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August 9, 2016

by AEA

The Global Oil&Gas 2016 – Exhibition South East Europe and Mediterranean

The Global Oil&Gas Exhibition provides an important platform for stakeholders in the region to showcase their products and services. Meeting existing and future customers face-to-face is now more important than ever. The exhibition will give you the opportunity to strengthen existing relationships and create new ones, see new technological developments and innovations, discuss future business and learn more about the market.

Exhibiting offers your company the opportunity to strengthen current investments, demonstrate advanced technologies and expertise, and increase your brand awareness with a highly focused audience from around the region and beyond.

Opening hours

28- 29 September: 10.00‐17.30
Metropolitan Expo
Athens, Greece

For further information and a floor plan please contact:

Johnson Obembe
ITE Group plc
Τηλ.: +44 (0)20 75967 5004
E-mail: johnson.obembe@ite-exhibitions.com

August 9, 2016

by AEA

Erdogan, Putin and the touchy Turkish Stream

The presidents of Russia and Turkey are expected to repair relations and revive a gas pipeline project at a meeting in St. Petersburg on Tuesday. There is, however, one key issue on the table, DW’s Andrey Gurkov writes.

The revival of the Turkish Stream pipeline project is expected to be the concrete outcome of the meeting between Russian President Vladimir Putin and his Turkish counterpart, Recep Tayyip Erdogan, in St. Petersburg on Tuesday. The presidents will also recommit to the construction of Turkey’s first nuclear power station, in Akkuyu, which is now severely behind schedule.

The main aim of this meeting, which was called at short notice, is to signal a thaw in relations betweenRussia and Turkey. In November 2015, there was a row over conflicting interests in Syria and the shooting down of a Russian bomber by Turkey’s air force. Putin and Erdogan will now be anxious to show their nations, the world and especially the European Union that their quarrel is over. They intend to send a message to Brussels, Berlin, Paris and, of course, Washington: We can be friends without you – and even against you.

The exchange of opinion and declarations of friendship will not be taking place on neutral terrain – on the fringe of a G20 meeting, for example. Erdogan, who apologized in June for the shooting down of the plane and the death of two airmen, will be meeting Putin in the city where the Russian president was born. This reinforces the impression that Putin has emerged from their short-lived conflict as the victor, both politically and economically. He wanted the Turkish Stream gas pipeline, and he’s going to get it.

But in what form? And at what price? This is where Erdogan could prove the victor. If the presidents decide to build only one pipeline along the route rather than two, it would be to Ankara’s advantage. Or to be precise: Moscow, and Gazprom in particular, would be at a disadvantage.

Substitute for another pipeline

For years, the Kremlin has made it a priority to put an end to the transit of Russian gas through Ukraine, from where it flows west to the European Union. But there is also a line that branches off southward. This line passes through Moldova, Romania and Bulgaria, and also supplies Turkey with Russian energy.

Initially, the pipeline through Ukraine was to be replaced by the South Stream, which consists of four strings with a total capacity of 63 billion cubic meters (82 billion cubic yards) per year. It was to run from the Russian port of Anapa along the floor of the Black Sea to Bulgaria and from there to Austria. However, the project contravened EU regulations.

And so, after a meeting with Erdogan in Ankara in December 2014, Putin suddenly announced that the Black Sea pipeline would be diverted toward western Turkey, where three of the four strings would continue on to the Greek border – the border with the main consumer of Russian gas: the European Union. This was the birth of the Turkish Stream.

Soon afterward, however, the project ground to a halt. All of a sudden Turkey wasn’t interested in the transit of large quantities of Russian gas anymore, and officials wanted only one string to cover domestic requirements. Then the jet was shot down, and for over half a year the project seemed to be dead in the water.

At Ankara’s insistence

No one is speaking of four strings anymore. But a single line with a capacity of 15.75 billion cubic meters would be the most expensive option for Gazprom – and therefore the least advantageous. The state-owned Russian company would have to spend several billion credit-financed dollars to lay a relatively small pipeline in the depths of the Black Sea and build all of the necessary infrastructure on the Turkish coast. And the sole purpose of this would be to replace an overland pipeline that already works perfectly well.

A second string would not, of course, make Turkish Stream cost-effective, but at least it would increase the turnover. Gazprom could then supply Greece and Italy via the planned Poseidon pipeline. However, during his recent visit to Moscow, Turkish Deputy Prime Minister Mehmet Simsek spoke only of a single string. It doesn’t sound like Ankara is in the mood for compromise.

So, it may well be that, by being totally focused on the geopolitical goal of taking the transit of gas away from Ukraine, Putin is imposing a burden on Gazprom that will stretch the state-owned company to the absolute limit – and at a time of empty coffers. Gazprom would have to invest a disproportionate amount of money into the Black Sea for a single Turkish Stream pipeline and potentially delay the Nord Stream 2 pipeline across the Baltic, which would have an annual capacity of 55 billion cubic meters.

At Russia’s expense, Erdogan would get a brand new underwater pipeline that is not subject to any transit risk – and thus, in the long term, Turkey would get even cheaper gas, as the transit costs currently imposed by several countries along the route would no longer apply.

Furthermore, Erdogan would be assured enduring gratitude from Azerbaijan. The close regional ally is already laying the TANAP pipeline to Greece via Turkey, and it has absolutely no interest in a competing Russian project to supply the southern European Union.

August 9, 2016

by AEA

TAP says construction of pipeline’s Albanian section on track

The Trans Adriatic Pipeline (TAP) AG has announced that the construction of the pipeline on the territory of Albania is progressing without delays.

TAP AG tweeted that 87.5 percent of access roads and bridges in Albania have already been upgraded.

TAP’s route through Albania is approximately 215 kilometers onshore and 37 km offshore in the Albanian section of the Adriatic Sea. It starts at Bilisht Qendër in the Korça region at the Albanian border with Greece, and arrives at the Adriatic coast 17 km north-west of Fier, 400 meters inland from the shoreline.

In the summer of 2015, TAP started the construction and rehabilitation of access roads and bridges along the pipeline’s route in Albania. The work is expected to be completed during 2016.

TAP project envisages transportation of gas from the Stage 2 of development of Azerbaijan’s Shah Deniz gas and condensate field to the EU countries.

The 870-kilometer pipeline will be connected to the Trans Anatolian Pipeline (TANAP) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in Italy’s south.

TAP’s shareholding is comprised of BP (20 percent), SOCAR (20 percent), Snam S.p.A. (20 percent), Fluxys (19 percent), Enagás (16 percent) and Axpo (5 percent).

August 4, 2016

by AEA

GETTING GAS OUT OF IRAN – NEW TRADING PATTERNS

Iran’s gas plans for Caucasus

Iran says it is preparing to triple gas exports to Armenia, start exports to Georgia and store its gas in Azerbaijan’s underground facilities.

For now, Iran barters about 1mn m³/d of gas with Armenian power at 1 m³ per 3kWh. Iran said this week that the volume of the gas-to-power deal would reach 3mn m³/d by late 2018 at the improved rate of 1m³ per 3.2kWh.

On the other hand, the managing director of the National Iranian Gas Company (NIGC) Ali Reza Kameli said August 1 that Iran has signed a deal with the Georgian International Energy Corporation to export 40mn m³ over a four-month period to test the feasibility of sealing a long term gas export agreement.

He added that that the deal becomes operational once Armenia has issued the needed permissions by late 2016.

Georgia’s deputy energy minister Mariam Valishvili told Trend that the ministry has no information on the conclusion of contracts for the import of Iranian gas to the country. Valishvili added that the Georgian government has not concluded the contracts for such gas supply. “Theoretically, private companies can sign a contract like that,” she said.

For now, Georgia receives more than 87% of its 2.5bn m³/yr demands from Azerbaijan (1.36bn m³/yr as commercial imports plus 5% of Azerbaijani gas transit to Turkey as fee) and takes 10% of Russian gas deliveries to Armenia as fee.

Iran also announced August 2 that it is willing to store its gas in Azerbaijan’s underground gas facilities. Azerbaijan has two gas storage facilities that can hold 5bn m³, of which a third is idle.

For now, two countries swap about 1mn m³/d of gas, while Iran has a 10% share in Azerbaijan’s Shah Deniz gas field.

Iran’s sole commercial buyer is Turkey. According to official statistics, Iran increased deliveries to Turkey in five months of 2016, while Azerbaijan and Russia cut gas deliveries to this country.

Iran aims to export 68bn m³/yr of gas by 2021 and is preparing to announce a joint tender with Oman for choosing a contractor to build a $1.5bn pipeline project in the Gulf of Oman, aimed to transit 10bn m³/yr of Iranian gas to Oman. Some of that gas could be liquefied as the Oman LNG terminal is not fully used.

Kameli said August 2 that “activities related to the gas pipeline project are being carried out rapidly as the marine survey has been completed and evaluation of the obtained information is being undertaken. After receiving the results of studies, we will decide with the Omani side who will be the contractor for the 200-km undersea pipeline.”

Iran is also preparing to start a restricted amount of gas supply to Baghdad this month at 5-7mn m³/d. This figure is to reach 25mn m³/d, based on agreements, in the coming years.

Iran has two agreements with Iraq to export 50mn m³/d of gas to Baghdad and Basra in total.

Iran also has a 22mn m³/d gas export agreement with Pakistan, projected to become operational in early 2015, but the pipelines are not completed in either country yet.

Iran is also looking for a contractor to resume building the Iran LNG project, which was half complete when it was hit by western sanctions. Gazprom is one of the companies to express an interest in taking part but it said August 2 that Iran hadn’t responded to its request yet.

Tehran has invested $2.5bn in this project which is hoped will produce 10.4mn mt/yr of LNG by late 2018.

Gazprom does not need extra gas but the Russian company most likely would like to suspend the growth of Iran’s gas exports,” said Mikhail Korchemkin, head of East European Gas Analysis. There is a threat of competition facing Iranian LNG projects, not from Russia but other players in the gas market although Iran’s LNG would have one of the world’s lowest feedstock prices.

Iran and Turkmenistan have also expanded their gas deals. Last year, Turkmenistan doubled deliveries to Iran to above 9bn m³/yr. Iran said June 27 that it will import gas worth $30bn from Turkmenistan over the next ten years and export engineering goods and services to Turkmenistan to an equivalent value.

TAP in progress

Turkmen gas is recognized as a potential source for feeding the Southern Gas Corridor (SGC), aimed to deliver 16bn m³/d of Azerbaijani gas to Turkey and EU by 2021. The volume would increase to 25bn m³/yr by 2025 and 31bn m³/yr in early 2030s.

The part from Azerbaijan to west Turkey is being built, while the European part of the SGC, Trans Adriatic Pipelinem (TAP), is being progressed. TAP said July 29 that 14,000 pipes have already been delivered to Greece and Albania for it. This amount accounts for about 30% of all pipes that will be used for the pipeline.

The 870-km TAP will be connected to the Trans Anatolian Pipeline (Tanap) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in southern Italy. The Initial capacity will be 10bn m³/yr in 2021. The European Bank for Reconstruction and Development (EBRD) confirmed earlier that it started talks to provide direct financing of €500mn and attract €1bn from banks.

The current cost of the SGC from the Shah Deniz 2 reservoir to landfall in southern Italy, is now estimated at around $40bn, comprising $9.3bn for Tanap, $6bn for TAP and $23.8bn for developing SD2 as well as the expansion of the South Caucasus line (SCPX).

August 3, 2016

by AEA

Greece, Bulgaria ink IGB gas pipeline, LNG terminal agreements

Athens is turning to Sofia in an attempt to re-establish its position in the region, top policy expert tells New Europe.

Greece and Bulgaria agreed to boost energy security in the Balkans in the framework of the European Union, during Greek Prime Minister Alexis Tsipras’ visit to Sofia on August 1.

Tsipras met with his Bulgarian counterpart Boiko Borisov and President Rosen Plevnelev. Within the context of the third high-level cooperation council between

Greece and Bulgaria, they signed a series of bilateral agreements, including the construction of the Interconnector Greece-Bulgaria (IGB) gas pipeline and the creation of a liquefied natural gas (LNG) terminal near the northern Greek city of Alexandroupolis.

“Bulgaria is probably Greece’s closest partner in the Balkans, but more by reflection and less as a result of a strategic plan. There is potential in bilateral relations, especially given the ‘energy connection’, but till nowadays we haven’t seen anything substantive,” Constantinos Filis, director of research at Institute of International Relations, told New Europe on August 2.

“But given the difficulties with Albania, FYROM and the problematic environment with other Balkan states of the Balkan corridor – as they agreed to isolate Athens in cooperation with Vienna – Athens is turning to Sofia in an attempt to re-establish its position in the region. But the Bulgarian government due to its bureaucracy and corrupted mechanisms cannot be trusted in full,” Filis said, adding that in the past, decisions have been overturned without any justification and consultations are usually complicated.

Meanwhile, following the rapprochement between Russia and Turkish, the Turkish Stream gas pipeline, which would transport gas from Russia to Turkey and Greece via the Black Sea, could be revived. Asked if Turkish Stream, which is also now called South European Pipeline, would have a landfall in Bulgaria, Filis told New Europe that Bulgaria is very much attached to the West and especially the United States and therefore it will be Russia’s last resort if the latter chooses to proceed with this project.

“In the case of Turkey, it seems that both states attempt a restoration of ties, which is a positive sign for energy cooperation. But again, SEP’s fate will be defined by other factors like: securing markets, funding and EU’s political consent and making sure that Russian economy can cope with it,” Filis said.

In addition to energy, Tsipras and Borisov also stressed the need to accelerate construction of a railway link from Alexandroupolis to the Black Sea resort of Burgas as a way to boost trade between the two EU member states.

Tsipras said relations between Athens and Sofia are “a model of constructive cooperation for the promotion of peace and stability in the broader region”.

The Greek premier also said that the two Balkan countries remain pillars of security and stability despite the challenges facing the two countries on the EU’s external border.

August 3, 2016

by AEA

Turkey’s energy role to continue after coup attempt

Turkey’s role as a key strategic energy actor in its region is expected to continue without much negative impact from July 15 failed coup, experts told Anadolu Agency Wednesday.

“Turkey’s regional energy role remains a key element of Turkey’s economic dynamism,” said David Merkel, a senior fellow at Dinu Patriciu Eurasia Center of the Washington-based Atlantic Council.

“If Turkey returns to stability and has competent officials in energy-related agencies and ministries, I suspect the impact [of the coup attempt] will be minor,” he added.

The coup attempt on July 15 has brought questions to ongoing energy projects in the country which acts as a strategic bridge between the gas-rich Caucasus and energy-hungry Europe.

Experts said that Turkey’s key position in between these two regions will not be affected by the failed coup attempt.

“Turkey’s importance for European energy security will not be significantly reduced,” Merkel said.

“I think Turkey is too critical to European energy security, especially in efforts to reduce dependency on Russia for Europe,” he added.

Around 30 percent of Europe’s annual natural gas consumption is dependent on Russian supplies. Europe has been trying to lower that dependency through diversification, and Azerbaijan’s gas resources in the Shah Deniz field as a major supply source have contributed to this aim.

Turkey’s Trans Anatolian Natural Gas Pipeline Project (TANAP) is an integral part of the Southern Gas Corridor that plans to carry Azeri gas via Georgia, Turkey, Greece, and Albania through to Italy. TANAP is planned to become operational in 2018 with an initial capacity to carry 16 billion cubic meters (bcm) of gas. Total capacity is planned to increase to 23 bcm by 2023 and to 31 bcm by 2026.

Volkan Ozdemir, head of the Institute for Energy Markets and Policies (EPPEN) said TANAP will continue as planned, and added that most of its investment comes from Azerbaijan.

“Investments in Turkey’s energy sector have not come from Europe in recent years. It is mostly foreign investors outside Europe that finance it,” he said.

Rapprochement with Russia

Although Merkel said Turkey’s key regional position would help European energy security by lowering its dependence on Russian gas, Ozdemir highlighted the fact that Turkey and Russia’s recent attempt at reconciliation after relations soured last November, could indirectly affect Europe.

“If the Turkish Stream gas pipeline project comes back on the agenda, this could have an indirect impact on Europe,” Ozdemir said.

He added that there are two conditions for the Turkish Stream project being taken off the shelf — the rapprochement between Turkey and Russia, and the impact of the Nord Stream II pipeline project coming online.

The Nord Stream II project plans to deliver 55 bcm of Russian gas under the Baltic Sea to Germany, and further into France, the U.K., the Netherlands and Denmark.

The Turkish Stream, which was initially planned to carry 63 bcm of gas to Europe via Turkey, had its project capacity trimmed down to 31 bcm later on. However, the project was shelved after Russia and Turkey failed to agree on the existing gas price discount which Russia was due to apply on Turkey’s gas imports. Turkey’s downing of the Russian jet last November, worsened bilateral relations leaving a stalemate in talks on the project between both sides.

“If a decision to build the Nord Stream II is taken, Russia will scrap the Turkish Stream,” Ozdemir warned, adding that “relations between Russia and Europe remain uncertain.”

“I believe, Turkey and Russia will get closer again after the failed coup attempt. And if the two countries can agree on building the Turkish Stream, Russia will be able to have another gas route to Europe through a southern corridor. That is something Europe would not want,” he explained.

Ozdemir asserted that relations between Turkey and Europe are uneasy. He added that with a potential Ankara Moscow reconciliation on the agenda, the realization of the Turkish Stream project is more likely than the Nord Stream II.

“I think a period has begun that will benefit Turkey, but will be unfavorable for Europe,” he concluded.

By Ovunc Kutlu and Ebru Sengul