Russia-Europe Energy Thread

[Sampanviking]

Two points

One: EU dependence is only going to grow as EU demand will continue to increase and North Sea output is in terminal decline and the cost of production rising sharply in accordance with Post Peak Oil projections.

Two: The main issue here is currently Gas and this comes not so much from Eastern Siberia but from the Caspian basin. President Medvedevs recent huge deals with Kazakhstan, Turkmenistan and protocols of understanding with Iran pave the way to realisation of the creation of a new OPEC style Gas Cartel with Gazprom at its heart. With Georgia neutralised, the acquiescence of Azerbaijan is largely a given, which gives Russia the controlling hand in Central Asia that it is looking for.

This Energy Security issue, is about who can satisfy Europe's Energy Security and now the answer is increasingly plain.. Russia. As is often quoted, "Nations do not have friends only interests" and Energy Security is "Interest" number one!.

With US failure to secure Europe's Energy security, its influence and power can only decline, while that of Russia can only increase. It is probably this reality that explains in a large part why European opposition to Russia is lukewarm verbiage and not backed with any significant action.

 

[Chrom]

So we can agree the Russian Govt has by discouraging investment capped production (and effectively diminished the reserves) for the purpose of maximising profit.

And since Russian domestic consumption is on the increase, Russian influence through oil is set to diminish in the future.

We can also say it will INCREASE in the future... since there will be not enough russian oil produced to supply all needs in the West - so EU will be forced to compete for russian oil. With that scenario russians will have choice whom to sell they oil WITHOUT suffering from over-production.

This will clearly increase they influence as oil sellers - they will be more independent to choose buyers.

 

[Grand Danois]

Several points on gas,

The increase in European energy consumption is unlike to continue when energy costs what is does and will continue to do so. Currently long term contracts are in play to keep costs down. It wont continue to be so cheap.

The two main consumers in absolute volumes, Germany and Italy, is unlikely to expand much beyond what they have now. And this situation is brought along due to those two countries switching away from nuclear for political reasons.

The large consumers, in relative terms, are the E Europeans which are connected to the ex-Sov grid and thus are consumers for traditional reasons. We are talking Poland, the Balts, Czechs, Slovaks, etc. (and Finland).They have their specific reasons to switch away, and are going to nuclear or imported LNG. I haven't looked into what they're doing wrt decentralised renewables etc...

Regardless of relations with Russia, energy policies are being managed and risk diversified. In other words, there is a cap somewhere on import from a single source, regardlass. Those happy go lucky projections that entrepeneurs present in their prospects for pipelines and gas powerplants are less likely to hold. Particularly if the powerplant is single fuel only. If there was any politician or advisors who were wobbly on their predictions, the situation with Georgia has large potential to shift their opinion and advice away from Russian controlled gas. (This is what I alluded to earlier in another thread). It will most certainly cement and create new strategies in the East.

Further, there is the impact of renewables. No, I don't have any illusions that it will contribute more than a handful of percentage points of the total. But you only have to manage the fraction of the fraction of the total that is imported Russian gas. Further it doesn't have to be replaced entirely just kept under critical levels. Wind power and decentralised biomass are mature and viable and the contribution to the total is on the increase (well, there is also the CO2 emssion reductions to consider).

But now for the big killer. Coal fired plants in Europe. Let's have a look at Germany: much of their coal fired capacity was built 50 years ago!!! It has an average electricity generating efficiency of 37%, whereas a modern coal fired plants have an efficiency of 47%!!! (and with central heating or using the excess energy for industrial co-gen it goes up to 65%) If you take the "The Dirty Dozen" in Germany and compare their CO2 emissions with what a 47% plant emits (730g CO"/KWh, please take a look. Very interesting link), it is realised that on average, the modern plant uses 30% less coal to produce same amount of electricity and central heating/process energy. And also emits 30% less CO2, for you greenies out there. Actually those old 30 coal fired plants eat up 50% of the German 2008 CO2 emission quota. Btw, note that modern coal fired plants can switch to and from coal and gas. I don't know if the current crop of gas fired plants can do the same.

Since coal and gas are direct competitors (electricity/process energy), and that much of E Europe have similar situations with their coal fired plants, it becomes obvious that there is ample potential and opportunity to increase production and at the same time reduce coal consumption (and CO2 emissions).

So a strategy of nuclear/modern coal/renewables/alternative import is viable. There is great potential and opportunity.

So there is no reason to think that Europe is destined to become dependent on energy from Russia.

Particularly not when energy diversification is a tool that is being used and there is ample room to maneuver in as shown above.

And when energy from Russia at the moment accounts for what? 10% of the total?

To relate it to the current situation in Georgia. The proponents of Russian gas just got one argument less and the opponents got one more.

Just as the proponents of a policy of embracing Russia to bring it into "the modern world" also have a worse vantage point (Schröder comes to mind). This is a great deal sadder. But this is for the other thread.

 

[roberto]

So we can agree the Russian Govt has by discouraging investment capped production (and effectively diminished the reserves) for the purpose of maximising profit.

And since Russian domestic consumption is on the increase, Russian influence through oil is set to diminish in the future.

Russian companies have built global alliances. it does not matter where they increase production . West is completely dependent on Russia. They dont need to increase there own production to maximise profits. Show me even a single country outside West that is against Russian policies. infact hardline policies of Russia with respect to resoruces giving more bargaining power to resource producing countries.

 

[Grand Danois]

Russian companies have built global alliances. it does not matter where they increase production . West is completely dependent on Russia. They dont need to increase there own production to maximise profits. Show me even a single country outside West that is against Russian policies. infact hardline policies of Russia with respect to resoruces giving more bargaining power to resource producing countries.

Haha. Russia doesn't control Algeria et al. So supply may be optimized for Algeria, but they're following their own interests - not Russias. Note the difference.

Read my above post. Gas is a fraction of the European energy budget - and replacable.

Cheers

 

[roberto]

Haha. Russia doesn't control Algeria et al. So supply may be optimized for Algeria, but they're following their own interests - not Russias. Note the difference.

Read my above post. Gas is a fraction of the European energy budget - and replacable.

Cheers

Surely. It is strong Russian power that is giving almost every country leverage to renegotiate contracts. I told you before. EU has nowhere to go but deal with Russian on Russian terms. Even UK will become big importer in less than 10 years.

http://www.macaudailytimesnews.com/index.php?option=com_content&task=view&id=13440&Itemid=34
Spain's Gas Natural, Russia's Gazprom sign cooperation deal
Tuesday, 22 July 2008
Gas Naturel, Spain's leading gas supplier which is seeking to reduce its dependence on Algerian gas, said yesterday it had signed a deal with Russian state-owned gas monopoly Gazprom on liquefied natural gas projects.
The company said in a statement that it would also work with Gazprom, the world's biggest gas producer, to study possible cooperation in other areas like electricity and gas pipelines.
"The signing of this accord demonstrates the interest that the two companies have in developing a close strategic cooperation over the next two years," it said. Gas Naturel gave no financial details of the agreement.
It is the second cooperation agreement between a Spanish energy firm and the Russian gas giant.
In October 2006 Spain's leading oil group, Repsol YPF, announced that it had signed a draft agreement with Gazprom to study possible joint oil and gas projects.
Earlier this month Repsol said it was in advanced talks with russia's Rosneft on buying a stake in an exploration block on Sakhalin Island, in Russia's Far East.
Algeria is the largest supplier of liquefied natural gas to the 27-member European Union, which is served by pipelines under the Mediterranean Sea that connect the north African country to Spain and Italy.
Algeria accounted for 34.6 percent of the total amount of gas which Spain imported between January 2007 and January 2008, according to industry ministry figures.
But there has been friction recently between Algerian and Spanish energy firms.
Last year Algerian state-owned energy company Sonatrach cancelled a contract with Repsol and Gas Natural to develop its Gassi Touil plant due to a dispute over pricing and delivery levels.
Sonatrach is also seeking to renegotiate long-term delivery contracts signed with Spain when the price of oil and gas was much lower than it is today.

 

[ASFC]

nfloorl: O really? The UK is building new Nuclear Power Stations, imports lots of coal from Poland (on top of any we produce ourselves), import LNG from Algeria (just because Gazprom has opened offices (dunn dunn dunn) in North Africa does not mean they control the resources there on anywhere else outside Russia). And we have Gas from the North Sea, from UK and Norweigen sources. Oh and then there is the fact that we seem to have gone wind trubine crazy. If anything the UK's reliance on Russian Gas will be reduced.

Before you accuse other posters of lying about what their sources say you need to stop, think and stop spouting unsubstatiated rubbish-like China building 100 reactors by 2020, or Russia controling all of the wests energy supplies, or the UK (or Europe for that matter) massively increasing its reliance on Russian Gas.

 

[roberto]

nfloorl: O really? The UK is building new Nuclear Power Stations, imports lots of coal from Poland (on top of any we produce ourselves), import LNG from Algeria (just because Gazprom has opened offices (dunn dunn dunn) in North Africa does not mean they control the resources there on anywhere else outside Russia). And we have Gas from the North Sea, from UK and Norweigen sources. Oh and then there is the fact that we seem to have gone wind trubine crazy. If anything the UK's reliance on Russian Gas will be reduced.

Before you accuse other posters of lying about what their sources say you need to stop, think and stop spouting unsubstatiated rubbish-like China building 100 reactors by 2020, or Russia controling all of the wests energy supplies, or the UK (or Europe for that matter) massively increasing its reliance on Russian Gas.

When u start importing Coal from Poland. It will increase price of coal not to mention transportation charges. Coal cannot flow in Pipelines like Gas. Similar is the case with Nuke fuel cyycle. the more u built the more power to Russia. And we are waiting for Nov Gas Opec meeting.
Look at Weak economic position. Wealth built on Debt.

http://www.guardian.co.uk/business/feedarticle/7734222
UPDATE 1-Russia tensions could hit Ukraine banks-S&P
LONDON, Aug 18 (Reuters) - The refinancing of the debt of Ukraine's highly leveraged banks is at risk if foreign investors take fright from worsening relations between the country and Russia, Standard & Poor's (S&P) said on Monday.
The ratings agency also said an escalation in tensions between Ukraine and Russia would lead to a drop in foreign direct investment into Ukraine, shutting down a key source of funding to cover the country's widening current account deficit.
"Ukraine's banking sector is highly leveraged and dependent on foreign investors to refinance existing debt. Western investors already have less appetite for Ukrainian risk than they did two weeks ago," Frank Gill, S&P director of European sovereign ratings, told Reuters.
S&P estimates that foreign debt of Ukrainian banks reached more than $35 billion as at mid-2008, representing 28 percent of the banking sector's total liabilities.
As a row continues over the use of a Ukrainian Black Sea port by Russian warships, the cost of insuring Ukraine's debt against restructuring or default rose on Monday to its highest levels since Ukraine's "Orange Revolution" of 2004. [ID:nLI728791]

Medvedev Doctorine. Practically giving Right to intervene where ever Russian ethinic minorities are.

http://www.reuters.com/article/GCA-Georgia/idUSL768040420080818
In a show of defiance, Medvedev said: "If anyone thinks that they can kill our citizens and escape unpunished, we will never allow this.

"If anyone tries this again, we will come out with a crushing response. We have all the necessary resources, political, economic and military," a stern-looking Medvedev told World War Two veterans in the Russian city of Kursk

 

[Grand Danois]

Surely. It is strong Russian power that is giving almost every country leverage to renegotiate contracts. I told you before. EU has nowhere to go but deal with Russian on Russian terms. Even UK will become big importer in less than 10 years.

profit maximizing was not your initial postulate. your initial postulate was the Russia controlled EU via energy dependency - which has been debunked.

cheers

 

[roberto]

profit maximizing was not your initial postulate. your initial postulate was the Russia controlled EU via energy dependency - which has been debunked.

cheers

Profit maximizing (increas prices )the corner stone of leverage. It makes EU poor as vast somes of money is used for energy and It makes Moscow richer to buy high technolgies and corporate exectives from West which in turn put more pressure on Western Politicians.
. Just look at Investment bankers.

http://www.bloomberg.com/apps/news?p...HIo&refer=home
Moscow Bankers Get $7 Million Payday, Double New York Average

By Elisa Martinuzzi and Todd Prince

May 14 (Bloomberg) -- Within a mile of the tomb of Vladimir Lenin, who vowed to destroy capitalists, investment bankers in Moscow are now earning double the pay of their counterparts anywhere else.
Income taxes in Moscow are 13 percent, while anyone who earns more than 42,055 pounds ($83,700) in Britain pays 40 percent.
Industry recruiters at RosExpert estimate that about 150 senior corporate bankers work in Moscow, compared with more than 1,000 in New York. Top dealmakers in New York, still the world's financial capital, can take home as much as $20 million, including bonuses that depend on the fees they generate for their firm, according to Options Group

If Russia doesnot control so Why Algeria cancelled already signed contract?

http://www.turkishweekly.net/news.php?id=58112
MOSCOW -- Libya sought to strengthen energy ties with Russia, an alliance that could raise alarms in Europe where countries had looked to Libya to help ease their dependence on Russian oil.
"We would like to achieve bigger volumes in investment cooperation between Russia and Libya in the oil and gas sectors," Libyan Prime Minister al-Baghdadi Ali al-Mahmudi said at the start of talks with his Russian counterpart, Vladimir Putin.

 

[Grand Danois]

Profit maximizing (increas prices )the corner stone of leverage. It makes EU poor as vast somes of money is used for energy and It makes Moscow richer to buy high technolgies and corporate exectives from West which in turn put more pressure on Western Politicians.
. Just look at Investment bankers.

Your threads of reasoning are long, full of conjecture and distorted to fit your view of the world.

cheers

 

[roberto]

Your threads of reasoning are long, full of conjecture and distorted to fit your view of the world.

cheers

surely this distorted view of the world.

http://newsweek.washingtonpost.com/postglobal/ali_ettefagh/2008/08/post_2.html
Russia Positions Itself As Global Economic Player
The Current Discussion: What's the next likely target of Russia's reassertion of power?
America has been busy with old-fashioned territory grabs and the eastward crawl of NATO towards Ukraine and Georgia, aiming for relatively modest oil reserves in the Caspian region. However, Russia has been nursing a modern global strategy that leaps over borders. Russia has cut landmark deals with former and potential American clients: weapon sales to Saudi Arabia, Indonesia, and Venezuela are the first of their kind. Sales of gas via a new trans-Siberia gas pipeline to northern China and talks of a "gas OPEC" with Iran, Algeria and others is another that towers over the pseudo-democratic ideas of Georgia. Border demarcation of the North Pole (with purported reserves of more than 90 billion barrels of oil-- twelve times the amount in the Caspian region), nuclear power deals with India and Iran and direct under-sea gas pipelines to Germany, Turkey and south-eastern Europe (bypassing the Ukrainian chokehold on Russian gas lines to Europe) are other moves on the multi-dimensional chess board -- all as Russia is simply keeping cool and amusing itself with the much hyped, but failed mission of Tony Blair as the chief negotiator of the Middle East Quartet, of which Russia is a member. From the Russian perspective, all options are on the table!

 

[Grand Danois]

Ahhh. This is the powerplant which supply my home with electricity and central heating:

Avedøre Power Station is situated at Avedøre Holme south of Copenhagen and consists of two power station units, Avedøre Power Station’s Unit 1 from 1990 and Unit 2 from 2001.

The overall production capacity of the two Avedøre Power Station units is 810 Megawatts of electricity and 900 Megawatts of heat. In 2006 the power station generated a net quantity of 4,398 GWh of electricity and a net quantity of 12,172 TJ of district heating. The Avedøre Power Station has approximately 130 employees.

Avedøre Power Station’s Unit 1 primarily uses coal, while Avedøre Power Station’s Unit 2 can use a wide variety of fuels: natural gas, oil, straw and wood pellets.
Avedøre Power Station’s Unit 2 has facilities consisting of several parts that, when combined, can make record-high use of the energy in the fuels. By simultaneously generating heat and electricity, Avedøre Power Station’s Unit 2 utilises as much as 94 % of the energy in the fuels and has an electrical efficiency of 49%. An achievement that makes the unit one of the most efficient in the world.

http://www.dongenergy.com/EN/busine...mary+power+stations/Avedore+Power+Station.htm

So modern, superefficiency, multifuel powerplants doesn't care if they use coal, natural gas, straw or wood pellets.

Whatever is cheapest determines the value of the gas - it is one big pool. It seems as the European power will be renewed, replaced, upgraded, the reliance on gas will diminish. Algeria and Russia won't be able to set the price of the gas. Btw, Unit 2 is currently fueled by S American coal. Better and cheaper than European.

Global, multisource and flexibility.

Cheers

 

[Grand Danois]

surely this distorted view of the world.

That's called alarmism. And you're several degrees beyond this.

cheers

 

[swerve]

But now for the big killer. Coal fired plants in Europe. Let's have a look at Germany: much of their coal fired capacity was built 50 years ago!!! It has an average electricity generating efficiency of 37%, whereas a modern coal fired plants have an efficiency of 47%!!! (and with central heating or using the excess energy for industrial co-gen it goes up to 65%)

Here in the UK we have plans for new coal-fired stations. We still have coal underground, & if prices of alternatives get too high, or supply becomes unreliable, production could be increased quite fast. At present, open-cast mining is limited by environmental & legal restrictions, not economic or physical. Also, there's a lot of coal that we can import without Russia being able to influence it in the slightest.

 

[Feanor]

Grand Danois. You mentioned that the Russian military budget has declined in relative terms, and in PPP. Do you have the numbers? I would be very interested to see them.

 

[Grand Danois]

Grand Danois. You mentioned that the Russian military budget has declined in relative terms, and in PPP. Do you have the numbers? I would be very interested to see them.

Got it from Jane's. The article is still accessible and on frontpage of their site.

When comparing budgets of the 1990s to today, one has to remember the devaluation in 1998 and the fluctuations in exchange range over the entire period.

 

[Feanor]

K, I'll look for it. Though I'll take it with a grain of salt, as Russian military procurement has increased from 2007 to 2008.

EDIT: The big sign of course will be if the Su-34 of which 10 are allegedly undergoing assembly right now, gets delivered.

 

[Grand Danois]

Here in the UK we have plans for new coal-fired stations. We still have coal underground, & if prices of alternatives get too high, or supply becomes unreliable, production could be increased quite fast. At present, open-cast mining is limited by environmental & legal restrictions, not economic or physical. Also, there's a lot of coal that we can import without Russia being able to influence it in the slightest.

As it seems they could also use gas, pellets, straw - some can even use garbage.

Absolutely outside of the influence of Russia or any gas cartel.

 

[Grand Danois]

K, I'll look for it. Though I'll take it with a grain of salt, as Russian military procurement has increased from 2007 to 2008.

EDIT: The big sign of course will be if the Su-34 of which 10 are allegedly undergoing assembly right now, gets delivered.

Yes, but this kind of perspective only provides the macroeconomics, i.e. not if the fraction used for procurment has increased and personnel cost has gone down.