Turkmenistan to supply 10bcm of gas to EU from next year: report

Turkmenistan to supply 10bcm of gas to EU from next year: report
AFP - Monday, April 14 04:38 am

LONDON (AFP) - Turkmenistan will supply 10 billion cubic metres (bcm) of gas annually to the European Union from next year, EU External Relations Commissioner Benita Ferrero-Waldner confirmed in an interview published Monday.

Speaking to the Financial Times, after French Foreign Minister Bernard Kouchner reported that a deal had been reached last week, Ferrero-Waldner said that the offer required increased European investment in pipeline infrastructure and exploration in the region.

"The president (Gurbanguly Berdymukhamedov of Turkmenistan) ... gave us assurances that 10bcm will be set aside for Europe in addition to possibilities in new fields to be tendered," she told the business daily.

She said it was "a very important first step", but noted it was not a "vast quantity".

Ferrero-Waldner noted, however, that to overcome technical difficulties in transferring the gas to Europe, the bloc would have to either build a small pipeline between off-shore installations in Turkmenistan and Azerbaijan, build a link connecting the two countries through Kazakhstan or compress the gas into liquid form and transfer it via tankers.

The EU is anxious to see the construction of a pipeline through the Caspian, bypassing Russia, to provide direct access to Central Asian gas.

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U.S. official urges Greece to diversify sources of energy supplies
The Associated Press
Published: April 10, 2008

ATHENS, Greece: Greece and other NATO countries should diversify the sources of their energy supplies, U.S. Deputy Assistant Secretary of State Matthew Bryza said Thursday during a visit to Athens.

Bryza met with Greek Foreign Minister Dora Bakoyannis hours after the Greek minister held talks with Russia's deputy foreign minister.

Russia is Greece's main supplier of natural gas, and a branch of the South Stream pipeline is to pass through northern Greece. The pipeline will carry Russian gas under the Black Sea to Bulgaria before splitting into several branches to western Europe.

The U.S. has urged European countries to seek alternatives to Russian natural gas. During a February visit to Brussels, Bryza took a swipe at Russia's state-owned OAO Gazprom, saying energy monopolies threaten countries' economic security.

In his meeting with Bakoyannis, "we talked about how important it is to put in place diversification options before deepening dependence in one direction, on a single company that's already such a major supplier, 80 percent in fact of the gas here to Greece," Bryza said.

Earlier Thursday, Bakoyannis met with Russian Deputy Foreign Minister Vladimir Titov for talks that included energy issues and the South Stream pipeline.

The U.S. backs a competing pipeline across Europe from Turkey. The Nabucco pipeline is favored by both Washington and Brussels. It will bypass Russia and is at least in part intended to help ease western Europe's dependence on Russian supplies.

But Greece's relations with Turkey are often tense, and Athens is likely to prefer not to rely on energy supplies that go through its eastern neighbor.

Greek Prime Minister Costas Karamanlis will be visiting Moscow soon — possibly before the end of the month — and is expected to finalize a number of agreements, including energy-related deals.

"We hope that we can finalize some of the agreements that are in the pipeline now, and a lot of them have to do with the energy field," Titov said.

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Analysis: EU eyes Gazprom's Nigeria play

Published: April 11, 2008 at 7:02 AM

GAS CRISIS

A Ukrainian worker operates at the natural gas pipeline from Russia to Poland in Boyarka town 15 miles from Kiev, January 3, 2006. Russia accused Kiev of illegally tapping off gas from the pipeline crossing its territory to Europe after the Russian gas monopoly Gazprom cut its feed for Ukraine on Sunday. (UPI Photo/Sergey Starostenko)

NATURAL GAS PIPELINE STATION NEAR KIEV
By STEFAN NICOLA
UPI Energy Correspondent
BERLIN, April 11 (UPI) -- Russia's Gazprom is making sure it keeps its dominance of the European gas market, observers say, by trying to influence a potential alternative supplier to Europe -- Nigeria.

Europe's dependence on Russian gas has worried officials in Brussels ever since Russia in 2006 temporarily shut off Ukrainian gas supplies until the country agreed to pay higher prices. What followed were a string of strategies to diversify Europe's energy imports, including a pipeline bypassing Russia and greater use of liquefied natural gas.

Western officials say they hope West Africa, though it has less reserves than the Middle East, may turn into a viable alternative supplier to Europe; already, the area is one of the fastest growing producers of LNG.

In West Africa, Nigeria is the uncut diamond: Boasting on- and offshore oil reserves of 35 billion barrels (twice as much as Mexico's) and 176 trillion cubic feet of natural gas (as much as the United States'), it's no surprise Nigeria's energy sector has been courted by U.S. and European officials.

There are problems, however. Violence in the oil-rich Niger Delta and widespread government corruption have cut production, according to some estimates, by as much as a third. Becoming a viable source of supply to Europe will require the reduction of violence to an acceptable level. Still, with most of the world's easy energy gone, Nigeria could be an attractive prospect -- a fact not lost on the Europeans.

Yet since last year, another player has entered the race: Gazprom is in talks with the Nigerian government about investing in the West African country's gas industry.

"We made a decision to go global in terms of acquiring assets and developing strategy outside Russia. Africa is one of our priorities," a Gazprom spokesman said.

It's also one of Europe's top priorities: A 2,700-mile pipeline linking the Niger Delta to existing gas transmission hubs to the EU in Algeria has already been proposed, a development that hasn't been exactly met with excitement in the Kremlin. While no specific Russia-Nigerian project has been mentioned yet, observers in Europe are worried that Gazprom's planned investments are of geopolitical, rather than economic interest: Gaining influence in Nigeria means keeping the ball in Russia's court when it comes to Europe's exports, observers say.

"A deal between Gazprom and Nigeria will increase Europe's dependence on Russian gas," Rob de Wijk, of the The Hague Center for Strategic Studies, a Dutch policy research institute, told the new energy magazine European Energy Review. "Russia has a deliberate policy aimed at controlling the whole gas market that is meant for Europe."

Yet while some observers fear Russia aims to block an alternative import route, others argue that by exploring gas fields in Nigeria, more gas will eventually get on the market, benefiting consumers in Europe in the long run. And Gazprom's decision, of course, makes absolute sense in business terms.

Others say European companies and governments simply need to do more to strike new contracts in Africa, where not only Russia, but also China has been very active -- and successful -- recently, scoring most of the important business deals connected to sub-Saharan oil resources.

Rather than speaking with one voice when it comes to investing in the continent's energy sector, European governments still act as a bunch of lone warriors in Africa. A disunited and thus "weak" Europe will not beat Gazprom to the table, however. And that may have far-reaching consequences.

"Europe wants to diversify its energy supplies away from the Middle East. When the Russians gain clout in Nigeria and elsewhere in the region as well, Europe risks exchanging OPEC for Gazprom," Cyril Widdershoven, energy expert at the Institute for the Analysis of Global Security, told the European Energy Review. "Which in my view is bad news. I fear an Arab camel less than I fear the Russian bear."

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Gazprom and Eni prepare to join forces to pipe natural gas from Libya to Europe
By Judy Dempsey
Published: April 9, 2008

BERLIN: Gazprom of Russia, the world's largest producer of natural gas, and Eni of Italy are preparing to join forces to pipe natural gas from Libya across the Mediterranean to Southern Europe. The ambitious deal would enable Russia to diversify its energy sources but also further increase Europe's dependence on Gazprom, which is state-controlled.

After talks between Gazprom and Eni held last week in the wooded surroundings of Novo-Ogaryovo near Moscow, the official residence of President Vladimir Putin, both sides agreed in principle to work together in Libya.

Paolo Scaroni, chief executive of Eni, said the deal with Gazprom would involve "the swap of assets outside of Russia." A statement issued by both sides after the meeting referred to "the realization of upstream joint projects in third countries." Upstream refers to oil exploration and production. Eni officials confirmed that these projects referred specifically to Libya.

Some analysts describe Gazprom's moves in North Africa as a "pincer" attack on Europe. They say if Gazprom succeeds in Libya and in Algeria, where it is already competing for contracts, it could end up dominating the supply routes to Southern Europe. That would be in addition to its current ambitions in southeastern Europe and parts of Northern Europe, where Gazprom is planning to build an elaborate network of new natural gas pipelines.

"Europe is sleeping as Gazprom makes every effort to become a global player and increase its grip on Europe," said Igor Tomberg, an energy expert at the Institute of World Economy and International Relations in Moscow.

"It is very important what Gazprom is doing in Libya and other parts of North Africa," he said. "By diversifying its supplies and gaining even more access to European markets, geopolitically, it is surrounding Europe."

The European Commission, the European Union's executive body, says it has been monitoring Gazprom's growing interests in North Africa. Andris Pielbags, the EU's energy commissioner, recently said he was concerned that Gazprom might try to create a natural gas cartel that would involve Algeria, where the Russian company is also seeking to win production contracts. Algeria supplies 13 percent of Europe's total natural gas needs.

Russia already supplies more than a quarter of Western Europe's energy needs, and nearly 80 percent of Russia's natural gas exports are sold to Europe. But most current pipelines pass through intermediate countries like Ukraine, Poland and Turkey, which charge transit fees.

The new Nord Stream and South Stream pipelines being built on the beds of the Baltic and Black Seas are aimed at reducing Russia's dependence on those transit countries.

The South Stream pipeline in particular will compete directly with one backed by the EU, known as the Nabucco pipeline.

Nabucco is designed to reduce the EU's dependence on Gazprom and Russia by having natural gas sent from Azerbaijan via Turkey across to Europe. But construction has yet to start and supply contracts to feed the pipeline have yet to be signed.

Indeed, as talks over Nabucco drag on, several of the EU's 27 member states, particularly Italy but also Germany, Hungary, Bulgaria and Austria, continue to strike their own separate contracts with Gazprom.

Such contracts have only weakened the EU's hand in devising a strategy for diversification or dealing with Russia.

"As Nabucco shows, the EU has no serious and united energy policy," said Kevin Rosner, energy analyst at the independent Institute for the Analysis on Global Security in Washington.

For some countries, including Italy, and most East European countries, the dependence on Russia for energy supplies can be as high a 90 percent.

"Europe has few cards now to play," Tomberg, the energy expert in Moscow, said. "Russia wants to get the markets in Europe, like any big company. That is what it will try to do by establishing itself in Libya as well."

Gazprom officials said the company was seeking new sources of energy and was behaving like any other big energy company.

Libya has the fourth-largest natural gas reserves in Africa after Algeria, Nigeria and Egypt

Gazprom bought exploration and development licenses last year in Libya and has said it plans to invest $300 million in the project over the next year.

As it does so, Gazprom is getting help from Eni.

Along with German and British energy companies, Eni rushed into Libya soon after Libya abandoned its nuclear, chemical and biological weapons program in 2003 and the United States lifted sanctions.

Eni already holds a 50 percent stake in the Greenstream pipeline in Libya, which has an annual capacity of eight billion cubic meters, or 280 billion cubic feet. Eni also holds a stake in a liquefied natural gas plant in Libya, for transporting natural gas by ship, and a 33.3 percent stake in the Elephant oil field. Last year, the company said it had agreed to expand its contracts for the production and export of Libyan oil and natural gas for next 25 years.

At the same time, Eni has been developing a close relationship with Gazprom. The two companies in 2006 forged a strategic partnership by agreeing to an asset swap. Eni entered the production, or upstream, business in Russia, a rare privilege for a foreign company, in return for Gazprom's entering the downstream, or retailing, distribution and transportation network in Italy.

Eni also holds a 50 percent stake in the Blue Stream pipeline, which Gazprom built under the Black Sea a few years ago, and is involved in Gazprom's new South Stream project.

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Greece, U.S. discuss energy security for Greece, NATO
Posted: 2008/04/12
From: Mathaba

The United States has urged Greece and other NATO countries to seek alternatives to Russian natural gas, saying the deepening dependence on Russian energy supplies threatens their economic security.

ATHENS, April 11 (Xinhua) -- Greece's energy policy is set for its own benefit, but the interests of its European Union partners are also taken into account, Development Minister Christos Folias said Friday.

"Our targets are clear, our policy is to invest in our geo strategic position not only for the benefit of our country, but for the benefit of our partners as well in the EU," said Folias after meeting with visiting U.S. Undersecretary of State Matthew Bryza.

The United States has urged Greece and other NATO countries to seek alternatives to Russian natural gas, saying the deepening dependence on Russian energy supplies threatens their economic security.

Russia is Greece's main supplier of natural gas, and a branch of the South Stream pipeline will pass through Greece and carry Russian gas to western Europe.

Washington backs the Nabucco pipeline, a competing pipeline across Europe from Turkey, which will bypass Russia and is at least in part intended to help ease western Europe's dependence on Russian supplies.

But since the Turkey-Greece relations are often tense, Athens is likely to prefer not to rely on energy supplies that go through its eastern neighbor.

Greece will not be pressured to do anything "it does not want to," said Bryza.

During the meeting, Folias and Bryza also agreed that the two countries will strengthen cooperation on the development of renewable energies by enhancing the exchange of experience, knowledge and visits.

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Opposing Views: Should NATO Defend Europe Against Russia's Energy Weapon?

Consensus has so far eluded the alliance on this acutely mission-related question. RFE/RL invited two experts to weigh in on both sides of the debate.

Yes, Moscow's strategy is political, not economic

By Ida Garibaldi

With Russia aggressively seeking a monopoly on the distribution of natural gas to Europe, the time is ripe for Washington to push NATO into a greater role in European energy security.

Over the last two years, the Kremlin has shown that it values the political influence associated with the ownership of natural resources and their distribution in Europe as much as the economic gains that come with it. Indeed, Russia's recent use of energy to bully Ukraine and Belarus and the consequent disruptions to distribution in Europe indicate that European energy security represents a serious strategic challenge for the trans-Atlantic alliance.

It is easy to imagine Moscow pushing any EU member to choose between continued supply of energy or support for a specific U.S. policy. It is in Washington's interest to back European energy security now before Russia has too great a hold on the continent. NATO is the right place to do it.

The EU is already deeply dependent on Russia's natural resources, importing 58.3 percent of its total need for natural gas and 82.8 percent of its total oil needs -- of which over 45 and 29.9 percent come from Russia, respectively. It is hard to overestimate the level of state control Moscow wields over the natural-gas industry or its significance to Russia's economy. The U.S. Department of Energy reports that Gazprom, Russia's state-run gas monopoly, is Russia's largest earner of foreign currency and its tax payments comprise fully one-quarter of the state's tax revenues.

Brussels and Moscow share mutual concern for the stability of their energy relationship. The EU is Russia's biggest energy export market and a source of steady profit, while without Russia the gas stoves would go out across Europe.

Whether this reciprocal dependency will be sufficient to maintain the durability of the relationship is an open question.

Only in September 2007 did the European Commission begin to seriously address its energy challenges. The EU Third Legislative Package on Electricity and Gas Markets endorsed the liberalization of European energy markets as well as the separation between the channels of production and distribution. The legislation requires each country interested in competing in the EU energy market to apply the same market-liberalization standards that the EU wants to apply to its member states. This includes access for European firms to purchase pipelines and other energy infrastructure in Russia and other countries involved in the European energy market.

The proposed legislation will probably be insufficient to achieve a substantial energy market liberalization due to the fierce resistance from France, Germany, and other EU members. And it will certainly not be enough to counterbalance Gazprom's penetration in Europe, but it represents an important step in the right direction, one on which Washington should build.

Senator Richard Lugar (Republican, Indiana) has argued that NATO should treat the manipulation of energy supply and its use as a weapon as a trigger to apply Article 5 of the North Atlantic Treaty, which states that an attack against one member of the alliance should be considered an attack against all members. European energy insecurity is a potentially lethal threat to NATO's unity, and could split the alliance between vulnerable and nonvulnerable members.

Including the use of energy as a weapon under NATO's Article 5 would work as a deterrent against aggressive behavior; developing (and publicizing) NATO's ability and willingness to supply a member that has come under attack by a hostile supplier would also greatly reduce the likelihood of such an attack in the first place.

In the short and medium terms, NATO could take other steps to demonstrate its attention to European energy security. These include encouraging Romania (a member) and Ukraine (a potential future member) to thoroughly question Russia and Gazprom about the construction of the South Stream pipeline, which would pump gas from Russia directly into Europe, bypassing Turkey. Because the pipeline would cross Romanian and Ukrainian economic zones in the Black Sea, Bucharest and Kyiv have the right under international law to inquire about the project's environmental impact, shipping and maritime safety, as well as request changes in the pipeline's route. This could give Washington, Istanbul, and Brussels an opportunity to build consensus around a trans-Caspian pipeline to bring natural gas from Central Asia to Turkey and the European Union bypassing Russia.

The largest summit in NATO's history, the Bucharest meeting on April 2-4 will focus on NATO's operations in Kosovo, Afghanistan, Operation Active Endeavor, and a potential future enlargement. It is a full agenda for a two-day meeting, but one that should at least make time to lay out the time frame for a thorough discussion on energy security.

The longer the United States and its European allies wait to involve NATO, the more entrenched Russia's presence in Europe will become, diminishing the alliance's leverage with potentially destructive consequences for the trans-Atlantic relationship.

Ida Garibaldi is a visiting research fellow at the American Enterprise Institute

No, Moscow's strategy is economic, not political

By Andrew C. Kuchins

Ever since the Gazprom-Ukrainian gas dispute of January 2006, some have called for engaging NATO in a new mission to promote European energy security.

Even Richard Lugar (Republican, Indiana), one of the Senate's most thoughtful and experienced voices on foreign policy, in 2006 called for NATO to engage Article 5 of the North Atlantic Treaty in the event of the "manipulation" of the energy supply and its use as a "weapon."

Such policy prescriptions are based on faulty analyses of the problem. Furthermore, it would prove impossible to reach agreement upon, let alone implement, a solution and the process would distract NATO from far more pressing issues.

First, it is highly debatable to assert that Gazprom/Russia used energy as a "political weapon" either with Ukraine over gas or Belarus over oil. This is not the place to repeat the history of those disputes, but the fact remains that Gazprom is raising prices for all its customers, including domestic consumers in Russia, albeit at different rates. The promised end result over the next few years will be to equalize net-back prices of gas supplies to all European customers.

Reduction of subsidies actually means more commercialized and less politicized energy relations. Higher prices also contribute to the increased ability of Gazprom to make the necessary investments in new fields to assure it will be able to meet its contractual commitments to Europe in the future. There are a myriad of things to criticize Gazprom for, but this broad strategic orientation is the right one. Whether Gazprom can effectively implement its goals remains to be seen.

Cries of the growing gas dependence of Europe on Russian supplies leading to greater vulnerability to political manipulation are exaggerated. Supplies of liquefied natural gas from other non-Russian sources are growing quite rapidly and, according to estimates by Nikos Tsafos of PFC Energy, this is likely to be the case to the year 2020. Europe's dependency on Russian gas is more likely to stay close to the current 25 percent of all the gas Europe consumes than to significantly rise with time.

If Europeans really were so concerned about vulnerability to Russia, then the better answer is to move more quickly to liberalize the European energy markets to encourage the development of infrastructure that can ship gas from west to east, thus providing real alternatives to those countries in the east that are most dependent on Russian supplies. There are a variety of commercial and European regulatory measures far more appropriate for the task of promoting energy security than would be invoking the venerable political-military alliance of NATO.

We also need to remember that NATO is a consensus organization; one needs the agreement of all members for it to take action. If there is a real and not exaggerated problem of energy security, then the real solution must come from the concerted action of the European Union, which is formally tasked with economic and trade issues.

Part of the problem of energy security for Europe vis-a-vis Russia is tied to the EU states' varying degrees of dependency on Russia: from some countries that receive no gas from Russia to others that are 100 percent dependent on Russian supplies. If Europe is not capable of reaching a common policy towards Russia on energy, a policy track I would not advise in any event, why would we ever assume that NATO could reach consensus more easily?

My final and most serious objection to engaging NATO on European energy security is that the organization is already overburdened with its current responsibilities, and it faces major challenges in maintaining consensus about its mission in the more traditional security field. This is most obvious today in the difficulties the alliance is encountering in Afghanistan with mustering adequate forces to maintain peace and promote reconstruction and development.

While there is a lot of press attention to the question of future membership of Ukraine and NATO, the most pressing issue at the summit in Bucharest is how to achieve success in Afghanistan and how to encourage more equitable member contributions to that success.

If NATO is ultimately unsuccessful in Afghanistan, then we will face a much more pressing question of the alliance's raison d'etre and future rather than speculating about an inappropriate mission for the organization in promoting energy security.

Andrew C. Kuchins is director and senior fellow at the Center for Strategic and International Studies' Russia and Eurasia Program

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What the Russian papers say

20:00 | 10/ 04/ 2008

MOSCOW, April 10 (RIA Novosti) NATO's summit in Bucharest models energy diplomacy / Russian-Georgian relations turn sour / United Russia trying to guess Kremlin plans - analysts / Russia tired of sponsoring Mongolian economy / U.S. military space lobby proposes orbital missile defense system / Ukraine insists on safety of its nuclear fuel, keeps Russia away

Vedomosti

NATO's summit in Bucharest models energy diplomacy

Berlin has vetoed Ukraine's and Georgia's early accession to NATO, no doubt, to annoy Washington. The United States imports negligible amounts of Russian fuel, while Europe is very dependent on Russia in this respect. Therefore, if Europe approves Ukraine's admission now, it will have to pay for it in America's stead.

Russia supplies almost half of natural gas supplies to Germany, and provides almost 100% of gas consumed by Slovakia, Finland, Greece and Bulgaria.

For Russia, gas is one of the few really effective foreign-political tools. Ukraine, too, depends on Russia's deliveries and is interested in Russia selling gas cheaply. As of now, it is traded at $179.5 per 1,000 cu m on the Ukrainian border, while its price for Western Europe is nearing $400.

Once Ukraine joins NATO, this privileged price, so beneficial for its domestic industry, will end. To compensate for that, Ukraine will begin charging Russia more for transit. In any case, the situation will be fraught with conflicts and interrupted deliveries.

It is little wonder that many Ukrainians and Europeans believe that a purely symbolic boost in defense capabilities would be too high a price for undermined energy security.

On the other hand, the energy sanctions Russia might apply, although effective initially, will stimulate the diversification of supplies. Even today, Russia is Europe's most important supplier of fuels, but not the only one. Oil accounts for 40% of energy resources consumed by Europe (16% supplied by Russia), natural gas for 24% (20% from Russia), coal for 18%, nuclear fuel for 12%, whereas 6% comes from recoverable sources, including hydro-energy. Overall, Europe receives around 60% of energy from diversified sources (22 countries), while 40% (oil and gas) comes from Russia and the Middle East. Which means Russia accounts for a total of 12% of Europe's energy supplies.

This is not a small share, but does not mean an absolute dependence either. If European nations take no action to diversify supplies, its dependence on Russia will grow to 15%-20% by 2030, mainly due to gas. Therefore, future investments in nuclear energy, coal and recoverable sources are a key to upholding Europe's energy security. Russia, in turn, will be working to diversify the demand for its mineral resources, for example by boosting exports to China. As a result, the very logic of the market will make it difficult to use economic pressure tools further.

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Gazprom Chief Defends Company's Image

On Monday, Gazprom Deputy Chairman Alexander Medvedev addressed colleagues from European energy companies and journalists on the role of Gazprom in European energy security. His speech focused on two pressing questions recently dominating headlines: the way Gazprom sets price policies to CIS countries, and his analysis of the long-term impact of increased participation by Gazprom in European energy markets. Currently, Europe receives 26 percent of gas supplies from Gazprom and by 2020, experts expect this percentage to grow to 33 percent.

Lamenting what he called "an absolutely disproportionally negative politicization" of oil and gas issues with Russia in European media, Medvedev accused journalists of creating fear among average citizens about the reliability of energy supplies from Russia.

He underlined this point with the contradictory results of two recent opinion surveys: one of regular European citizens conducted by the Financial Times in January-February this year and another at a conference of leaders of European energy companies. While the majority of European citizens held a negative opinion about Russia's reliability regarding gas supplies, almost 60 percent of European energy company leaders said Russia is the most reliable supplier for the next five years.

Recognizing the historical link between energy and politics, Med­vedev nevertheless distinguished between political discussion and unfounded politicization, adding that the latter disturbs long-term energy projects between Europe and Russia, which harms the interests of both countries.

Denying any political motivation behind the recent March 5 supply conflict between Gazprom and Ukraine's Naftogaz, Medvedev said, "[Gaz­prom's] price policies are built upon universal, non-discriminatory principals" and that his company would "not supply gas without contracts."

He attributed price differentiation "during this period of transition" (until 2011) among CIS countries to the length of agreements and their level of control over gas pipelines for transit to other countries.

Medvedev furthermore emphasized that Russia will be purchasing supplies from Central Asia at European market prices. By 2011, Gazprom will be supplying all consumers in CIS countries at European market prices.

"In the last 40 years, we have not once cut gas supplies to Europe," Medvedev reminded, as he renounced the "myth" of his company's "unreliability."

Unlike the Ukraine, Russia has not broken any supply agreements with its partners. As international contracts legally bind Gazprom to fully compensate European buyers for all possible losses in the incidence of default, Gazprom will not and "cannot break its obligations of supplies to Europe." For this reason, Medvedev corrected the term "dependence of Europe on Russia" by deeming the situation "interdependence between Russia and Europe."

Medvedev stressed the importance of signing new, long-term contracts with Europe, as these agreements affect plans for increasing internal production in Russia, which is needed in order to meet growing consumer demand.

When European countries, however, encourage Gazprom to boost production while they internally discuss reducing reliance on Russian gas supplies, they send mixed signals to which Gazprom has difficulty reacting.

Because public opinion influences internal political discussions, Medvedev ascribed particular significance to media portrayals of the company.

If the media continues to cultivate a negative image of Gazprom among average European citizens without warrant, Medvedev said, the gas partnership between Russia and European countries could in fact be disrupted. But he stressed it wouldn't be the result of any initiative on Gazprom's part.

By C. Anne Shupe

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Tehran Times, Saturday, April 12, 2008

Europe needs Iranian gas

Europe’s hunger for natural gas and its lack of reliable suppliers is leading several countries to court Iran. This is a delicate situation for the European Union, which also wants to keep the pressure on Tehran to give up its nuclear power program.

A look at projections for future gas supplies demonstrates the predicament. By 2030, Europe will depend on foreign producers for 85 percent of its gas, a big jump from the current 57 percent. Further, many European countries are uncomfortable with their reliance on Russian gas giant Gazprom, and are eager to find suppliers that don’t dance to the Kremlin’s tune.

Although Europe is unlikely to soften its stance on Iran’s nuclear ambitions, some analysts believe energy needs and security of supply concerns will eventually outweigh geopolitical differences with Tehran.

“What we assume is that the current issue will somehow be resolved and ultimately Iranian gas will find a place,” said Ian Ashcroft, principal gas analyst for Edinburgh-based Wood Mackenzie. “We’re not saying how or when, but ultimately, given their large potential gas resource and its location, it’s certainly likely

[Iranian] gas will find its way into Europe.”

Iran now has an annual export capacity of 247 billion cubic feet, which according to Wood Mackenzie is expected to increase more than 10-fold to over 2.8 trillion cubic feet by 2020. Those exports will likely be split evenly between Europe and Asia, with India and Pakistan the key Asian customers, said Ashcroft.

Iran’s main western markets will be Turkey, Italy, and Greece, reaching all the way up to Austria. Europe will continue to meet most of its new requirement through Russia and Norway, although the Middle East, North Africa, and the Central Asian republics will take a bigger share.

(Source: energytribune.com)

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Sourcing Gas to Europe
Oxford Business Group (UK)

Already the world's largest exporter of liquefied natural gas (LNG), Qatar has unveiled plans to more than double its gas production, a timely move as the country looks to step up its energy supplies to European markets.

On April 8, Mohammed Saleh Al Sada, Qatar's minister of state for energy and industrial affairs, said gas production would be raised to 77m tonnes by 2010, up from the present output of 31m tonnes. The planned increase will be the result of new fields coming on line and further investments to boost output, he said.

Along with the plans for the massive expansion of gas production, Al Sada also announced Qatar would increase its oil output to more than 1m barrels per day, from the present level of 850,000.

With the world's third-largest gas reserves, behind only Iran and Russia, Qatar is seeking to maximise the benefits of its resources and to further diversify its client group.

Having already become the largest single supplier to the Asian market, Qatar is now going head-to-head with Russia, which has all but cornered the European market. In part, Qatar is seeking to benefit from Europe's growing unease at the continent's dependence on Russia for much of its natural gas needs.

With Moscow regaining much of the political clout lost in the years after the fall of communism and the economic meltdown that ensued, many of its traditional European clients are becoming increasingly concerned about the reliability of Russian sources. At various times in recent years, Russia has cut gas supplies to Ukraine and Belarus, to add pressure during disputes.

In their search for an alternative source of gas supplies, an increasing number of European countries are turning to Qatar. One of these is Poland, which currently imports 70% of its gas needs from Russia. However, having had supplies disrupted when Russia turned off the taps on its pipeline running through Ukraine last year, Polish officials have started talks with Qatar over the possibility of forming a strategic partnership in a LNG terminal being built on the Baltic coast by the Polish Oil and Gas Company, in addition to supplying gas for processing and distribution.

During a visit to Doha on April 8, Andrzej Arendarski, the president of the Polish Chamber of Commerce, said Poland was looking for Qatari partners in the energy sector.

"LNG is an area of possible future co-operation because Poland has decided to diversify the sources of supplementation," Arendarski said.

Another potential client for Qatari gas is Hungary, which has flagged an interest in reducing its reliance on Russian imports, which currently account for 80% of its liquefied natural gas requirements.

Abel Garamhegyi, Hungary's deputy minister of economy and transportation, said Budapest was keen to source gas from Qatar, though this was dependent on being able to access supplies. Hungary has announced plans to link its gas pipeline network to that of Croatia by 2010, with a terminal at Rijeka scheduled to come on line by 2011, which could allow it to access gas from Qatar.

"We can use LNG from Qatar but it is dependent on when the Croatian terminal will be ready," he said during a visit to Doha on April 9.

Though not sourcing gas from Russia, Spain is another European country looking to expand its gas-buying options. While Algeria currently meets most of Spain's gas needs, a series of disputes over pricing, as well as Algeria's demands to be allowed greater direct access to the Spanish market, have resulted in importers scouting around for alternatives. Last year, Qatar supplied 13% of Spain's gas needs, a figure both buyer and seller are looking to increase.

On April 7, the Qatargas LNG tanker Duhail docked in the Spanish port of Cartagena to unload a delivery of gas for Spain's Gas Natural. The Duhail, with a capacity of 210,000 cubic metres, is a Q-Flex tanker, a new model of LNG transport vessel that is marketed as being more efficient, as well as larger, than traditional ships.

While en-route to Cartagena, the Duhail made a small piece of history, being the first tanker of its size and model to transit the Suez Canal, an event Qatargas shipping manager Abdullah Al Sulaiti described as a milestone achievement, one he indicated was part of Qatar's push to expand into Europe.

"The Q-Flex is currently the largest vessel to pass through the canal and we expect several more voyages by Q-Flex vessels this year," Al Sulaiti said.

Having grabbed a large slice of the Asian LNG market, Qatar now appears to have set sail for Europe.