A recurrent theme in the EU security of supply debate is the need to diversify natural gas imports, and to reduce the EU’s dependence on a few large suppliers. Continue reading »
In July 2009 the European commission published a proposal for a Regulation on the security of gas supply, due to replace the Directive 2004/67 on the same topic. The proposal has been discussed at the Council under the Swedish Presidency and the negotiation continues under the Spanish Presidency; a political agreement is expected in May 2010.
The Nabucco consortium strongly supported by the European Commission in the name of EU energy security interests is going ahead. It decided on February 2010 to order the steel to forge the 3000 km future pipe. Such a strong determination is striking because there is only room for one transit pipe-line and the rival project lead by Gazprom, namely South Stream, has much better chances to win the competitive battle because there will be gas to fill it and money to finance it, which is not the case of Nabucco.
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Demand for gas is on the rise in Europe, yet its indigenous production is in decline. The need for imports from remote sources will grow. At the same time, a pan-European market for natural gas is expected to develop, leading to new movements of gas in addition to the traditional direct flows from production facilities to consumers. Continue reading »
The Third Energy Package has been agreed. From the publication of the proposals by the Commission, in September 2007, discussions have been dominated by the issue of (ownership) unbundling. Following heavy pressure from some Member States, notably Germany and France, a ‘Third Way’ of unbundling was accepted as another unbundling option. The discussions have taken away attention from other issues and the quality of the Package has suffered as a result. But has it been worth it?
Long-term contracts play an important role in the energy industry, both in the electricity sector and in the gas sector. Gas importers sign long-term take-or-pay contracts with gas exporters, and resell the gas on a long-term basis to gas retailers. Similarly, energy-intensive companies often contract their electrical energy several years ahead.
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The gas crisis that hit European Countries at the beginning of 2009 is now far away from our mind. Officially, the tension in gas supply due to the conflict between Russia and Ukraine ended on January 17th, with resumed deliveries and higher gas prices for Ukraine. On 20 January, supplies to Europe began to flow again. Commission President Barroso welcomed the resumption of deliveries, after a two-week standoff that left millions of East Europeans without heating in the middle of winter. Why the crisis has not been so more severe for European importing countries? Apart form (geo)political stress and diplomatic solutions, there is a bit unknown actor in the backstage of the gas crisis: storage.
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Was the Russia vs. Ukraine match that we were forced to watch and endure in the cold in some countries in the EU in the past few weeks a commercial dispute gone political? Or is it a political dispute with a commercial lining? Continue reading »
Conventional wisdom has it that Russia dominates Europe’s natural gas market, and that European imports of Russian gas are growing and can only continue to grow. This supposedly places the EU in a dangerous state of dependency and compromises its strategic position towards Russia. All sides of the debate over Europe’s Russia policy share these premises, including those “realists” who argue that dependency on Russian gas makes it irresponsible for the EU to pursue policies that antagonise Moscow. But the conventional wisdom is wrong: Europe’s gas supply is not dominated by Russia, or, for that matter, by any other exporter.
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In the discussion on European gas supply security, short-term aspects such as the physical availability of energy resources, technical disruptions, etc., should be distinguished from the long-term aspects.
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