Breaking Russia's Gas Stranglehold

In regards to an earlier post, six countries have agreed to build a US-backed gas pipeline, the Nabucco, to break Russia's gas export monopoly to Europe:

Officials from six countries gathered Monday in Turkey and signed a deal to build a U.S.-backed pipeline, aimed at breaking Russia's near-monopoly on natural gas supplies to Europe.

The proposed Nabucco pipeline would run from Turkey's eastern border, through Bulgaria, Romania and Hungary, to a key gas terminal in Baumgarten, Austria.

Germany is also a partner in the deal, which is being signed in the Turkish capital, Ankara.Russia controls the current network of pipelines that supply Europe with natural gas.

To challenge the Nabucco proposal, Russia has proposed a competing natural gas pipeline to southeastern Europe. The South Stream pipeline would pass under the Black Sea and connect with Bulgaria. Russia and Italy would each control half of that pipeline.

[...]

Gas from Azerbaijan's Shah Deniz 2 field will be a crucial component of the project. European officials have raised hopes that other gas producers, such as Iraq and Turkmenistan, also might contribute to the pipeline.

Big hurdles remain for the pipeline project named after an opera by Verdi.

Consortium members must raise billions of dollars for the Nabucco project. Construction has not begun, and gas is not projected to be pumped through until 2014.Still, industry analysts called Monday's intergovernmental agreement a significant development.

"It's one of those steps that moves Nabucco out of the possible column and into the probable column," said John Roberts, an energy security specialist with Platts.

"My own guess is roughly by the end of the year, it will be pretty clear that Nabucco will be built."

- Brewskie

EU Tires of Russian Recalcitrance

Europe is getting fed up with Russia. After being left to freeze during the annual Russian-Ukrainian gas spat, the Eurozone has decided its had enough of the schizophrenic gasbag, and the trailer-trash instigator. Europe is looking to take matter into its own hands, and secure its gas future.

This won't be easy. Europe is experiencing declining production in the midst of increasing demand - consumption has risen 70% since 1990! Still, Europe is cradled in an enviable part of the world where others, bloated with gas, are willing to deal for "developed" currency: Africa, the Middle East, and Central Asia. Importing from a variety of sources could induce Russia and Ukraine to straighten out their act.

According to Businessweek, Europe's key banks and the EU presidency have reached an informal agreement to financial and political backing for the Nabucco pipeline. If constructed, this 2,050 mile winding snake will sip up gas from Azerbaijan and Turkmenistan, cut through Turkey and the Balkans, and make delivery in Central Europe - cutting out the Jerry Springer sparring partners.

Europe has also taken note to America's recent success with shale gas. GASH, an interdisciplinary shale gas research program, has recently begun a six-year initiative to map possible shale gas sites in Europe. Western Europe may possess 510 Tcf of shale gas (Canada is also looking into the same game).

Additional Russian-European pipelines that bypass Ukraine are also being considered.

- Brewskie