Saturday, October 17, 2015

Cyprus may export gas via Zohr | in-cyprus.com (Cyprus Weekly)

Cyprus may export gas via Zohr

By George Telaveris
Cyprus is looking to export natural gas to Egypt via the massive Zohr field, according to Energy Minister George Lakkotrypis.
Speaking on state broadcaster CyBC a day after his visit to Cairo on Tuesday, Lakkotrypis said that the two countries are looking to export Aphrodite gas through an underwater pipeline. The pipeline will connect with the Zohr field and from there it will be transferred to Egypt’s liquefied natural gas (LNG) terminals.
Technical teams from both countries have been examining the possibility of an underwater pipeline direct from Aphrodite to Egypt, although the cost could be significantly higher than the Zohr link-up option.
“Connecting Zohr and Aphrodite will save us money and time. …Egypt is very much interested in importing Cypriot gas, both for exports and for their own consumption,” Lakkotrypis said.
At the same time, Eni’s CEO Claudio Descalzi confirmed his company’s interest in taking Cyprus gas for the LNG complex in Damietta on the coast of Egypt.
Experts have been suggesting that the estimated 30 trillion cubic feet of gas from Zohr will help Egypt meet domestic demand and remove the need for imports from Cyprus and Israel.
“For the time being, exporting through Turkey to Europe could be the best solution and we must start realising that it is not only Turkey that will benefit from this but Cyprus as well,” an analyst told the Cyprus Weekly under condition of anonymity.
Cyprus and Noble Energy are at the final stages of agreeing the development plan for the Aphrodite field, which has an estimated 4.54 trillion cubic feet.

Total renews its interest
Meanwhile, Total has renewed its interest in Block 11 and is expected to file an official request to extend its licence within the next month.  Total’s geological surveys coupled with the mass gas discoveries in Egypt just 6.5 km from Block 11 convinced the company to stay.
Renewal of the licence will mean that Total will proceed with exploratory drilling.

Source: http://in-cyprus.com/cyprus-may-export-gas-via-zohr/

Thursday, October 15, 2015

ENI's Growing Presence In The Eastern Mediterranean - NATURAL GAS EUROPE






October 15th, 2015

ENI'S GROWING PRESENCE IN THE EASTERN MEDITERRANEAN

Eni has been awarded two new exploration licenses offshore Egypt, North El Hammad and North Ras El Esh, as a result of a competitive bid round. Eni has been awarded a 37.5% participating interest and operatorship in North El Hammad, where it partners with BP (37.5%) and Total (25%), and a 50% participating interest in North Ras El Esh, where it partners with BP (50%) which will act as operator, according to a press release by the Italian company. The two blocks, which will be managed by Eni’s subsidiary IEOC, are in the shallow waters of the Mediterranean Sea, facing the Nile Delta and located southwest of the Temsah area and west of the Baltim area, where Eni operates existing fields and production facilities.

Lakkotrypis denies Israeli rumbling over gas field | IN-CYPRUS / CYPRUS WEEKLY

15 OCT 2015

Energy Minister Yiorgos Lakkotrypis has dismissed media claims in Israel which say that a disagreement between Israel and Cyprus over development in the Aphrodite gas reservoir is delaying the signing of a unitisation agreement between the neighbours.

According to Wednesday’s reports in the Israeli business site Globes, the signing of the agreement – which aims to lay out the principles for the development of oil and natural gas reservoirs shared by the two countries and other cooperative energy efforts – is being held up because the Israelis are demanding a active role in the approval of development of the Aphrodite reservoir, which it says is partly in its waters.

The Cypriot government is said to be open to the idea to discuss the matter but the Israeli demands is delaying the signing of an agreement.

But reports in Phileleftheros on Thursday morning countered those claims with Lakkotrypis saying that there are no disagreements.

Wednesday, October 14, 2015

Lakkotrypis' Visit To Cairo Reinforces Energy Ties | Natural Gas Europe

Image via Twitter: @GLakkotrypis

October 14th, 2015

LAKKOTRYPIS' VISIT TO CAIRO REINFORCES ENERGY TIES

The Minister of Energy of the Republic of Cyprus Yiorgos Lakkotrypis visited Cairo on Monday where he met with his Egyptian counterpart Petroleum Minister Tarek El-Molla and Prime Minister Sherif Ismail. The purpose of the visit was to discuss important matters related to energy. In late August, Italian ENI announced a major discovery offshore Egypt: the Zohr field, located in the Shorouk block in close vicinity to Cyprus´Exclusive Economic Zone and estimated to hold up to 30 Tcf of natural gas, is expected to tremendously alter the geopolitical landscape in the region. Neighbouring countries Israel and Cyprus have also made major discoveries in their waters with Israel´s largest offshore fields, the Leviathan and Tamar, estimated at 21 and 10 Tcf respectively. Albeit more modest in size with an estimated 4.54 Tcf, the Aphrodite field discovered by Texan Noble Energy off Cyprus’ coast will also likely turn the island country into a net exporter of natural gas given the negligible domestic demand.
Egypt has been struggling to meet a rising domestic demand and was forced to look for suppliers of natural gas, regionally and beyond. The country has been engaged in talks to import gas from Israel and Cyprus via an undersea pipeline. Export deals with Jordan and Israel have led Egypt to enter a severe energy crisis. The discovery made by ENI will no doubt solve Egypt’s shortage of energy. The field is expected to reach production stage by 2020. In the meantime, Egypt will still need to import the hydrocarbon to satisfy its domestic needs. Egyptian officials have repeatedly reassured their Cypriot and Israeli counterparts that Egypt will still be looking to import gas in the near future.
Egypt is holding a strategic role in the region, not only as a potential customer for Eastern Mediterranean gas but also as a possible route. Egypt´s export terminals at Idku and Damietta are underused and could potentially process Cypriot and Israeli gas to far-reaching export market. Liquefying the gas for export will offer the advantage of flexibility in the choice of the export market. The only concern for Israel and Cyprus remains if Egypt, once its Zohr field goes online, uses up its export terminals to full capacity. Egypt’s discovery has however boosted regional confidence. The close proximity of the field to Cypriot waters has encouraged the resumption of exploration activities in the island’s maritime zone. ENI, TOTAL and Noble will be searching for more gas in the hope to encounter significant amounts of the hydrocarbon.
Karen Ayat is an analyst and Associate Partner at Natural Gas Europe focused on energy geopolitics. Karen is also a co-founder of the Lebanese Oil and Gas Initiative (LOGI). She holds an LLM in Commercial Law from City University London and a Bachelor of Laws from Université Saint Joseph in Beirut. Email Karen karen@minoils.com Follow her on Twitter: @karenayat 

Source: http://www.naturalgaseurope.com/lakkotrypis-visit-to-cairo-reinforces-energy-ties-25847

Natural Gas Isn't Just About Israel | Haaretz

The debate over how to apply antitrust laws to the energy industry overlooks the strategic importance gas should be playing in the region. Regulatory delays risk vital Israeli interests.

George Papadopoulos, Oct 14, 2015

Off Haifa coast, oil rig at enormous Leviathan natural gas field.Albatross

For the first time in its history, Israel has the potential to anchor itself politically and economically to the Middle East.

Israel’s energy exports can serve as the basis for enhancing strategic relations between Israel and Egypt.

They could also serve as the foundation for political and security cooperation with Greece and Cyprus at a time when Israel’s security and interests are threatened by surrounding enemies.

The Leviathan field has the potential to be the linchpin that transforms the region into an integrated energy zone. Its gas can assist Egypt in recovering from dual energy and economic crises, and enhance economic links for Israel with Egypt and Europe. These are large markets where demand is growing and diversification of supply is not.

But right now Israel finds itself in a state of dangerous introspection. Regulatory indecision has delayed development of the giant Leviathan offshore gas field, threatening both the future of energy cooperation between Israel and its neighbors and the development of a valuable national asset.

Policy indecision about how to apply antitrust laws in the case of Noble Energy and Delek Group, which control nearly all of Israel’s natural gas production, have caused the companies to suspend development of Leviathan and expand production at the Tamar field.

Israel cannot afford further delays. Faced with an increasingly unstable Middle East, Israeli regulators must take into account the nation’s vital interests by resolving the antitrust issues quickly and creating the foundation for signing long-term gas contracts between Israel and its neighbors – not only Egypt, but Jordan, Cyprus and potentially Europe.

Not just antitrust, Israel needs a clear policy and an articulated strategy – one that is currently lacking. That is because in a volatile oil pricing environment, international oil companies must manage their capital with high precision. Companies need to know they have locked in customers through long-term gas contracts in order to commit to spending the billions of dollars it will take to develop the gas fields. Uncertainty and needlessly restrictive regulatory policy makes complicate the task.

What of the export options?

Turkey was once considered the ideal regional market for Israeli gas. However, following the 2010 Mavi Marmara incident, a provocation aimed at creating discord between Israel and Turkey, the close and productive strategic relationship between Jerusalem and Ankara has ended. A rapprochement is not in the offing any time for the foreseeable future.

'Political feasibility'

Regarding the prospects for energy cooperation with Israel, Turkish Energy Minister Taner Yildiz has this to say: “We never talk about the economic feasibility of a project without political feasibility. Our national policy is based on this understanding. It is out of the question to proceed on any energy project [with Israel] unless a permanent peace is established in Gaza.”

Unrest in Gaza and the West Bank supported by Hamas leaders stationed in Istanbul renders any such “permanent peace” unlikely for at least the short term.

As Turkey has altered its strategic focus from the West to the Middle East, Turkish and Israeli policies have become increasingly at odds. Turkey’s once-heralded foreign policy of “zero problems with neighbors” in practice is now “problems with all neighbors.” Turkish foreign policy has alienated Israel, Cyprus and even Egypt and has isolated itself from the region’s emerging energy and security partnerships.

Consequently, Egypt, under the al-Sisi regime, has become the alternative principal market.

The Israel-Egypt relationship has been a cornerstone of Israeli security since 1974. Egypt’s president not only backs the global campaign against Islamic State extremists, but is leading his country toward an economic turnaround and strengthening regional relations. He has cut energy subsidies to revitalize the economy, launched a broad crackdown on the Muslim Brotherhood and IS militants, and works closely with Cyprus, Greece and Israel.

Egypt’s new government has cast its lost with the West and is now seeking to overcome the natural gas shortage it faces by importing expensive liquefied natural gas and possibly also Israeli and Cypriot natural gas via pipeline. Meanwhile, Egypt’s idle LNG-export plants could be used to process Israeli gas for export to Europe and create an important market for Leviathan, the discovery of the giant Zohr field in Egypt notwithstanding – Egyptian officials have said the Zohr field’s gas will probably be earmarked for the domestic market.

Win-win situation

Egypt hosts two idle LNG plants in Damietta and Idku. Damietta has a production capacity of 6.8 billion cubic meters annually, while Idku can produce 9.8 billion cubic meters. If Israeli gas is delivered, per the letters of intent signed in 2014, the Tamar and Leviathan deals could fulfil two-thirds of the two plants’ productive capacity.

This is a win-win situation for Egypt, Israel and the LNG plants’ European owners. The idled Egyptian LNG plants need natural gas that they can no longer source in Egypt. The Leviathan partners don’t have to build their own LNG plants, which would involve a huge amount of time and expense. Thus, with Egypt facing its worst energy crunch in years, access to Israel’s Leviathan and Tamar fields, as well as Cyprus’ Aphrodite field, offers the best hope of restarting LNG exports from Union Fenosa’s and BG Group’s (Shell) Egyptian plants, and ending their heavy financial losses, even with the recent discovery of the Zohr field.

The Egyptian government is unlikely to block Israeli and Cypriot exports to the plants. They make economic sense and offer long-term benefits for Egypt, by restoring investor trust and freeing up more gas for domestic use.

In any case, Egypt will need to import gas until its own production ramps back up. Despite efforts to revitalize Egypt’s natural gas sector, legacy production is likely to fall over the next five years, while consumption will continue to grow.

It is bold and strategic moves that shape the oil and gas industry. History also favors the bold. In Israel’s case, political deadlock and regulatory pressure can affect its role as a net provider to the provision of energy security in the region. With new gas coming online offshore Egypt, Cyprus, East Africa, the United States and Australia, it is in Israel’s interest to lock in long-term contracts with Egypt. A real alternative is to run the risk of being relegated to a secondary position as a supplemental supplier in its own backyard in what may become a glutted market.

Israel should be providing the regulatory certainty that will enable the Leviathan and Tamar partners to negotiate from a position of strength, while enabling Israel to forge strategic relations. At a time of political volatility, Israel will be able to maximize both geopolitical benefits by exporting gas.

Source: http://www.haaretz.com/business/business-opinion/.premium-1.680439

Tuesday, October 13, 2015

Israel, Cyprus in disagreement over Aphrodite gas field | Globes

Yuval Steinitz


Israel's claims the field extends into the area of the Yishai license are delaying a cooperation agreement between the two countries.

13/10/2015, 18:30
Amiram Barkat and Hedy Cohen

A disagreement between Israel and Cyprus over development of the Aphrodite gas reservoir is delaying the signing of a unitization agreement between the countries, designed to arrange the development of oil and natural gas reservoirs shared by the two countries and other cooperative energy efforts. Sources inform "Globes" that Minister of National Infrastructure, Energy, and Water Resources Yuval Steinitz, who was invited to Cyprus to discuss the promotion of joint projects for building a shared pipeline for exporting natural gas to Europe and laying an electrical cable between Israel and Cyprus, is delaying his trip until negotiations on the agreement, which have been taking place for over five years, are completed.
Actually, Israel is demanding a role in the approval of development of the Aphrodite reservoir, which it says is partly in its waters. For its part, the Cypriot government is willing to discuss the matter, but the Israeli demand is delaying the signing of an agreement.

The unitization agreement was slated for signing together with the marine areas border agreement in 2010, but the signing has been delayed by disputes over principles and various technical matters. A senior Israeli source involved in the negotiations told "Globes" that the demand for cooperation in development of the reservoir is based on international law and practice in similar drillings around the world. "We're asking for what we're entitled to, according to accepted practice," he said. Cypriot government spokesman Nikos Christodoulides told "Globes," "The Cypriot government is willing to discuss with Israel cooperation in the development of the Aphrodite reservoir, and wants to finish the talks about the unitization agreement as soon as possible."


The Cypriot reservoir, which was discovered in Bloc 12 in the Cypriot economic zone, also reaches over into the area of the Yishai license in the Israeli exclusive economic zone (EEZ). While Cypriot sources argue that only 3% of the reservoir is involved, sources close to the Yishai license holders say that the percentage is higher, and that the tests have not yet been completed. "Citing any number before the tests are completed and all the findings obtained is irresponsible," they say.

Noble Energy, which discovered the gas reservoirs in Israel, also discovered the Cypriot reservoir in a drilling conducted in late 2011. Nobel Energy's initial estimate was that the reservoir contained 5-8 trillion cubic feet (TCF). Following verification drilling, the results of which were published in October 2013, however, the quantity was revised to 3.6 TCF (for the sake of comparison, the Tamar reservoir contains 10 TCF and the Leviathan reservoir 20 TCF).

The owners of the rights in the Yishai license are companies controlled by billionaires Teddy Sagi and Benny Steinmetz and Israel Opportunity Energy Resources LP (TASE:ISOP.L). Steinmetz and Sagi financed an exploratory drilling in 2012 at a cost of $103 million in order to check whether Aphrodite extended into Israeli waters. The drilling discovered signs of gas, but these did not justify commercial drilling. Despite the failure of the exploratory efforts, the Ministry of National Infrastructure, Energy, and Water Resources approved the extension of Sagi and Steinmetz's license until February 2016, in other words, seven years after the license was received (the maximum period allowed by law). It appears that the extension of the license was designed, among other things, to support Israel's demand to be a partner in the approval of the development plans for the Cypriot reservoir.

During the negotiations, Israel argued that it was reserving the right to drill in the Israeli part of Aphrodite and take its relative share if it is not included in the development approval processes for the entire reservoir - even though it is clear that such drilling has no economic justification.
Is the failure to sign an agreement delaying the development of the reservoir? The Ministry of Foreign Affairs says it is. "Without an agreement between the countries and the companies, the investors won't agree to finance development of a reservoir at a cost of billions of shekels," the Ministry of Foreign Affairs says.

Michael Leigh, a senior advisor to the German Marshall Fund, a US entity, added, "An agreement will strengthen the ties between the two countries, and give the investors a signal that it is safe to invest." According to Leigh, who recently visited Israel and Cyprus to discuss the matter, "The attempt to reach an agreement between the parties has continued for several years, and neither side has made it a top priority." He commented that an agreement could be reached tomorrow "if each side is willing to negotiate a little with the other."

Published by Globes [online], Israel business news - www.globes-online.com - on October 13, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

SOURCE

Monday, October 12, 2015

Minister’s visit to Egypt to focus on energy | Cyprus Mail

Minister’s visit to Egypt to focus on energy

Minister’s visit to Egypt to focus on energyNEWS IN BRIEF
Energy Minister Giorgos Lakkotrypis
Energy minister Giorgos Lakkotrypis left Monday on a flash visit to Cairo for energy-related talks with Egyptian officials.

According to an official announcement, Lakkotrypis is scheduled to meet on Tuesday with Egyptian Prime Minister Sherif Ismail and the country’s Petroleum Minister Tarek El-Molla.

The purpose of the meetings is to “review ways of further strengthening cooperation between Cyprus and Egypt on hydrocarbons issues,” the announcement said.

Lakkotrypis returns to Cyprus on Tuesday evening.

Last month a huge natural gas reserve was discovered offshore Egypt, leading to concerns that the energy-hungry country may no longer have need for Cypriot natural gas.

Publically, Egyptian officials insist they are still keen on importing gas from Cyprus.

The two countries have completed a feasibility study for piping Cypriot gas from the ‘Aphrodite’ field to Egyptian shores.

Source: http://cyprus-mail.com/2015/10/12/ministers-visit-to-egypt-to-focus-on-energy/

New Gas Sources For Europe: The More The Merrier | Natural Gas Europe




image: trend
image: trend




October 12th, 2015

NEW GAS SOURCES FOR EUROPE: THE MORE THE MERRIER

New sources of natural gas making their way onto European markets are virtually always a good thing, says Ambassador Matthew Bryza, who recently offered an exclusive interview to Natural Gas Europe at the 25th Economic Forum in Krynica, Poland.
A 23-year veteran of the US Foreign Service who's served both in the White House and the US State Department (most notably as US Ambassador to Azerbaijan), today Ambassador Bryza is Senior Fellow at the Atlantic Council, and heads the Energy Program at the International Center for Defense and Security in Tallin, Estonia.
Having been responsible for US-Turkish relations for 8 years previously, Ambassador Bryza (now resigned from government) has been living in Turkey for over 3 years and sits on the boards of several companies like Turcas, through which he's trying to help develop a natural gas pipeline from Israel to Turkey (with possible buy-in from Cyprus); he also sits on the board of a small UK-based upstream company in the UK; does academic work; and has his own joint venture with a Finnish company that responds to oil spills.
Ambassador Bryza adds, “And I'm getting more and more involved in helping US investors scope out ways to make LNG exports, especially from the northeast US, economically attractive. We all understand the geopolitical attractiveness, meaning Eastern Europe and the US government, but the challenge is to make sure those projects are commercially attractive. And I think that's doable now, and I want to be part of that,” he explains.
Given that sentiment, how prepared do you think the European gas markets are for taking up that LNG? Not that long ago, many said that because of the liquefaction and shipping costs, things just did not add up to be economic.
The numbers are changing and part of it is that the cost of gas in the ground is so low, especially in the northeast of the US, away from Henry Hub, but in the Marcellus field of Pennsylvania. Part of it is that the price differential between Europe and Asia has gone down quite a bit and it's important for gas exporters and desirable to have a portfolio of buyers so the European market now looks more attractive than the Asian market in many ways.
Another reason why natural gas imports from the US are becoming attractive is because of the growing realization throughout the European space that it would strategically beneficial – given all the troubles with Russia – if it could be achieved. So the Europeans and the EU I think have done a terrific job in the last 9-10 years in waking up to the urgency of diversifying its natural gas supplies and putting in place the regulations to allow a genuine market to be established for natural gas.
The market works – we see how well it's worked in terms of the natural gas trading hubs in Northwestern Europe, where you have liquid markets that monopolists can't manipulate it and that has given European consumers, in fact, considerable leverage to the point that they've been able to negotiate price discounts and even rebates from Gazprom.
Now, the European Union has also put in incentives, subsidies – in the form of the Juncker fund, and others – to encourage development of additional physical infrastructure: pipeline interconnectors that will allow or help move toward a single integrated market for natural gas in Europe, where free market forces of supply and demand will of supply and demand will determine prices. And I think in that environment US LNG will feed in very well.
There will be times when US LNG – either on the spot market, or longer term prices – may be higher than what you may be able to get at a given time on a spot market in Europe, or from pipeline deliveries from Russia, but those lower prices from Russia are only available precisely because the Russian side knows LNG is increasingly available.
If you're an Eastern European consumer I think you will want to have a mixture: a portfolio of some LNG from the US for strategic reasons and long-term price reliability, some from the global market, and some piped gas from Russia. I think the European side is becoming increasingly well prepared to accept US LNG.
The one missing piece in my experience is that some of the biggest consumers are still afraid that if they move too quickly to procure US natural gas they'll anger Gazprom, who will somehow retaliate. I think that's a misplaced fear; I think market leverage works. But I think you could help some of the conservative large consumers of natural gas in Eastern Europe take the step they need to take if the Lithuanian or Polish governments were to come out and say “Purchasing LNG from the US is in our national interest.”
Overall, Europe's done a good job getting prepared. They just need to do a couple more things.
How do you see the addition of this new source of gas affecting gas relations and diplomacy between Russia and Europe?
I actually think this greater competitiveness that European consumers are displaying towards Russian suppliers is the best way in the long run to have a normal and constructive relationship with Russia. As long as the Russian side believes it has some monopoly leverage it's going to misuse it and generate tension in perpetuity with European consumers.
It's only when you close that door, when Gazprom knows it's got to behave like a normal market actor, that you will see much stronger relations between the two and you'll see Gazprom behaving as a normal company. That will be better for Russian consumers also, and it will be better for Gazprom.
There are great people at Gazprom – financiers, geologists, market experts, who just want to have a normal company, but they're constantly forced by the Kremlin to develop behemoths like South Stream that don't make any commercial sense, like Nord Stream in many ways. They want to be left alone by the politicians and just have a normal energy company. To me, that's the great quest that we're all after. When that happens, Russian-European relations will be much stronger and everyone will benefit.
With that in mind, how do you see the development of Nord Stream II? Is this just the latest move on the geopolitical chess board?
I think it's a huge mistake by European partners. It sends absolutely the wrong signal to Russia as many are concerned that President Vladimir Putin is thinking he's got no choice to get out of the box he's put himself in than to become more aggressive toward Ukraine.
By showing some daylight between the thrust of the EU sanctions policies and commercial partnerships, as Shell has just signed for Nord Stream, you're undermining the best leverage that the West has to convince President Putin that the costs of such aggressive adventurism outweigh the benefits.
I think it doesn't make sense at all for diversification in Europe, but I'm not afraid of it. Natural gas trading has become so robust at the natural gas trading hubs precisely in the Netherlands and Germany, UK, France and Belgium that there's really nothing Gazprom can do at this point to put that genie back in the bottle.
The Nord Stream expansion is a semi desperate effort by President Putin to get some oxygen from the West geopolitically, and to maintain some hold on European markets – it's going to have to be by lowering price, when there is this threat of LNG coming from many directions; not just the US, but eventually Qatari gas will be displaced from the Middle East as Australian gas comes onstream, there's going to be a lot of LNG from Mozambique, and even Eastern Mediterranean – Israel, Cyprus, and now Egypt could be exporting some natural gas soon.
So Russia's got to hang on to its market share, and I think that's what this is about.
Given your time as US Ambassador to Azerbaijan, are you able to provide us with any new insights on the Southern Gas Corridor project?
It's going to happen: the gas contracts have all been let and the commitments are there to buy all the gas, so that's not a problem.
Azerbaijan has gone through a difficult period with the drop in the oil price, and I understand SOCAR has sold a piece of its stake in the Trans Anatolian Pipeline to Goldman Sachs recently. One might wonder if that means that SOCAR is not strong financially. I don't think that's true at all. You could look at it the opposite way, that the investment has become so attractive that Goldman Sachs wants a piece of it, and SOCAR doesn't need to be the investor.
So, it's on track, the contracts are finalized, there are no major construction blockages. I think President Putin tried one last time last December to try to block the Southern Corridor by transforming South Stream, which the EU didn't want, into Turkish Stream, and I'm absolutely certain from all my years working on Turkey, living in Turkey that the Turks are too smart to allow themselves to undermine their own strategy, which is to become the central transit hub, trading hub over time of natural gas with good relations with Russia on natural gas, but not dependent on Russia - in fact, having diversified supplies so they can reduce the price of gas they pay from Gazprom, which is the highest in their portfolio.
What does your diplomatic “Spidey sense” tell you about the potential of natural gas volumes from Iran coming to Europe?
I think it's going to be a while before we see gas volumes. You'll see a really rapid uptick in oil volumes. They've got 40 million tons stored right now that could be released. They're going to increase production quite quickly once the sanctions are lifted over the course of a year or so.
Natural gas will be a bit more difficult because the infrastructure's not there. Iran has underperformed on its gas deliveries to Turkey for some time. There will probably be a flood of investment to help Iran develop those pipeline interconnections into Turkey and beyond, but I think it will take a little while.
Still, it's great – the more gas flowing into Europe, the better for everybody. We need, in the long run, the most liquid possible natural gas market that we can have in Europe, and once the sanctions regime is finished, Iran can help - not just Turkey, but the EU itself – manage its minuet with Gazprom and Russia that I think, in the long run, will lead Russia to be a more reliable partner, once Russia sees there's not going to be any monopoly leverage any longer.
Could you give me a sense of what you've heard here at the Economic Forum in Krynica, Poland, and what you'll be taking away from that?
One point is, people in the energy and natural gas sector in Poland are rightfully proud of the steps that the country has taken to emerge now as the key player in this part of Europe.
Poland has “joined the adults” at the holiday table. It is a major player in Europe and is about to be on natural gas thanks to the Świnoujście LNG terminal and the North-South Corridor, and is proud of that. It's done the right thing.
But I also hope Poland doesn't forget about the need to work with the Baltic States as well, and Finland – not just to be nice to them, but because it's in Poland's own interests to have as liquid as possible a gas trading hub network in the Baltic region just as already exists in the North Sea region. That's great for economic and strategic reasons and ultimately that's going to help Poland become really the major economic player in this part of the world.
So I hope Poland's evolution strategically will embrace even more the need to build a liquid market in the Baltic region. We're in an interesting moment, because the gas transmission system operators (TSOs) are becoming the market makers. TSOs are, in a way, public-private partnerships: state institutions that operate like companies and are the interface between the private energy companies, suppliers and consumers, and governments. In the Baltic region, whether it's Litgas or Ambergrid, etc., these TSOs understand that they are the ones who have a vision and commitment to building liquid gas trading hubs all throughout the Baltic region. Again, that will lead to a much healthier relationship with Russia and much stronger economic security for all of the EU.
As long as the EU's easternmost members are not connected physically to the natural gas or electricity markets of the EU, as is the case now in the Baltic States except for two electricity connections between Estonia and Finland, Europe is not whole and there can't be a unified energy market.
So there's a lot of unfinished business, but what we've heard in Krynica is, the vision is there, the EU knows what it needs to do, the Baltic States know what they need to do. Poland is willing, but sometimes its strategic attention is diverted westward or southward with a lot of unfinished business still eastward.
-Drew Leifheit


 Natural Gas Europe welcomes all viewpoints. Should you wish to provide an alternative perspective on the above article, please contact editor@minoils.com  

Source: http://www.naturalgaseurope.com/new-gas-sources-for-europe-matthew-bryza-25567