Tag Archives: EU

The Oil Needy and the Iran Sanctions: China and India

China is considering sovereign guarantees for its ships to enable the world’s second-biggest oil consumer to continue importing Iranian crude after new EU sanctions come into effect in July, the head of China’s shipowners’ association said.  Tough new European Union sanctions aimed at stopping Iran’s oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world. Around 90 percent of the world’s tanker insurance is based in the West, so the measures threaten shipments to Iran’s top Asian buyers China, India, Japan and South Korea.

Global crude oil prices have risen nearly 20 percent since October, partly on fears over supply disruptions from Iran.  “(Ship) operators are worried that if the insurance issue cannot be resolved, they will not be able to take orders for shipping Iranian oil any longer,” Zhang Shouguo, secretary general of China Shipowners’ Association, told Reuters in a rare interview with foreign media.  “We have put forward our concern and related government departments are studying the issue.”

Iran, OPEC’s second-largest producer, exports most of its 2.2 million barrels of oil per day to Asia, and major buyers have yet to find a way around pending EU sanctions.  Like China, India and South Korea were also mulling sovereign guarantees for their tankers. Indian shipping firms indicated last week they would continue to transport Iranian oil even if limited insurance cover exposed them financially to a spill or accident.  Chinese insurers and shipowners would not take the risk on themselves and government intervention was necessary, Zhang said. Major ship insurer, China P&I club, told Reuters earlier this month it would not provide replacement cover for domestic tankers carrying Iranian oil.  Most of China’s tanker fleet, owned by firms such as China Shipping, COSCO Group and Nanjing Tankers, were covered by European insurers, analysts said.

Several government departments were considering the industry’s request, including the Ministry of Finance, China Insurance Regulatory Commission, Ministry of Transport and National Development and Reform Commission (NDRC), Zhang said. He did not say when a decision might be made.  Until recently, China was Iran’s top customer, taking more than 20 percent of its crude exports but customs data last week showed China halved its Iranian crude imports in March compared with the same month in 2011.

Excerpt, Alison Leung, China mulls guarantees for ships carrying Iran oil, Reuters, April 30, 2012

Enough is Enough: Europe should find a place to safely dispose of its nuclear waste

The European Union has given member states four years to come up with plans to permanently store their nuclear waste, a problem that continues to vex all nuclear energy-producing nations.  One hundred and forty-three reactors in the EU produce 7,000 cubic meters of highly radioactive waste every year. No country in the union, in fact no country anywhere in the world, has facilities to store this waste permanently and safely – more than 50 years after the first nuclear power plants were switched on.  “Governments have been passing the problem on for decades now – to the next administration, the next generation,” said Mr. Oettinger. Critics don’t fail to notice the irony: Before going to Brussels, Oettinger was prime minister in the German state of Baden-Württemberg, home to four nuclear power plants. He did not stand out for attempts to find a solution to the waste problem.

The directive obliges member states to present timelines for the construction of disposal facilities, and to identify sites where legally binding safety standards can be implemented. Currently, it takes 40 years to develop and build a so-called deep geological repository. EU countries can team up to create common facilities; the export of waste to non-EU states is allowed only if the destination country operates a suitable repository. Exports to African, Pacific, and Caribbean countries and to Antarctica are ruled out.

Environmental campaigners criticize the directive for not being clear enough. “Lots of recommendations, but in the end, member states can decide themselves on the implementation,” says Rebecca Harms, leader of the Green party in the European Parliament. “The commission doesn’t even give a clear definition what constitutes nuclear waste. What we’ll see in the end is going to be not the safest but the cheapest solution.”  One requirement in the directive could prove to be the most problematic one: the general public should be given the opportunity to participate effectively in the decisionmaking process.

“It’s been the same story all over Europe,” says Gerhard Schmidt of the Institute for Applied Ecology in Darmstadt, which advises the German government on nuclear safety issues. “Nuclear industry and government are secretly looking for disposal sites, but as soon as the public gets wind of the plans, they are withdrawn. It’s political poison.”

Problems similar to those in Europe have hampered the search for nuclear-waste repositories elsewhere. In the US, lawmakers continue to struggle over the Yucca Mountain repository, a project the Obama administration has decided to shut down after decades of political wrangling and scientific doubts over its suitability.

A transparent procedure could help in finding adequate sites, says Mr. Schmidt, adding that the research into safe nuclear-waste management has made huge progress. “Scientifically, we are almost there. But we haven’t been able to create public acceptance, with the exception of Sweden and Finland, maybe.”

Michael Steininger, Can Europe find a safe place for nuclear waste?, Christian Science Monitor, July 20, 2011

Fracking in the European Union

Poland may have western Europe’s largest reserves of shale gas. A dozen global gas-exploration companies have promised to drill as many as 120 test wells over the next few years to find out. The prize could be trillions of cubic metres of gas. It is “a huge and expensive gamble”, says Tomasz Maj, the head of Polish operations for Talisman Energy, one of the exploration firms….But the extraction of shale gas is controversial. It requires fracking: blasting fissures in subterranean rock and pumping in water and sand, and occasionally nasty chemicals, to force out the gas. France won’t do it. There is local resistance in the Netherlands. Yet other countries’ qualms may make fracking more attractive for Poland. If others won’t frack, they will probably buy Polish gas.

European energy policy is in turmoil. Germany decided last month to abandon nuclear energy. A referendum in Italy on June 12th also said “no thanks” to nuclear power. Reliable sources of energy are inadequate to meet future demand. Poland sees an opportunity.  “We’ll never be an oil state, but we could become a Norway,” says Andrzej Kozlowski of PKN Orlen, an oil company in which the government has a 28% stake. The Polish government is keen to attract firms with experience of fracking in North America, such as ExxonMobil and ConocoPhillips. It has awarded nearly 90 concessions so far. These are cheap, and production royalties will be low. But firms will be penalised if they fail to drill the promised test wells…Fracking is a completely new industry for Poland, so the government is anxious to get the rules right. Taxes must be low enough to encourage investment, but high enough to raise revenues. Getting neutral advice on the environmental risks is not easy. Fracking can damage the water table, disrupt communities and even cause earthquakes. (In Britain on May 31st Cuadrilla Resources said it was halting a fracking operation near Blackpool, pending investigation of two small earth tremors which it may have triggered.)

The French government imposed a moratorium on fracking on May 11th. In Britain, by contrast, a parliamentary committee was friendly to fracking. EU law allows member states to exploit their natural resources as they see fit, but subject to minimum environmental standards. The European Commission is due to roll out its long-term energy strategy in November, which could affect fracking. But Poland, whose six-month presidency of the European Council begins in July, is in a good position to influence what it says. On June 21st Poland was the only EU member to vote against a proposed tightening of carbon-emissions targets for 2020.

Energy in Poland:Fracking heaven,Ecomomist, June 25, 2011, at 79