NEWS

[EUROPE] Iran 'to withdraw European assets'

2008-06-26T04:08:00.002+02:00

Iran will withdraw assets from the European Union in response to the tightening of sanctions imposed over its nuclear programme, Deputy Foreign Minister Mahdi Safari said yesterday.

"We are going to withdraw the money and invest elsewhere," Safari said.

"If you withdraw more than $100 billion, then of course this will bring about a scarcity of money and have an impact on the world economy."

The 27-nation EU agreed new punitive measures on Monday targeting businesses and individuals the West says are linked to Iran's nuclear and ballistic programmes.

An Iranian monthly reported earlier this month that the Islamic Republic had withdrawn $75bn in assets from Europe to prevent their being blocked under new sanctions. But Iran's economy minister on Sunday played down the report "as yet not serious".

The new EU measures include a freeze on the assets of Iran's largest bank, Bank Melli, and visa bans on senior officials such as Revolutionary Guards head Mohammad Ali Jafari, Defence Minister Mostafa Mohammad Najjar and atomic energy chief Gholamreza Aghazadeh.

Safari said that Europeans would lose out as a result of the newly imposed measures.

"We have gas and oil resources everyone wants to buy. Now we are trading mostly with Asian countries," he said.

"Previously our main partners were in Europe - Germany, Italy, France, and also Austria. Now we have other partners."

Source: Gulf Daily News

[INTERNATIONAL AFFAIRS] International Atomic Energy Agency, Accuses Iran of Willful Lack of Cooperation

2008-05-27T12:08:00.002+02:00

The International Atomic Energy Agency, in an unusually blunt and detailed report, said Monday that Iran’s suspected research into the development of nuclear weapons remained “a matter of serious concern” and that Iran continued to owe the agency “substantial explanations.”

The nine-page report accused the Iranians of a willful lack of cooperation, particularly in answering allegations that its nuclear program may be intended more for military use than for energy generation.

Part of the agency’s case hinges on 18 documents listed in the report and presented to Iran that, according to Western intelligence agencies, indicate the Iranians have ventured into explosives, uranium processing and a missile warhead design — activities that could be associated with constructing nuclear weapons.

“There are certain parts of their nuclear program where the military seems to have played a role,” said one senior official close to the agency, who spoke on the condition of anonymity under normal diplomatic constraints. He added, “We want to understand why.”

The atomic energy agency’s report highlights the amount of work still to be done before definitive conclusions about the nature of the program can be made, a task that the official associated with the agency said would require months.

Iran’s nuclear program has long been a flashpoint, with critics fearing that suggestions that Iran is developing weapons could embolden factions within the administration who have been pushing for a confrontation with Iran.

Iran has dismissed the documents as “forged” or “fabricated,” claimed that its experiments and projects had nothing to do with a nuclear weapons program and refused to provide documentation and access to its scientists to support its claims.

The report also makes the allegation that Iran is learning to make more powerful centrifuges that are operating faster and more efficiently, the product of robust research and development that have not been fully disclosed to the agency.

That means that the country may be producing enriched uranium — which can be used to make electricity or to produce bombs — faster than expected at the same time as it a replaces its older generation of less reliable centrifuges. Some of the centrifuge components have been produced by Iran’s military, said the report, prepared by Mohamed ElBaradei, the director general of the agency, which is the United Nations nuclear monitor.

The report makes no effort to disguise the agency’s frustration with Iran’s lack of openness. It describes, for example, Iran’s installation of new centrifuges, known as the IR-2 and IR-3 (for Iranian second and third generations) and other modifications at its site at Natanz, as “significant, and as such should have been communicated to the agency.”

The agency also said that during a visit in April, it was denied access to sites where centrifuge components were being manufactured and where research of uranium enrichment was being conducted.

The report does not say how much enriched uranium the Iranians are now producing, but the official connected to the agency said that since December, it was slightly less than 150 kilograms, or 330 pounds, about double the amount they were producing during the same period about 18 months ago.

“The Iranians are certainly being confronted with some pretty strong evidence of a nuclear weapons program, and they are being petulant and defensive,” said David Albright, a former weapons inspector who now runs the Institute for Science and International Security. “The report lays out what the agency knows, and it is very damning. I’ve never seen it laid out quite like this.”

Ali Asghar Soltanieh, Iran’s ambassador to the atomic energy agency, however, said that the report vindicated Iran’s nuclear activities. It “is another document that shows Iran’s entire nuclear activities are peaceful,” the semi-official Fars News Agency quoted him as saying.

A National Intelligence Estimate published in December by American intelligence agencies concluded that Iran suspended its work on a weapons design in late 2003, apparently in response to mounting international pressure. That report added that it was uncertain whether the weapons work had resumed. It concluded that work continued on Iran’s missiles and uranium enrichment, the two other steps that would be necessary for Iran either to build and launch a weapon or to announce that it is able to construct one quickly.

The Bush administration, in its waning days, seems powerless to modify Iran’s behavior. The question seems to have been pushed to the future with the forceful disagreements in recent days between the presumptive Republican presidential nominee, Senator John McCain, and Senator Barack Obama, contending for the Democratic nomination, over whether an American president should negotiate with Iran’s leadership.

Still, Javier Solana, the European Union’s foreign policy chief, announced in Brussels on Monday that he would go to Iran soon — possibly “within the month” — to present a new offer of political, technological, security and trade rewards for Iran if it halts its uranium enrichment program.

Mr. Solana will travel with senior foreign ministry officials from five of the six countries involved in the initiative — Britain, France, Russia, China and Germany — but not the United States, which has refused to hold talks with Iran. The incentives, agreed on by the six countries in London this month but still not made public, repackaged and clarified an incentives package presented to Iran in 2006.

Iran rejected it at the time, saying that relinquishing its uranium enrichment program was non-negotiable. After the London meeting this month, the Iranian foreign minister, Manouchehr Mottaki, said the new package should not cross Iran’s “red line” — shorthand for its uranium-enrichment program.

On May 13, Iran responded with its own package of proposals, calling for new international talks on political, economic and security issues, including its nuclear program and the Arab-Israeli peace process.

The proposal, made in a letter from Mr. Mottaki to the United Nations secretary general, Ban Ki-moon, includes the creation of international fuel production facilities in Iran and other countries — a longstanding goal of Iran — as well as improved supervision of Iran’s nuclear program by the atomic energy agency, which is based in Vienna.

Over the years, the United States and France have led the way in opposing the idea of a fuel-production facility in Iran, contending that it would allow Iranian experts to master the complex process of enriching uranium and to use that knowledge in a secret bomb-making project.

Iran insists its uranium enrichment program is devoted solely to producing fuel for nuclear reactors that generate electricity.

The report, which was released on Monday to the agency’s 35-country board of directors and the United Nations Security Council, will be formally discussed by the board next week.

Source: The New York Times|By ELAINE SCIOLINO

[NUCLEAR RENAISSANCE] The Nuclear power and the europeans. Bad reactions

2008-05-08T08:46:00.006+02:00

With French and German companies lining up to build new nuclear power stations in Britain, the die now seems cast for nuclear. Or is it?

The government's goal is certainly ambitious. Ten countries - primarily the UK, US, France and Canada, but also including Japan, Korea, Brasil, Argentina, South Africa and Switzerland - have set up the Generation IV International Forum. It will develop a successor nuclear energy system to the previous Generations I (Magnox) and II (advanced gas-cooled reactors and the Sizewell B light water reactor) and follow the Generation III systems now being built. The latter includes the French Areva evolutionary pressure reactor (EPR), the prototype of which is being constructed at Olkiluoto in Finland, with another being built in France.

Improved versions
It is intended that these Generation III models, plus (hopefully) improved versions in future, will lead reactor orders through to 2030, after which it is hoped that Generation IV will kick in, with the goal of nuclear sustainability.

However, the roadmap to get there is beset by practical problems that may prove insurmountable. Generation II and III nuclear plants operate in a "once-through" mode, which means that only half the 0.7% fissionable uranium 235 content of natural uranium goes into the fuel, while most of the heavy metal ends up in enrichment tails and in spent fuel as waste. This, therefore, requires a constant and increasing supply of natural uranium to meet the rising demand for electricity, while intensifying the already unresolved problem of what to do with vast accumulations of radioactive waste.

Even the International Atomic Energy Agency and the optimistic Organisation for Economic Cooperation and Development put the total world uranium reserves at 4.7m tonnes, and that assumes a purchase price of at least $130/kg. In fact, prices are currently nearly twice as high, yet primary uranium production is falling. But even if the figures were roughly correct and not significantly inflated, the total of known uranium resources is expected to be exhausted by 2030. If fast reactors were to be introduced by then, which is the centrepiece of the strategy, a further 10m tonnes - twice the known resources - would have to be ready for production, and this could only come from "speculative and undiscovered resources".

The nuclear power industry answers this by referring to the universality of uranium in the Earth's crust and in sea water. But the enormous energy needed to extract it from these low-concentration sources would exceed the energy output of the fission of the fuel provided.

These pressures are already being felt. The USA gets half its nuclear fuel from diluted former nuclear weapons' highly-enriched uranium from Russia. And even Russia, with insufficient primary production, will be forced to rely on ex-weapons material to power its planned expansion. The UK's aim to secure energy supplies will not be aided by importing 100% of nuclear fuels, and that's on top of increased dependence on imported fossil fuels, notably gas.

Meanwhile, Japan has closed seven nuclear power stations built on an earthquake fault line. The Olkiluoto reactor is already two years behind schedule after just two years' building and has a £1bn cost overrun so far, and there can be no reliable evidence on the economics of nuclear power until the new designs of the Westinghouse AP1000 and European EPR water reactors have been fully tested over many years in service. Contrary to claims by the industry, unresolved questions of cost and the looming shortage of uranium are the biggest challenges to the nuclear revival.

To overcome the fragility of this recovery, the industry looks to Generation IV development of the fast reactor by 2030 as the key to ultimate nuclear sustainability. However, if for this purpose the fast reactor were adopted in "breeder" mode, an even greater quantity of highly radioactive actinoids (plutonium, neptunium, americium and curium) would be generated, exacerbating still further the waste management problem. If, on the other hand, the fast reactor were adopted in "burner" mode, as currently seems likely to prevail, the waste problem is alleviated, but there is no sustainability.

The Generation IV fuel systems offer at present six types, of which two are emerging as likely candidates. One is the very high temperature thermal reactor (VHTR), which can be used for coal gasification as well as thermo-chemical hydrogen production. The US government favours this because a hydrogen economy is seen as the solution to the exhaustion of oil reserves, and the petrol derived from it.

The main problem with VHTR, which has a coolant system outlet temperature of about 1,000C, is likely to arise from irradiation characterised by the Wigner effect - the displacement of atoms in a solid caused by neutron radiation - and from progressive disintegration by neutron bombardment. Indeed, a similar problem with the Wigner energy in Pile 1 at Windscale (now Sellafield) caused the fire in 1957 and melted the fuel elements. Given the very high temperatures needed for this complex and quite likely unstable process, its viability would need rigorous and exhaustive testing before such a problematic reactor were ever adopted.

Repetitive cycle
The second favoured Generation IV candidate is the sodium-cooled fast reactor system (SFR). The idea here is that as the supply of natural uranium declines, it is replaced by a plutonium-based fuel that is incrementally augmented by fresh plutonium in a repetitive cycle, providing claims of sustainability. It is envisaged that there is a gain in the plutonium in a surrounding "blanket" of uranium 238 over and above the plutonium consumed in the reaction, with a doubling time of 15 to 20 years.

Again there are two key problems. It is a burner reactor, not a breeder, so that while reducing waste management problems, it does not provide for sustainability. Second, even if fast reactors of this kind could be successfully deployed - a big if - the doubling time of 15 to 20 years would require supplies of natural uranium to be maintained for decades, if not centuries, until the fleet of "once-through" reactors can be progressively replaced. And the uranium simply is not available for that timespan.

So, a nuclear renaissance? Forget it.

Source: The Guardian | by Michael Meacher (MP is a former environment minister)

[EUROPE] MEPs to vote to open up European Union energy market

2008-05-08T08:16:00.004+02:00

MEPs are expected today to endorse controversial plans to force huge mainland European energy groups to sell off their power transmission networks and open up the European Union market to greater competition.

The European parliament's industry, research and energy (ITRE) committee is also expected to stymie alternative proposals to hand over control of the grids to independent operators but allow the groups to retain ownership.

Today's vote will be seen as crucial by British and Spanish groups such as Centrica, owner of British Gas, and Iberdrola, owner of ScottishPower, which have seen their ambitions to break into other markets thwarted by the dominance of "national champions".

Labour MEP Eluned Morgan said that the vote would give a fillip to the proponents of full "ownership unbundling" (separating transmission from generation/supply) and added: "We should be able to deliver a knockout blow to the other, weaker options" - a so-called third way would have given more power to regulators to control grid investment.

The European commission, which favours unbundling as the best way to promote competition and lower energy prices, will use today's vote to toughen its plans in the face of opposition from France, Germany and six other countries that form a blocking minority among the European Union's 27 members.

Senior officials have suggested that power grids should at least be controlled by independent operators which would set annual investment plans and raise capital, with the plans overseen by regulators.

But Morgan said this could cement conflicts of interest if generators remained the owners of grids: "We would like to see national regulators given far more powers to fine companies which break the rules, adopt a more stringent approach to appointments and monitor, manage and police the networks. Consumers should also be given much greater influence."

Today's vote will coincide with a call from Chris Davies, a Liberal Democrat MEP, for new coal-fired power plants to be fitted with carbon-capture and storage (CCS) technology by 2030. Fifty new coal-fired plants are planned in Europe over the next five years.

Davies, in charge of negotiations with the commission on CCS, said his strict time frame would help compensate for European Union countries' failure to meet their targets for 20%renewables within Europe's energy mix by 2020.

"There's very little likelihood that the UK, above all, will meet its [15%] target," he said. "As matters stand we will probably be halfway to the target at best ... At least if we accelerate CCS we will have made up the ground."

He said CCS could remove 80% of coal emissions. But he clashed on the issue with the environmental pressure group Greenpeace, which said CCS was a "false promise" and "simply can't deliver in time" because there are no large-scale plants in the world capturing CO2. Whereas renewables that are technically accessible could provide six times more energy than the world now consumes. Davies said such comments were "divisive and dangerous".

Source: The Guardian| by David Gow

EUROASIA: Privatization of Russia's electricity company enters home stretch

2008-04-21T19:56:00.005+02:00

A plan to privatize the world's largest electricity company is entering the home stretch, successfully it seems, in spite of its Rube Goldberg-like complexity and the general hostility toward privatization in Russia today. The plan's architects say they have raised $33.9 billion by creating a simple and obvious investment opportunity - the chance to sell heat and light to one of the world's coldest and darkest countries. The Russians say they have learned how to privatize their electricity market by watching the best example of failure: the Americans and Enron.

The Russian state electricity monopoly, Unified Energy Systems, will be disbanded June 30 after spinning off dozens of subsidiaries and floating a portion of shares in those companies on the Russian stock market, then selling the balance at auctions.

To attract buyers and investors, Russian officials promise they will also liberalize electricity tariffs for industrial consumers by next January.

"From a market point of view, it's very sexy," said James Fenkner, chairman of Red Star Management, a hedge fund based in Russia. "You are going, all of a sudden, from a system of government controlled inputs and outputs to a market based system with more potential for profit."

Red Star Management has invested in hydroelectric plants in Russia.

By Tuesday, Unified Energy had raised 797 billion rubles, or more than $33.9 billion, in spite of glum market conditions, according to the company spokesman, Stas Degtyarev. Though the company sells mainly to other utilities rather than portfolio investors, shares in newly privatized Russian electricity companies are now popping up in portfolios and on the books of hedge funds around the world.

To be sure, enthusiasm has been dampened not only by the complexity of the securities, but by memories of President Vladimir Putin's reversal of some oil industry privatizations, and concerns the same fate could await electricity investors. Also, many Russian power plants co-generate heat for residential buildings - a market whose rates will not be liberalized.

Generally, electricity privatization is fiendishly complex, and it has failed spectacularly before. But the Russians say they have learned from others' misfortune, especially the case of Enron.

"What happened in California, though it was unfortunate, helped us design restructuring," said Sergei Dubinin, the chief financial officer of Unified Energy Systems and a former Russian central banker. "We said, 'We can't do it that way.' "

The case for investing rests on a scarcity of electricity as Russia's economy grows and the belief that prices will explode after liberalization. Russia is the fourth-largest electricity market in the world, behind the United States of America, China and Japan.

The deals are low profile, but high-priced. OGK-1, for example, which owns power plants in western Russia and the Ural Mountain region, is expected to fetch about $7 billion at auction on April 17. On Monday, the Russian billionaire Mikhail Prokhorov bought 32 percent of TGK-4, with plants in smaller cities near Moscow, for $500 million at auction.

The gas-powered electricity plants have become acquisition targets for the European utilities like Enel of Italy and E.On of Germany; both have bought plants with intentions to invest money and expertise in energy savings in order to balance a projected rise in the price of natural gas in Russia.

For their part, portfolio investors have tended to bid up the price of power plants before large sales, then exit the stocks, making these shares more volatile than the average equity in the Russian stock market. Shares in the power and heat company TGK-5, for example, dropped 40 percent since its spin-off from Unified Energy.

Some investors have bought Russian hydroelectric capacity that taps the currents of the wide northern rivers. The cost of production, of course, will not rise with the price of gas. This was the approach taken by Red Star, Fenkner's hedge fund. But the government may increase a water tax for these plants .

Controversially, one outcome of Russian electricity privatization is likely to be a shift from natural gas to the relatively cheaper, but less clean-burning coal as plants seek savings - indeed, a Citigroup investor note has even recommended investors buy coal-fired plants.

One looming risk, however, is that Gazprom, the gas monopoly, will raise domestic prices for natural gas before the electricity market is fully liberalized, squeezing the profits of the electricity companies and their new owners. And, as one investor who did not want to be identified because his company deals with Gazprom, noted, "Gazprom is far more powerful than Enron ever was."

Source: International Herald Tribune| By Andrew E. Kramer

GERMANY: E.ON proposes to increase competition in German electricity market

2008-03-01T01:37:00.004+01:00

E.ON has offered structural remedies to the European Commission to settle ongoing antitrust cases in the electricity sector. E.ON proposes to commit to sell its electricity transmission system network to an operator which would have no interest in the electricity generation and/or supply businesses and to commit to divest 4,800 MW of generation capacity to competitors.

The Commission intends to market test E.ON’s proposals, with a view to adopting a decision under Article 9 of regulation 1/2003. Under this procedure, the commitments would be made legally binding by al decision of the Commission and the Commission would not pursue the current antitrust cases.

The Commission has conducted a number of antitrust investigations into energy companies as a consequence of the energy sector inquiry. Inter alis, the commission has been investigating two cases against E.ON in the electricity sector.

The European Commission welcomes these proposed commitments in so far as they could remedy the concerns that it has regards E.ON. These proposals, if adopted, would structurally change the electricity sector in Germany and could spur competition in the sector to the benefit of domestic and industrial customers.

SOURCE: Scandoil

RUSSIA: Dreams come true. Gazprom and Putin

2008-02-19T15:36:00.005+01:00

As the world's attention increasingly focuses on Russia's March 2 presidential election, speculation is rising about what President Vladimir Putin will do in the aftermath.

While it's a foregone conclusion in Russia that First Vice Prime Minister Dmitry Medvedev will most likely replace Putin, various theories have been floated, several of which seem to have Putin's support -- that he would take the post of prime minister under a Medvedev presidency, or continue discreetly to exercise power behind the scenes. Now the newspaper Pravda has put forth an intriguing scenario -- that Putin would replace Medvedev as chairman of the board of directors of Russia's natural gas giant Gazprom.

The idea has a certain elegant simplicity. Gazprom, founded in 1989, is now Russia's largest company and the world's biggest natural gas provider, with 432,000 employees. Gazprom ranked sixth on the 2007 Financial Times global 500 list, with a market value of $245 billion.

Its majority shareholder is the Russian government, with 50.01 percent of its stock. According to Gazprom's Web site, in 2006 the company earned $66 billion, with a 31.72 percent operating profit from sales. Since June 2007, Gazprom shares increased 12 percent, leading Russian analysts with few exceptions to identify Gazprom as their top stock pick for 2008. Ever the capitalists, Russian analysts expect higher profits as the company recently won government approval to increase domestic tariffs for industrial users.

As for Gazprom's future, the sky's the limit. Russia has the world's largest natural gas reserves, with 1.68 trillion cubic feet, nearly twice Iran's reserves, the world's second largest. Gazprom produces nearly 90 percent of the Russian Federation's natural gas and operates the country's natural gas pipeline network. Gazprom is Russia's largest earner of hard currency and pays more than $40 million in taxes each day, accounting for around 25 percent of the Russian Federation's federal tax revenues.

Gazprom's revenue stream could be far higher if the company were not constrained by domestic regulation, which compels it to supply the domestic market at government-regulated prices, approximately $28 per 1,000 cubic meters. In contrast, Gazprom's exports to Europe now cost more than $270 per 1,000 cu. m. Gazprom's Russian ventures are not limited to natural gas, however; and in the best spirit of capitalism, Gazprom, which produces 90 percent of the country's sulfur, announced that later this year it will introduce price increases of more than 700 percent, severely affecting production costs for Russia's fertilizer producers.

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If Putin is seriously interested in heading the natural gas giant, observers will not have long to wait, as Gazprom's administration will have to approve the new list of candidates to its board of directors on Feb. 4, prior to the June 27 annual Gazprom shareholders meeting. There are 42 candidates, according to the Gazprom spokesman.

European governments, already concerned about Putin's growing centralization of government power in Moscow, will be anxiously waiting to see if he does, in fact, throw his hat into the ring for chairmanship of Gazprom. The truth is European governments are increasingly reliant on Russian energy imports. Over the last several years, Gazprom has strengthened its presence in the European Union market and now accounts for approximately 25 percent of its natural gas imports. Gazprom is the sole gas supplier to Bosnia-Herzegovina, Estonia, Finland, Macedonia, Latvia, Lithuania, Moldova and Slovakia, as well as providing Bulgaria (97 percent), Hungary (89 percent), Poland (86 percent), the Czech Republic (75 percent), Turkey (67 percent), Austria (65 percent), Romania (40 percent), Germany (36 percent), Italy (27 percent) and France (25 percent.) Not that Gazprom has finished its infiltration of European energy markets; Gazprom recently secured a license to enter Ireland's $2.96 billion natural gas market and intends to begin initial shipments by the end of the year.

In an interesting political precedent, when German Chancellor Gerhard Schroeder left office in September 2005 he almost immediately accepted Gazprom's nomination to head the Nord Stream shareholders' committee, a pipeline project design to bring Russian Gazprom natural gas directly to Germany via an undersea Baltic pipeline.

While Putin apparently remains committed to retaining political power, even if exercising it behind the scenes, in the end, the allure of Gazprom might prove too much to resist, especially as his handpicked successor, Medvedev, recently commented that Gazprom's market capitalization could quadruple in a decade to reach $1 trillion, which would make it the world's biggest corporation.

Putin is spoiled for choice, unlike Gazprom's hapless customers, who will be nervously waiting to see if he does accept the chairmanship, and whether he will use the same hardball tactics that he used to resurrect Russian political power in Western energy markets. In the end, the opportunity to humble competitors ExxonMobil, General Electric, Microsoft, Citigroup and AT&T, No. 1 through 5 on the global 500 list, may prove too hard to resist, especially as they are all American companies. In observing from afar the carnage in Western capitalist markets, Putin is doubtless contemplating Gazprom's slogan, "Mechty sbvaiutsia!".

Source: United Press Internaional

GLOBAL WARMING: The Group of Seven and the Global Markets

2008-02-17T16:56:00.004+01:00

There was a lot of talk, but not much action at the Group of Seven (G-7) meeting in Tokyo on Saturday, where finance ministers and central bank governors discussed how to minimize what U.S. Secretary of the Treasury Henry Paulson, Jr., referred to as the "spillover of capital markets to the modern global economy" — that is, the global turmoil that has built up in markets since last August.

Top finance chiefs talked about the U.S. housing market, rising energy prices, financial-sector reform, credit problems, inflation and exchange rates. But rather than resulting in specific measures, the meeting produced a kind of watch-and-wait strategy whereby the Group of Seven nations, Britain, Canada, France, Germany, Italy, Japan and the United States, would "continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies," according to their statement.

Translation: The Group of Seven chiefs are looking at the same economic horizon but from different vantage points, given the unique economic circumstances in each of their countries. The hope for a concerted effort by banks to lower interest rates in Europe and Japan, for example, simply won't happen. "The fact is that the European Central Bank faces inflation risk and the Bank of Japan won't move either way," says Kenichi Kawasaki, Lehman Brothers' chief economist for Japan, last Thursday.

"It's not that we had discord amongst ourselves, we just noticed differences respective to each of our economic situations...and the degree of impact," said Japanese finance minister Fukushiro Nukaga, who co-chaired the Group of Seven meeting with Bank of Japan governor Toshihiko Fukui. "But we're here to work in partnership to overcome this difficulty." The U.S. was "taking on the central role" Nukaga said, adding that "each country will do what they can, respectively."

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There was, however, at least one specific point of agreement: the importance of the joint-initiative of Japan, Britain and the U.S. to start a climate-change fund in cooperation with the World Bank. "There's clearly a role for a fund aimed and focused at technology and technology adoption in developing markets," says Paulson. "We have no chance of solving this problem unless we accelerate the use of clean technology and come up with incentives for the private sector." Japan hopes to take the lead in climate change when it hosts the Group of Eight summit in Hokkaido at the lakeside resort of Toyako in early July.

In the short term, the financial chiefs see slow growth. They are keen to increase transparency and various form of disclosure in the financial sector, encourage appreciation of the yuan, and also encourage OPEC nations to raise production. In the long term, the Group of Seven economies seem more optimistic, but their statement points out that the U.S. will face further deterioration of its housing market. Asked his view of a potential U.S. recession, Paulson answered: "I've been careful to say I believe we're going to continue to grow," said Paulson. "If you're growing, you're not in a recession, right? We all know that." On Friday, Paulson ushered through a $168 billion stimulus package that he says will send checks to 130 million people in the U.S. by the end of summer and add "seven-tenths of a percent to GDP, more or less."

At their last meeting in October, the Group of Seven ministers asked the Financial Stability Forum to evaluate the causes of the current global economic situation; the interim report, released on Saturday, offered some direction to financial institutions, but the full report is not expected until April.

By COCO MASTERS
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TOKIO: Group of Seven Calls for an End to Oil Subsidies Used By China and India

2008-02-09T22:54:00.000+01:00

Group of Seven nations called for an end to the oil subsidies used in China, India and Indonesia to shield domestic consumers from high energy prices.

``It should be avoided to artificially lower domestic energy prices through fiscal measures,'' G-7 finance ministers and central bankers said today in Tokyo. ``It works against market- based adjustment of energy demand.''

The G-7 also called on oil producing countries to increase production and refining capacity, noting that rising fuel prices and the risk of inflation are risks to global growth. An end to energy subsidies might cut demand in some of the world's fastest growing economies, easing pressure on prices.

``Subsidies in places like China, India, Indonesia, have led to artificially high levels of demand,'' said Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong. ``There's probably a better way of spending that money rather than subsidizing energy.''

Indonesia may spend 106.8 trillion rupiah ($11.5 billion) this year in capping fuel prices and spend an additional 44.2 trillion rupiah on keeping power costs below market rates, the Finance Ministry proposed last month.

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In China, the government pays compensation to refiners who sell their product to consumers at below-cost prices. In the past two years China paid Sinopec, Asia's largest refiner, 15 billion yuan ($2 billion) as compensation.

India's government partly compensates refiners for selling fuels below cost by giving them bonds. Indian Oil Corp. and other refiners received 112.5 billion rupees ($2.8 billion) of bonds from the government on Jan. 18.

``If oil is priced correctly in the market, then it provides valid signals to businesses and encourages the adoption of alternative energy sources, which will be more successful in limiting demand and price increases,'' said Maguire.

The G-7 consists of the U.S., the U.K., Canada, Italy, France, Germany and Japan. Its members account for two-third of the global economy.

Source: Bloomberg|By Jason

EUROPEAN UNION: The industry shelving investments over greenhouse gas emissions plans

2008-02-07T18:06:00.000+01:00

A growing number of European industrial groups are scrapping investments because of European Union plans to make them pay for the right to emit greenhouse gases, an energy industry association said Wednesday.

"Every week a project is being cancelled," said Johannes Teyssen, vice chairman of the World Energy Council, which represents groups in 96 countries.

Teyssen, who said he had lost count of the number of projects that had been called off, cited in particular the cancellation in recent weeks of plans for several coal-fired power plants in Germany.

While the shelving of the projects was "probably a reflection of increased costs," it was also a a result of the European Commission's "rigid and tough" stance on emissions, he said.

The European Commission proposed last month that industrial polluters should have to bid for currently free quotas to emit greenhouse gases as part of a broad strategy to fight global warming.

"Full auctioning could lead to more vulnerability" for European Union companies, warned Teyssen, a senior executive at German energy giant EON.

While power companies would have to pay for their pollution quotas from 2013 under the Commission's proposals, other industries would gradually be phased in to the programme afterwards.

Source: Agence France Pressee

EUROPEAN UNION: Major projects cancelled because of uncertainty. Green laws and regulation risk energy crisis

2008-02-07T03:41:00.001+01:00

Europe is facing an energy crisis because of green-influenced legislation and regulation, and difficulty in obtaining planning approval for key projects, energy companies warned yesterday.

Europe needs to spend €2tn (£1.5tn) on upgrading power networks in the next 25 years but leading energy companies have cancelled investments in new power plants worth billions of euros because of increased regulatory uncertainty, a senior executive claimed yesterday.

Johannes Teyssen, chief operating officer at E.ON, Germany's biggest energy group, blamed the European commission's plans to make companies pay for all their pollution permits from 2013, huge delays in approving planning applications and confusion among national regulators for the cancellations.

Teyssen, vice-chairman of the World Energy Council (WEC) Europe, said: "We see now every week a new investment project being cancelled across the European Union." He cited at least four multibillion-euro projects to build power plants in Germany and said thousands of kilometres of new power lines were "lying on the table" because of planning delays.

The pan-European industry lobby, Eurelectric, says the European Union will need about 520 gigawatts (GW) of new capacity by 2030. But the WEC, in a report handed to the commission yesterday, said investments had slowed in recent years and Europe was now twice as vulnerable to external shocks as it was in the 1960s. It would be 70% dependent on imports by 2030 without a change in policy.

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Teyssen said the commission's plans to scrap free emission permits and move to a full auction system would further blight investment decisions. He also said it took longer to approve planning applications than to build a nuclear power station. "I hardly know of any European Union nation where it's easy to build a high-voltage transmission line or new gas pipeline."

Centrica, owners of British Gas, said delays in planning applications were holding up projects for onshore wind farms and new gas-storage facilities. But, officials said, the group backed commission plans to auction pollution permits, creating greater regulatory clarity and offering incentives to invest in new low-carbon or carbon-free plants.

Teyssen urged the European Union to avoid putting all its eggs into the renewables basket, arguing that they could cause more harm than good if national and cross-border grids were incapable of meeting the growth in their use.

"You need a broader picture; you can't just say green is good," he said.

However, the British government rejected the suggestion and said its energy market was the most competitive and liberalised in the European Union and G7, encouraging investment from firms such as E.ON.

John Hutton, the business secretary, said: "We are legislating to speed up the planning system and to put in place incentives for energy companies to bring forward the investment we need. This will mean a dramatic expansion in renewables, new investment in nuclear power and technologies to clean up how we use fossil fuels."

Companies are also resisting the commission's drive to open the EU energy market to more competition, saying that uncertainty put them off investing in new projects. Eight countries, led by France and Germany, have attacked the central pillar of the commission's liberalisation package. This involves forcing the big continental players to "unbundle", or sell their gas and electricity transmission networks/pipelines to independent operators and allow new players to enter a more competitive market.

The eight, backed by big groups such as E.ON, France's EDF and GDF, and Italy's Eni, have formed a "blocking minority" within the council of ministers. They are proposing instead, in a letter to the EU energy commissioner Andris Piebalgs and MEPs, that national regulators draw up 10-year investment plans that the companies would be obliged to follow.

In the letter, seen by the Guardian, they say the "unbundling" plans are unconstitutional and inappropriate to "guarantee an adequate level of investment in the networks and foster the integration of our national networks".

The Piebalgs plan faces growing internal opposition within the commission itself, with one senior official saying that it would break up big companies capable of competing in global markets and force the European Union to be more dependent on huge foreign players.

Source: The Guardian

SPAIN: Iberdrola Climbs in Madrid After Biggest Investor Talks to Electricite de France

2008-02-06T13:47:00.000+01:00

Iberdrola SA, Spain's second-biggest power producer, climbed in Madrid trading after its largest investor said it held talks with Electricite de France SA about that French utility's interest in its Spanish rival.

Iberdrola rose as much as 32 cents, or 3.3 percent, to 10.17 euros a share and traded at 10.03 euros at 10:43 a.m. local time.

Actividades de Construccion y Servicios SA, which controls about 12 percent of Bilbao-based Iberdrola, said in a filing yesterday it wanted to create a ``big Spanish power group in which Actividades de Construccion y Servicios can be a protagonist along with the rest of the partners.'' Talks with Electricite de France about the Iberian energy industry were ``normal conversations'' between power operators and didn't lead to any agreements, Spain's biggest builder said.

``Iberdrola now appears to be the target of a future takeover,'' said Alejandro Varela, an analyst at Madrid-based brokerage Renta 4 who recommends buying the stock.

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Since newspaper Cinco Dias first reported Electricite de France 's interest on Jan. 24, the utility's shares have gained 11 percent to boast a market value of about 50 billion euros ($75 billion).

Actividades de Construccion y Servicios aims to benefit from its position as the largest shareholder in the country's second and third-biggest power producers to be the kingmaker in an industry that last year attracted bidders from Italy, Germany and Spain to buy the nation's largest power producer, Endesa SA.

Source: Bloomberg | by Kristian Rix
Blogalaxia:Iberdrola fotolog Technorati:Iberdrola Bitacoras:IberdrolaagregaX:Iberdrola

EUROASIA: Bulgaria Joined South Stream

2008-01-20T11:32:00.000+01:00

Bulgaria will join the South Stream project. Prime Minister of Bulgaria Sergei Stanishev has made the respective statement today, January 18, 2008. Bulgaria will ink the contact for joining the South Stream project initiated by Gazprom today, during the visit of Russia’s President Vladimir Putin to Sofia. The contract budget is estimated at €10 billion.

Italian ENI and Gazprom signed the agreement on laying a new pipeline for shipping gas from Russia to Europe June 23, 2007. On November 22, 2007, the parties sealed a supplementary agreement under the project, the South Stream, that provides for setting up a firm to elaborate a feasibility study for it. Gazprom and ENI will own the venture pari passu; the company's working name is South Stream.

The third partner could be also attracted. The plans are to create the venture by January 15, 2008 and elaborate marketing survey and feasibility study by the end of 2008. The investments will probably exceed $10 billion.

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The 900-kilometer South Stream will run through the Black Sea’s bottom from Russia’s shore to the shore of Bulgaria. There, it will divide into the south and north branches. The south pipeline will run from Bulgaria to Romania, Hungary, the Czech Republic and Austria with the optional supplies to the markets of Germany and Italy, while the southern branch will go through Bulgaria to southern Italy. The pipeline’s capacity is estimated at 30 billion cu meters a year and the launch of supplies is slated for 2013.

Russia is negotiating South Stream's construction with Bulgaria, Greece and Serbia.

Via:Kommersant

Tags: fotolog|gasoducto|Russia|

ASIA: Japan to launch G8 energy-saving talks

2008-01-09T15:57:00.000+01:00

Japan will host a series of meetings on energy-saving ahead of this year's Group of Eight summit where climate change will be high on the agenda, officials said Tuesday.

Talks will be held in Tokyo on January 22 and 23 to prepare for a meeting of energy ministers from the eight nations in June in northern Aomori prefecture, said an official at Japan's Agency for Natural Resources and Energy.

The energy ministers are expected to adopt proposals to present to national leaders when they gather in Toyako, a lakeside resort on the northern island of Hokkaido, from July 7 to 9, the official said.

"As a host, Japan hopes to take the lead in discussions on energy-saving measures as our country plans to help reduce greenhouse gas emissions by sharing its energy-saving technologies with other countries," he said.

In a New Year statement, Prime Minister Yasuo Fukuda also vowed that Japan would "lead the worldwide discussions in order to hand over clean skies to our children."

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Apart from Japan, the G8 club is made up of Britain, Canada, France, Germany, Italy, Russia and the United States. The world's second biggest economy after the United States, Japan is also the home of the Kyoto Protocol, the landmark 1997 treaty that mandated cuts in greenhouse gas emissions heating up the planet.

However, Japan is well behind in meeting its Kyoto targets and has been criticised by environmentalists for not advocating more explicit mid-term goals for when Kyoto's obligations expire in 2012.

The Yomiuri Shimbun reported Sunday that the G8 summit would propose setting up a new international organisation to study countries' energy-saving measures.

The world body would provide emerging economies with the environmental know-how of developed countries, Japan's best-selling newspaper said.

The new organisation would be funded by Japan, the United States and European countries, with the International Energy Agency in Paris being eyed as a possible location for the new body's headquarters, the Yomiuri said.

The energy agency official, however, denied the report, saying: "It is true that we plan to discuss a wide range of energy-saving topics but we don't have any plan to set up such a new body."

Via: Agence France-Presse

GERMANY: 'Green' energy up in Germany but future clouding

2008-01-09T12:27:00.000+01:00

Germany produced almost a tenth of its energy needs for transport, electricity generation and heating from renewable sources in 2007, an industry group said on Tuesday.

The German federation for renewable energy (BEE) warned however that further progress was likely to be hampered by falling investment in renewable energy sources. A total of 9.1 percent of the energy for Europe's biggest economy was produced from sources such as the wind and the sun, compared with eight percent in 2006, the group said.

The biggest year-on-year jump was in electricity generation, with 14.3 percent in 2007 from renewable sources compared with 11.8 percent a year earlier, a difference BEE said equated to the annual output of a nuclear power station.

It said however that much of the increase could be attributed to a year of exceptionally high winds which activated wind turbines more than in 2006.

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Federation president Johannes Lackmann said investment in renewable energy sources turbines had actually fallen in 2007 and called on the German government to do more to stimulate its growth.

"The government's current provisions are insufficient to continue the successful course of recent years," he said.

Tax breaks and other subsidies that renewable energy sources receive in Germany are due to be gradually phased out over the next few years, which "green" producers say will erode their already weak competitiveness compared to traditional energy sources such as coal and nuclear power.

Via: Agence France-Presse

GERMANY: Berlin opposes European Union directive restricting invest in energy sector

2008-01-04T11:05:00.001+01:00

Germany opposes a European Commission energy directive that restricts investment by third countries in the European Union’s energy sector and requires the separation of production and transportation at the ownership level, German Economy and Technology Minister Michael Glos told Interfax.

“We are skeptical regarding the European Union Commission’s proposals banning investment in the transportation network by third countries. In Germany the door to foreign investment is wide open,” Glos said.

“Of course, there must be rules that can be used in isolated cases to battle investments pursuing non-economic goals. However those rules should apply to all sectors,” Glos agreed.

At the same time he expressed support for the European Commission’s goal of strengthening integration and competition on the market in electricity and gas.

“However, important points of this packet of documents are still not sufficiently convincing. For example, we are not convinced that the separation of ownership of the transport network is a suitable engine for the development of dynamic competition,” Glos said. “There is not convincing evidence that such a separation at the ownership level is capable of producing growth in investment, reduced prices and a de-monopolized market. Disproportionate interference in private ownership is also associated with that,” he said.
Glos was in Moscow to participate in the ceremony of opening the German-Russian foreign trade chamber on December 14.

“That event alone is confirmation of the dynamically developing relations with Russia. After the record turnover of 53.5 billion euro in 2006, German exports to Russia rose 33% in the first eight months this year. Delivery of investment goods to Russia increased by leaps and bounds,” he said.

“The cars, machinery and equipment delivered from Germany are an important factor in the modernization and diversification of almost all areas of the Russian economy, including those other than the oil and gas sector,” Glos said.

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Concerning the route of the Nord Stream gas pipeline, Glos said: “There has not been a final decision on which route across the Baltic sea bed will be chosen. It follows that the just (environmental) interests of the countries in the Baltic area must be fully taken into account.”

“The Nord Stream gas pipeline is a private economic project on a European scale. Economic and, to a significant degree, environmental considerations will affect the construction of the pipeline and associated work along its route,” he said.

The environmental protection issue has prompted the participating companies to examine several alternative pipeline routes, he said.

Glos also said it would be desirable for new representations of German car manufacturers to be opened in Russia. “The German federal government welcomes the activity of Volkswagen in Russia – a promising sales market for the entire German automobile industry. Opening new divisions of German firms in Russia, including in the automobile and auxiliary industries, would be desirable,” he said.

However, he said, the decision on operations abroad is made by the companies themselves. “The federal government has absolutely no influence on that,” Glos said.

IRAN: Nabucco pipeline project impossible without Iran

2007-12-27T06:48:00.001+01:00

Oil Minister Gholamhossein Nozari here Wednesday assured that it would not be possible to put Nabucco gas pipeline into operation without Iran, dismissing it as uneconomical.

“If Nabucco pipeline comes on stream, Iran will be the sole option for supplying its gas as the country is the world’s second-largest holder of natural gas,” said the minister, however adding other companies could also provide some part of the project’s gas.

National Iranian Oil Refining and Distribution Company (NIORDC) Managing Director Mohammadreza Ne’matzadeh had already announced that Europe had no way out but to satisfy its energy needs by transferring Iran’s gas via Turkey’s Nabucco pipeline.

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“Europe’s need in Iran’s gas supplies through Nabucco pipeline which passes through Turkey is inevitable,” he said, adding European countries needed Iran’s gas while Iran, for its turn, was in need of the EU market, stressing that such a trade deal would yield many political and economic fruits for both sides.

“That’s why the new Nabucco pipeline which was proposed by Turkey for transferring gas supplies of Central Asia and Iran to Europe was welcomed by the energy ministers of Austria, Hungary, Romania, Bulgaria, and Turkey itself and that’s why the said energy ministers in a recent meeting have each taken up a 20% share for the establishment of the pipeline.”

Turkey and Iran are expected soon to complete the agreement to build some 3,500 kilometers (2,200 miles) of gas pipelines to transport up to 40 billion cubic meters (1.4 trillion cubic feet) of gas annually to Europe through Turkey.

Nabucco pipeline aims to reduce Europe’s dependency on gas from Russia, which has proved to be an unreliable energy supplier in recent years. European Union is lagging behind in implementing the project and has not made headway yet. A reason is that Europe has not found a proper alternative for Russian gas.

It seems Nabucco project cannot be economically viable unless it transfers Iran’s gas to energy-hungry European countries via Turkey’s gas could be transferred via the pipeline by 2017.

The United States, in continuation of its hostile stance on Iran since the Islamic Revolution, has so far exerted pressure to impede Iran’s participation in the project.

However, whether the U.S. and its allies like it or not, Iran is the most reliable and best partner for the project.

The latest EU report on the project said that it would start in 2013 and EU coordinator in Nabucco project predicted that Iran

The project faces two major obstacles; Russian concerns about possible participation of Central Asian countries and transfer of required technologies to Iran to control its high gas consumption.

Independent gas transit deals signed between Moscow and former Soviet Union states and Russia’s contracts with Germany and Italy for laying gas pipelines will weaken the possibility of Central Asian countries in the project.

Partners in the Nabucco project, whose name is taken from the Babylonian king Nabucco, famously known as Nebuchadnezzar, which expelled the Jews from Babylon, have set up their dreams to ensure energy security for Europe. They should know that their dream will not be materialized without peace and security in region traversed by the pipeline.