Gas in Europe

Gazprom, and the UK gas and power regulator both agree that shale gas is too expensive, environmentally constrained and simply too problematic to be a threat to Russia in the first case and UK energy policy in the second. Which government is working for who here?
http://www.nohotair.co.uk/gas-guru-blog/shale-gas-2012/168-energy-policy...

The cost of supply of gas has not gone up, those who seek to talk up the situation have a hidden agenda, be it political or economic. As the cost of supply has not changed then it would seem that those who seek to increase the price for domestic supply are proffit takers and should be subject to review and possible charges and penalties.

Each time there is a severe winter in RFussia supplies are cut to the EU. This underlines yet again that a major supply diversification is needed with the contruction of interconnectors and underground storage facilities as well as LNG terminals. And those countries opposed to shale gas exploration and exploitation in the EU should think again. We need to extract that gas if it exists in commercial quantities in a rational and safe way so that in future Gazprom will no longer be able to negatively impact energy supplies in Europe.

Nabucco would be as dead as its namesake.

The unpredictable gas supply in EU countries was also a topic at the Munich Security Conference last week when Ukrainian President Yanukovych called on energy market participants to seek joint solutions for future energy supplies.

He called for the EU countries, with support of international financial institutions, to enter into agreements on participation in upgrading and joint management of Ukraine's gas transportation system which is and will remain for many years the key gas supply route from northern Russian gas deposits.

The present tight supply situation underscored the need for cooperation among all parties and the importance of clear, transparent and fair rules in the energy sector. There was a need to balance the interests of Ukraine as the main gas transit country, Russia as the main supplier, and the European Union as a major gas consumer.

Yanukovych also spoke of one-sided terms of the 2009 gas contract with Russia according to which Ukraine is forced to pay over $500 per cu.m. for Gazprom's gas, while the European market prices are around $400 per cu.m. Ukraine is stepping up measures to reduce Russian gas imports by almost 50%.

There are increasing concerns that Moscow is trying to use its dominant gas supply and pricing to prevent Yanukovych from signing the Ukraine-EU Association Agreement and developing closer ties with the West.

Despite repeated assurances about its gas supply Russia's Gazprom clearly has difficulties meeting peak domestic and foreign demand. Responding to Putin's instructions to ensure adequate gas supply to domestic consumers facing unusually cold weather, Gazprom appears to have reduced gas volumes pumped both via Belarus-Poland and via Ukraine's major gas transmission systems.

Playing a political card Ukraine's Naftogas has offered to make some gas supplies available from its extensive underground storage reserves. Ukrainian government has been promoting a new pipeline system ownership arrangement with the EU and Russian Gazprom taking 33% each and Ukraine's Naftogas retaining 34% equity. There are related issues of splitting the costs of upgrading the transmission system over the next 3 to 4 years.

Gazprom has planned a potential increase by 4 bill.cu. m. of gas transmission to Europe via Belarus to the EU countries in 2012 and in the years beyond. According to provisional data, 31.3 bill.cu.m. of Russian gas was conveyed via Belarus to Western Europe in 2011.
This is less than 1/3 of the volume of gas transmitted to EU via the Ukrainian transmission system.

Even though Gazprom discounts potential significance of shale gas resources on gas supply in Europe, exploratory work is underway in Poland and Ukraine. Both countries have put greater emphasis on their extensive domestic coal resources in order to reduce dependency on Russian gas supply. It will take some time and investment capital but Gazprom monopoly in the European markets will gradually fade away.

There will always be a capricious head of state/ warlord/ religious numbnut to dislike the people at the other end of the pipe. Resuscitate nuclear energy and coalmining.

Russia will exercise its energy monopoly to strangle Europe much like it has done to Moldova, Ukraine and Lithuania. Yes they can cause governments to fall by turning a spigot.

It will happen during winter's bone, during delicate diplomatic negotiations and of course during war and lesser conflicts. Russia is now in conflict with the EU over the Syrian Policy.

Power is pulling strings, leveraging economics and using coercing to influence decision making. Russia is headed by no less than a master KGB spy. And nobody puts baby in the corner!