Storage – Czech independent gas supplier Ceská plynárenská (CP) is planning to build a new underground gas storage facility in an old uranium mine, the company confirmed to ICIS Heren on 22 September. CP has obtained an exploration permit from the Czech Environment Ministry.
“We are not decided yet if we will create a joint venture with a foreign investor or just use financing provided by Canadian mining companies,” CP’s co-owner Ladislav Dráb told Czech daily MF Dnes.
The 300 million cubic metre (Mm3) storage facility, scheduled for completion within five or six years, is the second storage project developed by CP.
The company is building another facility with capacity of 200Mm3/day in South Bohemia. It had said earlier the facility would be available to third parties on a commercial basis. It is planned to start within four years.
Trading – Denmark’s Nord Pool Gas has confirmed that it will launch a gas swap product at Ellund, on the Danish-German border, in addition to the Balance of Month (BOM) quote on 1 October (see EGM 14 September).
The company said the swap is to alleviate potential bottlenecks and will therefore contribute to a more flexible market. Like other Nord Pool Gas products, the gas swap will have a baseload physical delivery.
The confirmation of the launch date represents a one-month delay, caused by an unexpected staff shortage.
Biogas – Up to 1 billion cubic metres (Gm3) of biogas could be used in the Danish gas supply mix, if plans for a restructuring of current network codes and policy go ahead.
Danish transmission system operator (TSO) Energinet.dk is working towards using biogas produced from pig waste and slaughterhouses – a by-product of the profitable Danish bacon industry.
The biogas will most likely run through the normal distribution network, and will be traded on the GTF and the Nordpool Spot exchange, a spokesman for Energinet.dk said. The potential 1Gm3 of biogas for the Danish supply mix would only be possible if 100% of all the waste generated was used, according to Energinet.dk. The country is more likely to see around 50% of that figure, a spokesman said.
Takeovers – The European Parliament has asked the European Commission to take action against hostile takeover bids by “nontransparent” foreign entities in the EU energy market – such as Surgutneftegaz’s recent acquisition of a stake in Hungary’s MOL, and Centrex Europe Energy & Gas’s 20% stake in Austria’s Baumgarten trading and storage facility – in a resolution adopted on 18 September.
Surgutneftegaz, based in Siberia, is primarily an oil company (accounting for 13% of Russia’s total production), although it has produced, on average, more than 10 billion cubic metres/year of gas since 2003. Centrex is owned by Gazprombank. The bank itself is 62.59% owned by Gazprom directly, with the remainder owned by Gazprom subsidiaries.
Members of the European Parliament (MEPs) listed the measures necessary to prevent energy disruption, and reiterated their call for a common European external energy security policy.
Competition – Gazprom Marketing & Trading (GM&T) plans to supply up to 4 billion cubic metres (Gm3) of gas in France by 2014, the company’s CEO for France, Iouri Virobian, told ICIS Heren at the Congrès du Gaz in Lyon this month. GM&T has supplied around 1.5Gm3 to the French wholesale market and large and medium-sized customers in 2009. The company said it plans to grow organically first.
“We won’t increase our share in the French market at any price,” GM&T CEO Vitaly Vasiliev commented. He refuted the rumours of acquisitions or asset swaps with French companies regularly mentioned in the media, but said the company was still exploring potential acquisitions as well as partnerships in the country. In December 2008, Gazprom Export general director Alexander Medvedev had reportedly said the company expected to sell 1.5Gm³ in the next three to five years, indicating that the business has grown faster than expected. The company has no plans to expand into the residential market.
Loss – Independent energy supplier POWEO posted net loss of €12.8m during the first half of 2009, down from an €18.8m loss in the same period last year, the company said on 22 September.
Energy supply fell by 4% in the first half of 2009, compared with the first half of 2008. The company also said that the industrial start of the 412MW Pont-sur-Sambre combined-cycle gas turbine power plant is scheduled for the end of September. POWEO had said earlier that its total revenues increased by 7% year on year to €264.9m during the period.
Balancing – The German market zone NetConnect Germany (NCG) will use the German exchange EEX to acquire “control energy” to balance the system, making the process more transparent, the company said on 14 September.
Up to now, NCG has balanced its system through over-the-counter (OTC) deals. NCG spokesman Nikolaus Schmidt told ICIS Heren that the new process was expected to bring down prices, though he stressed that this was not the main goal of the approach. The company chose to relocate its control energy procurement to the EEX as the exchange brings together many participants in the German energy market, he added. Initially, NCG will buy day-ahead products and will consider other spot market products in future.
The NCG will become Germany’s third high-calorific, or H-gas, market zone when it merges with three other zones from 1 October. The new TSOs to join from 1 October will be Eni Gas Transport Deutschland, GVS Netz and GRTGaz joining the existing TSOs, EGT and Bayernets.
LNG – The 8 billion cubic metre/year (Gm3/year) Adriatic LNG terminal near Rovigo in Italy has completed cool down and started send-out into the Italian grid on 6 September, a senior source close to the terminal told ICIS Heren. The third LNG cargo on board the 152,000m³ RasGas vessel Al Daayen is now expected on 7 October, Lloyd’s Register Fairplay showed on 29 September.
Qatar’s Emir Sheikh Hamad bin Khalifa al Thani is to inaugurate the terminal on 19 October. A spokesman for Italian utility Edison confirmed the terminal would be “fully operational” by the time of the inauguration.
Edison holds 6.4Gm3/year of the terminal capacity, and will receive LNG under a 25-year contract with Qatar’s RasGas consortium.
Oil and gas major BP has contracted a further 1Gm3/year while 600Mm3/year remains uncommitted.
Qatar Petroleum-subsidiary Qatar Terminal Limited and ExxonMobil Italiana Gas hold each 45% stakes in the terminal, while Edison holds a 10% equity share.
Ireland’s Bord Gáis is to invest almost €280m in a gas storage facility in Northern Ireland and is in talks about a similar facility at Kinsale, according to local press reports.
The Irish Examiner quoted Bord Gáis’s chief executive John Mullins as saying there is an opportunity to convert the Kinsale field into storage. Bord Gáis expects results of its geological and geophysical studies into the feasibility of underground storage in the North Irish site in six months, the daily said.
Balancing – The Dutch Ministry of Economic Affairs has approved a 2011 start-up proposal for the new balancing regime – the Bid Price Ladder – in the Netherlands put forward by the country’s transmission system operator, GTS. However, it warned that some details still needed to be ironed out. The new regime has been ordered by the Dutch state and its energy and competition regulators in order to make it easier for new market entrants to participate at TTF (see EGM 16 July).
GTS published on its website a letter from the ministry received on 11 September, in which it approved a start date for the new balancing regime of 1 April 2011. A transition period prior to the start of the new regime would commence on 1 October 2010, the letter said.
Election – The Norwegian Oil Industry Association (OLF) welcomed the country’s election result, which saw the re-election of the red-green coalition on 15 September. The current coalition of the Labour Party, Centre Party and the Socialist Left Party obtained 86 seats in the Norwegian parliament, with non-socialist parties securing 83 of the total 169 seats.
Much focus from the oil and gas sector was on the strategy towards opening up potential reserves in offshore northern Norway, including Lofoten and Vesterålen. The Socialist Left Party is against lifting the ban on opening the area up to exploration, and lost some support, despite maintaining power through the coalition. Parties who want to lift the ban (including the Progress Party) are not in government, but gained overall support.
Exploration – Preliminary results show that 44 companies have applied for acreage in the Norwegian shelf in 2009, just three less than last year, the Norwegian Petroleum Directorate said on 16 September.
Applications were made to the Awards in Predefined Areas (APA) from March this year for blocks in the Norwegian Sea, the North Sea and the Barents Sea.
The results show that interest in mature areas on the Norwegian shelf is still present for oil companies, according to Sissel Eriksen, the NPD director in charge of exploration.
“High oil prices in recent years have made the Norwegian shelf attractive, which is confirmed by the very high level of exploration activity,” he said.
The interest in the area comes despite the economic downturn, with most of the same companies applying for APA that showed an interest last year.
Exploration – Figures show that potential gas reserves in the Victoria field on the Norwegian continental shelf are well below initial estimates. The discovery is now pegged at 20bn–60bn cubic metres (Gm3), compared with the initial estimate of 89Gm3, the Norwegian Petroleum Directorate (NPD) said. The move is a setback for France’s Total, which recently finished drilling the appraisal well at the site. The Victoria field was previously considered potentially Norway’s largest undeveloped gas discovery.
“The result is, of course, disappointing. The most important thing now is to give the operator the time and opportunity to analyse samples and data, and ascertain what this means,” said Sissel Eriksen, director for exploration at the NPD.
To put the field size within the context of Norway’s largest fields, Troll had 995Gm3 estimated remaining reserves at the end of 2008, and Ormen Lange had reserves of 381.6Gm3.
The NPD also said development of the Victoria field could take longer than expected. Total will drill another appraisal well on Victoria in the coming years. This is limited by the pipeline capacity in place in the Norwegian Sea, particularly in the region in question, where the Åsgard Transport pipe is key.
RWE – RWE will shortly appoint a new CEO for UK division RWE npower, as current CEO Andy Duff will step down.
Volker Beckers – currently the CFO of RWE npower – will take on 1 January, with Frank Weigand taking Becker’s place as the new CFO. Duff, who has been CEO in the UK for six years, will take an advisory position as a nonexecutive chairman of RWE npower from 1 January.
Supply – Poland’s gas incumbent PGNiG believes it may need to restrict supplies to its largest industrial customers during Q4, as it expects to have a 500Mm3 shortfall over the period.
PGNiG told ICIS Heren on 21 September that oil company PKN Orlen and fertilizer giant Paklady Azotowe Pulawy (ZAP) were the most likely candidates to have their supplies reduced as their contracts had the most leeway. PGNiG had to briefly implement this measure at the start of the year, when deliveries via Ukraine were cut.
PGNiG’s own supplies were cut at the start of the year, with the removal of intermediary shipper RosUkrEnergo. The 50:50 venture between Gazprom and Ukrainian businessmen Dmytro Firtash and Ivan Fursin supplied Poland with 2.8 billion cubic metres in 2008. Since then, the Polish government has been in talks with Gazprom to increase deliveries under its long-term contract through Belarus to cover the shortfall, although it has yet to agree anything permanent.
LNG – Portuguese transmission system operator (TSO) Ren has announced that its subsidiary Ren Atlantico has completed work on the Sines LNG jetty. It is now able to receive vessels with an LNG capacity of up to 215,000 cubic metres, an increase of 30%.
The expansion means the terminal is now able to receive Q-Flex ships. One of these ships can fill almost two tanks at the LNG terminal. Ren Atlantico is working on an expansion of the terminal, which will see a third tank added by 2012, increasing total storage to 390,000m³
LNG – The Slovenian government is likely to appeal against the construction of the 8 billion cubic metre/year Trieste regasification plant by Gas Natural in Italy. After a meeting with Italian Prime Minister Silvio Berlusconi, Slovenian Premier Borut Pahor has been reported by local press as saying: “It will be improbable for Slovenia not to appeal [to the European Court of Justice].”
The onshore plant – to be built in Zaule, 10km from the Slovenian border – has already received an environmental assessment from the Ministry of Environment, but has yet to receive the regional one.
Storage – Construction of Spain’s largest underground gas storage (UGS) facility by working gas should begin in the spring in 2010, according to a report in Spanish newspaper Cinco Días on 25 September.
The 1.9 billion cubic metre Castor UGS project that Canadian firm Eurogas plans to build off Spain’s east coast should begin in the spring of 2010, and the first steps to guarantee funding had now begun, the Spanish newspaper reported.
Transit – Russia and Turkmenistan are to resume talks soon in order to restore the transit of Turkmen gas to Russia, Turkmenistan President Kurbanguly Berdymukhammedov said during a government meeting in Ashgabat shown on television. The pipeline link between Turkmenistan and Russia was destroyed during an explosion back in April. It is now repaired, Berdymukhammedov said.
“The Russian Federation is our long-time, historical and strategic partner and, in the future, we will strengthen and reinforce our relationship with this country,” he said. Before the explosion in April, Russia was the largest importer of Turkmenistan’s gas, buying about 50 billion cubic metres per year. ICIS Heren understands that after the explosion, Russia attempted to renegotiate the contracts.
Exploration – Dong Energy has discovered gas at the Glenlivet licence off the west coast of Shetland, the Danish state energy company said on 14 September. The licence is located close to the Laggen and Tormore gas discoveries. Faroe Petroleum and First Oil Expro each hold 10% in Glenlivet, while Dong controls the remainder.
The West of Shetland fields have been earmarked as being an “area of prospectivity”, although it was not included in the UK’s 2009 budget, despite assurances by the government that it would make investment available to indigenous oil and gas resources.
Production – E.ON has started installing its production platform at the Babbage field in the UK North Sea, the company said on 22 September. Babbage is expected to produce more than 5 billion cubic metres (Gm3) of gas, according to E.ON, with a production of around 2 million cubic metres/day of gas. First gas is planned for April 2010.
E.ON Ruhrgas’ production, currently 1.4Gm3 of gas, will “increase significantly” due to the development. The mid-term objective is to produce more than 10Gm3 of equity gas per year, the company says.
The British independent oil and gas company Dana Petroleum approved the development of the Babbage gas field (Dana 40%) in the UK Southern North Sea in April. Dana’s partners in the project are E.ON Ruhrgas (47% and operator) and Centrica Resources (13%).
Coalbed methane – UK independent Island Gas has accelerated development on its three UK coalbed methane projects following the placing of shares.
Andrew Austin, CEO of Island Gas, explained to ICIS Heren that using coalbed methane is economical. Despite falling NBP gas prices – the front season has fallen by 16% in the past month and Winter ‘10 and Summer ‘11 have fallen by 10% and 8% month on month respectively.
“It is more expensive than some traditional methods in some ways, but the forward price of gas is still between 40p/th and 50p/th. Our gas is economical at 20p/th. We don’t have the high transportation charges of pipeline gas. We are next door to our customers.”
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