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  • Armenia’s Aging Metsamor Nuclear Power Plant Alarms Caucasian Neighbors

    The USSR might have imploded two decades ago, but debris from its headlong industrialization drive litter the post-Soviet landscape, and nothing more unsettles the population of the fifteen new nations carved out of the Soviet Union than its nuclear legacy.

     

    The poster child for Caucasian nuclear concerns is Armenia’s aging Metsamor nuclear power plant, which provides nearly 40 percent of the country’s electricity.

     

    The facility has not only alarmed neighboring Georgia, Turkey and Azerbaijan but begun to receive international notice as well - on 11 April National Geographic ran a story entitled “Is Armenia’s Nuclear Plant the World’s Most Dangerous?”

     

    Metsamor, 20 miles west of the capital Erevan and 10 miles from the Turkish border, encapsulates the dilemma facing many energy-poor nations heavily dependent on nuclear power – unlike Germany, they do not have the cash or alternatives needed to shutter such facilities and consequently, keep them running while crossing their fingers.

     

    Metsamor, which began operations in 1976, contains two VVER-400 V230 376 megawatt nuclear reactors generating about 2 million kilowatt hours of energy annually. Many environmentalists regard it as an accident waiting to happen. The Armenian government closed Metsamor's Unit 1 in February 1989 and Unit 2 the next month following a massive December 1988 earthquake which killed more than 25,000, left much of northern Armenia in ruins and caused more than $4 billion in damage.

     

    Perhaps not surprisingly, the facility itself is a hostage to the vicious politics disrupting the Caucasus. Armenia went to war with Azerbaijan in February 1988 over the disputed Nagorno-Karabakh enclave. During the clash, which lasted until May 1994, Azerbaijan blockaded roads, rail lines and energy supplies, leading to severe energy shortages in Armenia. In 1991 pressure to restart Metsamor increased after a natural gas pipeline from Turkmenistan was blocked by a Turkish and Azeri fuel embargo. By the winter of 1994-95, residents of Yerevan often had only an hour or two of electricity daily, which the restart of Metsamor's Unit 2 in October 1995 increased to 10-12 hours per day and has been running ever since, environmentalists be damned.

     

    Earlier this month however Metsamor was brought offline on 11 September and will resume operation on 27 October. The EU has classified the Metsamor’s reactors as the "oldest and least reliable" category of all the 66 Soviet reactors built in Eastern Europe and the former Soviet Union.

     

    Azerbaijani National Academy of Sciences President Mahmud Karimov recently voiced his country’s concerns over Metsamor, stating, "The European Union also expressed the need to close the plant. Despite regular inspections of the plant by international organizations, the results of these inspections are kept secret and no information is given to Azerbaijan about them. The countries of the region – Azerbaijan, Turkey and Georgia – have repeatedly proposed allowing the specialists of these countries to examine the Metsamor nuclear power plant. But the reports on Metsamor are not available to these three countries. The Armenian side says ten different committees have checked the Metsamor NPP in 2011. But the test results are not available to neighboring countries, that is, the inspections lack transparency."

     

    Quite aside from its aging technology, Metsamor, high in the mountains, lacks suitable water resources to use as reactor core coolant in the event that an earthquake damaged the facility, while Armenia’s parlous fiscal situation means that its government lacks financial resources to address the consequences of a possible accident. Metsamor is one less than a half dozen remaining nuclear reactors of its kind that were built without primary containment structures.

     

    Nor is the only threat to Metsamor’s operations coming from its aging technology – more than 140 workers at Metsamor have threatened to quit their jobs if their wages are not raised, Radio Free Europe/Radio Liberty’s Armenian Service reported.

    Metsamor Director Ashot Markosian told RFE/RL on 23 September that despite the workers writing him directly, the plant currently lacks the funds for a salary increase. Earlier this month several Metsamor employees sent an open letter to Armenia’s presidential staff, the Prime Minister as well as European branches of the International Atomic Energy Agency, accusing Metsamor’s chief engineer Movses Vardanyan of abusing his official position, nepotism and embezzlement.

     

    But no mind - Armenian authorities have said they will build a new $2-5 billion nuclear power plant to replace the aging Metsamor facility, which will operate at twice the capacity of the Soviet-built power station. In 2004 the European Union's envoy called Metsamor "a danger to the entire region," but Armenia later turned down the EU's offer of a 200 million euro loan to finance Metsamor's shutdown.

     

    Aging nuclear technology, a disaffected work force in a facility located in a seismically active region – what could possibly go wrong?

     

    Time for the EU to up its bribe – err, loan.

     

    Source: http://oilprice.com/Alternative-Energy/Nuclear-Power/Armenias-Aging-Metsamor-Nuclear-Power-Plant-Alarms-Caucasian-Neighbors.html

     

    By. John C.K. Daly of Oil Price

    Oct 06 11:32 AM | Link | Comment!
  • Turkey and Russia Spar Over Natgas Prices

    While few people in the world have warm feelings for energy companies beyond perhaps their stockholders, Russia’s state-owned natural gas monopoly Gazprom has shown an unrivalled and unique capacity to alienate is customers over the past two decades since the collapse of the USSR.

     

    Nations unhappy with Gazprom’s bludgeoning tactics include virtually all of the new nations composing the post-Soviet space and beyond. Issues range from aggressive low-balling of purchase prices for natural gas exports (Central Asia post-Soviet states) through transit countries getting screwed on both prices and transit fees (Belarus, Ukraine and China) to end consumers from Eastern and Central Europe to Asia.

     

    Gazprom’s customer base is nervously contemplating if the monopoly’s obnoxious buccaneering capitalist tactics will cause further disruptions in continued supplies of natural gas if the energy giant pushes their transit neighbors too far.

     

    One of Russia’s customers has had enough of being regarded as Gazprom’s milch cow, and unlike Ukraine or Belarus, Moscow may suddenly find that Turkey has both the inclination and wherewithal to fight back, and it is a fight that Gazprom would be foolish to pursue.

     

    The storm flags were raised in Ankara on 29 September when Turkish Energy Minister Taner Yildiz told a symposium on the exploitation of mineral resources that Turkey may sever its natural gas contracts with Russia if discounts on fuel supplies cannot be resolved. Taner said, "The operation of our agreements for the supply of gas through the western corridor is expiring later this year. We import much of our oil and gas. In this regard we have requested from the Russian side a discount on the gas being supplied along the western corridor. If Russia does not offer a discount that will satisfy us, we intend to raise the question of terminating the contract" before reminding his audience that over the past 29 months the price of Gazprom natural gas imports had risen by 39 percent.

     

    Yildiz stated that in view of the rising prices the Turkish government intended to seek a partial rebate for the country’s purchase price of Russian oil and natural gas via the Balkans, commenting, "Specifically, we shall analyze every agreement in this area that is expiring.

     

    Among them contracts for supply through the western corridor" before reiterating that without a discount Turkey would not renew the purchase agreements.

     

    Now Ankara has upped the ante, as on 2 October the Turkish state gas pipeline operator Botas informed Gazprom that it will end its contract with them for the delivery of natural gas to Turkey through the Balkans. Sources in the Turkish Energy Ministry, speaking on condition of anonymity said, "Russia has failed to take steps that would satisfy the Turkish side. Proceeding from this, Botas has officially informed Russia that it will not extend the agreement."

     

    Turkey is seeking a 20 percent natural gas price reduction on its Balkan purchases. On 2 October Turkish Energy Minister Taner Yildiz said, "Russia is the most important country in our import of natural gas. Our annual natural gas import from three different channels in Russia is nearly 30 billion cubic meters. The Western Line provided an annual 6 billion cubic meters of natural gas. End of inflow of 6 billion cubic meters of natural gas will not cause any problem. Turkey also imports natural gas from Iran and Azerbaijan. Our annual natural gas consumption is 35-37 billion cubic meters. On the other hand, Turkey is able to import 45 billion cubic meters of natural gas under its agreements,"

     

    The view from Moscow is that it has the whip hand in its negotiations with energy-poor Turkey, which currently imports about 90 percent of its energy needs. In 2010 Gazprom provided bout 60 percent of Turkey's total domestic gas imports for domestic consumption.

     

    That, however, is half the story.

     

    Turkey and Russia are already connected with pipelines not only through the Balkans but also by the Blue Stream 754 mile-long, $3.2 billion, natural gas pipeline, which runs across the bottom of the Black Sea from Russia’s Beregovaia Compressor Station to Turkey’s northeastern Black Sea Durusu Terminal. While gas flows from Russia to Turkey started in February 2003, pricing disputes delayed the official inauguration ceremony at Durusu until November 2005. Turkey took some criticism from the U.S. for the pipeline prior to its opening, as Washington publicly criticized the pipeline, calling upon Europe to avoid becoming any more dependent on Russia for energy. Despite the cost wrangles, relations were running sufficiently well that in March 2009 discussions were held in Ankara between Turkey’s previous Energy Minister Hilmi Guler and Gazprom CEO Alekhsei Miller about a parallel Blue Stream 2 undersea pipeline project.

     

    What Miller and his cohorts seem to fail to understand is that Gazprom is not the sole significant player in the Turkish market that it used to be. Iran, which contains the world's second-largest gas reserves, currently provides nearly one-third of Turkey's domestic demand and is eager to expand sales, while neighboring Azerbaijan, which currently supplies roughly 5 percent of Turkey’s imports, is also seeking to expand its market share, particularly given its recent massive offshore Caspian natural gas discoveries. Last but not least, Turkey also receives liquefied natural gas (NYSEMKT:LNG) supplies under contract with Algeria and Nigeria.

     

    Earlier this year, Turkey’s natural gas reserves were estimated at roughly 218 billion cubic feet, nearly all of which is undeveloped, as the country currently only produces approximately 25 billion cubic feet per annum. There are 14 gas fields in Turkey, the largest one of which is Marmara Kuzey, an offshore field in the Sea of Marmara in the Thrace-Gallipoli Basin and Turkish and foreign companies have been exploring for oil and natural gas in Turkish territorial waters from the Black Sea to the Mediterranean.

     

    So, Turkey is hardly bereft of longer-term energy options should Moscow continue to put the financial screws to its natural gas prices. While a cessation of Russian natural gas imports would undoubtedly cause some interim dislocation to the Turkish economy, there are the options enumerated above that could in short order begin to take up the slack.

     

    Gazprom accordingly should listen very carefully to Ankara’s pricing concerns.

     

    Source: http://oilprice.com/Geo-Politics/International/Turkey-and-Russia-Spar-Over-Natural-Gas-Prices.html

     

    By. John C.K. Daly of Oil Price

    Oct 04 10:21 AM | Link | Comment!
  • Russia Claims New Arctic Hydrocarbon Finds Effectively Double Nations Reserves

    Russia, currently vying for the title of world's top oil producer with Saudi Arabia, claimed that new findings in its offshore Arctic territories have effectively doubled the nation’s energy reserves.

     

    According to numerous Russian media reports, addressing a meeting of the sixth media forum of the United Russia Party on 25 September, Russian Natural Resources Minister Iury Trutnev said that the preliminary forecast is that resources in the Russian Arctic shelf are comparable to those in mainland Russia, adding, “Speaking of long-term planning, these reserves could last 100, may be 150 years, but longer is unlikely. Humanity will eventually have to look for new energy anyway. Recently, we completed 40-year talks with Norway, delineated the gray zone, and now obtained another 5 billion tons of fuel equivalent there.”

     

    Trutnev’s new Arctic reserve claims are buttressed by the United States Geological Survey (USGS) 2008 survey, which estimated that 90 billion barrels of undiscovered oil and 1.668 trillion cubic feet of undiscovered natural gas lie beneath the Arctic’s waters and ice, representing 13 percent of the world’s undiscovered oil. Strong oil prices, more advanced offshore equipment and receding sea ice are leading to a growing interest in the Arctic.

     

    Four years ago Russia’s Arktika 2007 expedition took a team of Russian geologists on a six-week voyage aboard the 50 Let Pobedy (“50 Years of Victory”) nuclear icebreaker to the underwater Lomonosov ridge in Russia's eastern Arctic Ocean, which they claimed was linked to Russian Federation territory and contained 10 billion tons of natural gas and oil deposits. The Russian Federation has been busily advancing its claims over its Arctic continental shelf ever since. Just to be on the safe side, Russia has prepared a justification for submitting in 2013 a new claim for the expansion of the borders of its Arctic shelf, according to Trutnev, who told media forum participants, "Important work was carried out this year: our vessels covered a distance of 22,000 kilometers and conducted activities to justify Russia's new claim in 2013."

     

    Russian Prime Minister Vladimir Putin has also gotten into the act of national chest-thumping about Russia’s new-found Arctic riches. According to information posted on the Prime Minister’s website, Putin told participants at the second International Arctic Forum, "The Arctic - Territory of Dialogue" in Arkhangelsk on 22 September, “We have already installed one of the world's largest hydrocarbon platforms there. Russia is starting to develop the Arctic shelf and opening a new chapter in the history of Arctic exploration. Very soon it will contain pages on the commissioning of the Shtokman deposit in the Barents Sea and the development of resources in the Kara Sea and on the Yamal Peninsula.”

     

    Seeking to allay the not inconsiderable environmental concerns about the Arctic’s fragile ecosystems Putin added, “All our plans will be carried out in compliance with the toughest environmental standards. A careful, civilized attitude to nature is a requirement of all development programs. Active economic development of the Arctic will be beneficial only if we maintain a rational balance between economic interests and environmental protection for the long term, not just for 10, 15 or 20 years. I mentioned the Prirazlomnoe deposit, where oil production is expected to last for at least 25 years and, hence, environmental support must be provided for this entire period. The Shtokman deposit is expected to last for 50 years.”

     

    Just coincidently, during the Forum Putin fielded a telephone call from Rosneft president Eduard Khudainatov, who just happened to be standing on its Prirazlomnoe offshore platform in the Pechora Sea. Via sat-phone hookup Khudainatov addressed environmental safety concerns by telling Putin, "We know absolutely how to do this. We have started this work and we are absolutely certain that the risk in Arctic shelf exploration will be ruled out."

     

    Whether of not the Russians have either the expertise or the necessary cash to exploit the region’s reserves is another matter, as Arctic oil and natural gas exploration is more technically and physically challenging than for any other environment. However, Putin added that Rosneft has a long strategic cooperation agreement with ExxonMobil, and no doubt there will be other international energy companies willing to brave Russia’s tortuous bureaucratic maze for a piece of the action.

     

    In the early 2012 Russia plans to start the first commercial offshore oil drilling in the Arctic on its Prirazlomnoe offshore platform, hailed in the Russian media as the world’s first Arctic-class ice-resistant oil rig.

     

    Oh, and if things do screw up in spite of Khudainatov’s promises, well, according to Russian Transport Minister Igor Levitin, addressing the same forum as Putin, the Russian government has allocated 20 billion rubles ($623 million) to construct three new nuclear and three diesel-electric icebreakers.

     

    Source: http://oilprice.com/Energy/Energy-General/Russia-Claims-New-Arctic-Hydrocarbon-Finds-Effectively-Double-Nations-Reserves.html

     

    By. John C.K. Daly of Oil Price

    Oct 03 10:51 AM | Link | Comment!
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