Tantrum around Russian gas
Immediately, two significant events give precedents for a new panic in the commodity markets. First, yesterday there was a conversation between Putin and Erdogan, in which the construction of the Turkish Stream was touched upon. Discussion of this topic will continue at the energy congress in Istanbul, and the stream itself can kill all European ideas about creating competition for Gazprom in the bud of southern Europe.
But the “Turkish Stream” is not the most interesting. news for Europe. She is interrupted by a message about yesterday’s meeting of Miller with representatives of Shell, Uniper, Engie and Wintershall, who confirmed their intentions to contribute to the implementation of the Nord Stream-2 project.
About the project. The total capacity of the two threads of the Nord Stream 2 is 55 billion cubic meters. m of gas per year. Thus, the total design capacity of the SP and SP 2 is 110 billion cubic meters. m of gas per year. Expansion of the joint venture will cost 9,9 billion euros. The pipeline route runs along the bottom of the Baltic Sea from Portovaya Bay near Vyborg to the coast of Germany in the Greifswald region. The length is 1224 km.
Market skepticism about gas consumption in Europe crashed about the signing of environmental agreements in 2015. Up to this point, coal mining has grown, which, however, is the most dangerous energy source for the environment. But after the Paris Climate Agreement came into force, Euro-appetite for gas is only increasing. Gas supplies via the Nord Stream-1 gas pipeline have already increased from January 1 to October 3 by 13% to 32 billion cubic meters. m
According to IEA forecasts, gas demand in Europe will not fall at least until 2040. Prospects SP-2 are also determined by the slowdown in gas production in Western Europe. In the Netherlands, the peak of production was passed in 2007-2008, and after 15 in years, the country will become a net importer of blue fuel. The UK with 2005 consumes more natural gas than it can produce. In parallel with the decline in its own production volumes, London will gradually incapacitate the most polluting coal-fired CHP plants, which will provide an additional incentive for gas imports.
It is expected that by 2020, the UK's dependence on gas imports will reach 70-75%.
As for France, it did not manage to work out a consistent line regarding the replacement of capacities, which will be disabled by 2025 due to the decision to bring the share of nuclear energy in the country's energy balance to 50%. In this regard, Paris could also greatly benefit from an additional source of energy.
The position of Germany. Germany remains the main beneficiary of the second part of the north stream. The German Federal Anti-Monopoly Office approved the entry of European companies into the project’s equity capital. Thus, the process of legal registration of a joint venture that will build a gas pipeline was completed.
However, in order to sit on two chairs at once, Berlin requires the preservation of transit through Ukraine after the 2019 of the year (that's when the launch of the SP-2 is supposed).
However, by this time Germany itself, approximately by 60%, will depend precisely on Russian supplies, so it will not be necessary to choose.
In this regard, the statement of fact "Ukraine is everything" becomes real. Gazprom is regularly accused of irrational use of funds, of the high cost of the project, of its lack of load. However, the growing demand covers the minimum prices (which promise growth in the future - see the issue of wholesale contract prices), and the geopolitical instability and interest of Western Europe clearly indicate not in favor of Ukraine, which loses not only discounts, but also transit fees through its territory, which is about 2 billion dollars annually.
And one moment. Former German Chancellor Gerhard Schroeder became the head of the governing council of Nord Stream 2.
Well, you understand ...
Now back to Turkey and the construction of another project - "Turkish Stream".
A year ago, experts argued and chose between these two projects. However, after a quarrel with Erdogan, the choice was dropped by itself. And now the Turkish president again does not mind, but Moscow seems to be a very good pros. However, the prospects for TP are not as bright as the joint venture.
According to the report of the national industry consultant in the field of fuel and energy Vygon Consulting, TP could be useful for Russia in the following aspects: reducing the risk of transit; "destruction" of competitors.
About the project. The budget of the Turkish stream should be 24 billion euros, which is a very unfavorable price for the balancing on the verge of losses of Gazprom.
The offshore section of the gas pipeline was planned to run along the bottom of the Black Sea from Anapa region to Turkey. The length of 1100 kilometers, the project was to consist of four lines. Capacity - 63 billion cubic meters of gas per year, of which 47 billion cubic meters of gas per year was planned to deliver to the border of Turkey and Greece. The length of the Turkish onshore gas pipeline should have been 180 km.
About the Turkish stream speak less and less, as this is the case of only two states and a lot of money. There is no war for payment for transit, however, they often forget that Europe also wants to have its own pipes: for this, it is trying to launch TANAP (Southern Gas Corridor - gas transportation project bypassing Russia), the agreement for which was signed on June 26 2012 Istanbul This is another attempt to reduce the monopoly of the Russian Federation. The idea is realized if not only Azerbaijan is connected to it (let us remember the conflict in Nagorno-Karabakh - who will allow just having money for gas transit?), But also Iraq, Iran, Turkmenistan. To connect Iraq, for example, it will be necessary to agree with the Kurds. And in the context of their war with the Turks, which has only become aggravated, it will not be very easy.
What's next?
The International Energy Congress will be held in Istanbul from 9 to 13 October. According to the Minister of Energy Industry of Venezuela Eulohio del Pino, the ministers of Saudi Arabia, Algeria, Gabon, Qatar and the United Arab Emirates, as well as the Minister of Energy of the Russian Federation Alexander Novak will take part in the meeting. And since the official OPEC summit with decisions to limit oil will take place only on November 30, Istanbul will become some kind of springboard for official and not very arrangements.
Most likely, the fate of the Turkish Stream will be decided during this period. I dare to suggest that it is in Turkey that the search for sponsors and partners in the TA will be conducted.
What Gazprom considers more promising for itself is only Miller knows. But it is unlikely that in the conditions of such strong economic uncertainty, the company will manage to invest in two projects at once. So there are two options: either the search for sponsors for the implementation of the southern branch of the pipeline, or the concentration on only one project. And in this case, the joint venture-2 is much more likely to be realized.
And you could play a nocturne
on the flute of gas pipes?
Information