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Energy – EESC President Christa Schweng and Commissioner Kadri Simson say 2021 will be the year of delivery

EU Reporter Correspondent

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The European Economic and Social Committee (EESC) and the European Commission believe that the clean energy transition must be at the heart of the post-COVID-19 European Union and that now is the time to accelerate implementation of green measures for economic recovery.

2021 must be the time for action to speed up implementation of measures for energy efficiency and sustainable development in Europe. This is the message that EESC President Christa Schweng and European Commissioner for Energy Kadri Simson conveyed at the discussion on the presentation of the European Commission's 2021 Work Programme and its priorities in the field of energy, held in Brussels and remotely on 11 February 2021.

Schweng stressed that in 2020 (compared to 2019), global energy demand was estimated to have dropt by around 5%, energy-related CO2 emissions by 7%, and energy investment by 18% but that recoveries from previous global economic crises had generally been accompanied by a large jump in emissions. "A similar rebound in emissions can be expected after this crisis unless an effort is made to place green energy at the heart of the economic recovery. Now is the time to accelerate clean energy transitions, energy resilience and sustainable development," she said.

The prompt and targeted implementation of the EU financial programmes (Recovery and Resilience Facility, NextGenerationEU, Just Transition Plans) will play a key role in the EU's recovery and in achieving the European Green Deal targets. "It is important to underline that the energy transition is not just a technological issue but also a profoundly social and political challenge. Due consideration, particularly in the context of the COVID-19 crisis, must be given to the real impact of action taken in the energy sector on the life of citizens and business." That is why it is important that civil society organizations are involved in the preparation of the national recovery plans.

For her part, Simson described 2020 as a difficult, unprecedented and disruptive year but also a breakthrough year for energy in Europe: "Almost one year ago, the Commission proposed a new European Green Deal Strategy for Europe. And with it, we set the goal of a climate-neutral Europe by 2050. The member states have now also endorsed this objective."

Looking ahead, she mentioned that while 2020 was the year of strategies and visions, 2021 would be the year of delivery, with several key legislative proposals on renewable energy, energy efficiency, energy performance of buildings, methane emissions and the gas market, to be adopted in June: "As announced in the Commission's 2021 Work Programme, the "Fit for 55" package will include five legislative proposals revising existing energy legislation in order to cut greenhouse gas emissions by at least 55% compared to 1990 levels, as decided in the Climate Target Plan in September last year. To this end, the renewable energy share needs to increase to 38-40% by 2030."

Stressing the importance of the cooperation between the EESC and the Commission, Ms Simson added that the Committee's members could play a crucial role in achieving these goals, as the expertise of business and civil society players will be valuable in the process of prioritising energy and climate projects in both the Recovery and Resilience Plans and the Just Transition Plans.

In this respect, Baiba Miltoviča, president of the EESC Section for Transport, Energy, Infrastructure and the Information Society (TEN), referred to the need to coordinate work among the EU institutions and the importance of the social and societal dimension of the energy transition: "In many EESC opinions, TEN section members have discussed energy poverty, which has become a pressing issue in light of the COVID-19 pandemic. Energy poverty is an example of social, environmental and economic injustice. The risk is that those in energy poverty will end up paying for the energy transition and energy policies. We need to do more in this regard".

For more information on the TEN section's activities, please consult the website.

Energy

Kazakhstan will continue to increase oil production under OPEC+ agreement

Astana Times

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Kazakhstan will continue to increase oil production in May, June and July of 2021 following the 15th meeting of OPEC (Organisation of the Petroleum Exporting Countries) and non-OPEC ministers meeting that took place virtually, the Kazakh Ministry of Energy press service reported, writes Abira Kuandyk in Business.   

“On 1 April, a ministerial meeting of the countries participating in the OPEC+ agreement took place. Collectively countries decided to increase the current production level of OPEC+ countries by 350,000 barrels per day in May and June and by 450,000 barrels per day in July,” said the Kazakh Ministry of Energy in a press statement. 

Kazakhstan’s obligation under the OPEC+ agreement states that oil production will amount to 1.46 million barrels per day for May and June and 1.47 million barrels per day for July. 

The data on the trading platform illustrates that the cost of Brent crude oil has risen in price by almost 3.6 percent and rose to US$65 per barrel. 

The Meeting welcomed the positive performance of participating countries. “Overall conformity reached 115 per cent in February 2021, reinforcing the trend of aggregate high conformity by participating countries,” said OPEC in a press statement.  

On 4 March, Kazakh Energy Minister Nurlan Nogayev participated in the 14th meeting of OPEC and non-OPEC ministers after which Kazakhstan and Russia were allowed to increase oil production to 20,000 barrels per day and 130,000 barrels per day, respectively, in April. 

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Energy

Azerbaijan unearths first gas condensate in Shafag-Asiman

Energy Correspondent

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Azerbaijan’s SOCAR has made the first gas condensate discovery in Shafag-Asiman fields, the company reported.

According to the statement: “As we reached a depth of 7,189 metres in an exploration well drilled in the Shafag-Asiman block, part of the Azerbaijani sector of the Caspian Sea, the first gas condensate was found. That meant the successful completion of the drilling of the Fasila formation in the gas field. At the same time, to fully grasp the extent and size of the reserves, appropriate technical design will be needed to drill an extra lateral appraisal well towards the structure’s arch.”

Exploration at the Shafag-Asiman block is underway as part of the SOCAR-BP venture. In accordance with the Production Sharing Agreement (PSA), the well was drilled by BP at a depth of 623 meters, using the Heydar Aliyev semi-submersible rig operated by the Caspian Drilling Company (CDC). The drilling kicked off on January 11, 2020.

Shafag-Asiman, a complex of offshore geological structures that was discovered in 1961, lies 125km south-east of Baku and covers an area of 1,100 square meters. Here the water depth ranges from 650 to 800 meters. On October 7, 2010, SOCAR and BP entered into a 30-year agreement on exploration, development and production sharing of the Shafag-Asiman offshore block in the Azerbaijani sector of the Caspian Sea. Under the contract, BP conducted a 3D seismic survey at the Shafag-Asiman block in 2012. Having examined the data, the two partners identified the location of the first exploration well and spudded it in 2020.

SOCAR is involved in exploring oil and gas fields, producing, processing, and transporting oil, gas, and gas condensate, marketing petroleum and petrochemical products in domestic and international markets, and supplying natural gas to the industry and the public in Azerbaijan.

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Energy

The world still needs coal

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In the Asia-Pacific region, coal consumption has been going up for many years now, and the Asia-Pacific countries plan to keep this trend going in the next decade. (Researchers at China’s Tsinghua University argue that coal is the prime source of energy production in East and South Asia, where the countries are building new coal-fired plants,) writes Fridrich Glasow, PhD, MMM and O&G expert

There is a great deal of discussion now going on in the world about the development of decarbonized energy. At the same time, Moscow is once again mulling the prospects of developing the coalmining industry, which looks somewhat paradoxical amid the rapidly "greening" European energy sector. On the other hand, it was interesting to compare the evolution of the coal industry in Europe and Russia. After all, pertinent reforms have been introduced in both of them.

However, looking closer at the subject one will realize that these reforms took place in completely different ways. First, the reform that took place in Europe can be called routine as it lasted for decades and was initiated by the state, concerned about the shrinking segment of the coal industry in the energy sector of the economy. Secondly, just tens of thousands of people were released from working in the most difficult conditions and reassigned to other sectors of the economy.

A closer analysis shows that the reform carried out in Russia was absolutely one of a kind. One should bear in mind the sad legacy that the young Russian Federation inherited from the Soviet Union: the collapse of all economic indicators (with an automatic drop in coal consumption), and mounting social tensions. The coal industry was falling apart across the board in terms of technology, labor safety, etc. Labor productivity and production efficiency were extremely low too.

In addition, coal was being “squeezed out” of the economy by natural gas (although back in the early 90s, even in Moscow there was a large segment of anthracite generation). The Russian coal industry (100% subsidized by the state) was no longer competitive on the world market.

To make things worse, the social crisis in Russia was nothing short of catastrophic with the living conditions in the mining towns and cities being extremely harsh. The number of people working in the coal sector stood at 900,000 and taking into account their family members, about 3 million people had found themselves in an incredibly difficult situation. The industry itself was in a real fix both when it comes to coal production, sale, underfunding and dim prospects for the future.

It was against this background that the reforms were launched with a program of restructuring the coal industry developed by the Ministry of Fuel and Energy, led by Yuri Shafranik. The program was three-pronged: closure of hazardous and unprofitable industries (with the withdrawal of all government subsidies, provision of social protection for laid-off workers and technical re-equipment of enterprises, along with measures to encourage new viable projects.

Results of the restructuring in figures

Due to increased labor productivity, the number of people employed in the coal industry fell from 900,000 in 1992 to 145,000 in 2018. The volume of production in 1990 was 395 million tons, and in 2019 - 439.2 million. Coal exports in 1990 stood at 52.1 million tons, while in 2019 they spiked to 217.5 million tons. Foreign currency earnings from exports increased fourfold, reaching $16 billion in 2019. This means that the Russian coal industry is now fully efficient, money earning and competitive. By the way, as a result of privatization, private companies now account for 100 percent of the total volume of coal mined in the country (the state has developed mechanisms of working with the private industry, regulating, helping and creating conditions for development).

However, just like in the case of the "gas problem," as soon as Russia entered foreign markets with more and higher quality coals (and cheaper too), it started facing complaints from Old and New World competitors that it was ignoring “green energy."

Well, in the first ten days of February 2021 alone, Germany increased the purchase of Russian gas by 47.8 percent compared to the same period in 2019. In January 2021, Italy had increased its purchases from Gazprom by 221.5 percent, Turkey - by 20.8 percent, France – by 77.3 percent, the Netherlands - by 21.2 percent, and Poland - by 89, 9 percent. Clearly, Europe does not want to freeze. The surprises that the process of global warming can hold for us can hardly be predicted by definition, so no one knows just how much natural gas the EU countries may need at the end of the day.

Coal remains very much in demand with low temperatures and rising gas prices putting Europe’s coal-fired power plants back to work and Russian coal exports going through the roof. And Europe is not the only one to face such problems. It is no coincidence that, speaking at a meeting dealing with the development of the coal industry, President Vladimir Putin said: “As for the long-term prospects of the global coal market beyond the current decade, I know that there are different forecasts to this effect. It is no secret that some of them imply a significant contraction of the market, including due to technological changes in the global fuel and energy complex and the extensive use of alternative fuels. What is happening we know all too well: Texas froze up during the cold season, and the windmills had to be heated in ways that are far from environment-friendly. Maybe this will also introduce its own adjustments."

P.S. - When I delved into this topic, I was surprised by how little I knew about it, and now I’m sure that 99 out of 100 European energy specialists were unaware of the fact that  Russia had succeeded in effecting such a phenomenal reform with such incredible results. Therefore, I firmly believe that Russia will not just give up its share of the world coal market.

We are often guided by political and economic clichés, but we must never forget just how efficiently the Russian people managed to mobilize in the most difficult moments of their country's history - Fridrich Glasow, PhD, MMM and O&G expert.

                                           

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