Natural Gas in Europe - Week 7 Overview
If we had to choose a song for the seventh week of the year, it would clearly be La Marseillaise. For once, the national anthem of France rang out louder that Gosudarstvenny Gimn, the hymn composed by Alexander Alexandrov.
While the Sochi Olympics are proceeding with few complications, French President Francois Hollande met Barack Obama, in a move that pushed Paris closer to Washington. Some positive consequences emerged soon after.
European growth prospects are getting better, and the French U-turn in diplomatic relations was combined with French companies perking up and moving on.
FRANCE ON THE RISE
On Tuesday, Paris-based Technip was awarded by Statoil a contract for future intervention services on the Asgard Subsea Compression Stations 200 kilometres off Norway, confirming the leadership of the French company in subsea infrastructure.
On Wednesday, GDF Suez received the approval from the US Department of Energy to export LNG from the Cameron project in Louisiana to countries that have not signed a FTA with the USA. Even though it has not been mentioned in the note, the green light from the American government increases the probability of LNG export to Europe and Asia in the near future.
Also on Wednesday, Total reported lower earnings on diminished demand and decreasing refining margins. But it also reported a 14% year-on-year increase in net investments to 19,487 millions of euros. The French company even raised dividends, demonstrating an increase in optimism.
On Thursday, GDF Suez said that Gaztransport & Technigaz, the engineering company owned by GDF Suez (40%), Total (30%) and private equity fund Hellman & Friedman (30%), will promote an initial public offering (IPO) in the next days.
It looks like France is finally gaining some optimism. Hollande is getting stronger and more confident. And this can be good for Europe as a whole.
The country demonstrated that it is somehow “the same but different” – Hollande reinforced French ties with the US after the spy scandal, but his visit in Washington was more a handshake than a hug. France remains proud of its peculiarities.
It comes as no surprise the final ironic remark by Hollande, who alluded at persisting differences between the two countries. France wants to follow the successes registered in the United States, but it wants to do it its way.
For instance, Paris is trying to understand if “clean fracking” is a possible solution to tap shale gas resources with a reduced environmental footprint. But as typically French, the debate cannot be anything but loud.
On Thursday, the Institute for Sustainable Development and International Relations (IDDRI) released its report about unconventional hydrocarbon, arguing that shale gas will not have a major impact in Europe given the outstanding differences with the United States in terms of demography and institutional framework.
BICKERING IN THE UK
Some bickering emerged also on the other side of the English Channel.
On Monday, Britain's Energy Secretary Ed Davey wrote a letters to regulators asking for more transparency in the local national market. Davey also wrote to have a deeper insight into the next steps to take to increase integration with other European markets.
A few hours later, also on Monday, the Falkirk Council unveiled that Dart Energy’s proposal to drill 22 boreholes across Scotland would be analysed after the independence referendum.
Despite the hurdles, shale explorers are pressing ahead.
On Friday, the founder of shale gas firm Cuadrilla said something that is likely to ignite more debates. Chris Cornelius believes there are large volumes of offshore shale gas that could be extracted in the Irish Sea.
Debates and confrontation is typically European. It is clear that Obama is right drawing a parallelism between France and the United Kingdom with his two daughters. The two countries have a lot in common. Both will be resistant to give their green light to shale gas production. Daughters are daughters, even though they don’t like each other.
SOUTH STREAM
Chances are that European recovery could finally gain momentum. This would automatically increase the Old Continent’s gas needs. Good news for Moscow, which continues to push forward its major and controvesial project – the South Stream pipeline. On Monday, a Russian official said that Gazprom could launch the first part of the South Stream gas project in less than two years. The first delivery could be anticipated to December 2015.
In conclusion, France was the protagonist of the week. It achieved some precious results and more importantly proved that it could soon regain its centrality in a growing Europe. At the end, that would be logical - La Marseillaise is the first example of the European march anthemic style. What remains to be seen is the long-term impact of these achievements. Is the French rebound the beginning of a revolution in the gas markets and in Europe? Time will tell.
Sergio Matalucci