P61. Pick Points

A few stories of interest to start off the week.

When I wrote about the EIA Energy Conference last week I had promised that I would make a better reference to the views of others who were there. For example, I noted that Reuters had a piece on the final morning session dealing with greenhouse gases and climate change. Robert Rapier has two posts up now, one on Dr Chu’s remarks; and the second on the rest of day 1. Robert went to the session on Transport demand that I missed, and so this is a place to catch up. His take on the Renewable Energy session is also a little different, and so a trip over there would be worthwhile. Gail, at TOD, has so far, only covered the Plenary Session.

Stranded Wind also has a post summarizing the whole Conference at Daily Kos.

Moving on around the world to see what other stories have been gathering headlines, it sometimes seems that one cannot go far without bumping into Gazprom stories. It seems to have troubles on two fronts at the moment. Looking first at its supply, it has (as I noted last Sunday) run into a bit of bother with Turkmenistan. The story got worse as the week continued with a reported gas explosion in a pipeline inside Turkmenistan that was carrying natural gas to Russia. This shut down the feed to Russia.

"Turkmengaz informed Gazprom that on April 9 at 01:32 an explosion occurred at the 487th kilometer of the Davletbat-Daryalik pipeline. Since then, transport of Turkmen gas to Russia has not been carried out," Gazprom said.

"At the present time the Turkmen side is working to rapidly repair the damage.... The damage will not affect the supply of gas to Gazprom's customers," it said in a statement.

This was followed, on Friday, by a story in the LA Times where Turkmenistan blamed Gazprom

Turkmenistan's Foreign Ministry said in a flurry of statements that Russia's Gazprom decided on short notice to reduce the amount of gas it takes from Turkmenistan. Gazprom's export division gave only one day's warning, which wasn't sufficient time for Turkmenistan to reduce its flow into the pipeline network, the ministry said.

The blast, which occurred late Wednesday, "was caused by a gross unilateral violation by Gazpromexport of the norms and rules of the natural gas sales agreement," the statement said. Another statement said Gazprom's actions were "rash and irresponsible" and put lives at risk.

Turkmenistan is now reportedly angry that the Russians are, in contrast, blaming the blast on them. Repairs were scheduled to take 3 days. The story is now being carried in Moscow, where part of the blame is seen to be because of the decision of the Turkmen to seek international bids for a pipeline, instead of giving it to Russia.

There has been a significant drop in demand from Europe. In March Gazprom produced 24% less gas than the same month last year, and is down 18% over the whole quarter. Demand in Russia alone dropped 6.6%. With demand for Russian gas expected to stay depressed by 10% over the next five years. However in the short term, it does report seeing a slight upturn in demand from Europe.

Which brings us to the second side of the story, since Gazprom is now threatening to fine Ukraine for not consuming more gas, and lowering demand below expected levels. With this threat of a lack of customers it seems odd to some that Gazprom is taking the step of buying Eni’s stake in Gazprom Neft (the oil side of the house). At a cost of $4.2 billion it is considered “a strange decision” given the company’s need to cut debt. On the other hand there is now an agreement to ship some of Sakhalin gas to the West Coast of the USA. (Actually to Mexico and then into the US).

In a statement announcing the agreement yesterday, the two companies said liquefied natural gas (LNG) from the newly completed Sakhalin-2 project will be shipped to a regasification facility in Baja California, Mexico. It will then be transported to southern California by pipeline and sold to U. S. consumers by Gazprom's subsidiary in Houston, Gazprom Marketing & Trading USA, Inc.

The first tanker of Sakhalin gas arrived in Japan last Monday, after leaving the island on the 1st April. Japan is expected to take 60% of Sakhalin’s supply (about 7% of Japan’s need) with the remainder being split between South Korea and the USA.

While many eyes on Pakistan are focused on the problems with insurgents and controlling the travel of the Taliban and friends across the border into Afghanistan, it is not as widely known that the country remains in a relatively desperate energy shortage. In one of the latest moves to counter this, the country will go onto daylight saving time on April 15th, in a move that is hoped to save the country 250 MW a day. Given that the country is short around 4,000 MW, this won’t help much. In Islamabad alone the gap was 190 MW last Thursday causing 150 MW of load shedding to be imposed. By Sunday it had increased to a shortfall of 1,200 MW and after having only had load shedding of 4 – 6 hours, the city is now back to blackouts of up to 12 hours as air conditioning demand rises with the hotter weather.

In Karachi the daily shortfall of 350 MW is coming with 8-10 hours of unannounced blackouts. (Hat tip to Energy Shortage). The Prime Minister still believes that load shedding can be ended this year. Part of the problem in Karachi, apparently, is that the power company has been taken over by a Saudi company who then sold it, but the new owners have yet to take possession. None of the problems have apparently been tackled.

And just to return to Russia for a moment, I had always remembered that before things got unpleasant in Iraq, Russia had been on its way to getting a sizeable chunk of the energy in that country. Turns out that they are now back

A Russian consortium including oil group Lukoil signed a $3.7 billion deal to develop Iraq's West Qurna oil field in 1996, when Saddam Hussein was in power.

"The goal has been set to restore the contracts concluded between Russian and Iraqi companies before the war," Energy Minister Sergei Shmatko told Reuters, adding that a working group on the issue would convene in the near future. . . . .
Saddam's government tore up the Lukoil deal in 2002, months before the invasion, saying the Russian company had done no work at West Qurna since signing it and had failed to fulfil its contractual obligations.

JP Morgan said in March last year that, according to Russian estimates, production at the field was expected to peak at 700,000 barrels per day, and reserves could total between 4.5 billion and 7.3 billion barrels.