24 January 2012, 14:31

Europe to assess gas department situation

Europe to assess gas department situation
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The security of gas deliveries, compliance with the Third Energy Package requirements and transformation of the European gas market are the main topics of the European Gas Conference opening in Vienna. This time the forum starts in the context of the EU joining the oil embargo against Iran.

The security of gas deliveries, compliance with the Third Energy Package requirements and transformation of the European gas market are the main topics of the European Gas Conference opening in Vienna. This time the forum starts in the context of the EU joining the oil embargo against Iran. Traditionally, the forum will pay special attention to the largest gas supplier, Russia.

The annual European Gas Conference is being convened for the fifth time.  Like in 2011, the security of gas deliveries remains in the focus of attention. Instability in the Middle East and North Africa is still a significant factor. What’s more, now it is necessary to take the Iranian aspect into consideration.  Experts point out that if Tehran blocks the Hormuz Strait the gas market will suffer just as much as the oil market.  In this case, today’s low gas prices will soon become a thing of the past, analysts say. The security of gas deliveries is closely connected with the price policy. The gas price should not be lower than 70% of the oil price and now gas only costs 50%.

The diversification of deliveries and establishment of the European gas market will be a separate discussion. The discussion of the so-called Third Energy Package is not expected to be easy either, one of the participants in the conference, Vladimir Revenkov from the Russian Institute of Energy and Finance, told The Voice of Russia.

“The conference will discuss key issues associated with the confrontation between European importers of Russian gas and Russia. The European Commission proposes to eventually establish a common gas and electricity market so as to develop gas transportation systems uniting various gas hubs in Europe. This is done to guarantee profitable prices to European gas importers.”

The diversification of gas suppliers is also of paramount importance. This year the conference will discuss the role of Azerbaijan and its participation in the South Corridor, a joint project of the EU and a number of other countries which is to provide gas supplies to Europe by-passing Russia. The Nabucco gas pipeline is one of the central arteries in the South Corridor. However, its construction is still very doubtful, Director of the Institute of National Energy Resources Sergey Pravosudov says.

“Europe has long been discussing gas supplies alternatives. However, nothing is still being done in their main project Nabucco. Europeans themselves admit that the more time passes the fewer chances remain to breathe life into  Nabucco. Obviously, in spite of all the talk, Russian gas deliveries to Europe will keep growing.”

Meanwhile, the Russian South Stream project which the West calls Nabucco’s main rival is consistently developing. Yesterday the head of Gazprom Alexey Miller declared that permission to lay a section of the pipeline in Turkish territorial waters has been received without additional price reductions. Recall that it was the Turkish factor that impeded the startup of the construction phase of the Russian project.

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