Wednesday, March 03, 2010

Central European States Huddle For Energy Security

The European Union has talked lots, acted little, on coordinating energy policy for the 500-million, 27-nation, mega bloc.  The specter of the Russian bear grinning as its grips Europe's energy spigot gives EU bureaucrats the heebie jeebies.  But that fear, largely unfounded the Informant believes, has not translated into action.  Until now, possibly.  Leaders from eleven central and eastern Europe, where Russophobia is an art form, have met for a first ever energy summit, to chart a course of energy security.  The big news to come out of the Feb. 24th meeting in Budapest was the signing of a declaration to create a north-south-east gas supply network. 

Under the plan, the European pipeline project Nabucco would be linked to liquefied natural gas terminals in Poland and on the Croatian island of Krk. 

Hungarian Prime Minister Gordon Bajnai called this a "North-South-East supply triangle."

The Eurasia Daily Monitor adds more detail:

An interconnector would run from Poland via Slovakia, adding to the interconnectors currently under advanced construction between Croatia and Hungary and between Hungary and Romania. As a net result, Central Europe could be linked to natural gas or LNG reception points on the Baltic, Adriatic, and Black Sea coasts, at EU borders. Thus far, however, the EU is funding a modest share of the interconnector projects.

That framework, if implemented, can substantially advance the fulfillment of the NETS (New Europe Transmission Systems) concept, launched in 2007 by the Hungarian energy company MOL. The goal is to interconnect the gas transmission systems of Central and Southeastern European countries, in line with EU market unification goals.

The head of the International Energy Agency told the Hungarian news agency MTI in Budapest that Nabucco would be a better bet to improve Europe's energy security rather than the Russian-backed South Stream pipeline

Nobuo Tanaka also said Nabucco would not only diversify where the gas comes from, but open up new markets. 

Croatia, perhaps smells the strategic sweet spot it occupies in the evolving energy sweepstakes.  And Zagreb is not shy about exploiting that position to the hilt just like every other EU country.

On March 2, and just weeks after the Budapest energy powwow, Zagreb agreed to jump into the South Stream pipeline project. 

The breakthrough came in Moscow where Croat Prime Minister Jadranka Kosor met with her Russian counterpart in name only, Vladimir Putin

Putin took the occasion to boast about the project's successes to date.

"This project has received broad international support and Bulgaria, Hungary, Greece, Serbia and Slovenia have already signed up for its implementation," Putin said in televised remarks.

"The benefits for all participants in the project, including Croatia, which joined today, are clear. Above all, this concerns the stability of energy supplies to Europe," Putin added.

Interestingly, just before Kosor traveled to Moscow, US State Department’s special envoy for energy affairs Richard Morningstar was in Zagreb for "consultations."

Perhaps, Washington was doing a little arm twisting with the Croats on South Stream?

The standard line goes that Nord and South Stream will tighten Russia's grip on Europe's aforementioned spigot. 

But is that true?

A closer look at the ownership and players in these projects tell a different story.

Take South Stream.

Everyone forgets the Italian energy company Eni is also a player.  

And in December, France's power group EDF agreed with Russia to take a stake in the project.

But, you argue, Gazprom still calls the shots with its majority stake?

Well, Gazprom deputy CEO Alexander Medvedev said Tuesday in an interview to Bloomberg that his company could reduce its stake below 50 percent to allow EDF in.

So, South Stream is, more precisely, a joint, Russian-French-Italian project. 

No Russian monopoly here.  Seems like a good example of Russian-European cooperation.

Then there's Nord Stream

Yes, Gazprom has a 51 percent majority stake in the project, not surprising since it will be Russian natural gas flowing through it.

But Germany's BASF-Wintershall and E.ON Ruhrgas also hold 20 percent each and Gasunie of the Netherlands has a nine percent stake.

And it seems the European Commission -- the Star Chamber of the EU -- may be coming to its senses.

A top EU commissioner said on March 2, that the EU could back both Nabucco and South Stream. 

"South Stream could be backed by the European Commission on condition that it meets the technical requirements for security," Commissioner Gunther Oettinger said on the sidelines of an energy forum in Bulgaria.

"South Stream will increase the capacity for gas imports (to Europe) and set up a new infrastructure supply network," Oettinger told the AFP news agency.

More pipelines, more choice. 
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