The European Union is facing a whole array of problems pertaining to the search for reliable gas supplies. First
There are scores of transit issues that face all possible pipelines which would carry Caspian gas to Europe. For one pipelines would need to pass through several countries where the transit risks overlap. The Southern Gas corridor project has three troublesome regions, Turkey, the Caspian region and Azerbaijan.
Some are saying there has been a so-called “shale revolution”. However this is not entirely true. To begin with we should first take a look at what shale gas is and where it comes from. There is a sediment worldwide, called a shale, which contains large amounts of organic material necessary for forming oil and gas.
The Caspian Sea, the largest land-locked enclosed body of water on Earth, has been an exclusive economic zone of Russia and Iran for nearly 300 years. Originally, the status of the Caspian Sea was enshrined in the Treaty of Rasht signed by the Russian Empire and Persia in 1729.
The Caspian Sea washes the borders of five countries. These are Russia, Kazakhstan, Turkmenistan, Iran and Azerbaijan. They remain at odds over a wide range of difficult issues, including the legal status of the Caspian Sea itself.
The South Stream’s main competitor, the Nabucco Pipeline cannot solve supply issues and other important issues to make it viable and thus the project, for all intents and purposes is dead. This is despite the irrational fear of many Europeans when it comes to depending on Russia for gas.
The Third Energy Package is something that the EU leadership wants Europeans to believe in. The European Commission paints a glowing picture of the new rules for the European market, which will allegedly help reduce gas prices and Europe has been discussing the package for more than three years now.
The nuclear renaissance in Europe ended as soon as it started, completely buried by the disaster at the Fukushima 1 nuclear power plant in Japan which was caused by a powerful earthquake and the ensuing tsunami. Without nuclear power to meet Europe’s energy needs one of the few alternatives left is natural gas.
The Nord Stream gas pipeline has become a reality with the first section of the pipeline entering into service on September 6th. At the outset the pipeline will be pumping process gas, as opposed to the real product, in order to verify system integrity before going on-line, with the first gas to reach Germany by November.
Not long ago Western experts were growing optimistic as the market was becoming increasingly dominated by non-hydrocarbon energy and sales on the spot market (where commodities are traded for immediate delivery, sometimes also called the cash market), which triggered the idea that perhaps there was a new gas reality in Europe.
The idea of a South Stream pipeline was born during the course of Russian-Italian talks about the possibility of expanding gas exports to Europe. This led to the signing of an agreement in 2007 between Gazprom and Eni, on a strategic partnership and on establishing a joint project company.
The forecast for European gas prices does not point to a drastic drop anytime in the next decade although not long ago gas prices and demand in Europe dropped considerably as the fuel was being replaced by increasingly competitive nuclear power and alternative energy sources.