers will discuss the Communication in Brussels on 5 March 2015 and during an informal gathering to be hosted by the Latvian presidency on 14-16 April 2015, before adopting a formal position at the Luxembourg Energy Council on 11-12 June 2015.

Bellona Europa




Source: http://bellona.org/news/climate-change/2015-03-ec-recognises-need-ccs-energy-union-strategy

Monday, March 2, 2015

THE ENERGY ISLAND: ISRAEL DEALS WITH ITS NATURAL GAS DISCOVERIES | Natural Gas Europe



THE ENERGY ISLAND: ISRAEL DEALS WITH ITS NATURAL GAS DISCOVERIES

In a paper published by Brookings on 19 February 2015 and entitled The energy island: Israel deals with its natural gas discoveries, the authors Natan Sachs and Tim Boersma highlight the challenges Israel is facing in its path towards becoming a net natural gas exporter. Since its discovery of large offshore natural gas fields in its Exclusive Economic Zone, Israel has been struggling with domestic policy debates and with the complicated geopolitical landscape that makes of Israel an energy island. Despite the substantial size of its discoveries, Leviathan estimated at 22 Tcf and Tamar believed to hold around 10 Tcf of gas, enough to secure Israel’s domestic demand for decades and allow its entry into the export market, the country has faced serious regulatory and political challenges.
Israel was historically reliant on imports to satisfy most of its natural gas demand. Egypt was Israel’s main supplier of natural gas before the relationship deteriorated in the aftermath of the Arab Spring in 2011. The large deposits of natural gas under Israel’s seabed are likely to render Israel self-sufficient in terms of its natural gas needs for decades to come and improve its relationship with its neighbours. Jordan, Egypt and the Palestinian Authority are potential customers given that they are all undergoing severe energy crises at home. Since the disruption in the flow of Egyptian gas, Jordan has been heavily reliant on imports to alleviate domestic needs. Egypt’s growing domestic demand and its declining production have also turned the once energy-exporter into an importer of gas and the country is now considering gas imports from Israel and Cyprus. The Palestinians also rely on Israel despite the discovery of the Gaza Marine field by BG in 2000, a field believed to hold 1 Tcf of gas but that remains untapped to this day.
The most recent regulatory hurdle facing Israel is the dispute between its Antitrust Authority and the partners in Israel’s largest fields Leviathan and Tamar. Israel’s competition regulator has come back on a previous agreement that would have allowed the partners to retain their stakes in the fields as long as they sold their shares in smaller fields in an attempt to ensure a fair market. However, fearing a lack of competition in the domestic natural gas market, the regulator qualified Delek and Noble’s partnership as constituting a cartel, a decision that could mean breaking up the monopoly. The dispute has led many to believe that Leviathan’s production will be delayed beyond 2018 and that future investors may be deterred from participating in Israel’s future gas explorations due to the climate of regulatory uncertainty. Regional deals may also be jeopardized by the delay. Brookings’ paper stresses on the need for a proper regulation to avoid the problems associated with the monopoly, such as high prices that would affect both industry and consumers throughout the Israeli economy for decades to come.
Brookings’ paper highlights a previous debate that has divided the country. In 2013, policymakers were divided as to whether Israel should allow gas exports or retain the findings for domestic consumption. A history of heavy reliance on imports and Israel’s strained relationships with nearly all of its neighbours would have justified, to some, its decision to ban gas exports in order to secure its gas needs for generations to come. But the need to give investors incentives to search of gas in Israel’s waters as well as the considerable revenues that could be generated from gas sales have led the Israeli cabinet to decide in June 2013 to allow the export of around 40% of the gas discovered, a decision ratified by Israel’s Supreme Court in October of the same year.
The pending maritime dispute between Lebanon and Israel has also raised security concerns. Brookings’ paper discusses the need to secure the energy facilities along the Israeli coast, particularly given the volatility in the region. The report adds that new platforms to guard maritime facilities are needed. The paper also covers the lack of proper regulation protecting the environment from the new discoveries and the urgent need for its development to avoid the long term environmental ramifications of offshore facilities.
The main takeaways of the paper are the significant potential of the new discoveries on Israel’s energy outlook, its economy and its relationships with its neighbours. The paper also highlights the complex regional landscape that might stand in the way of effective cooperation and the need to resolve domestic debates to allow for regional dialogues. The conclusion is the need to achieve a predictable and stable domestic climate that would allow Israel and its neighbours to improve diplomatic ties and benefit from the hydrocarbon wealth.
The full report can be accessed here
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. She reads International Relations and Contemporary War at King's College London focusing on Natural Resources and Conflict. She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat



Source: http://www.naturalgaseurope.com/israel-natural-gas-brookings-paper-energy-island-22298

Egypt Aims for LNG Import Independence by 2020 | Forbes

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Egypt Aims for LNG Import Independence by 2020

Establishing high hopes for Egypt’s domestic energy sector, Oil Minister Sherif Ismail announced that the country intended to be free of LNG imports by no later than 2020 with the help of local field development.
The announcement comes as Egypt continues to grapple with a daunting energy landscape that has been especially challenging since the collapse of the long-standing government of Hosni Mubarak in 2011. Since then, the one-time natural gas exporter has struggled to meet growing domestic demand at a time when foreign investment was growing more cautious. Coupled with security issues in the eastern Sinai region, the energy challenges erased Egypt’s role as natural gas exporter and left Cairo searching for new, sustainable options.
The country’s reliance on costly imports has remained a challenge in recent years, resulting in a daunting debt to foreign producers that has proven difficult to chip away at.
However, Ismail’s announcement appears to demonstrate a government that feels it has turned a corner in terms of domestic production. According to a Reuters report, the minister said that recent efforts to partner with firms like Vitol, Noble and BP begun to take shape, bolstering existing production efforts in the Nile region of the country.
“Egypt’s gas production is 4.7 billion cu ft a day and we need no less than 700 million cu ft extra per day to meet the country’s electricity needs during the summer, in addition to the gas needs of the industrial sector,” Ismail said, according to the Reuters report.
Late last year, local media reported that Egyptian gas exports had seen a 73.4 percent decline from July of 2014, citing the Information and Decision Support Centre (IDSC). That dramatic reduction meant about $70 million less in energy sector revenue compared to the same period in 2013. Not relegated to natural gas, the decline also hit crude oil exports, reducing it to $350.7 million for the summer month from $398.8 million the year before.
In an effort to reverse course, Cairo has announced a series of efforts to entice needed foreign interest in new energy development, including unconventional shale efforts alongside Apache and Shell Egypt. According to the Reuters report, the government will also be announcing tenders for exploration in offshore sites and in the country’s western desert. Egypt has also recently benefited from new investment interest from Kuwait to the tune of $6.8 billion in energy sector projects.
Taken with the recently reported 7.9% increase in foreign direct investment in Egypt, the country’s burgeoning domestic energy sector suggests that some near-term relief could be in view.

Source: http://www.forbes.com/sites/christophercoats/2015/02/27/egypt-aims-for-lng-import-independence-by-2020/?utm_source=followingweekly&utm_medium=email&utm_campaign=20150302