Page 34 - bne monthly magazine October 2022

34 I Cover story bne October 2022
other origins in addition to the crude oil of Russian origin, depending on the availability and economic conditions of procurement on the world market. In the following period, the refinery will continue to process other types of crude oil that are not of Russian origin, as it is possible to obtain them on the free market,” the ministry’s emailed statement added.
Bulgaria struggles after losing Russian gas
Bulgaria lost its supplies of Russian gas in April when then president Kiril Petkov refused to pay in rubles. Petkov aimed to buy in liquefied natural gas (LNG) from the US and increase gas imports from Azerbaijan.
After his government was ousted in June, the new caretaker government said it would reopen talks with Gazprom – leading to accusations of trying to return Bulgaria to Russia’s sphere of influence – as well as exploring other sources.
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Bulgaria, like Serbia, is looking to Azerbaijan, and in mid-September offered to export electricity to Azerbaijan in exchange for more natural gas. Azerbaijan is already supplying 1bn cubic metres of natural gas per year to Bulgaria and has said it could double that amount. Bulgaria’s Ministry of Economy and Industry by Minister Nikola Stoyanov also held talks with Iranian ambassador Syed Mohammad Jawad Rasooli on September 13, according to a ministry statement, which described the conversation as a "continuation of the search for all opportunities to ensure the diversification of our country”.
Elsewhere in the region the situation is somewhat easier, but even in Romania the government is seeking to speed up development of major gas projects.
Long before the current crisis,
Croatia took the step of setting up a floating LNG (FLNG) terminal off the island of Krk, supporting its energy independence, and also has ambitions
to become an LNG hub for the region. Zagreb now intends to double the capacity of the terminal from 2.9 bcm to 6.1 bcm, Prime Minister Andrej Plenkovic said in June. Nonetheless,
the government in Zagreb recently announced a sizeable package of anti- crisis measures to help the country cope with soaring energy prices.
All countries in the region, both EU members and aspiring members, plan to invest in renewables and end their use of coal. The green transition is already underway, albeit with states in the region at very different stages, and there are numerous investments into solar, wind, hydro and even geothermal energy. While the emergency move back to coal generation is anticipated continue though the winter ahead, with worrying consequences for air pollution, in the longer term the need to have secure energy supplies and end dependence on Russia is expected to be an added impetus for investment into cleaner energy.
Can Europe keep the lights on this winter? Ben Aris in Berlin
Europe is facing a major energy crisis this winter that will test the continent’s power supply systems to the limit. The EU has been rushing through a plan to reach zero- emissions by 2050, but as a result it has decommissioned too much generating capacity and left itself exposed to Russia’s threat to cut off gas supplies.
On top of the gas shortage, some really bad luck has created a perfect storm. Germany’s poorly timed decision to shut down its coal-fired and nuclear power plants, France and the UK’s problems with their NPPs, and a scorching hot summer reducing water levels in hydropower reservoirs have all contributed to reducing Europe’s ability to generate electricity this winter.
As the cold weather approaches,
Europe has probably stored enough gas to get through a mild winter, but the European power system is in a delicate balance ,with many countries relying on a few big producers for power exports, creating vulnerabilities. If one big supplier like Germany runs out of fuel then there is a very real risk that the resulting black- and brown-outs could ripple across the Continent.
“Europe’s energy system faces unprecedented physical and institutional stress. The policy response so far has been excessively nationally focused and could undermine the
goals of calming energy markets over the next 18 months and achieving ambitious decarbonisation targets,” The Bruegel think-tank said in a paper
that also looked at the consequences for Europe’s Green Deal goals.
Not enough wiggle room
Europe had a total installed generating capacity of 970 GW at the end of 2021 that could produce a total of 3,628 TWh of power if it was working at full capacity. The actual output was 5% lower, as the stations were run at 95% of capacity
over the year – the year when Russia first started squeezing gas supplies and caused an energy crisis-lite.
But Europe, or rather the Continental Europe Synchronous Area (CESA) – which covers all of Europe plus new members Ukraine and Moldova, but does not include the UK, Ireland, Norway, Sweden, Finland and the Baltic States – doesn’t have enough generating capacity
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