The Final Countdown

The final countdown

Will it be Nabucco? Will it be South Stream? Both? Neither?

You have heard the Nabucco versus South Stream debate being waged over the last few years about which new gas pipeline(s) will be built to serve Europe in its “Southern Corridor”.

Well, we now (almost) have an answer for you. The winner will be neither!

The first pipeline to get built will instead be a much smaller and more modest project: the Trans Adriatic Pipeline (TAP).

That, at any rate, is the prediction made by Friedbert Pflüger, the well-connected Director of the European Centre for Energy and Resource Security (EUCERS) at King’s College London, and a former German Member of Parliament and State Secretary in the first Merkel cabinet.

Most of you are probably familiar by now with the story: the European Commission is backing the prestigious Nabucco project, which is meant to bring large amounts of non-Russian gas to Europe and in which RWE and OMV are the main private shareholders. At the same time Russia – backed by ENI, Wintershall and EDF – is planning to build a whole new pipeline in the same region, but one that will obviously bring Russian gas into Europe. That’s South Stream, which is seen by many observers as a deliberate move by the Russians to forestall Nabucco.

Nabucco, meanwhile, has had to tolerate other, non-Russian rivals as well: smaller projects that are vying for the same gas from Azerbaijan that Nabucco needs. Those are the Trans Adriatic Pipeline (TAP), backed by Eon, Statoil and EGL, the Interconnector Turkey-Greece-Italy (ITGI), backed by DEPA and Edison, and the recently announced South-East Europe Pipeline (SEEP), an initiative of BP.

In a detailed exposition written for EER, Pflüger – who is also advising the Albanian government on gas policy – explains:

-why the shareholders of the Shah Deniz II consortium in Azerbaijan (currently the only supplier of new non-Russian gas) will have to decide very soon which pipeline project they will select for their gas

-why this will most likely be TAP

-and why there is a chance that South Stream might not be built after all

As to Nabucco, Pflüger argues that it is in effect too big and inflexible at this moment. It could only become viable if the European Commission is prepared to fully back it financially, he says.

We are very glad with this must-read article on a topic that will have a profound impact on European energy policy and the European energy market. To read it, click here.

Special E-World supplement: smart grids, Austrian gas hub, offshore wind

We would like to remind you that EER has just produced a Special Issue for the E-World Conference and Exhibition which will take place from 7 to 9 February in Essen, Germany.

It includes an exclusive interview with Gottfried Steiner, CEO of the Central European Gas Hub (CEGH) in Austria, and an in-depth report on European developments in smart grids written by our Italian correspondent James Osborne. It also includes an interview with Anders Eldrup, CEO of Dong Energy, on that company’s offshore wind strategy, which was published on our website last year.

E-World is one of the major annual energy conferences and exhibitions in Europe, attracting some 20,000 visitors. This year’s edition has signed up 540 exhibitors from 20 countries. Over the three days of the event, some 20 conferences will be held, on a wide variety of subjects.To read this special E-World issue, please go to our homepage and click on the banner.

Announcements

6-8 February 2012 | Istanbul, Turkey

President of TPAO to speak at the EMEA Unconventional Gas E&P Forum

The forum will focus on technical challenges and commercial considerations in the EMEA region and discuss technologies integral to unlocking and optimising plays and case studies based on field-proven experience of successful unconventional gas developments.

21-22 March 2012 l Amsterdam, The Netherlands

RECS Market Meeting 2012

Make sure you don’t miss the opportunity to participate in the only conference that will give you a full picture of today’s market for renewable electricity. Find out what is driving the market, what is missing, what needs to be improved, who is bying renewable electricity and why?

Coming up on European Energy Review

LNG: the second wave is coming
The future of EU gas market – including interview with Sergei Komlev, Head of Contract Structuring and Price Formation Gazprom Export
Interview Professor Jan de Jager, ex-Shell: “unconventionals – easy to find but hard to produce”
Why Russia needs Qatar
Five reasons the Energy Efficiency Directive won’t work – and what can be done about it

Recent posts

11 tips, trends and traps for 2012

By Matthew Hulbert and Karel Beckman

Energy security expert Matthew Hulbert and European Energy Review’s chief editor Karel Beckman provide a quick guide to 2012 for European energy decision-makers. Their most important recommendations: check your plan B, prepare the International Energy Agency for a new future, launch an Apollo programme for energy efficiency, free nuclear power from the embrace of the State, put an end to UN climate conferences and hold on to your hats.

“Oettinger’s think piece” needs to be backed up with concrete actions

By Karel Beckman

Responses to the EU’s 2050 Energy Roadmap range from “broadly” positive to fairly and sometimes highly critical. The most heard criticism is that the Commission fails to put words into action. As WWF puts it, ‘Oettinger’s roadmap will remain a pure think piece if not backed by effective legislation’.

And the winner is … Dutch windmills

By Karel Beckman

Editor Karel Beckman looks back on the second year of EER’s online existence. For EER, the news has been overwhelmingly positive: the number of subscribers and visitors has continued to grow. He also reveals what was EER’s best-read story of 2011. Rather surprisingly, it was a story about Dutch windmills!

Interview Pier Nabuurs: ‘My smart meter should belong to me, not to the network company’

By Karel Beckman

Pier Nabuurs, ex-CEO of Dutch energy consultancy KEMA, Chairman of the Dutch Smart Energy Collective and ex-President of the European Technology Platform Smart Grids, is worried that anti-market sentiments might derail the liberalisation of the European energy market. He is also dismayed that the European Commission has put responsibility for the development of smart grids into the hands of the grid operators. ‘We need to involve a wide range of different companies to build the platform for smart grids.’

It’s energy that will make or break the BRICs

By Matthew Hulbert

The future of the world economy depends increasingly on how the partnership of the BRIC countries will develop. But how far this partnership can go, depends more than anything else on the energy relations between the four countries, argues Matthew Hulbert. It is ultimately how they will play out their energy interests that will come to define – or destroy – BRIC relations.

Durban leaves large question marks hanging over climate policy

By Sonja van Renssen

The EU hailed the outcome of the climate conference last weekend in Durban, where world governments agreed to create a new global climate treaty by 2015, to enter into force in 2020. The world is once more set on the path to a low-carbon future, said EU representatives. Yet there will be no increase in emission cuts for a decade and uncertainties continue to plague the future climate regime. Does Durban give energy companies the signals they need to invest in a low-carbon future?

Danes decline oil, gas, coal and nuclear

By Frede Vestergaard

The newly elected Danish centre-left government has raised the CO2-reduction target from 20% to 40% by 2020 and wants a complete phasing out of all fossil fuel use by 2050. Denmark, poised to take up the EU Presidency in January, already has the highest energy prices in Europe, but the government believes its new green policies will be good for the economy: they will stimulate green technology with a big potential for jobs and exports.

European Energy Review is Europe’s foremost independent energy journal on the internet. It features original reports, interviews, analyses, viewpoints and debates from across Europe. Registration to our newsletter, which is free and without obligations, gives you full and free access to our website. For more information about EER, click here.