Transient Travel Break

I have been traveling over the last two days and will be spending the next week at a Conference. However, since the Conference is dealing with the uses of high pressure water and I will be taking about such OT things as the wear of diamond nozzles, and how to make art using this tool, the chances for much posting are diminished. I’m afraid that won’t be putting up new temperature and tech talks for a couple of weeks until I get back. However there may be the occasional other post and I hope to be able to post a summary of the ASPO Conference in the form of a short note on what I found different this time around.

For those interested, I did go to the Spanish Riding School today, and took a number of photos of horse-drawn carriages, but I suspect that this won't encourage Vienna to switch to horse-drawn garbage collection. The carriages slow traffic considerably around the Palace it seemed.

Michaeler Platz, Vienna.

I did note the number of folk still sitting out drinking coffee, even as the weather demanded they wrap up in overcoats to do so. Oh, and by the afternoon they had to hoods up on the carriages. More excuses to drink hot chocolate, or something stronger!

Nabucco, or is the Great Gas Game turning into a waltz?

It seems as though, whenever things are relatively quiet in the energy world, which they currently seem to be, then all one has to do is type Gazprom into Google search box, and there will be some interesting snippet.

And lo, it appears that Gazprom is looking into a take-over one of the Hungarian gas pipeline networks. Now that is not what the initial part of the post says, where it notes that the Hungarians are switching their gas purchases from a company (RosUkrEnergo) (RUE) that purchased Russian gas through Ukraine, to a company known as Rosgas AG. As part of the fallout from the January dispute between Russia and Ukraine RUE lost that business, and now Hungary has found a new middleman, Rosgas.

The immediate suspicion is that RosGas AG is yet another in a long line of shadowy intermediary companies created by Firtash and Gazprom. However, in the case of RosGas this may mask a possible attempt by Gazprom to cut gas supplies to Firtash's Emfesz, as a precursor to a company takeover - vastly increasing its share of the Hungarian domestic gas distribution network.

This becomes of some importance when one looks at the relative prospects of the two alternate paths for new gas to reach Western Europe – South Stream and Nabucco. South Stream is being increasingly pushed by Gazprom. The pipeline will bring gas under the Black Sea, and pass through Serbia and Slovenia before reaching Austria. However Eni, who is a 50% partner with Gazprom in this stage of its development, is upset that Gazprom is keeping it out of the negotiations with Serbia and Slovenia. Both countries are anticipated to sign agreements with Gazprom in the near future, without Eni, for gas supplies from South Stream.

And this may be where Hungary comes in, since the competing Nabucco pipeline goes through Hungary to get to the Austrian hub. So that if Gazprom controls the Hungarian pipelines, and can stop competitors’ gas flowing through them (a fact they used to get TNK-BP out of the rich Kovytka field after TNK-BP had developed it.) It is yet another couple of nails in the Nabucco coffin.

Earlier this week, with a fanfare celebrating the coming signature of the Nabucco agreement to run gas through the pipeline across Turkey it looked as though the pipeline was moving rather rapidly forward. However, buried within the story is the backing off of European funding

The European Commission is proposing to scale back its support for the Nabucco project to 200 million euros ($268 million) from 250 million euros, Tarradellas said in February. The aid would be channeled through the European Investment Bank.

At the same time, the last paragraph is interesting.

Friday's statement, signed by leaders of the EU, Azerbaijan, Georgia, Turkey and Egypt, also said the EU and Egypt should "agree on specific projects in developing Egypt's gas reserves and export potential for the EU." It said it was signed "in the presence of the representatives of Kazakhstan, Turkmenistan and Uzbekistan."The statement also called for a memorandum of understanding on energy between the EU and Iraq "as soon as possible." Barroso said a preliminary energy accord with Iraq was "imminent."

There are nuggets in that paragraph – first the pipeline cannot be effective without the gas from Kazakhstan, Turkmenistan and Uzbekistan. But none of them signed the document. Further Azerbaijan does not think that the project is feasible without Turkmenistan. The Turks will get paid for their trouble

The Turkish government has been driving a hard bargain, insisting on collecting a "tax" on the gas being pumped and demanding 15 percent of the transit gas at discounted prices. These requests have been rejected by the European Commission, the executive branch of the 27-nation bloc, delaying the 9 billion-euro project. More than half of the pipeline is to be located in Turkey.

But getting them on board helps negate the pressure that Russia (read Gazprom) is applying to discourage the “stans” from selling Nabucco their gas.

So as steps in the Great Game you could say that Europe took the first by planning Nabucco, then Russia took the second by stopping an adequate supply availability through pressure on Turkmenistan etc. Europe now gets the third, since with the pipeline running through Turkey they can (if politics allows) run connections into Iran, Egypt and Iraq. And before the step is completed Russia moves to step on their toes and gain control of the Hungarian section, thereby taking the fourth.

With Austria involved, maybe this part of the game is turning into a waltz – but with constantly changing partners - we shall see.

Should Soviet-style nuclear plants be reactivated?

Providing fuel is critical to generate power that keeps people warm, cooks their food, provides them light, and runs the tools they need to hold a job. But what happens when the fuel source they all rely on is no longer there? This is a growing problem around the world, both in underdeveloped and developed nations. The most recent examples show up on Energy Shortage, but the one that is currently drawing increasing attention is the fallout from the shut-off of gas by Russia. The government of Slovakia, given their responsibility for the welfare of their people, have decided to go ahead and re-start a nuclear power plant that had been mothballed. The European Union is concerned, and has said that it will “take action”, if the reactor is re-started.

The problem is a little complicated, since back when Slovakia applied for membership of the EU, one of the entry conditions was that this reactor at the Jaslovske Bohunice nuclear plant be closed. The plant was closed at the end of last year and, as the Austrian Environment Minister stated:

"We cannot accept the reopening of this unsafe reactor . . . Now it's up to the European Commission to strongly urge compliance with the accession agreement," said Nikolaus Berlakovich, Austrian environment minister.

In Brussels, officials made clear there could be "no legal basis" for Slovakia to reopen the plant.

Now this raises an interesting question – how else are the Slovaks going to be able to provide power to the people? Is the European Union telling them to freeze to death in the dark?

One presumes that there is not a whole lot of choice out there – and although this could be a case of the “Admiral’s Barge syndrome?” (In which, when the Navy is told to cut their budget, they never get rid of the barge, but always propose getting rid of a critical element such as an aircraft carrier battle group, and everyone says “gosh we can’t do that” and so the budget, and the barge, survive) the press stories seem to tell a different tale.

Clearly in Bulgaria and other Eastern European countries it is hard to deny that there is considerable hardship, since all gas was cut off to the country last Tuesday. To help the EU has offered them funds to put in a 70-km pipeline to tie the Bulgarian grid into the networks of Greece and Rumania. But that pipeline won’t be built in a day! So what are the people supposed to do in the interim?

In this particular case Ukraine has offered Bulgaria some 2.5 million cu m per day of the gas that is stored in Ukraine to help, but apparently there is not enough driving pressure in the pipeline to allow the gas to get through. In Bulgaria, in the meanwhile they are using the last remaining amounts that were in storage, and that is expected to run out this week. The small remaining gas producing field has virtually ceased production, and was planning on re-using the reservoir to store imported gas, but that change has been postponed. However the Galata field can only produce about 5% of that needed and hundreds of thousands of people have no power.

Bulgaria is also talking about re-opening a nuclear reactor, though again EU pressure may well keep it closed. There will be a small gas field, Kavarna, brought on stream at the end of this year, but that will not be enough, although with the addition of the Kaliakra field, which may also to come on stream this year, production may be sustained at around 20% of the country’s needs. (Though there may be some environmental issues).

Those developments are however a sidetrack from the original question of how a government deals with the lack of fuel that it populace has to have if it is not to start dying off. And that brings me back to the issue of the nuclear reactors, whether Bulgarian or Slovakian.

Slovakia anticipates that the re-start of their reactor can be completed this week, and power restored.

(Prime Minister) Fico told reporters that reneging on the terms of its EU membership was better than taking the risk that his country's electricity grid would collapse.

"We are facing a blackout here, therefore we have to act fast," said Fico, adding that the government would shut the reactor down again "as soon as the situation is stabilized."

The situation was made easier for Slovakia since the plant had only just been shut down at the end of last year. Opinions in the EU are more divided.

In Brussels, the European Commission said there was "no legal basis" for the nuclear re-launch, but conceded that Slovakia had a "real problem" with the gas shortage.
The Czech Republic, which was the other half of the former Czechoslovakia and just kicked off its current six month EU presidency, was even more sympathetic to Slovakia's plight.

Czech Prime Minister Mirek Topolanek rejected all criticism on Sunday, pointing out the shortcomings of the EU's energy and security policies.

"At the moment, I take it rather as a demonstration of (Fico's) readiness to tackle an issue that the European Union cannot resolve for Slovakia -- a looming blackout," he said in Prague.

The question of providing adequate power is thus likely to become more of an issue over the next year, since once the reactor is shut down again it will likely take more effort to start it next time, and the EU in the interim might require some steps that would make it impractical for future restarts to occur. And they are certainly pressuring Bulgaria already not to follow this example.

But should a government have a fall-back energy source in case the primary supply fails? And if it should, what, and how much should there be, and who is going to pay for it? The Bulgarian reactor was closed down two years ago, but can be brought back to power in a month. If the crisis lasts that long, then by that point I expect that the power will be well received and the unpopularity of the government might be a little appeased. But what if those preventing the availability of power were shown to be doing so purely on environmental grounds? This may be a situation that strikes closer to home in the years ahead.