East Mediterranean Eyes EU And Global LNG Markets For Gas Sales

Reuters

Europe's efforts to reduce its reliance on Russian energy supplies and booming demand for shipped gas are pushing ahead the development of the East Mediterranean's gas reserves, which have so far been marred by the region's instability.

Israel and Cyprus are both well placed to help diversify Europe's Russian-dominated market by pipeline, while sending liquefied natural gas (LNG) tankers to the world's best paying customers in Asia and Latin America.

Russia's seizure of Ukraine's Crimea region has shaken political relations between Russia and the European Union, and Brussels is stepping up efforts to find new suppliers.

"With recent events in Europe... and the aspiration of different countries to diversify their gas supply, that puts another spotlight on our massive resources and transforms our story into a global one," said Gideon Tadmor, CEO of Avner Oil , a leading explorer in the region, at a conference in Tel Aviv on Tuesday.

Almost one trillion cubic metres of recoverable natural gas has already been discovered in the eastern Mediterranean Levant Basin, enough to supply Europe with gas for over two years and worth between $370-$740 billion in current European or Asian market terms respectively.

Israel, which has so far found over 80 percent of all the gas, has said it would allow 40 percent of its reserves to be exported, while Cyprus will sell almost all of its gas abroad.

Europe to find it difficult to wean itself off Russian gas

AFP

Europe will have trouble weaning itself off Russian natural gas, analysts say, as its faces declining production at home and Asian competition for supplies.

Even before the current flare up of tensions with Russia over its de facto occupation and possible annexation of Ukraine's Crimea peninsula, Europe has been trying to reduce its dependence on Russian supplies.

The diversification effort has been bearing fruit: imports of Russian natural gas fell from 45.1 percent of the EU's total to 31.9 percent over a decade to 2012, according to data from the EU's statistics agency, Eurostat.

"Europe has reduced somewhat its dependence on Russian gas, even if Gazprom remains a key actor in Europe," said Pascale Jean, a natural gas specialist at PriceWaterhouseCoopers.

However the Russian gas giant Gazprom has made no secret it aims to claw back its market share, having built a new pipeline to Germany and a second one under construction to southern Europe.

The share of Russian gas in European imports climbed last year, and its share in total consumption has remained relatively stable over the past decade at just under a quarter.

However, EU production which currently covers a third of consumption, is expected to fall by up to 20 percent by 2020 and up to 30 percent by 2030.

Turkey’s gas trading hub dream realistic: Oxford Study

Reuters

Turkey’s vision of becoming a gas trading hub is realistic given its diversity of supply but it would need to speed up market reform and invest more in gas infrastructure, an Oxford University study said on Feb. 10.

Turkey has long wanted to have a major power and gas market, capitalizing on growing domestic demand for gas and its proximity to cheap natural gas resources.

It has few natural resources of its own, but is at the centre of nearly all gas pipelines that would link Central Asia to Europe, defining the regional market for decades to come.

Turkey’s rise to prominence in energy markets would also add to its growing influence as a major economic and political player between Central Asia, the Middle East and the European Union, to which Ankara aspires to be a member.

According to state pipeline company BOTAS, Turkish natural gas demand is forecast to grow to 81 billion cubic meters (bcm) a year by 2030 from the current 47 bcm/yr.

It could potentially trade up to 100 bcm of gas a year when large-scale investments in gas infrastructure have taken place, such as new liquefied natural (LNG) gas and storage facilities, said the paper by the Oxford Institute for Energy Studies.

Azerbaijan offers Iraq access to Europe gas pipelines

AFP

Azerbaijan has offered Iraq access to the "Southern Gas Corridor" connecting the Caspian Sea to the European Union to help Baghdad sell natural gas to Europe, Baku's foreign minister said Monday.

Elmar Mammadyarov told journalists in the Iraqi capital that officials in Baghdad had already expressed interest in joining the massive project, which is supported by the United States and aims to reduce Europe's dependence on gas from Russia.

"It's a huge project ... and it's open if Iraq is also interested to deliver their own natural gas," Mammadyarov said at a joint news conference with his Iraqi counterpart Hoshyar Zebari.

"The project is there, so if any other countries ... want to join the Southern Gas Corridor, including Iraq, who already expressed some interest for this project, we are ready to start negotiations." Gas pumped from the immense new Shah Deniz II field will travel across Azerbaijan and Georgia and across Turkey through a new Trans-Anatolian Pipeline, which is set to be a key part of the Southern Gas Corridor from the Caspian Sea to Turkey and the EU.

Russia, meanwhile, backs a new pipeline under construction known as South Stream that aims to transport 63 billion cubic metres under the Black Sea to Europe.

Shah Deniz 2 awaits TANAP FID for project commencement

 

Hürriyet Daily News

Al Cook, the Vice President of Shah Deniz Development, emphasizes the importance for TANAP’s key shareholders, Turkey and Azerbaijan, to finalize their decision on investment plans to carry gas.

The Shah Deniz 2 consortium is awaiting the partnership heading the Trans Anatolian Natural Gas Pipeline project to make their FID prior to making their own, with the FID required to trigger the execution of plans to develop Azerbaijani gas fields, according to a high level BP executive.

The TANAP oil pipeline will be carrying gas from Azerbaijan through Georgia and Turkey to European markets the year. Talking yesterday at the Atlantic Council summit in Istanbul, Al Cook, the Vice President of Shah Deniz Development, emphasized the importance for TANAP’s key shareholders, Turkey and Azerbaijan, to finalize their decision on investment plans in order for the FID required for the Shah Deniz 2 project to be made.Yet the reverse is also true for TANAP, according to energy experts, who said TANAP is also waiting for the Shah Deniz 2 consortium to make its final investment decision in order for the project to receive the green light.

“Shah Deniz 2 needs to make the FID before the end of the year because they can no longer delay it,” John Roberts, an energy security specialist, told the Daily News. Al Cook expressed confidence that the Shah Deniz 2’s final investment decision will be made before the end of the year, although admitting that “there will be few very busy weeks ahead.”

No easy to break gas dominance of Russia

Reuters         Henning Gloystein


* Russia's EU market share to stay around 30 pct
* New supplies seen, mainly from overseas LNG

The European Union aims to diversify away from Russian natural gas supplies, yet Reuters research indicates the EU's biggest provider a decade from now could easily still be Russia.

Billions are to be spent on piping gas from Azerbaijan while new finds in Africa and eastern Mediterranean also promise new supply for the EU, which currently buys mostly from Russia and Norway.

Europe also gets liquefied natural gas (LNG), mostly from Qatar, and the U.S. shale boom could free up LNG exports from there in coming years, too.

But growth in Europe's demand for gas will eat up much of the new potential supply, and the Russians show little willingness to fade away as they gear up to defend their position through massive projects, such as the $35 billion South Stream pipeline to Italy.

"Russia will continue to remain Europe's primary energy supplier, including natural gas supplies, for many years and possibly decades," a U.S. congressional research paper on Europe's energy security said in March.

Reuters' own research indicates that in 2023 Russia will likely remain the dominant supplier, as it boosts exports while EU and Norwegian output declines.

BP, SOCAR, Total and Fluxys join the TAP project

TAP

The Trans Adriatic Pipeline AG (TAP) today announced that BP, SOCAR and Total - members of the international consortium developing the giant Shah Deniz field in Azerbaijan - have exercised their option to join the Trans Adriatic Pipeline AG.

BP and SOCAR have each taken a 20% share while Total has acquired 10%.  In addition, Fluxys, a major gas transit operator in Europe, has opted to join TAP, taking a 16% stake in the project. TAP’s shareholders, Axpo of Switzerland, Statoil of Norway and E.ON of Germany also continue their support of the project.

TAP’s shareholding is now comprised of BP (20%), SOCAR (20%), Statoil (20%), Fluxys (16%), Total (10%), E.ON (9%) and Axpo (5%).

Kjetil Tungland, Managing Director for TAP said: “I would like to welcome the Shah Deniz shareholders and Fluxys to the TAP project. Our new shareholders will significantly enhance TAP’s strategic position in becoming an integral link between both their upstream and downstream businesses. This will further strengthen the integration of the entire Southern Gas Corridor value chain and support TAP’s delivery of the project on time and on budget. ”

TAP’s shareholders remain open to further strategic partners joining the project in the future.

TAP outgunned Nabucco for Azeri gas on most fronts

 Reuters

* TAP beat Nabucco on 7 of 8 criteria

* The reason was not high gas prices in Italy, Greece
* Government continues to support South Stream
* GALSI pipeline important for Italy

The Trans-Adriatic Pipeline (TAP) project outscored rival Nabucco West on virtually all fronts to win the race to carry Azeri gas into Europe, a junior minister at Italy's Industry ministry told Reuters.

Azerbaijan's state energy company SOCAR and its partners in the Shah Deniz II gas field, including BP and Statoil , said on Friday they had selected TAP.

The project, linking a Turkish pipeline to southern Italy via Greece and Albania, plans to deliver 10 billion cubic metres (bcm) of Azeri gas to Europe each year beginning in 2019.

BP said there was a "substantial" commercial difference between the two competing pipeline projects, including the cost of shipping the Azeri gas and gas prices in the respective markets.

The head of Austria's OMV, part of the rival Nabucco project, said last week the TAP project had been chosen because of high gas prices in Italy and Greece.

"It was not for high gas prices in Italy and Greece," Claudio De Vincenti said in an interview.

TAP Countries Give Tripartite Support

Natural Gas Europe

The governments of Albania, Greece and Italy have created a special committee to coordinate support for the Trans-Adriatic Pipeline (TAP), one of two major contenders for the contract to convey gas from the Shah Deniz 2 field off Azerbaijan.

External Affairs Director for TAP, Michael Hoffmann, said the support was a major vote of confidence in his consortium, which is led by Norwegian major Statoil.

TAP is included in the so-called Southern Corridor, a planned network of pipelines meant to offer alternatives to Russian gas for Europe.

Albania, Greece and Italy are all transit countries for TAP. When the gas supplies arrive in Italy, they will then be transported on to a range of customer countries, according to the plan.

TAP is up against the ambitious Nabucco West pipeline, which is backed by other European countries. Also on Wednesday, the Nabucco website recorded a call by Austria, Bulgaria, Hungary and Romania to support his alternative in the Shah Deniz decision.

On Monday the New York Times reported that Hungarian prime minister Mark Orban had said that MOL, his contry's participant in Nabucco West, wanted to withdraw from the project.

A BP-led consortium operating Shah Deniz is due to decide on the successful candidate by June.

Source: http://www.naturalgaseurope.com/tap-countries-give-tripartite-support

Black Sea Region and Natural Gas Prospects

Natural Gas Europe

The recent international Black Sea Oil & Gas Forum held in Bulgaria highlighted culminations surrounding natural gas trade and investments in the region, which are gaining strong pace.

The president of the Bulgarian energy regulatory authority, Mrs. Evgenia Haritonova, pointed out that Bulgaria's immediate target is to increase the production of domestic natural gas while at the same time diversifying its import sources, based on the current pipeline projects, such as the Southern Corridor and the interconnectors with its neighbors - Greece, Serbia and Romania, which will be finalized within the next 18 months. Further she added that the Bulgarian government had already signed with an energy consortium comprised of the France's Total SA, Austrian OMV and Spanish Repsol to conduct research for gas in the Black Sea field of Khan Asparuh. Identical competitions with international companies will take place in due time for the offshore locations of Silistar, Sveta Marina and Teres.

Regarding shale gas, Haritonova stated that for the moment the energy Ministry is following the moratorium of the Parliament, and until it is lifted no research could be made.  It is interesting to note that Bulgaria's special advisor of the ministry of economy Petar Poptchev noted that Chevron was not so much interested in shale gas exploration, but in conventional gas.