Qatari LNG gas to arrive in South Wales, real soon now

The Tembek, (built at Samsung's Geoje Yard, Korea and registered in Mjuro in the Marshall Islands ) one of a new generation of so-called Q-Flex LNG tankers, with a capacity of 211,885 cubic meters of LNG left Qatar and transited the Suez canal on or about Jan 23rd 2009.

She is due to dock at South Hook LNG, Milford Haven (a joint venture Qatar Petroleum, Exxon Mobil Corp. and Total SA) any day , marking Qatar’s arrival as the key natural gas supplier to the U.K. The ship will stop near the U.K. so its arrival coincides with final commissioning steps of the terminal in the “next few weeks,” the company says.

BG Group Plc’s Dragon LNG terminal at Milford Haven also awaits commissioning.

South Hook expects to receive as much as 7.5 million tons of LNG a year, or 10.5 billion cubic meters of natural gas, in its first phase. The terminal’s capacity is planed to double by 2012.

Dragon and South Hook together will have a combined import capacity of 19.4 million tons of LNG a year, or 26.7 billion cubic meters of natural gas.

Currently the U.K. is a higher-priced market than the U.S. at present, making it more attractive for Qatari shipments. Gas for delivery next month at Henry Hub in Louisiana, the U.S. benchmark price, traded at US$4.74 a million BTU's on Jan 22nd on the New York Mercantile Exchange - approximately US3 less than February gas delivered UK.

Typically, one or more initial cargoes of LNG are used to cool down a new import facility’s pipes and storage tanks to the correct operating temperature. LNG is natural gas chilled to liquid form at minus 161 degrees Celsius (minus 258 Fahrenheit) to aid transportation and storage.

Qatar exported 38 billion cubic meters of gas in 2007, up 24 % on 2006, according to BP’s Statistical Review of World Energy. Qatar plans to produce 77 Mn tons by 2010. That’s equal to 106 billion cubic meters of gas, roughly equivalent to UK annual consumption.

PS. The Tembek is owned through a joint venture between Qatar Gas Transport Company (Nakilat) and OSG, from which Qatargas will charter the vessel. Mr Angus Cambell, is Head of OSG Gas (Overseas Shipholding Group - 666 Third AvenueNew York, NY 10017) and his beautiful wife Naomi named the ship September 13th 2007.

UPDATE : 1600 BST Frid 30-1-09 BG Group PLC-operated (BG.LN) Dragon liquefied natural gas terminal at Milford Haven in Wales, the South Hook LNG terminal at Milford Haven have been hit by walkouts related to protesters demonstrating at Total SA's (TOT) 220,000 barrels-a-day Lindsey Oil Refinery in Immingham, northern England.

Milford Haven has highest percentage of empty shops in country
11:58am Thursday 22nd January 2009 ----- Milford Haven is facing a future as a ghost town with the highest percentage of empty shops in the country, major new research has revealed. etc....

Not a UFO a large load of frozen H2O - and the press comment is a load of bollocks

Folks mystified by the damaged windmill in Lincolnshire should read the post Thursday, August 30, 2007 Wind Energy as a source of electricity - benefits overblown ..

"After the industry's recent boom years, wind power providers and experts are now concerned. The facilities may not be as reliable and durable as producers claim.

Indeed, with thousands of mishaps, breakdowns and accidents having been reported in recent years, the difficulties seem to be mounting.

Gearboxes hiding inside the casings perched on top of the towering masts have short shelf lives, often crapping out before even five years is up. In some cases, fractures form along the rotors, or even in the foundation, after only limited operation.

Short circuits or overheated propellers have been known to cause fires. All this despite manufacturers' promises that the turbines would last at least 20 years."

Insurance costs increasing in Germany

Among insurers, who raced into the new market in the 1990s, wind power is now considered a risky sector. Industry giant Allianz was faced with around a thousand damage claims in 2006 alone. Jan Pohl, who works for Allianz in Munich, has calculated that on average "an operator has to expect damage to his facility every four years, not including malfunctions and uninsured breakdowns."Many insurance companies have learned their lessons and are now writing maintenance requirements -- requiring wind farmers to replace vulnerable components such as gearboxes every five years -- directly into their contracts.

A gearbox replacement can cost up to 10 % of the original construction price tag, enough to cut deep into anticipated profits. Indeed, many investors may be in for a nasty surprise. "Between 3,000 and 4,000 older facilities are currently due for new insurance policies," says Holger Martsfeld, head of technical insurance at Germany's leading wind turbine insurer Gothaer. "We know that many of these facilities have flaws."

Lots more at the link with pictures.

The problem in Lincolnshire wasnot little green men but simply ice build up on stationary blades which were then released, the load deformed and stripped a blade which hit another.

The missing one will be found somewhere

Are UK natural gas supplies secure this winter ? The margin of security gets smaller and smaller - and gas more expensive.

Gazprom reduced natual gas supplies to Ukraine at 0700 GMT today - Current debts have been cleared but the parties cannot agree on a price for future deliveries.

Ukraine was paying US $179.50 per 1,000 cunic metres, Gazprom now want US$250 pMcfm. and the Ukraine is said to have offered to pay US$201 per 1,000 pMcf.

This will not affect European domestic supplies in the near terms but if there was a lengthy stand off the effects could be felt as the Ukraine siphoned off supplies which pas throughfor Europe for their own use.

Looming UK natural gas shortages

Rune Likvern has posted a 2 part analysis entitled Will the UK Face a Natural Gas Crisis this Winter? on the Oil Drum Europe. Part 1 October 18th and Part 2 December 18th which with the usual well informed comments makes essential reading if you wish to grasp what is happening to UK energy security. (click on any image to enlarge)

This chart illustrates the case made by Forthcoming UK Energy Deficit FCUKED over a decade - the trend is clear, gas usage is increasing, rincipaly because nuclear production - green line (due to the disastrous and continuing reactor problems detaield here for years) is declining and the ultimate reduction in coal generation as the EU Fuel Directive results in the closure of antique coal generation plants.

The role of natural gas in the next 5 years has therefore becoem increasingly critical.

The UK has several sources of natural gas ;

1. Indigenous supplies from the North Sea / Morecambe Bay etc ... which are declining - National Grid figures show that current production averages 190 Mcm/d. This corresponds to approximately a 10% decrease over the corresponding period a year ago.

2. The newly opened Langeled pipeline joining the UK to the Ormen Lange field offshore mid-Norway. This pipeline goes via the Sleipner hub (see map) at which point Ormen Lange gas can come to the UK or be diverted to continental Europe. The other main pipeline is the Tampen Link joining Norway's northern oil fields to the UK's FLAGS pipeline system. This may pipe gas from Statfjord and other Norwegian oil fields to St Fergus in Scotland.

3. The UK is also joined by two interconnectors to Europe. The Dutch interconnector was bult to export UK gas to Holland and is currently an export only link. The Belgian interconnector may pump gas both ways and can be used to balance UK and European supplies.

4. LNG imports enter via terminals are concentrated in Wales and the Thames estuary and are developing their capacity . The South Hook facilities in Wales have been developed as a joint venture between Qatar Petroleum and EXXON Mobil .

Note : Net nat gas imports as modeled average 108 Mcm/d during the next 12 months. This corresponds to a very slight (<>

However due to very limited capacity to store gas - the UK can only store 4% of annual consumption compared with say 20-25% in Holland and Germany.

This storage is based on ;

1. Long Term (Rough, capacity of 3 340 Mcm and max flow rate of 42 Mcm/d),

2. Medium Term (Hornsea, Hole House Farm, Hatfield Moor, Humbly Grove; total capacity of 767 - 837 Mcm and max total flow rate of 37 Mcm/d)

3. Short Term (Avonmouth, Dynevor Arms, Glenmavis, Partington; total capacity of 260 Mcm and max total flow rate of 48 Mcm/d).

The total storage capacity of these facilities at the end of May 2008 was 4 367 - 4 437 Mcm, according to data from BERR. This amount corresponds to about 4% to 5% of annual consumption.

Based on these figures the latest BERR and Department of Energy and Climate Change (DECCA)and Nationa grdi information RUne Likvern has attempted to simulate the possible inputs of natural gas / usage and weather and the impact on draw down from storage

This indicate he says , medium term storage (yellow) is forecast to be emptied by late January, and that long-term storage (blue) is forecast to be emptied by mid February. The amounts shown are a combination of actual and forecast amounts. The darker shades represent development to date; the lighter shades represent the forecast period. (For a more detailed analysis go to the article).

UK Natural Gas prices

The price of natural gas in U. K. is important, because it helps determine the amount of imported natural gas available, both as pipeline imports and as LNG imports. Presently U.K. nat gas is traded at around 60 p/therm (day ahead) at NBP. (remember in Euros and US$'s actual contract costs expressed in sterlig have been rising the last few months.

At 60 p/therm suppliers would not be attracted ins hipping to the UK . Based on prices as they are today, it seems to Rine Likvern that a price in excess of 100 p/therm will be needed to move additional supplies to the U. K.

In November 2008, Russian natural gas was trading in Germany at around 110 p/therm (US$ 16 - 17/Mcf) at present exchange rates. If this reflects nat gas prices at the margin from Continental Europe (plus transport and administrative costs etc.), this suggests that U.K nat gas day ahead prices need to exceed 120 p/therm this winter to attract any meaningful supplies from Continental Europe.

The situation with LNG is less clear as contracts tend to be for long periods and spot cargoes are not readily available.

Don't expect to see your gas bills shrink and as the proportion of gas used to generate electricity increases your electricity bills won't either.

What happens if we start running out of gas ?

A lot of gas is supplied on interruptible contracts but domestic demand cannot be cut off - see the rawtenstall explosion when 14,000 homes had to each be visited to re-started by experts to ensure no air had entered the system to produce an explosive air/gas mix.

Quite simple ...

The Government are way ahead - domestic gas rationing in UK, this would be done by rolling 3 hour electricity blackouts - as most central heating systems rely on a continuous electricity supply. The government has it all planned - see http://www.berr.gov.uk/files/file35360.pdf !

Maybe a gas fire with a piezo spark starter would work and gas rings / ovens could be used - but not as heaters as they are not flued and Carbon monoxide could build up.

So lay in the candles, a camping stove - primus , propane gas, easily heated / cooked food , plan for vulnerable people , children , the elderly and get out the board games if the TV doesn't work. In the long term install a wood stove.

Warning signs in the oil industry

Apparently as the world oil price slumps much of the North Sea oil fields become uneconomic and the rumour mill says Conoco in Aberdeen are believed to have sent out letters of intention of redundancy. The very real threat here is that the North Sea is decommissioning - leading energy analyst Euean Mearns says if oil prices don't recover quickly then 2009 may see a flood of applications to shut down the rust belt - with Brent in front of the queue. See Bow Valley Divests Interest in UK North Sea's Peik Asset 29th Decemeber 2008

See Petrol price hits three-year low as crude falls again as tesco cuts prices today on the forecourt for regular unleaded to 82.9 p litre - Diesel is now averaging 99.72p a litre - the lowest price since November 2007 . Elsewhere Royal Dutch Shell Plc, and StatoilHydro ASA, Norway’s biggest oil producer, are among companies that deferred or canceled at least 14 projects this year in Alberta’s oil sands. Shell postponed a near-doubling of production in Canada’s oil sands .

Shtokman project on hold as financing hiccups

Russian gas monopoly OAO Gazprom owns 51% of Shtokman Development, a joint venture with France’s Total SA, - 25% stake, with Norway’s StatoilHydro ASA, holding 24%. Yuri Komarov, chief executive of Shtokman Development AG is on record saying he is concerned about financing caused by the "credit crunch".

Located in icy waters 550 kilometers into the Barents Sea, Shtokman is estimated to hold 3.8 trillion cubic meters of gas and 37 million tons of gas condensate, or enough to meet U.S. demand for six years.

Early estimates of costs to develop the field top $20 billion, and the consortium expects up to 70% of the development cost for the project’s first phase to be raised from capital markets.

The massive Arctic project will remain economically viable if oil prices stay around $50 or $60 a barrel.

Ukraine scratches around for the scratch to pay Gazprom the gas bill for October & November

The Ukrainian government website said Tuesday the state-controlled gas company Naftogaz will pay a $2 billion gas debt to Russia's OAO Gazprom with credit from state banks.(WSJ) See Tuesday, December 23, 2008 Putin on the prowl in Ukraine and Rawtenstall cut off from world - the Bigger the Bang the bigger the silence

Under the order, issued by Ukraine's government on Dec. 29 and published on the Ukraine Governmentwebsite it has been announced that Naftogaz will borrow from Oshadbank and Ukreksimbank to pay a US $2 billion gas debt to Russia's OAO Gazprom . The government also said it guarantees that Naftogaz would fulfill the order which they hope (?) to pay off by the end of 2008.

Gazprom spokesman Sergei Kupriyanov said in an interview with Echo of Moscow radio on December 27. Gazprom is well aware that Naftogaz Ukraine cannot pay out of its own funds.

Gazprom says Naftogaz owes it over US $2 billion for gas delivered (plus fines for late payment) in November and December. If the debt issued, isn't settled before Jan. 1. 2009 Gazprom is threatening to halt supplies from January 1st 2009 and hike the price of gas for Ukraine to US$418 from US $179.5 per 1,000 cubic meters. (Kiev Post)

Gazprom spokesman Sergei Kupriyanov noted , without a trace of humour, “There is no technical problem in shutting off gas supply from January 1,”

Ukrainian Prime Minister the beautiful, blonde blue eyed Ice maiden, Yulia Tymoshenko has canceled her visit today to Yevpatoria to console the survivors and relatives of the 26 dead, from the massive apartment block explosion last week - not caused by gas. Labour and Social Policy Minister Liudmyla Denysova deputised for her as the PM was busy with, " important state issues." The Government have promised that the residents of the five-storey apartment building will be given new apartments by the end of the year.

The Government website said she was busy today ....."within the framework of consultations and negotiations on gas supply and transit Prime Minister of Ukraine Yulia Tymoshenko held telephone conversations with Federal Chancellor of Germany Angela Merkel, Secretary-General of the Council of the European Union, EU High Representative for the Common Foreign and Security Policy Javier Solana and European Union Energy Commissioner Andris Piebalgs. Yulia Tymoshenko has informed them about the process of Ukrainian-Russian negotiations."

Ukraine struck a deal with the IMF for a US$16.4 billion loan at the beginning of November just as the economy suffered a dramatic turnaround. Growth shrank 14.4 % in November year-on-year after industrial output fell almost 30%. President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, and IMF chief Dominique Strauss-Kahn are still engaged in discussions over next year's budget abot conditions of the loan and when the balance of the loan will available.

Gazprom supplies a quarter of Europe's gas needs. The majority of that is shipped through pipelines crossing Ukraine. Cutting Ukraine's gas supplies would disrupt supplies to Europe, as it has done previously, because theUkraine siphoned off gas intended for Europe.

PS : Europe is facing 4 weeks very cold weather.

PPS : The Ukraine hryvnia last half of its value since September touching 10 to the US dollar earlier this month, although it has since strengthened to about 7.7/US $.

PPS : Get some candles and firewood in.

Medvedev and the Russian Bear tie up Serbian / South Stream / Gazprom Neft / INS deal to make inroads into Europe's soft underbelly

Finally, after talks lasting 11 months,( see Saturday, January 26, 2008 Putin plays the power card (again) in the Balkans ) Russia and Serbia have a mega bucks energy deal so that Russian state gas monopoly Gazprom Neft will now purchase 51% Serbia's oil monopoly NIS in exchange for building a gas pipeline through Serbia.

The deal was finalised today in the Kremlin between Dmitry Medvedev, the Russian president, and Boris Tadic, the Serbian President.

Alexander Dyukov, the Gazprom Neft president, said that his company would need to seek approval of Serbia's anti-monopoly agency for the deal to buy NIS, the Russian Interfax news agency reported. This means that if approval is given - and they have 130 days to think about it, the deal will be completed by May.

Not everyone is happy and economy minister , European leaning Mladjan Dinkic,of the panty waisted neo-liberal G-17 Plus has resigned. Critics point out that there are no guarantees that Russia will build the South Stream pipeline by 2015.

The US$13bn pipeline under the Black Sea would carry Russian natural gas to Bulgaria and Serbia before branching out to points in western Europe.

Others say that US$550 million (400 Mn Euros) for NIS is a giveaway and is really a hidden kickback for Russia's support of Serbia's bid to retain its claims on Kosovo. For what their opinion is worth Independent consultants Deloitte valued the whole company at 2.2 billion euros in September.

As part of the deal, Russia agreed to invest 550 million euros to modernize Serbian refineries and build a gas storage facility.

Reuters report that Vyacheslav Bunkov, an oil and gas analyst at Aton brokerage said that under the deal Gazprom essentially had received control of "all of Serbia's oil processing and sales network."

"Gazprom Neft begins its integration into Europe," he added.

One thing is certain , the guys in Camp Bondsteel in Kosovo and their masters will be none too happy with Mr Tadic.

Putin on the prowl in Ukraine and Rawtenstall cut off from world - the louder the Bang the bigger the silence

The Russian bear is once again threatening EU gas supplies. Their annual fisticuffs with the Ukraine over unpaid bills and increased charges has led state controlled Gazprom, Russia's largest energy provider, to hint at doubts over gas supplies across Europe.

In a statement on Monday, Viktor Zubkov, the Russian first deputy prime minister and chairman of Gazprom, refused to guarantee that the dispute would not cause problems for gas supplies to Europe.

Ukraine transmits 80pc of Russian gas exports to Europe via its pipelines and a similar dispute in 2006 led to an interruption of supplies across the continent. See here for explanation of how cutting gas to Ukraine affects EU gas supplies- Tuesday, March 04, 2008 The Bigger the Bang - The Louder the silence No 17 : Massive gas Explosion at Nyagan, Siberia covered up... and gas cuts to Ukraine ??

Ofgem, the UK energy regulator, said it was "monitoring the situation closely" ( = it is getting ready to wake up Lord Mogg the totally ineffectual wanker who is chairman of the spavined regulator) while a spokesperson for the Department of Energy and Climate Change (Decc) added: "We urge both parties to treat this as a commercial matter and to seek agreement. We have diverse sources of gas supply which means we are not reliant on any single supplier. Russia is not cutting off Europe. A reduction in Russian gas deliveries via Ukraine should not pose an immediate risk to the supply of gas to the EU."

Which means we also have sources of LNG and supplies could be available within ...ooooh ... months although we can only store some 14 days supplies nationally at any one time.

Around 2pc of the UK's gas supply comes directly from Russia, Decc claimed. So that's alright then. See also Wednesday, April 02, 2008 Hymne Russe

It's Grim Oooop North

Gas leaks were reported on December 4th and the smell has increased until yesterday , whilst repairs being done, a massive explosion in the main gas pipeline also brought down power lines near a sub station in Rawtenstall, Lancashire.

The blast left 18,000 homes without gas and 17,000 without electricity.200 homes have been evacuated.

It is most likely the gas supply will not be resolved until after Christmas.

Areas affected include Bacup, Waterfoot, Rawtenstall, Newchurch and Crawshawbooth and residents were asked as a safety measure to turn off all gas supplies and equipment.

A United Utilities spokesman said about 17,000 homes were without electricity after the blast, but all were expected to be reconnected by 2000 BST Monday.

Don't really expect to read / see this on national news it's only 18,000 left without gas after it has taken the gas company since Decemeber 4th to mend a leak.

UPDATE : Saturday 2100 GMT
Russia, Iran and 12 other nations are members of the Gas Exporting Countries Forum (GECF). This is of concern to Gas importers who can see that an effort is underway in Moscow to recast GECF into a gas cartel similar to Organization of Petroleum Exporting Countries (OPEC).(Which of course they deny)

In a speech Putin said

.."This means that despite the current problems in finances the era of cheap energy resources, of cheap gas, is of course coming to an end,"

Rawtenstall Gas explosion has now reached national news and some 300 engineers have been drafted in from across the country. District nurse cover to cope with Rossendale's older and vulnerable has been boosted. NHS Lancashire said it would mean more staff working over Christmas but a commitment to keep people in their own homes if possible.

Following the explosion evacuees were taken to Kay Street Baptist Church where volunteers from the Red Cross were on hand to provide help.

Areva, 2 year delay and massive cost increases on Olkiluoto 3 - Half Year profits rise

Greenpeace have been sniping at French nuclear group Areva (see postFriday, August 15, 2008
Greenpeace and the Magic Documents - How they are mongering scares and totally missing the point about nuclear power - it's too expensive chuck ) and their problems in building the world's first, next-generation pressurised water reactor , the Finnish Olkiluoto 3.

The cost of construction at Olkiluoto has risen from 3 to 4.5 billion euros (US$ 6.7 Bn.), and Areva admits the need to boost staff levels "ensure work proceeds better."

Finnish nuclear safety agency STUK launched a probe earlier this month into whether safety procedures were respected at the site after Greenpeace disclosed confidential documents indicating there were no qualified personnel supervising the welding and that the quality of the welding had not been verified.

Areva has been forced to set aside one billion euro in provisions to absorb the rise in costs, the French business newspaper Echo eports as Areva nnounce record profits of nearly 750 million euros today.

Construction delays have already forced Areva to push back the target date for the reactor to enter service to 2011 from 2009.


Should therefore EDF get into bed with British Energy (improbably incredibly John Hutton Minister of some crazy name thinks a deal is still possible), this news must impact upon the whole flawed energy planning of the UK and the forecast costs of plants and the electricity produced.

Areva produced half year results today

These show that Profits were up 14.8% and operating margin up from 3.9% to 8.7% with EPS up from 8.31 Euros to 21.45 Euros.

The Order backlog has risen 13.6% to 38.5Bn Euros

IFA 2000 - strategic link at the heart of the European electricity market.

It is of interest of course that part of that backlog includes the announcement in July that AREVA's Transmission and Distribution Division has been awarded a contract with the UK National Grid and RTE, to enhance the reliability and reinforce availability of IFA 2000, the world's largest subsea High-Voltage Direct Current (HVDC) scheme opened in 1986 which can supply electricity for 3 Mn. people.

This subsea system interconnects the French and British national power systems from Mandarins near Calais, to Sellindge in Kent and enables France to sell us electricity from the French nuclear powered grid.

AREVA will replace the existing high-voltage converter equipment and the control and cooling system, implementing its H-400 HVDC Thyristor valves and Series V control system. Learn more hereabout this critical system and Europe's closely linked electricity network.

The Russian Bear when provoked ....

It may not be unique but it is unusual to conduct foreign policy through the letter columns of the Daily Telegraph.

The letter from Yuri Fedotov, the Russian Ambassador in today's copy signifies the new and truimphant voice of Russia ,who have successfully confronted NATO, annexed Stalin's birthplace ,large chunks of the Black Sea coast, along with the major port of Poti and ensured control over the Baku - Tibilisi - Ceyhan pipeline (which has just been re-opened after the mysterious "fire" - see Friday August 8th 2008 PKK claim responsibility for Baku-Tbilisi-Ceyhan (BTC) pipeline blast - although initial reports said it was an accident ).

Your leading article (“This is what Nato is for”, August 21) rightly points out that the current capabilities of the US missile system can be called into doubt. But it is certainly not “absurd” to suggest that the deal struck between America and Poland, as an integral component of the US global ballistic missile defence system, poses a real danger to Russia and its nuclear deterrent.

Radek Sikorski, Poland’s foreign minister, is certainly in no doubt about the potential of the system, stating this week that he “was sure the system will be developed, improved and upgraded”. Ultimately, the deal between America and Poland establishes a US military presence only 100 miles from Russian territory.

Given the huge investment of the US government in the missile defence project – $57.8 billion under the Bush administration alone – it is perfectly reasonable to expect the system’s capabilities to increase and diversify.

The West should consider whether establishing new military facilities and restating Cold War geographies is how it wishes to conduct international relations in the 21st century.

This is a thinly veiled threat. "The West" however configured and it's citizens would do well to ponder the words of Mr Fedatov , which of course are really those of Mr Putin.

It would be worth remembering that in February 2007 the dismantling of TNK:BP started after the Russian cabinet had launched a bill limiting foreign investors to ownership of no more than 49% of certain "strategic" sectors, including energy.

Shortly after Mr Fedatov told reporters that BP and Russian gas monopoly Gazprom were in the process of striking a deal over TNK:BP, (Russia's 3rd largest oil company and 1/4 of BP's global oil rserves)but would not rule out BP's 50% stake in the project being reduced. "I know that they're in the process of finding a deal that would be suitable to BP and Gazprom," Fedatov said at the time. "They're discussing different options and figures, and I would not want to preempt that. It's a commercial matter between two companies, which I hope will be resolved in a satisfactory manner."

Rosprirodnadzor, Russia's environmental protection agency discovered that TNK:BP had broken the terms of its license in Kovykta and had three months to remedy the violations. The helpful Mr Fedatov hinted in the friendliest way possible that threats of prosecution hanging over BP from Rosprirodnadzor may not emerge. "There is some kind of prosecution but I don't think it was final and I don't think it's something which should be over-dramatized," he said Friday. "A solution will be found," he added.

New readers may not be aware that BP are in bed with Mikhail Maratovich Fridman who runs Alfa Group, from whom BP bought half of Tyumen Oil for US$6.15 billion (who is also a member of the Council on Foreign relations) , Viktor Felixovich Vekselberg chairman of TNK who operates under his Remova Group (and bought for the State , Faberge eggs from the Forbes collection in 2004) , his pal American passport holder Leonard "Len" Blavatnik of Access Industries and German Khan who helps run TNK. They are said to have planned their move for seizing control of the 50% they don't currently own in the plush lounges of the Four Seasons Hotel near Limassol where menus are in Russian and the whores are from everywhere, in June.

BP have a long, complicated and bitter feud with these 4 and on July 5th BP lodged a claim in the High Court in London suing their Russian partners in the High Court in London over a $360m (£180m) tax claim.

The claim, alleges that BP is owed the sum under the terms of an agreement that was struck at the creation of the TNK-BP joint venture in 2003.

Tied in with this Vekselberg demanded the sacking of Robert Dudley, the chief executive of the joint venture and has threatened legal action against the three BP-appointed directors who sit on the management board, Steve Ridlington VP Finance & Treasury, Steve Truman and Peter Henshaw head of communications , if he isn't sacked.

The end result is that Mr. Dudley, who is a U.S. citizen, temporarily left Russia last month, citing "harassment" by Russia's authorities, and has been unable to return after the authorities failed to issue him a new visa.

He has now been banned from holding executive office in Russia, and has now written to senior officials, accusing the country's labour authorities of abusing their power.

The endgame is that BP (which is, since the take over of Amoco, basically an American company, despite the name) will be forced to surrender - as did Shell over Sakhalin and the gas (enough to supply the world for a year) from Kovykta will be shipped eventually to China by Gazprom.

As Mr Fedatov said in February when Oleg Mitvol, deputy chairman of Rosprirodnadzor started raising problems for TNK:BP, " "A solution will be found,"

A man of his word, Mr Fedatov.

Statoil shutdown some UK North Sea gas supplies - gas and electricity, spot and future prices rise > 15%

The announcement from Statoil, Norway's State oilco today was very down beat ;

During a routine inspection, a small leak was discovered in the gas pipeline between the Kvitebjørn platform and the Kollsnes gas treatment facility outside Bergen.

However the leak has appeared at the same place (about km from the Kvitebjørn platform ) where the pipeline was dragged out of position by a ship's anchor last autumn. Plans were being prepared for a permanent repair next spring. The Kvitebjørn project is a gas condensate field located east in the Tampen area in the northern part of the North Sea the field is said to have at the end of 2007 reserves of 75 BnSm3 and recoverable reserves of 63 BnSm3. Production in 2007 was reduced due to scheduled repairs Statoil can expect to lose some 7-8 Bn Sm3 of production during the shutdown. (UK annual consumption 90BnSm3) Financial Times

Whilst Statoil can re-supply customers from other sources (StatoilHydro had been buying up large volumes of gas on the U.K. market today to make up for the outage.) it has had an immediate effect on gas prices and UK spot and futures for winter supplies shot up nearly 15 % to 103.00 pence per therm today, reaching the peak price in June which have since declined with the decline in the oil price. CNN claim electricity prices rose 15% to £100 a megawatt hour.

As gas forms a major part of the electricity baseload this will impact on electricity prices.

To handle the immediate problems turnaround operations are presently being carried out at Kvitebjørn and Kollsnes and pipeline pressure has been reduced - slowing leakage . The pipeline will be further depressurized and emptied via flaring at Kollsnes.

The Visund platform also normally utilises the Kvitebjørn pipeline for gas export, but has reinjected gas during the turnaround at Kvitebjørn and Kollsnes. Oil production from Visund is being maintained, but at a somewhat lower level than usual.

Norwegian Petroleum Directorate (NPD), figures show that Kvitebjoern was due to produce 6.1 billion cubic metres (bcm) of gas during 2008 and 23,000 barrels of oil per day (bpd). The associated Visund field which will be hit produced 3.5 Bn Sm3 in Jan / June 2008 so a 9 month shutout of both fields could easily be 7-8 BnSm3.

NPD figures also show that North Sea continental shelf production of gas Jan/June 08was 51 Bn Sm3 up 7.2 Bn Sm3 (16 %) from 43.9 Bn Sm3 Jan/June last year.

This relatively trivial problem shows the multiplier effects unique to the UK ;

1. Increasing dependence on imports of gas (40% this year up from 27% last year)
2. Very limited storage facilities of gas, 2 -3 weeks at most
3. Impact of gas on electricity prices
4. Difficulty of replacing lost supplies
5. Increased costs to industry
6. Unpopular retail price increases especially for the heat sensistive elderly and Scots

Memories of Thursday, February 28, 2008 Bacton Gas Explosion - immediate gas price rise in UK of 18% . It is also worth noting this news item from earlier this month.. "Companies using Britain's Rough facility to store gas on an interruptible basis must take it out from Aug. 9 th so customers holding firm storage rights can get more in said Centrica. Britain's largest gas storage site (80% of UK capacity and can supply 10 % of average daily winter demand) , which lies under the North Sea off the east coast of England, was 93 % full on Monday 4th August and only shippers who have paid for guaranteed storage rights will be able to inject more into it after Aug. 9 and until further notice, Centrica said.

When there was a fire on a platform in February 2006 Rough storage was shutdown which pushed prices up for some time and caused considerable problems for high volume users in UK industry.

PS : The direct effect of gas prices can be seen multiplied by global warming. The barley barons of East Anglia are harvesting very wet grains which have to be dried with gas having doubled in cost since last year - current cost is £5 a tonne. Wheat is now (Chicago) US$8.74 a bushel (35.74 to a tonne) = £174. Futures are being quoted in the high US$9.80 's for the whole of next year.

A good article about the Norwegian pipeline is here.

Vestas now into profit with generous plans for global growth in wind power

When windmill supplier Vestas takes half page colour ads in the Wall Street Journal inviting readers to go and look at their Q2 08/09 results at vestas.com - you know it's good news.

It is .. but good news has been a long time coming .. see Thursday, March 30, 2006 Vestas, Big sales more losses in the wind farm business Vestas, the world's largest producer of wind turbines, lost nearly DKK 1.2bn (EUR 116m) on sales of DKK 26.7bn (EUR 3.58bn)last year (04/05) up 52% on the previous year. The company's board called the loss 'disappointing' and 'totally unacceptable'. see also Friday, November 25, 2005 Wind Energy - more problems / losses stack up for Vesta.

Investors, like Lord Patel who have hung in there have seen some modest gains as they have finally solved a lot of the problems of manufacture and reliability in use.

June 27th Order for 36 wind turbines with a combined output of 66 MW on 4 sites of 28 units of V90-1.8 MW wind turbine , eight units of its V80-2.0 MW wind turbines, installation and 5 year contract from Spain's Enel Union Fenosa Renovables (EUFER).

June 27th Order for 50 wind turbines for China 50 turbines in two projects totalling 100MW in China with a subsidiary of China Datang Group, a leading wind power producer in China, Delivery of the turbines is scheduled to begin at the end of the year and be completed in the first half of 2009.

June18th Order for 36 wind turbines for a 66MW Trapani Salemi project in Sicily from Suez' unit WINDCO Spa. due to come on stream October 2009.



The Statement says that the continuing improvement in profitability is attributable to the higher prices which Vestas initiated in 2005 and improved operational efficiency...."The overall demand pressure on the industry persists, and there are still long lead times for a number of key components; up to 15 months." ... Cash flows have improved and large inventories have helped to stabilise production capacity and Vestas’ ability to supply in the second half of 2008.... and explain the short lead times on the new projects listed above.

They also stated that order backlog on June 30 of 7.2 billion euros (US$10.73 billion). This compared with 4.8 billion at the end of the first quarter and was 67 % up on the figure at end-June last year. Note turnover year on year for Q2 is only up 3% 1067 to 1094 DKK.

These guys have vision

.."Vestas expects that modern energy (what BERR calls sustainable) will account for at least 10 % of global power production in 2020. To achieve this, more than 900,000 MW of modern energy must be installed over the next 12 years, which translates into annual growth in installed capacity of 20-25 %. The market will thus rise to an average of at least 80,000 MW per year over the next 12 years, against 20,000 MW in 2007 (ie 4 fold increase)."

By 2010 Vestas aims, together with its sub-suppliers,(and 17,370 staff worldwide) ) to be able to manufacture, ship and install 10,000 MW. In 2007, Vestas shipped a total of 4,974 MW.

On 2 June 2008, The U.S. Department of Energy (DOE) Assistant Secretary of Energy Efficiency and Renewable Energy Andy Karsner and 5 wind turbine manufacturers, (GE Energy, Siemens Power Generation, Vestas Wind Systems, Clipper Turbine Works, Suzlon Energy, and Gamesa Corporation) signed a Memorandum of Understanding (MOU) with a view to jointly seeking to increase the proportion of wind power relative to overall US power production from the current level of 1% to 20 % by 2030. See DOE Report 20% Wind Energy by 2030- May 2008
this addresses the 20% Wind Scenario:The 20% Wind Scenario presented here would require U.S. wind power capacity to grow from the current 11.5 GW to more than 300 GW over the next 23 years. (If interested in wind energy and how a modern industrial nation with an established manufacturing base should act in planning for, it this is a must read). BERR please Note , orders backlog, staff recruitment (see below) a5 month delay on component supplies Ditto on nuclear power.

Vestas has a blade factory in Windsor, Colorado,with an annual capacity of 1,800 blades, a second plant near Brighton, Colorado, will double capacity by 2010.

China’s most recent statement regarding wind power is to have an installed capacity of 100,000 MW by 2020, which is largely the same as the global capacity at the end of 2007.

On 26th June 2008, the UK government announced its fairytale plans for achieving 20 % renewable energy by 2020. The Vestas Isle of Wight factory will cease making the blades for its V82 turbine (which now mainly go to US) and change in 2010 to 44-metre blades for the V90 turbines which is predicated on the UK expansion using the V90-2.0 MW and 3.0 MW turbines are particularly well suited for this market, onshore as well as offshore. IOW will also become an R&D centre. The Cambeltown factory will shut.

Vestas expects to employ up to 1,500 people in the UK in 2010, against 1,114 employees today.

It is of interest that Vestas launched a global employee bonus programme, from Jan1 2008 in which eligible employees may achieve a bonus of up to 8 per cent of their base salary. The way this has been introduced suggest that recruitment of qualified engineers and their retention is a problem.

Looking for Press comment on Vestas results - we found this from Reuters "Shares in Spanish wind turbine maker Gamesa rise to the top of Madrid's leaderboard, up 4.2 % to 30.01 euros after Danish rival Vestas reports its order backlog has ballooned on soaring oil prices.

For those interested in investing in wind power, especially in the US you might look here at the report that The Goldman Sachs Group 21st March 2005 announced it will acquire Houston, Texas-based Zilkha Renewable Energy.

Goldman Sachs was then invested in 30 power-producing entities. “Goldman Sachs doesn’t invest in sectors that they think are stagnant or declining,” said Chris Taylor of Zilkha. This by the way was Zilkha of Selim Zilkha the son of the Banker of Baghdad who set up Mothercare in the UK, sold out. Setup an oil facilities company using the (then) new computer technology to exploit Gulf oil wells declining rserves and sold out for US$1 Bn to El Paso Gas ...then set up Zilkha energy investing in wind whcih he sold out to Sacks of Gold.

Zilkha Energy was an early investor in UK wind energy with the $80Mn. 10 sq Km site with 30 Vestas V80 2MW units at th North Hoyle field off Rhyl (Total Installed capacity 60 Mw. annual Load Factor 35.8% - UK Average 27.1%) which is the longest running offshore development(commenced Nov.2003) in the UK and now owned from 2005 by Beaufort Wind Limited.***

A BERR report on North Hoyle provides useful information - total overall final project cost totalled £81m (prior to grant) which equates to £1.35m/MW. The BERR (DTI as was) grant for the project of £10m reduced the total cost to £1.18m/MW. Total metered output 2007 was 117,000 MWh Annual operating costs in 2007 ( 3rd year of operation) amounted to £2.8m (equivalent to £47/MW or 1.51p/kWh - compare this with British Energy nuclear power realised sale price £45.7/MWh ).

As a bribe to operators The Energy White Paper 2007 declared the government’s intent that from 1st April 2009 wind ROCs will be banded:– Offshore wind farms to receive 1.5 ROCs per MWh. – Onshore wind to continue receiving 1 ROCs per MWh.

TO really understand the UK Renewables business got to Renewable Energy Foundation The REF is charity , supported by private donation and has no political affiliation or corporate membership. In pursuit of its principal goals REF highlights the need for an overall energy policy that is balanced, ecologically sensitive, and effective.

REF is part of a growing national consensus that the United Kingdom's energy policy is unbalanced, and that the drive for renewable energy generation has been inadequately planned.

*** Beaufort Wind Energy was owned 100% by Zephyr Investments .Three partners: RWE Innogy, Englefield Capital LLP4, and the Bahrein based First Islamic Investment Bank E.C. (F.I.I.B) (called Arcapita from April 2005) through its investment vehicles arranged by its subsidiary, Crescent Capital Investments (Europe) Limited, took one third (Jan 2004)each of the share capital of the investment fund, Zephyr Investments Ltd, established in April 2003.

RWE Innogy's retail subsidiary, npower, continue to purchase power and Renewable Obligation Certificates from Beaufort Wind Ltd under long term purchase contracts as part of its strategy to meet the UK Government's Renewable Obligation targets.

In August 2007 , Englefield Capital, sold their 1/3 rd stake and Arcapita Bank sold their 1/3rd stake in Zephyr which owned 17 wind farms = 20% of UK wind farm capacity for £145 Mn each (they said their cost was £55Mn each) to Infracapital, a European infrastructure fund managed by Prudential M&G, and a subsidiary of an investment entity advised by JPMorgan Asset Management, will each buy half of Arcapita's stake.

The value of Renewable Obligation Certificates dropped during 2007 from about £48 to £32 as more renewable energy came on stream.

If you have got this far, the North Hoyle farm generates electricity at say £47/MW it sells that for roughly that price and receives £33 for each ROC (it was £48 in 2007) which is effectively the gross profit. That is why they need a bribe from April 1st in 2009 to receive 1.5 ROC's for each MW generated.

Georgia - the dress rehearsal for Ukraine ..already suffering from once ina century floods and a very nasty gas bill shock due at New Year....

Elisabeth Byrs of the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) reports that “The situation on the ground (in Georgia) is deteriorating, sparking a significant movement of population”. The United Nations High Commissioner for Refugees (UNHCR) reports that more than 2,000 people have died in the first week of fighting and nearly 100,000 have been uprooted from their homes.

The Adventist Development and Relief Agency (ADRA) has been operating for the last 8 years in South Ossetia region, implementing health projects from its local office in Tskhinvali.

They report that according to UN estimates there approximately 56,000 displaced persons inside Georgia, of which more than 40,000 are from Gori. An additional 12,000 residents of South Ossetia have been left homeless inside Georgia, while 30,000 others have crossed into Russia’s North Ossetia region.

The UN also reports that 1,000 ethnic Georgians from the upper Kodori Gorge in Abkhazia, a region by the Black Sea that borders Russia, have become displaced following violence there.

Because many areas under conflict remain inaccessible, the number of (Internally Displaced Persons) IDPs is expected to rise. Food, water, shelter, and medical supplies are becoming difficult to find, intensifying an already difficult situation for local residents.

In Tbilisi, there has been a rapid influx of displaced persons fleeing the fighting , which has strained the city’s food supply, medical, and shelter capacities, ADRA plans to provide medical assistance to those affected.

A major disaster - the worst floods for a century in Ukraine

All the while this is going on in Georgia there has been virtally no reporting of the flooding and subsequent destruction in prospective NATO ally Ukraine, when between July 23 to July 26, massive storms hit western Ukraine, forcing thousands from their homes, and submerging hundreds of towns and villages. Nearly 40 people have been listed as either dead or missing since the onset of the storms, which government officials say are the worst storm to hit Ukraine in a century.

According to the Ukrainian Ministry of Emergency, more than 422 miles (679 km) of highway and motor roads and more than 900 bridges were destroyed in the storms. This has left more than 300 towns and villages without electricity, downing communication lines, and blocking food access routes throughout five regions of western Ukraine.

The floods , mainly from the Prut, Dniestr (15 metres above its normal level) and Seret rivers have submerged 40,600 homes and over 84,000 acres, (34,000 hectares) of farmland in western areas - some reports claim over 100,000 acres.

The regions of Ukraine most affected are Ivano-Frankivsk, Chernivtsi, Transkarpatsky, Ternopil and L’viv. In Ivano-Frankivsk alone, 50,000 are suffering from the impact of the floodwaters. Heavy floods have also hit neighbouring riparian areas of the Dniester River in Romania and Moldova. In the Moldovan capital, Chisinau, three people were found dead after being swept away by floodwaters, an Interior Ministry official said. Two drowned when they became trapped under cars while trying to cross a flooded road. Another was found under a bridge.

The authorities in Romania said that four people had died and more than 11,000 been evacuated.

The flooding has hit the Ukraine local farming economy and (OCHA) report that flooding in the Ivano-Frankivsk region has destroyed as much as 75 % of planted crops causing an estimated US$80 Mn. loss according to Deputy Agriculture Minister Serhiy Melnyk.

President Viktor Yushchenko on July 30th declared a 3 month state of emergency in western Ukraine.

The Ukraine Government are watching events in Georgia very closely and at a ceremony today granting 72 housing orders to the military in the Novohrad-Volynskyi garrison ,Defense Minister Yurii Yekhanurov said,"149,000 servicemen are enough to guarantee sovereignty and security of our country." Hmmm.

On the 31st July , the Euro-Atlantic Disaster Response Coordination Centre (EADRCC) - which is a NATO body, received an urgent request for assistance in coping with flooding from Ukraine.

Their latest SitRep is dated August 7th and they confirm 36 people, including 8 children died, 2 are missing and about 500 people have been injured. They list the EAPC (EU basically) countries who have contributed to an appeal for equipment - Austria, Czeck republic, Greece,Hungary, Poland, Lithuania, Russian Federation, Slovak Republic, Belgium, Estonia, Spain and Switzerland - something been overlooked here by Messrs, Brown, Benn and Milliband ?

If the UK Government want to help they can contact The Euro-Atlantic Disaster Response Coordination Centre can be reached in the following ways:
Telephone: +32-2-707.2670
Fax : +32-2-707.2677
Mobile Phone: +32-475-829.071
e-mail: Eadrcc@hq.nato.int
or they could have a look at them on the Internet website thingy here - http://www.nato.int/eadrcc/home.htm or perhaps have quick look at the manual "NATO’s Role in Disaster Assistance"

" ....the capabilities to protect our populations against the effects of war could also be used to protect them against the effects of disasters. As early as 1953, following disastrous North Sea floods, NATO had an agreed disaster assistance scheme. By 1958, the North Atlantic Council had established procedures for NATO coordination of assistance between member countries in case of disasters."

Given the circumstances in Georgia you might have thought that even those not on holiday in Whitehall might lend a hand to Ukraine if only in solidarity to NATO. If only to get some practice in when the Russian Bear decides to cut up rough in East Ukraine.

Just a thought.

PS : See Friday, August 15, 2008 Could Ukraine Become Russia's Next Target? @ Kiev Ukraine News Blog. "Ukrainian President Viktor Yushchenko prohibited ships from the Russian Black Sea Fleet that are engaged off the Georgian coast from returning to port on Ukraine's Crimean peninsula without Kiev's official permission.....Russia's Black Sea Fleet, which leases naval facilities in Sevastopol in Crimea, will likely steam back to port in defiance of a Ukrainian presidential order that it must first ask for Ukrainian permission."If Russia openly challenges Ukrainian sovereignty, I think that Ukraine will then turn to the West and say, 'you know guys, they're challenging our sovereignty with their fleet."

And this will happen without any kind of use of arms, or anything made in anger.

PPS : January 2009 Ukraine is committed to begin paying Russia’s Gazprom in the range of US$400 per 1,000 cubic meters for natural gas or US$22 billion per year. Presently the country pays US$179 per 1,000 cubic meters, or US $9.9 billion per year.

Viktor Yanukovych, is the leader of the opposition pro-Russian Party of the Regions - who have kept quiet about the price increase - Gazprom and the Kremlin might be tempted to play the “gas card” in order to see Yanukovych elected and to gain control—if not direct ownership—of the Ukrainian trunk gas pipeline, a long-time objective of Russian policy meant to give Gazprom the ultimate say over the largest supply route of Russian gas to Europe.

With a possible debt of over US$10 billion by late 2009, the new Ukrainian government could be forced to sell the pipeline to Gazprom by writing off most of the accumulated debt — as well as a substantial part of its industrial base, maintain the Russian Black Sea Fleet in Sevastopol and renounce its intention to join NATO.

... if it is cold in December ...

I you see Sid (or Gordon or Hilary of the Boy David )..tell 'em.



PPS - want to know more about Pridnestrovyaian Moldova Republic and their contacts with South Ossetia ? See Volunteers from Pridnestrovya leave for South Ossetia 8th August 2008 2008

British Energy - production, margins, profits, down.

British Energy have produced disastrous Q1 08/09 results today - which must have affected EDF's disinterest in moving ahead on a take over - although ever optimistic CEO Bob Coley does say, "Advanced discussions continue in connection with a potential offer " and in a BBC "Today" interview this morning claims they are "uniquely" placed for the new build as they own suitable sites for Gordon's nuclear "renaissance".

He also said that it would be at least 3 years before the planning process for building could start.

Electricity output down 26%

Electricity output from the nuclear stations was down 26% from 13 Tw last year to 9.5 Tw this year , total output only dropped to 11.4 Tw from 13.0 Tw as the Eggborough coal fired plant doubled production (using very expensive imported coal) from 0.8Tw to 1.9 Tw hrs - a drop of 18% . Total output in Q1 07/08 was 14TWh which had dropped 18% from 17TWh in Q1 06/07. This suggests Total output this year will be probably 46Tw a drop of 12 Tw (22%) from Last year

Earnings per share will be more than halved this year

The result of this reduced output and increased costs is largely due to the Boiler Closure Unit (BCU) outages at Hartlepool and Heysham 1 , Profits adjusted EBITDA is £129m, down from £253m from Q1 07/08 . To put this in context Adjusted EBITDA was £1,221 Mn in FY 06/07 and was cut (-28%) to £882 Mn in FY 2006/07 - so they will be lucky if it remains in the range £450-500 Mn this year.

When this is taken down to Adjusted Earnings per share it turns out at 2.9p for Q1 this year and 8.9p last year. Total Annual Adjusted Earnings per share were 48.2 p in FY 06/07 and 29.6 p in FY 07/08 - so they will be lucky if it remains in the range of 10p per share this year.

Operating margins more than halved

The sales of energy showed ;
1. Realised price was £45.7/MWh for the period, up £4.9/MWh (12%) from £40.8/MWh in the comparable period
2. Unit operating cost increased to £39.6/MWh for the period up £12.72 (47%) from £27.0/MWh in the comparable period
3. Operating margin decreased to £6.1/MWh from £13.8/MWh in the comparable period a drop of 56%

Going forward, Contracts are in place are 42.2TWh at an average price of £47/MWh £32/MWh. The capped contracts are for delivery of approximately 5TWh per annum up to March 2011

In addition, contracts are in place for approximately 33.3TWh £42/MWh excluding the impact of capped price contracts at around £33/MWh

So there is little prospect that the average realised price of £45.7 /MWh is going to rise much, and there is little prospect that in this financial year that nuclear production will be above 38Tw + coal fired 7.5Tw = 45.5 Tw compared with 58.4 Tw in both the last 2 financial years. In the last two Financial years the average realised price was £40.7/MWh in 07/08 and had dropped 7% from £ 44.2 / MWh in 06/07. So the selling pricetoday is only 3.2% up on 27 months ago. aperiod when retail sales prices have more than doubled.


BE currently have stocks and contracts in place which provide nearly 100% coverage of anticipated requirements until 31 March 2011. The current market price of uranium has increased significantly from the level at which we entered into these existing fuel agreements.

Existing stocks and contracts provide a fuel cost advantage of approximately £115m per annum, based on nuclear output for the financial year 2008/09. It is anticipated that this fuel cost advantage will gradually reduce between the financial years ending 31 March 2012 and 31 March 2017. Shrewd buying or our old pal serendipity ?

With current levels of building there is little doubt that uranium demand will not decrease significantly - and new sources donot appear to be being discovered.


BCU project costs at Heysham and Hartlepool have soared 130% in 6 months

Total project costs at Hartlepool and Heysham in financial year 2008/09 now expected to be around £115m (up from £50m), driven by increased costs for inspections and increased costs of design, fabrication and installation of modifications.

"The cost of the remedial engineering work is not expected to exceed
£50Mn,incurred in financial year 2008/09."

See BE website statement Hartlepool and Heysham 1 Boiler Closure Unit (‘BCU’) update 18th January 2008 - so 8 months later costs have risen 130% and work hasn't been finished - more costs lurking ?

Regulatory approval to commence installation of circumferential bands at Heysham and Hartlepool is expected within the next few days. More than 1,200,000 man hours have been spent on the project to date which is on track to deliver return to service in the third quarter of this financial year. The faults in the BCU were discovered in October / November 2007.

Make of this waht you will..." In the event of any additional slippage in return to service timing, incremental costs may be expected to arise." ... from wher we are sat it looks like forewarning and arse covering ofexpected slippage and cost increases.... we did warn you etc.,

Some good news - Hinkley and Hunterston due for restart after planned outages

Hinkley Point B Reactor 3 returned to service following successful planned inspection outage. The Hunterston B Reactor 4 restart process has been initiated. Both these plants have been given Five year plant life extensions to 2016 - their planned closure was 2011 when constructed .

Conclusion

It is increasingly evident that British Energy prospects for the next 12 - 24 months are going to be increasingly unprofitaable. No explanation has been provided for the Sizewell outage that ocurred and led to blackouts in the South East.

On any rational view the company will struggle to produce both electricity and profits so EDF are being asked to buy the company just for the "unique" and "pivotal" position they have for opening new nuclear plant.

Such advantages are not unique and at £12Bn are extraordinarily costly.
See Annual report FY 07/08
Q1 report 08/09 published today online

US / NATO / EU left to ponder over the consequences of Saakashvilli's blunder - the Russian Bear carries his gun and his hands on the gas + oil taps

It is extremely difficult to construct a coherent picture of events in the Caucasus and even harder to forecast the consequences both on the ground but on commodity pries, especially oil and gas.

The Russkis are calling for President Saakashvillis head. His short lived, and ineffectual attack on the tiny town of Tskhinvali, the capital of South Ossetia, reveals he truth of Tallleyrand's dictum: it was worse than a crime, it was a blunder.

1. It appears that 3 days after the deliberate "invasion" of Georgian forces into South Ossetia (which is by any international legal standards Georgian territory) there has been a declared withdrawal and ceasefire from 5 am local time, (EST +8 hrs)and something like a 90% ceasfire - ie Georgians are still shelling in Abkhazia and into Ossetia - firing at aircaft. TV coverage is very confusing as the location / date / forces are not identified.

2. The Russians are relentlessly pursuing military action on the ground and from the air. It seems (BBC) that a military airport near Tibiklis has been bombed and some reports talk of the International airport being bombed.

The Russians have sunk at least one missile coastal patrol boat , they say it ignored shots across it's bows - there are also credible reports of widespread damage at Poti and maybe the BT oil terminal at Supsa - it would be like shooting fish in a barrel as they have overwhelming air superiority.

There are reports , most likely exagerated of 7/8 Russian planes shot down. At least one Georgian plane has been shot down in Ossetia.

3. Some 20-25 thousand Ossetians who have been given Russian passports have fled north to Russia and many Georgians in ossetia have fled south - there have also been smaller scale movements in Abkhazia.

4. It seems most Western Embassies have told nationals to leave , there has been no information about flights out -- passengers reaching London etc.,Poland, a major US ally who are already members of NATO have called for an EU stabilisation force to be sent in.

5. There are no reports of consequential armed events in Nagorno Karabak, Armenia etc.,

6. There are no reports of damage to the BTC pipeline although Georgia has cklaimed it was bombed but missed. The Russians must surely know precisely where the pipeline lies - pumping stations etc. It s probably safe to assume that 1% of the world's oil supply has been held up for at least 4-6 weeks and maybe for 6 months.

7. Geneva conventions apply as this is an international conflict - looking after civilians etc., and Georgia is a member of the ICC. This is aproblem for lawyers way down the road. It is evident in Gori that civilian targets were hit

8. There is much talk but little evidence of any result of EU intervention , diplomacy. Zalmay Khalilzad (a Pushto speaking Afghani-American) the US representative at the UN has tabled a motion about Ruissia's "inappropriate behaviour" which in their diplomatic doublespeak isn't even a rap over the knuckles. Silence reins on the surface but anxious phone calls will be made and nails chewed in Downing Street. Quote is ""We have made it clear to the Russians that if the disproportionate and dangerous escalation on the Russian side continues, that this will have a significant long-term impact on US -Russian relations."

The Russian response has been dismissive ..Russia's UN ambassador Vitaly Churkin branded "completely unacceptable" US claims that the Russian military in Georgia has waged a campaign of "terror." "This is completely unacceptable, especially from the lips of a representative of a country whose action we are aware of in Iraq, Afghanistan and Serbia." (Trans. Kosovo)

The Russian Press talks of Georgian "genocide".

The timing for Putin et al is perfect, Bush wants no more adentures and the contenders don't want to, and haven't even mentioned Georgia.

Somebody in Sarkozy's office (everyone in France is on Vacances) said they should all stop fighting.

NATO's secretary general Jaap de Hoop repeated his call for an immediate cease-fire, he also expressed his concerns about the disproportionate use of force and lack of respect for the territorial integrity of Georgia."

The Ukrainian Foreign Ministry stated that the country reserved the right to forbid vessels of the Russian Black Sea Navy to return to their base in Ukraine’s Sevastopol.

A "Ukrainian official" said that Ukraine was not willing to become involved in the conflict. They also have had their gas cut off.

9. It can only mean markets will open lower and oil / gas prices will move up at least US$5 and maybe more for near month contracts.

10. Casualties / deaths are impossible to assess. Visually there a few dead and few injured but bad civilian residential damage. Much of the shelling / missile strikes / bombing seems haphazard.

The Russkis are calling for Saakashvillis head. His short lived, and ineffectual attack on the tiny town of Tskhinvali, the capital of South Ossetia reveals he truth of Tallleyrand's dictum: it was worse than a crime, it was a blunder.

Not an ideal man to unify the Georgians - but can Uncle Sam have his glove puppet changed or removed ?

Where will Georgia get their gas from this year ? - it was turned off before in December '06 afterwhich they agreed on doubling the price with Gazprom.

Monday papers
Daily Telegraph - Georgia: America admits it has few options for dealing with Russia-Georgia war
Independent Georgia bows to might of Russia
Times Retreat and terror in face of Russian Army (Exclusive ! ?)
Guradian Russia rejects ceasefire calls as Georgia withdraws
Daily Mail Russia tanks 'turned back' at Georgian border as refugees flee in panic byline "A Daily Mail reporter - shy war correspondent?

As we go to bed Oil is holding steady with no major movement at all.

Thanks to aangirfan for link to excellent backgrounder in Sunday Herald 'This is no longer about the future of a tiny far-away country but about the nature of the world order in the 21st century - Rob Parsons, former BBC Moscow correspondent

On Thursday night, Georgian forces launched a lightning attack that brushed aside Ossetian resistance within hours. By Friday afternoon, they had taken control of the Ossetian capital, Tskhinvali.

The Georgians have modernised and restructured their armed forces to bring them into line with Nato standards, and their special forces now serve regularly in Iraq and Afghanistan. They are well-trained and battle-hardened. But the Georgians miscalculated. They thought that if they moved quickly before the Russians could act, the international community would then act to ensure the conflict was contained.

The Russians were indeed caught off balance. Moscow had a tough choice: face the humiliation of accepting a fait accompli or incur the anger of the international community by effectively going to war against a Western ally.

With Putin at the helm, there was never really any question what the Russians would do - at least not once Russian peacekeepers died. The ferocity of the Russian response, though, has caught the West by surprise.

The ferocity of the Russian response, though, has caught the West by surprise....Why ? on't we have mebassies . military attaches, surveillance , intelligence - or is everyone on holiday ?

We must not forget 2 things - the recent exercises with US troops and the bombing / damage / cutting off of the BTC pipeline in Turkey.

Again the oil price remains fairly unmoved by all this. Latest 1230 EST US$116.31
Up US$ 1.11 Up 0.96%

European Energy security exposed by events in Georgia - and winter is 2/3 months away - UK decades of delay ...

Robert Gates the US Secretary of Defence made a speech to NATO about NATO in February this year ... as things start to boil in Georgia it might be worth recalling a few things he said ..

The Alliance must put aside any theology that attempts clearly to divide civilian and military operations. It is unrealistic. We must live in the real world. As we noted as far back as 1991, in the real world, security has economic, political, and social dimensions. And vice versa. The E.U. and NATO need to find ways to work together better, to share certain roles – neither excluding NATO from civilian operations nor barring the E.U. from military missions. In short, I agree entirely with Secretary General de Hoop Scheffer and Minister Morin’s comments yesterday that there must be a “complimentarity” between the E.U. and NATO.

He also recalled the Berlin airlift in 1948 ...

In January of that year, Ernest Bevin, the British foreign secretary, went before parliament to discuss the Soviet Union and other threats to the United Kingdom. Between all the “kindred souls of the West,” he said, “there should be an effective understanding bound together by common ideals for which the Western Powers have twice in one generation shed their blood.”

Less than two months later, President Harry Truman stood in the United States Congress and echoed that sentiment. He said: “The time has come when the free men and women of the world must face the threat to their liberty squarely and courageously . . . Unity of purpose, unity of effort, and unity of spirit are essential to accomplish the task before us.”

That unity held for decades through ups and downs. It held despite divisions and discord, stresses and strains, and through several crises where another war in Europe loomed. Alexis de Tocqueville once warned that democracies, when it comes to foreign affairs, were ill-suited to pursue a “great undertaking” and “follow it [through] with determination.” But the democracies of the West did just that – for more than 40 years. And they can do so once more today.

This was sometime after Aneurin (Nye) Bevan said in a speech at Blackpool..

This island is made mainly of coal and surrounded by fish. Only an organizing genius could produce a shortage of coal and fish at the same time. Daily Herald, 25 May 1945

Yet Senator Richard Lugar of Indiana at Riga gave a keynote speech to the German Marshall Fund conference on Monday, November 27, 2006 in advance of the NATO summit , which it is well worth re-visiting ..

The Centrality of Energy

NATO’s challenges continue to come in new formations. We have to understand not only the military configuration of threats before us, but also the likely basis for future conflict. The NATO alliance has been successful, not because it fought wars, but because it prevented them. If the NATO alliance is to be fully relevant to the security of its members, it must expand beyond the mission of military defense and begin to think about how to prevent the conditions that will lead to war.

In the coming decades, the most likely source of armed conflict in the European theater and the surrounding regions will be energy scarcity and manipulation. It would be irresponsible for NATO to decline involvement in energy security, when it is abundantly apparent that the jobs, health, and security of our modern economies and societies depend on the sufficiency and timely availability of diverse energy resources.

We all hope that the economics of supply and pricing surrounding energy transactions will be rational and transparent. We hope that nations with abundant oil and natural gas will reliably supply these resources in normal market transactions to those who need them. We hope that pipelines, sea lanes, and other means of transmission will be safe. We hope that energy cartels will not be formed to limit available supplies and manipulate markets. We hope that energy rich nations will not exclude or confiscate productive foreign energy investments in the name of nationalism. And we hope that vast energy wealth will not be a source of corruption within nations that desperately ask their governments to develop and deliver the benefits of this wealth broadly to society.

"We hope that energy rich nations will not exclude or confiscate productive foreign energy investments in the name of nationalism" .. well what has happened with TNK-BP .

What is happening to the BTC pipeline as you read this ?

What is happening to European energy security ?

Are we FCUKED ? See The Oil Drum for Forum on events in Georgia and the BTC pipeline - ecellent well informed comments.

Read both of the speeches , go to the Lugar Energy initiative and reflect on what has happened over the last 3 decades in Europe and especially the UK to secure our energy security.