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EU & WBs / Albania Energy Market Updates

Presentation of Albanian Centre for Energy Regulation and Conservation - ACERC

ACERC is a think tank centre with focus in Albania energy market and its integration on 8th Regional Area & EU IEM. The ACERC mission aim to provide a qualified contribution to the promotion of the liberalization and the effective integration as well as the efficient use of energy resources.

ACERC main activities profiles briefly consists in the release reports, articles and periodicals. In cooperation also with collaborates the offering of the activities that support capacity building of market actors, such as national and regional seminars, trainings and conferences. Initiatives completed by advocating in the energy sector promoting a forum called in Albanian School of Regulation.

For more visit us at the Official Website of Acerc | Albanian Energy Market - AEM Group in LinkedIn

EU holds urgent talks on Trans-Caspian pipeline 30 APRIL 2015

AEM Updates April 2015 Posted on Fri, May 01, 2015 00:12:55

EU holds urgent talks on Trans-Caspian pipeline

30 APRIL 2015

Ashgabat, Turkmenistan, Apr. 30

By Huseyn Hasanov– Trend:

Ashgabat holds multilateral meetings at the government level with the participation of high-ranking delegation of the European Commission, where the possibility of Turkmen gas supplies to Europe was discussed, a source close to the negotiations told Trend April 30.

While anticipating the resources of the Caspian region, especially from Azerbaijan and Turkmenistan, the EU has actively promoted the Southern Gas Corridor project. A project for the Trans-Caspian gas pipeline construction can be a part of it.

Laying the pipe through the Caspian Sea from the city of Turkmenbashi in Turkmenistan to the city of Sangachal on the coast of the Absheron Peninsula in Azerbaijan is expected to be one of the variants of this route.

Azerbaijani Energy Minister Natig Aliyev said April 29 at the 3rd Baku Global Shared Societies Forum that negotiations to transport gas from Central Asia to Europe have been held for several years. Turkmenistan, along with Russia and Qatar also has huge gas resources, he said.

Turkmenistan, ranking fourth in the world’s largest natural gas reserves, is one of the key players on the energy market in the Caspian region and Central Asia. It is interested in searching for new markets, particularly in Europe.

In this aspect, the pipeline route to Europe via the Caspian Sea and Azerbaijan is considered one of the most attractive ones.

In its turn, Brussels has recently announced that it is time for the European companies, directly interested in Turkmen gas import, to join the negotiation process. The Caspian Development Corporation, which is being established, can serve this goal.

The RSK Environment Ltd. carried out the preliminary environmental studies on the World Bank’s order.

The examination confirmed that from the environmental point of view, the Trans-Caspian Gas Pipeline is a safe route, and today, Turkmenistan and Azerbaijan have every opportunity to implement the project for its construction as part of bilateral activities.

The deposits of the Turkmen sector of the Caspian Sea may be the resource base for the gas supply via the Trans-Caspian Gas Pipeline at the initial stage. The presence of the already explored and proven natural gas reserves in the Turkmen sector of the Caspian Sea makes it possible to supply 16 billion cubic meters of gas per year in Europe.

In the future, there will be an opportunity to use the resources of gas fields in eastern Turkmenistan to supply gas through the Trans-Caspian Gas Pipeline. This will be possible after the commissioning of the East-West gas pipeline with a pumping capacity of 30 billion cubic meters per year. Its construction will be completed this year.

Edited by CN

Follow us on Twitter @TRENDNewsAgency

GDF Suez Announces Name Change to Engie 27.04.2015 AUTHOR:

AEM Updates April 2015 Posted on Thu, April 30, 2015 14:12:43

GDF Suez Announces Name Change to Engie



French energy major GDF Suez announced on April 24 that it will be called Engie in a bid to align its corporate identity with changes in the energy sector towards decarbonisation , renewable energy and energy efficiency.

“The energy transition is more than ever a reality for which we have both great ambitions and a great responsibility. To meet the new challenges of this reality and to accelerate our development, we have decided to give the Group a new name: ENGIE. It is an easy name and one that is powerful, a name that evokes energy for everyone and in all cultures, a name embodying our values and activities. We thus confirm our new ambition and the dynamics of change that drive our Group. This new name is an expression of our new corporate ambition whose conduct I entrusted to Isabelle Kocher, Deputy CEO and Chief Operating Officer. With a presence in 70 countries throughout the world and across every energy source, ENGIE aspires more than ever to be the benchmark energy player in fast growing markets and the energy transition leader in Europe”, Gérard Mestrallet, Chairman and CEO of ENGIE declared.


AEM Updates April 2015 Posted on Thu, April 30, 2015 10:38:40


April 30th, 2015

At the Flame natural gas conference in Amsterdam, the Netherlands, Natural Gas Europe had the chance to catch up with Gulmira Rzayeva, Senior Research Fellow at the Center for Strategic Studies of Azerbaijan, as well as research associate at the Oxford Institute of Energy Studies.

Last December, Russia’s state-owned Gazprom announced a bombshell decision to abandon the South Stream project and to launch the so-called Turk Stream, which would deliver gas to and through Turkey to the Greek border. Given that Turkey is a partner in the Southern Corridor project that will transport gas from Azerbaijan and maybe eventually from other countries, how would you describe the strategic approach of Azerbaijan given the new geopolitical landscape?

The Turkish Stream will not change anything in terms of volumes, nor in terms of tightening the market. This is because there will not be any new volumes coming to the market, except for the 3 bcm that Turkey and Russia agreed to import for Russia, which will happen out of necessity. This is because demand is increasing very rapidly, and even 2 years ago we predicted that the Turkish natural gas market may face supply shortages in 2015-17, before Shah Deniz gas comes to the market by 2018 – so for those three years, Turkey did not have sources from which it could increase its gas imports, and could face supply shortages because of the growing demand.

This 3 bcm is crucial for Turkey to avoid facing this gap.

This should not pose any threat to either phases I or II of Shah Deniz, because that gas has already been contracted and sold. Reversing the development is simply impossible, so it’s no threat to Shah Deniz, nor for the Trans Anatolian Pipeline (TANAP) in terms of transportation, at least until 2021-22, as it will be operating as planned for 16 bcm: at the first stage 10 bcm+ for Europe and 6 bcm for Turkey.

However, in 2021 it’s expected that an additional 5 bcm of gas from the Absheron field in Azerbaijan can come online. The project’s operator is Total, who is developing it together with SOCAR and GDF Suez. It is intended to be transported to the Turkish market via, by that time, existing infrastructure: TANAP and an expanded South Caucasus Pipeline, and if they agree with the buyers, it can be transported by the Trans Adriatic Pipeline (TAP) to Europe.

If Russian gas arrives before Absheron gas, and those parties would like to transport it via TANAP; it is the pipeline that will be operated in accordance with international laws and regulations, so I think that the partners will look at any offers coming from shippers, because this could add some value to the financial visibility of the project. TANAP is expected to be expanded to a second stage in 2024 for some 26 bcm of gas.

Will it be worth it for the partners to invest in an expansion? That’s one issue they should consider, so I think the priority for SOCAR, which now owns 58% in TANAP, and who is the decision maker, as well as for BP, would be gas from Azerbaijan: Absheron.

The TAP project will be operated according to European regulations; it will be exempted for 10 bcm for Shah Deniz gas.

How realistic is it then to consider the prospect of Russian gas flowing through TAP?

The pipeline technically can be expanded to 20 bcm, so this 10 bcm is not exempted for Azeri gas, and if another shipper, namely Gazprom or any other, were to come with the offer to transport an additional 10 bcm via TAP then the TAP consortium is obliged to consider this offer and to see if it’s financially viable for them to invest, and if it is they will have to do that.

The thinking here is that hopefully Absheron gas will come before any other gas from other sources. But who knows what the potential market will be for Absheron gas, because for the partners whoever offers a good price for the gas that’s where they will sell it, so there is not only BOTAS and Turkey but a few private companies there that also import gas – some 10 bcm from Russia – and they are also potential buyers. Perhaps they will offer a much better price than the European customers, and because gas in Turkey will end up much cheaper than in Europe, this could be better financially to place these volumes into Turkey instead.

Private companies in Turkey have one issue that they have to secure licenses for importing gas from non-Russian gas, so this is another question that I think is solvable. The other option for the Absheron gas is SOCAR may wish to buy out all the gas from the consortium and add to its gas export portfolio. In this case, they may offer a lower price but the consortium would reduce all the risks that may occur in transportation all the way to Turkey or Europe.

Has this altered the balance a bit for other sources of gas that could flow in the Southern Corridor project, like from Turkmenistan or Iran?

Turkmen gas coming to Europe is still on the agenda, at least for Turkmenistan and the EU. It’s quite an important issue for both and they are holding meetings about this, but there are still problems with the Trans Caspian Pipeline that need to be solved and when this will happen, nobody knows because negotiations started back in 1995 and are ongoing.

I don’t think that the transport of Turkmen gas, at least ’til the Turkish – European border, from an infrastructure point of view, will be a problem, because the infrastructure that Azerbaijan and its partners are building, investing billions of dollars. The good news is that it’s quite flexible and can accommodate additional volumes, so expansion of the South Caucasus Pipeline will be of course for Shah Deniz gas, but there are plans to further expand it – so called “future expansion” – if there is gas available for transport, if it’s financially attractive and worth investing in the expansion, then this will happen.

TANAP is the same – it’s also scalable and can be expanded up to 31 bcm in three stages. SOCAR and its partners investing in this infrastructure is not only good for the gas producers, but also very good for Europe as well because without this infrastructure Europe would have another major concern as to how to bring this gas from Turkmenistan in the future, or from Iran, to the market.

What are your thoughts on Iranian gas?

If they decide to export it and this is feasible it would be much better for Iran to export its gas because it’s in the south of the country. In the form of LNG to world markets would be much better in terms of economics than going all the way to Europe with pipe gas.

We don’t know what the Iranian decision will be. Before Iranian gas comes online, if they make the agreement in June and final accords sanctions will be lifted. Following that, they will need 7 years from now to develop and produce this gas. So it won’t be there tomorrow. Seven years in the gas industry is not so long, but for Iran exporting this gas to its neighboring countries like Egypt, Oman, Jordan would be better than going to Europe.

But, if for geopolitical reasons Iran wants to go to Europe or to Turkey, then the infrastructure within the country should be developed for bigger volumes and Iran could have two options: to go to the north to Azerbaijan and from there to transport it via the South Caucasus Pipeline, then TANAP and either leave it in Turkey or go further on to Europe; or the second option is to go to Turkey and from Turkey via TANAP to transport to the European border. Again, this brings up the same issue regarding expansion of the pipeline if it’s feasible. And then if they wanted to go to Europe, I think if there are large volumes then TAP will not be enough to accommodate all the Iranian gas volumes, so if feasible TAP could be expanded beyond 20 bcm, but this would be looping or a second pipeline – again, it all depends on economics.

So many factors have been in play recently – Ukrainian crisis, Iranian situation, end of South Stream, beginning of Turk Stream – numerous dynamics and various potential sources. How do you see the role of Azerbaijan moving forward amidst so much going on?

Despite this very challenging time in terms of energy and the gas industry specifically, and we are living in a very changeable environment – it’s also a changing landscape because of the current low oil price, demand stagnation in many markets, etc.

Azerbaijan within the region is probably one of the few countries which, despite all these difficulties, has initiated this project and is investing billions and is continuing to pursue this multi-billion dollar project to supply some gas to Europe.

While other energy majors are decreasing their investments or scaling back, we are increasing ours and creating opportunities for such an investment, not only in Azerbaijan itself but also in Georgia, Turkey, Greece, Albania and Italy. So this is a good opportunity for investment for other European majors in this challenging environment.

I think this is something that needs to be taken into account by European policymakers, because I think that they need to be a bit more active in helping us to pursue these projects. We are taking all the financial and technical risks, materializing these projects with our partners, but they have to take all the responsibility for solving, for example, regulation issues that arise in Italy; we still have some problems in Italy, that are created artificially by lobbyist organizations or those interested in impeding the project in Italy, with other countries paying the price for such activities. The EU should be more active in preventing such things or addressing regulatory problems.

Energy security has a price, as does European energy security – Europe has to pay for it, as does everyone else.

Regarding Azerbaijan’s role in what I would call “energy turmoil,” yes, it’s a difficult time, but, on the other hand, it’s increasing the importance of Azerbaijan – we are emerging as an important gas exporter country, as in the ’90s or early ’00s when we initiated the Baku-Tblisi-Ceyhan oil pipeline and the role of Azerbaijan and Turkey gradually increased vis a vis oil. Now we are witnessing almost the same or even on a bigger scale with natural gas – we’re emerging as an important gas exporter country for Europe, and Turkey is gaining a position as a very important gas transit country. It’s paradoxical, because until now Turkey has been playing the role of transit country only with Azeri oil and, in the future, gas. Now, Turkey is also emerging as a main gas and oil trading center with Azeri oil and gas – in the future, it will be more, coming from a number of countries, but this is what we managed in a very close partnership between Azerbaijan, Turkey and Georgia.

With the prospect of Turk Stream being floated, how has this affected the very close relationship between Turkey and Azerbaijan?

Turkey is a country that has its own ambitions, which is very understandable. If it wants more pipelines going through its territory, it’s understandable and normal. Of course we regard it as Turkey’s own business and it’s Turkey who decides how to use its territory. There’s never been any confusion or problems in regards to other suppliers when we entered the Turkish market; it’s competition and competition is good, so I don’t think it can cause any confusion between two countries.

TANAP is also a Turkish project as Turkey’s Botas has a 30% stake in the project, and of course it’s in the Turkish interest as well to have this pipeline come before any other similar pipelines that could be materialized in the country.

Finally, could you tell us a bit about what you’ve been working on?

We’ve just finalized a report on the Azerbaijani gas industry, which is more than 100 pages on the outlook for Azerbaijan’s gas supplies in the 2020s and in the 2030s. We are looking at all the fields and prospective structures in Azerbaijan beyond Shah Deniz, which of course is also included. The focus of the paper is non contracted free gas that could potentially be available for export in Azerbaijan in the future.

The publication should likely be released end of April, available on the OIES website.

-Drew Leifheit

«L’Albanie est en train de gagner la bataille contre la corruption» De Benjamin Edgard et Julien Renault 21.04.2015

AEM Updates April 2015 Posted on Wed, April 29, 2015 22:55:57

«L’Albanie est en train de gagner la bataille contre la corruption»Candidate à l’UEPour le premier ministre socialiste albanais, Edi Rama, l’Union européenne est l’horizon indépassable pour redresser le pays.

De Benjamin Edgard et Julien Renault21.04.2015

Un an après l’obtention par l’Albanie du statut de candidat à l’Union européenne, le premier ministre socialiste albanais, Edi Rama, entend accélérer la modernisation du pays. Entretien.

Près de 150 Albanais ont rejoint les rangs des djihadistes de Daech. C’est inquiétant, non?

Nous ne craignons pas un nouveau prosélytisme. Nous avons pris les mesures nécessaires. Ce chiffre de départs correspond à l’ensemble des Albanais, y compris ceux du Kosovo et de Macédoine. Dans ce contexte, les Européens doivent comprendre qu’il ne faut pas retarder le processus d’élargissement. C’est la seule perspective qui donne de la solidité à la société albanaise.

Parmi vos engagements de pays candidat à l’UE figurent la lutte contre la corruption et la criminalité. Quels sont les progrès dans ces domaines?

Nous avons éradiqué des filières de contrebande, notamment dans le trafic de drogue installé depuis vingt ans dans le pays. Et les chiffres de la criminalité sont en net recul. Nous continuons aussi à réformer la justice afin d’instaurer pleinement un Etat de droit.

La corruption reste un problème, cependant…

La fin de la corruption passe par la modernisation de notre pays. C’est une bataille de tous les instants, et je suis convaincu que l’Albanie est en train de la gagner.

Après trois années de faible croissance, une dette à 72% du PIB et un chômage à 18%, de quels leviers économiques disposez-vous?

L’Albanie est de nouveau sur les chemins de la croissance. Nous tenons nos engagements et nos objectifs. Nous avions prévu un retour à la croissance à 2% en 2014, nous l’avons obtenu. Cette année, nous prévoyons 3% et nous allons les obtenir aussi. Et nous arriverons à 4,5% à la fin de 2016.

Cela passe par un combat contre l’économie parallèle?

L’année dernière, 93 000 emplois sont revenus vers l’économie formelle. Nous avons récupéré dans les caisses de l’Etat quelque 100 millions d’euros pour les retraites. Ces résultats sont dans la lignée de la construction des institutions nécessaires afin de répondre à nos engagements et à nos obligations.

Le prêt du FMI de 300 millions d’euros en 2013 vous oblige-t-il à une libéralisation à marche forcée?

Non, nous avons négocié un programme flexible de croissance, et ce n’est pas du tout un programme d’austérité. Nous l’avons organisé de manière souveraine et il n’est pas en train d’asphyxier le pays. Il favorise au contraire la mise en place d’un Etat moderne après des années de chaos et de dérives financières (ndlr: dictature communiste d’Enver Hoxha de 1945-1985).

Dans le cadre de l’Union de l’énergie, le nouveau gazoduc Trans Adriatic Pipeline passera par l’Albanie. Quelles vont en être les retombées?

Nous ouvrons un nouveau chapitre de gazéification de l’Albanie. Les travaux vont commencer dans les semaines à venir. Cela va aider substantiellement notre activité économique. Ce sera un point très important de nos investissements publics.

Mais la Commission européenne regrette que les privatisations dans le secteur de l’énergie soient lentes, voire inexistantes.

Nous ne faisons pas des réformes parce l’UE nous le demande. L’Albanie se réforme parce que nos enfants en ont besoin. Nous allons dès cette année engager la privatisation de la plus grande compagnie pétrolière du pays, Albpetrol. Même si elles sont parfois douloureuses, ces privatisations sont vitales pour notre avenir.

Vos modèles politiques sont Michel Rocard et Tony Blair, deux réformistes européens…

Ces hommes politiques incarnent tous les deux une gauche qui innove. Et cela passe par plus d’Europe. Il faut compléter le projet européen et retourner à l’analyse des pères fondateurs de l’UE. Toute tentative de retour au passé nous conduirait hors de l’Histoire.


(Créé: 21.04.2015, 17h07)


AEM Updates April 2015 Posted on Tue, April 28, 2015 13:51:50


April 27th, 2015

Serbian officials at the beginning of April, in a bid to provide the state with stable gas supply sources, carried out intensive diplomatic activities aimed at including Serbia in the Turkish Stream project and finding ways to secure the delivery of gas from Azerbaijan.

Serbia currently receives gas from Russia, with very low domestic production, and transit is done via Ukraine and Hungary. After Russia announced plans to stop deliveries via Ukraine in 2019, the Serbian authorities are attempting to find other ways and sources of gas supply.

First, Minister of Foreign Affairs Ivica Dacic in Budapest on April 7 took part in a meeting with his counterparts from Hungary, Macedonia, Greece and Turkey, where the topic of discussion were projects meant to ensure energy security in the region. The ministers signed a declaration on strengthening energy cooperation and agreed that cooperation in establishing energy security contributed to good neighborly relations and citizens’ well-being. They also supported “the creation of a commercially sustainable route and sources of diversification for natural gas deliveries from Turkey via the territories of their countries to central and southeast Europe, and to other countries.”

After the meeting, Minister Dacic said that all states were trying to find an alternative to the South Stream project, which Russia abandoned, and that estimates say the construction of a new pipeline through Serbia within the Turkish Stream project would cost between 1.5 and two billion euros. The pipeline is to become operational in 2019, while gas from Russia would be delivered to Turkey and then to Greece, from where Macedonia, Serbia, Hungary and perhaps some other central European countries as well would be supplied. The gas pipeline is to have the annual capacity of 63 billion cubic meters of gas and is set to run along the Black Sea bed from Russia to Turkey, mainly following the route initially planned for South Stream.

However, Dacic underscored that the situation was more unfavorable for Serbia compared with South Stream, because the money for the construction of that pipeline would have been paid back to the Russians from the charging of the transit fee, whereas it would have to find the money for the pipeline that would connect to Turkish Stream from its own modest budget. “We, the citizens of southern Europe, Western Balkans, through Greece to Turkey, have the same rights and are equal with the citizens who satisfy their needs from North Stream and some other gas pipeline that had the support of the European Commission and were even exempted from the Third and various energy packages, which South Stream was not,” said Dacic.

Analysts in Serbia have said that Turkish Stream is a good substitute for the abandoned South Stream project, but that it is highly questionable whether Serbia will find the money to get involved in the Russian-Turkish project. “The very idea of Turkish Stream is to make it an alternative to South Stream. It’s good that Serbia is on its route, because that is our alternative for gas supply,” said Balkan magazine editor Jelica Putnikovic. However, Vojislav Vuletic, head of the Serbian Gas Association’s Assembly, said that the problem lay in the fact that the money for Turkish Stream would have to be provided by the states through which it will pass. “Turkish Stream is to be built by the countries it would run through, and they are Greece with no money, Macedonia which is no better than Greece, and us, who also have no money,” said Vuletic.

Seven days after the meeting in Budapest, Russian Minister of Energy Alexander Novak sent an encouraging message to Serbia by saying Turkish Stream could run through Serbia and from there extend to Hungary and Austria. “I know that many countries are interested in the project. For example, the delivery of gas to the Austrian hub Baumgarten is possible via Greece, Macedonia, Serbia and Hungary,” said Novak, as reported by Russian news agency Sputnik. The Russian minister, who is slated to visit Serbia at the end of April or beginning of May, added that Russia was leading intensive negotiations with the countries that could become transit hubs.

However, schooled by the experience with South Stream and the fact that the Russians have announced they will stop sending gas via Ukraine in 2019, Serbia is trying to find alternative supply sources. One of them is Azerbaijan, which Serbian Prime Minister Aleksandar Vucic visited in mid-April.

At the meetings in Baku, agreement was reached for the Azerbaijani state gas company SOCAR to form a commission that will look into the possibilities of supplying gas to Serbia from Azerbaijan. Vucic said it was very important that Serbia was attempting to connect to the Southern Gas Corridor, which is to bring Azerbaijani gas to southern Europe, so that Serbia may diversify its supply sources. SOCAR owns stakes in the Trans-Anatolian Gas Pipeline (TANAP) and Trans-Adriatic Pipeline (TAP).

Serbian Minister of Mining and Energy Aleksandar Antic said the cancelation of South Stream imposed the need for countries in the region to analyze all the projects that could bring gas to the region. Antic added that at the meeting in Budapest, besides Turkish Stream, participants had also examined the potential of a TANAP-TAP project, a liquefied natural gas terminal in Greece and Croatia. “We agreed to continue our activities and to take them from the political to the technical and expert level, and to provide answers to whether those projects are feasible,” said Antic.


AEM Updates April 2015 Posted on Sun, April 26, 2015 19:47:16

April 20th, 2015

Amid speculations about Iran, Russia, Turkmenistan and even Iraqi gas flowing via the Trans Adriatic Pipeline (TAP), Azerbaijan says it will fulfill its own commitments for realization of the project.

TAP is a part of Southern Corridor Pipeline, aimed to transit Caspian Sea littoral gas reserves to Europe. TAP’s initial capacity of 10 billion cubic metres (bcm) of gas per year is equivalent to the energy consumption of approximately seven million households in Europe, is expected to be supplied by Azerbaijan by 2020. The future addition of two extra compressor stations will double the supplement amount to more than 20 bcm.

The Vice President of The State Oil Company of Azerbaijan Republic (SOCAR) for Investments and Marketing Elshad Nasirov told Natural Gas Europe that there is no problem in delivering the first 10 bcm/a of Azeri gas to TAP, however, European Union’s Third Energy Package put restrictions on doubling gas delivery to TAP by Azerbaijan.

“Then, there is needed the second gas supplier to join this project for meeting this project to the EU’s laws,” added Nasirov.

The Third Energy Package outlines a set of rules regulating the European gas and electricity market and aims at increasing competition on the energy market, allowing other players to join the sector and liberalizing energy prices.

Nasirov said that Azerbaijan is fulfilling its own obligations completely in all spheres like managing, organizing, financial and legal commitments. He confirmed that the European part of Southern Corridor Pipeline (i.e. TAP) has faced obstacles, but did not provide a detailed explanation.

However, Greece has previously indicated that it eyes a new arrangement with TAP.

The SOCAR vice president added that in the initial gas supplement to TAP upto 10 bcm/annum can be commenced without any restrictions from the Third Energy Package, but for expanding this project in future, the addition of another gas supplier besides Azerbaijan is inevitable.

Ilham Shaban is Director of the Azerbaijan Centre for Oil Studies, in Baku

Independent Bulgarian Energy Exchange Signed Agreement with Nord Pool Spot, 22.04.2015 14:08

AEM Updates April 2015 Posted on Wed, April 22, 2015 13:35:06

Independent Bulgarian Energy Exchange Signed Agreement with Nord Pool Spot
22.04.2015 14:08

The Cooperation Agreement has the aim to prepare and facilitate the implementation of the first competitive Bulgarian day-ahead power market


Nord Pool Spot announced today, that it signed a Cooperation Agreement with the Independent Bulgarian Energy Exchange (IBEX), part of Bulgarian Energy Holding. The Cooperation Agreement has the aim to prepare and facilitate the implementation of the first competitive Bulgarian day-ahead power market that will be extended with an intraday market at a later stage, the official message by Nord Pool Spot says.

According to the statement of Nord Pool Spot, IBEX is committed to develop a transparent and efficient Bulgarian power market and, thus, to enable a timely and reliable implementation of the EU Target model. In order to ensure the fulfillment of its goals and commitments and, in the same time, to deliver valuable service to the Bulgarian customers, IBEX has nominated Nord Pool Spot for a partner to deliver trading systems as well as to operate the day-ahead market as a service provider. The Bulgarian day-ahead market is planned to become operational by the end of Q4 2015.

The CEO of IBEX, Mr Konstantin Konstantinov, is quoted in the message: “The members of the IBEX team have been working for a strategic partnership for almost a year. We are very satisfied and inspired to create a reliable, liquid and non-discriminatory market in Bulgaria together with Nord Pool Spot. Finally, we will ensure the best possibilities for power trading to our potential domestic and international customers. We are extremely excited about this relationship with a major European power exchange”.

The CEO of Nord Pool Spot, Mr Mikael Lundin, added: “We are very pleased to build this strategic alliance with IBEX in order to develop the Bulgarian power market. Nord Pool Spot has extensive experience delivering innovative solutions for European power trading and we want to continue to be at the very heart of developing future power markets.”


AEM Updates April 2015 Posted on Thu, April 16, 2015 10:24:48

April 16th, 2015

On December 1 2014, during his official visit to Turkey, Russian President Vladimir Putin announced the suspension of South Stream, blaming the EU for its “unconstructive” position. In fact, the realization of pipeline had become untenable as a result of various legal, political and financial issues, such as the EU’s Third Energy Package, the Ukraine crisis and the ensuing sanctions over companies involved in South Stream (Stroytransgaz and Gazprombank). That day, Turkish BOTAŞ and Russian Gazprom signed a Memorandum of Understanding for construction of a new offshore gas pipeline with 63 bcm/a capacity, to run under the Black Sea to the Turkey-Greece border. Some 16 bcm of this amount will be supplied to Turkey in the first phase in December 2016. In the second phase, the remaining 47 bcm will be delivered to the planned gas hub near the Turkish-Greek border – on the Turkish side – to transport Russian gas to Europe.

The key question is whether the Turkish Stream will be a competitor for the Trans-Anatolian or Trans-Adriatic Pipelines, which envisage the delivery of 16 bcm of Azerbaijani gas to Turkey and Europe by 2018 and 2020 respectively. There had been similar tensions between the South Stream and Nabucco projects; while previously Nabucco offered an alternative to South Stream, now Turkish Stream presents an alternative to TANAP/TAP.

However, Nabucco failed due to political and financial uncertainties, and was subsequently redesigned as Nabucco-West, after Azerbaijan and Turkey initiated TANAP in 2012. When Azerbaijan opted for TAP over Nabucco-West in June 2013, Baku’s choice was interpreted a positive development for Russia’s South Stream; Azerbaijan refrained from angering Russia as a pipeline competitor.


One of the main factors in Moscow’s shift from South Stream to Turkish Stream was the EU’s Third Energy Package (TEP). Under these rules, a single company cannot own the pipeline through which it also supplies gas. Neither Russia nor Turkey is an EU member, and so neither are bound by the TEP, which makes the construction of Turkish Stream much easier. However, the construction of Turkish Stream is not the only issue at stake. The pipeline will have to stop at the Turkey- Greece border because of the TEP rules, given that Greece is an EU member state.

Thus Russia will need its customers to buy its gas right at the border from the planned natural gas hub in Turkish territories. Meanwhile, the new government in Athens has expressed interest in the extension of the Turkish Stream into Greece. In order to transport its gas to Greece and onwards, Gazprom needs to use existing interconnectors – either TAP or Interconnector-Turkey-Greece-Italy, including the DESFA-operated Greek National Gas Transmission System (NGTS).

Turkish Stream is intended to end in the Ipsala district of Turkey (near the Greek border), where TANAP is also planned to end and connect with TAP. This raises another question, namely whether the termination of both pipelines at the same location will create competition in terms of market share, given the possible expansion capacity of both TAP (from 10 to 20 bcm/a) and TANAP (from 16 bcm/a to 23/31 bcm/a).

In fact, Russia has the opportunity to export its gas via TAP from the Turkish Stream toward Europe, without Gazprom’s presence in the TAP Consortium and without breaching the TEP rules.

First of all, Russia has no stake in TAP. Second, in the first stage, TAP is supposed to use 50% of its total capacity for 10 bcm/a. It can expand its capacity up to 20 bcm/a (100% of total capacity) in the second stage. Third, the EU Commission’s regulation left 50% of TAP’s total capacity open for Third Party Access (TPA) for the Expansion Capacity (second stage). Fourth, the EU regulation also states that upon request of a third party, TAP is obligated to construct additional entry/exit points in Greece to receive gas from non-Shah Deniz sources.

In this context, Russia may reserve space in the TAP by requesting TPA to transport its gas (as a supplier, not an owner) at the second stage of gas delivery, or request the construction of additional entry/exit point for additional compressors at the expansion capacity of TAP. If Russia does not own the infrastructure, but simply sells its gas from the Turkey-Greece border, its actions are not in contravention of the TEP rules. However, the Shah Deniz Consortium has already secured 10 bcm of Azerbaijani gas with a 25-year-contract for the first stage of gas delivery via TAP. Under this contract, the Consortium has already secured 100% of its initial capacity (50% of final capacity). Meanwhile, the Consortium has been already granted a TPA exemption by the EU Commission for 100% of initial capacity (for 10 bcm) of the pipeline for 25 years. This means that Russian gas cannot be transported via TAP for at least the next 25 years, unless there are either significant market or geopolitical changes, or sufficient gas demand to drive expansion. The long-term contracts of Shah Deniz Consortium together with the relevant provisions of EU law make this option unlikely, as Gazprom plans to pump its gas as earlier as possible.

Allowing Russian gas to enter TAP could put both Russian and Azerbaijani gas in competition in terms of price and volume. Beyond the 10 bcm, Azerbaijan is expected to increase its gas flow from the Azeri-Chirag-Guneshli, Umid, Absheron fields and possibly Shah Deniz Phase III. It can deliv- er this via the Interconnector-Greece-Bulgaria to Bulgaria, and the Ionian-Adriatic Pipeline (from Albania) to Montenegro, Bosnia-Herzegovina and Croatia in the second stage of gas delivery. More- over, the amount that Turkey is supposed to receive via Turkish Stream is close to the volume currently transported by the Trans-Balkan pipeline (TBP) to Turkey via Ukraine, Moldova, Romania and Bulgaria. However, the expiration of a transit agreement on Russian gas supply through Ukraine in 2019 along with the completion of Turkish Stream mean that TBP will likely be suspended. Thus, Turkish Stream will enable Russia to change the route of its current gas export to Turkey, without affecting the current volumes, and without competing with TANAP in terms of capacity.

Furthermore, Greece also wants to see Russian gas transported via the Interconnector-Turkey-Greece-Italy (ITGI) as an extension of the Turkish Stream from Greece to Europe. This could pave the way for Russian gas through the Interconnector-Greece-Bulgaria (which also considers transportation of Azerbaijani gas) as an additional branch from ITGI. Back in June 2007, President Putin suggested to Athens that Greece join South Stream, because Russia was planning to construct an alternative route for South Stream towards Greece in case the northwestern route to Bulgaria did not come to fruition. However, both the Turkey-Greece (ITG) part of ITGI and the Greek part of IGB will be operated by DESFA as part of the NGTS. Given that SOCAR hopes to purchase 66% of DEFSA, it is possible that SOCAR can control Russian gas delivery if Gazprom decides to transport its gas through ITGI (or ITG).

Surprisingly, on March 4 ,2015, following his meeting with Azerbaijani President Ilham Aliyev, Bulgarian PM Boyko Borisov called for the revival of Nabucco pipeline as a part of the Southern Gas Corridor (SGC). After the failure of both Nabucco and South Stream, Borisov’s stance is understandable, as Bulgaria has been sidelined twice. President Ilham Aliyev states that, “Bulgaria has already become a part of the Southern Gas Corridor via IGB pipeline, [but] we can merge TAP and Nabucco by virtue of the huge gas reserves of Shah Deniz, Absheron and Umid fields.” The issue is not the revival of Nabucco; the intent is to transport Azeri gas through existing interconnectors to Nabucco-West countries – namely Bulgaria, Romania and Hungary, which Russia is also targeting. Russia plans either to revive South Stream’s onshore section as an extension of Turkish Stream from Bulgaria to Serbia, Hungary and Austria, or to set a reverse flow via Trans-Balkan pipeline to Bulgaria, Romania through to Greece. Russia also supports the construction of a new pipeline from Greece through FYROM, Serbia and to Hungary, once gas volumes have entered Greece through the Turkish Stream. However, it is not yet clear from where in Greece this new pipeline will pump Russian gas toward Hungary, nor which pipeline with which it will be merged – TAP or ITGI.


Ultimately, the move from South Stream to Turkish Stream will not change Russia’s energy market, as the latter might be extended into Greece or Bulgaria via different pipelines. Thus, Russia is seeking either to target potential markets (Central and Eastern Europe) for Azerbaijani gas, or to use the additional capacity of Azerbaijan’s gas export routes. At first glance, it might seem that the timeline and capacity of Turkish Stream will hamper Azerbaijan’s gas strategy in Southeast Europe, given that Azerbaijani gas will reach Turkey in 2018 and Europe by 2020. However, the 16 bcm of gas from Shah Deniz’s Phase II that TANAP/TAP will carry to Europe has already been sold based on 25-year contract with European companies, and the initial capacity of TAP has been secured via a TPA exemption under EU Regulations. These long-term agreements protect SOCAR from the risk of competition from other gas suppliers. Consequently, Russia is seeking additional routes for gas exports, such as onshore sections of South Stream and reverse flow via Trans-Balkan Pipeline. Meanwhile, the transportation of Russian gas via ITGI is matter of time and financing, while a new pipeline via FYROM, Serbia to Hungary might encounter new problems with TEP rules.

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