This is a Special Energy Monitor, briefly summarizing the debates and discussions on the energy sector future at the Houston based CERAWeek 2018, one of the largest and most important energy conferences worldwide.
Special Energy Monitor
During the CERAWeek 2018 the debates were largely about climate change and new technologies for the industry. This highlights a major shift in the energy sector. The high-carbon part of the energy industry and in particular the big oil and gas companies have discussed the employment of high tech as a way to embrace for a low carbon future.
During the conference, the chief technology officer at Saudi Aramco – the world’s top oil company, lauded the recently passed U.S. law – the Future Act or The Furthering carbon capture, Utilization, Technology, Underground storage Act. The bill extended and expanded the 2008 tax credits for capturing CO2. The expanded credit is known as 45Q and was approved as part of a 2018 budget bill. Considering that the technology is expensive, this credit is provided for the capturing and handling of the energy byproduct, not the energy itself. Considering Saudi Aramco was one of the sponsors of the tech hub housed by the conference, it is clearly that the trend for sustainable cleaner energy is supported even by the more conservative part of the industry.
Besides the debates on new technologies, research and development needed for a more sustainable energy sector, there were also discussions about a new set policies being drawn by Washington with regards to the industry. Local media reported that the U.S. administration wants to develop a new policy framework together with the energy companies which aims at the development of small-scale coal-fired power plants. This points to the fact that President Trump still desires to revive the coal sector. However, considering that today’s coal-fired power plants are big and not easily turned on and off, the Energy Department’s challenge is pretty high.
Also during this past week:
EU/Russia: Nord Stream 2 is still debated within the EU. Euractiv published a report, quoting documents obtained by the media organization, saying that the EU “Council’s legal service believes that the EU does not have jurisdiction to apply energy law on unbundling, transparency, third-party access and regulated tariff to pipelines crossing the Exclusive Economic Zone (EEZ) of member states”. This refers to the EU Commission proposal in November 2017 to extend EU internal energy market rules over the offshore gas pipelines, trying to de facto limit the construction of Nord Stream 2 which it sees as undercutting Brussels efforts to reduce dependence on Moscow’s gas exports.
Russia/Ukraine: The deliveries of gas to Ukraine have not resumed, in spite of EU repeated calls on Russia to restart its exports to its neighboring country. Instead, the Russian energy company Gazprom filed an appeal against the ruling by the Stockholm arbitration court that had ordered it to pay more than $2.5 billion to Ukrainian Naftogaz. In the same time, due to the continuation of the bad weather in Russia, media reports highlight that Russian gas demand will get priority over Russian exports during the next week, which makes for the continuation of the current situation, where gas deliveries to Ukraine remain cut with no resumption in sight in the very near future.
EU/Germany/Azerbaijan: Germany announced it would give a loan of 1.2 billion EUR to the Azeri Southern Gas Corridor Closed Joint Stock Company. The sum will help Azerbaijan finance its part of the project, effectively linking the South Deniz gas field in the Caspian Sea to the Trans Anatolian pipeline (TANAP). This comes after the EU Commissioner for Energy visited Azerbaijan and discussed about the options the EU getting gas from the region. Germany loan to Azerbaijan is adding to other funding awarded for the South Corridor in February by the EU financing institutions, the EIB and the EBRD for building up the leg connecting TANAP to Europe, the Trans Adriatic Pipeline (TAP). TANAP is 99% done and it will become functional in July 2018, while TAP is only 66% completed at the moment. Germany is interested in the project as it is a way to diversify its own import sources, considering that once TAP becomes operational, it would get Azeri gas from Italy through the existing TransitGas system.
Bulgaria: Bulgarian Prime Minister Boyko Borissov and Russian President Vladimir Putin discussed on March 5 about the energy projects that the two countries may work on in the future. The local media indicate that the two discussed about the development of the Belene nuclear plant project, (which was shelved by Bulgarian government in 2012, considering the EU pressure) and de development of the Varna energy hub, considering talks about the potential extension of the Turkish Stream into Europe. However, the conversation was also largely symbolic, considering that it came after the visit of the Russian Patriarch on March 3 to celebrate Bulgaria’s national day. On March 3, Bulgaria celebrated the 140th anniversary of the San Stefano Treaty, marking the Ottoman Empire defeat in the Russo-Turkish war between 1877-78, which effectively liberated Bulgaria from the Ottoman rule.
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