THERE MUST BE GAS. (Ci deve essere gas)

Poland’s hopes of hitting a shale gas bonanza have suffered a blow as ExxonMobil ended exploration for the unconventional fuel after tests failed to find gas in commercial quantities.

The US oil major said there had been “no demonstrated sustained commercial hydrocarbon flow rates” in two test wells in eastern Poland and added that it had “completed its exploration operations in Poland”.

ExxonMobil has six concessions in Poland and it remains unclear what plans the company has for them.

The decision by ExxonMobil is the latest in a series of disappointments over Poland’s possible gas reserves.

Energy companies and the government were enticed by an estimate last year from the US Energy Information Administration, which said Poland might hold 5.3tn cubic metres of shale gas – the largest reserves in Europe.

However, a newer estimate by Poland’s government geological institute cut about 90 per cent off that, suggesting reserves of 346-768bn cubic metres.

Although the lower number is unlikely to turn Poland into a gas exporter, it would make it much less dependent on gas imports from Russia, which currently supplies about two-thirds of the 14bn cubic metres of gas the country consumes annually.

Waldemar Pawlak, Poland’s economy minister, suggested that ExxonMobil became less interested in its Polish operations after agreeing last week to develop tight oil reserves in Siberia together with Rosneft, the Russian state oil group.

“With such prospects, shale gas in Poland did not have as much meaning for [ExxonMobil],” said Mr Pawlak.

In 2009, ExxonMobil abandoned shale gas exploration in Hungary after a disappointing result from a test well.

The Polish government has handed out 109 shale gas exploration concessions around the country, and the other companies still looking for the fuel – a process that involves pumping fluids at high pressure deep underground to fracture rock, releasing trapped oil and gas – are still optimistic about Poland’s possible deposits.

Companies active in Poland include Chevron, ConocoPhilips and Poland’s PGNiG, the former gas monopoly, as well as a host of smaller groups specialised in shale gas exploration.

“I’m a bit perplexed as to why anyone would drill just two wells and then leave,” said John Buggenhagen, exploration director for Aim-quoted San Leon Energy, which has concessions near the Baltic coast, as well as in the west and south of the country.

“We believe it will take dozens of wells to explore just a small area. San Leon believes Poland has huge potential.”

One of the earliest tests came from 3Legs Resources, the UK-based independent that was the first operator to drill and test two shale wells near the Baltic coast where it found “encouraging” quantities of gas, although the flow rates were less than expected.

Mikolaj Budzanowski, the treasury minister, estimates that the first commercial shale gas extraction should begin in 2014-2015, with about 0.5 to 1bn cubic metres coming to market initially, with production eventually ramping up to 5bn-10bn cubic metres a year.

Poland has been one of the most enthusiastic backers of shale gas in the European Union, while other countries such as France, Romania and Bulgaria have instituted moratoriums on shale exploration for environmental reasons.

(FinancialTimes)

AT FULL SPEED! (A tutto gas!)

Il Primo Ministro slovacco Iveta Radicova e il suo omologo ungherese Viktor Orban hanno firmato oggi a Bratislava un accordo internazionale su un collegamento gas transfrontaliero. Un accordi di programma era stato sottoscritto già il 19 Gennaio scorso dai Sottosegretari dei due Ministeri dell‘Economia, Martin Chren per la Slovacchia e Pal Kovacs per l‘Ungheria, e successivamente approvato dal Governo slovacco il 26 Gennaio.

Il collegamento tra Slovacchia ed Ungheria rientra nel più ampio progetto di corridoio nord-sud del gas, composto di diversi singoli progetti interconnessi. Il corridoio nord-sud si connetterà ai terminali di gas in Polonia e Croazia, e quindi il gasdotto attraverserà tutti i Paesi del Gruppo di Visegrad (V4), dunque anche Slovacchia e Ungheria. La Slovacchia sta i questo modo cercando di ridurre i rischi associati a possibili interruzioni delle forniture di gas dalla Russia, cosa che portò nel Gennaio 2008 ad una crisi del gas che mise a rischio non solo il riscaldamento delle abitazioni, ma anche la produzione di non poche aziende.

L’operatore slovacco Eustream di trasporto del gas ha già avviato colloqui con la sua società partner ungherese Foldgazszalito Rt per la redazione del rispettivo accordo commerciale e dettagli tecnici. Analogo accordo sarà fatto con la Polonia, con il cui operatore di rete GAZ-System è stata firmata una lettera di intenti pochi giorni fa.

L’accordo di oggi significherà un maggior grado di indipendenza in termini di sicurezza energetica della Slovacchia, nonché quello di tutta l’Unione Europea, ha affermato il Premier slovacco Iveta Radicova dopo la firma.

Secondo la Radicova, ci sono altre aree nelle quali i due Paesi possono migliorare. «Abbiamo sollevato il problema del collegamento delle reti elettriche, e abbiamo concordato con il Premier [Orban] che porteremo avanti un accordo in questo settore simile a quello del gas», ha detto, specificando che lo ritiene un obiettivo strategico. Tra gli altri temi discussi, la prevista ripresa dei lavori di costruzione della strada che collega la R4 nella Slovacchia orientale con l‘Ungheria. «L’Ungheria ha deciso di riprendere i piani per la superstrada tra Kosice e Miskolc», ha detto Orban, aggiungendo che intende trovare un accordo con la Slovacchia anche per il nuovo ponte nei pressi della città di confine di Komarno (regione di Nitra).
(Buongiorno Slovacchia)

SUSPICIOUS SILENCE. (Silenzio sospetto)

The recent signing of the Nabucco pipeline project is definitely a political rather than economic deal. Its feasibility, the probability of its actual construction and its profitability aside, the deal shows clearly that, at least for the present, those who want to see a weaker Russia prevail over those who would rather see it strong and an integral part of the West. It is also obvious that without heavy Washington lobbying the Nabucco pipeline would never take off. Since there is practically no economic interest for the U.S. in it, Washington politics make the direction of the much advertised "reset" quite uncertain.

In the last 20 years since the collapse of communism every U.S. president has kept repeating that it is in American interests to see Russia as a strong, democratic, and prosperous nation. But actions rarely suit the words. Washington needs, and often gets, Moscow’s cooperation on major security issues, but then it turns around and does its damnedest not only to prevent “non-democratic” and “authoritarian” Moscow from becoming an energy superpower, but to make sure that it gets as little cash as possible -- by diverting this cash to former Soviet republics where democracy is so rudimentary as to be barely discernible, while Oriental despotism, sometimes hereditary, is very much in evidence. So much for the hugely advertised U.S. democracy promotion mission.

OK, let us forget about democracy and get to real things. Has in the end Russia lost this round? What about another important problem for Nabucco - the Iranian connection? It is more or less obvious that this new pipeline will be extremely difficult to fill. If one excludes Russian and Iranian gas it would be practically impossible to do. That is why Turkey insisted that both Russia and Iran should be on the list of gas suppliers but then the whole idea of Nabucco of eliminating Russia from the supply equation did not materialize. Pretty soon the Nabucco lobbyists will have to face squarely some unpleasant questions: Why we should spend billions to enrich Iran or Russia? The next question will be what if both Russia and Iran say that they are not interested since they already have other gas delivery contracts through different routes? Will Nabucco actually bring Russia and Iran closer together to manipulate not only the gas supply line but geopolitics?

Russia provided so much help to U.S. and NATO in Afghanistan. It can do a lot more in Iran since practically the whole Iranian nuclear program is dependent on Russia, which makes RF the best guarantor of it being used for peaceful rather than military purposes.

Of course, Russia made a mistake in accepting Ahmadinejad’s claim for victory in the recent elections a bit too soon. The Iranian opposition is not crushed yet, and the final outcome is not too certain. More and more political leaders and even mullahs are switching sides. The Kremlin would be well advised to show some restraint or at least neutrality, to avoid a future backlash.

Another interesting observation is that Ukrainians, Poles and Balts are suspiciously quiet. They were quite vocal in protesting against the Nord Stream Project to connect Russia with Germany through the Baltic Sea. Ukraine was the most vocal opponent since Nord Stream will bypass it, thus depriving Kiev of the much needed currency and of any chance of blackmailing Russia by delaying gas payments. The Nabucco pipeline -- if it is ever built, of course -- will also bypass Ukraine, but so far it looks like their leaders do not seem to mind. Moreover, they are cheerleading it, so is there some secret protocol to Nabucco regarding Ukraine?

To sum up, the way things are now, the Nabucco project may end up as a hot air balloon, for its economics are pretty questionable while the politics surrounding it smells very bad indeed.

However, one good thing for Russia is that Nabucco should force it to be more aggressive in building the alternative Nord Stream and South Stream pipelines and at the same time spare no effort on its economy diversification so as not to depend too much on its natural resources.
As for Nabucco cheer leaders it is to early for them to celebrate. At the present time I’d not advise to buy the pipeline stocks to anyone but instead want to repeat to some narrow-minded folks that it is a lot more advantageous to have Russia as a friend rather than foe.
(Russia Blog)