Energy

The United Arab Emirates (UAE) and Germany signed a "landmark agreement" on Sunday (25 September) aimed at accelerating joint efforts to boost energy security, decarbonisation and combat climate change. The major deal was struck in the presence of UAE President, Sheikh Mohammed bin Zayed, and German Chancellor Olaf Scholz, who is currently visiting the Emirates. The deal secures the delivery of 137,000 cubic meters of LNG to be sent to the new LNG terminal in Brunsbüttel near Hamburg in December. According to the dpa news agency, the amount included in the first delivery equates to around 0.95 billion kilowatt hours of electricity. However, the LNG deal can only make up for a small part of the 56.3 billion cubic meters of gas that Germany received from Russia in 2020.

Russia has restarted gas supplies to Germany via the German-Russian Nord Stream I gas pipeline on Thursday (21 July). The gas pipeline had been closed for the past ten days for the usual annual maintenance, but it was uncertain whether gas would flow via the pipeline again. The Russian state-owned gas company Gazprom had previously informed European clients by letter that it cannot guarantee that deliveries will be resumed after the maintenance work. It invoked "exceptional circumstances". The European Commission therefore feared that Russia would permanently stop the gas supplies from Nord Stream I after the maintenance. European Commissioner Johannes Hahn said this week that the European Commission was even working on the "assumption that the gas supplies will not be resumed". Gazprom already reduced gas supplies to Germany by 60 per cent in June. It is not clear whether resumed deliveries will be at the same level as before the maintenance. At that time, they amounted to 67 million cubic metres per day, about 40 percent of Nord Stream I's maximum capacity. Since the supply resumed, the gas price has fallen slightly, first by 6.5 percent, after which the price stabilised around 4 percent. 

After years of uncertainty in EU-Azerbaijan relations, co-operation between the two sides has finally been put on a strategic footing with the signing in Baku on Monday (19 July) of a new "Memorandum of Understanding on a Strategic Partnership in the Field of Energy". The signing of the MOU comes at a crucial time when Europe is frantically trying to replace gas and other energy supplies from Russia, in the aftermath of the latter's invasion of Ukraine. A report on the website of the European Commission said that the memorandum signed by the two Presidents today includes a commitment to double the capacity of the Southern Gas Corridor to deliver at least 20 billion cubic metres to the EU annually by 2027. This will contribute to the diversification objectives in the REPowerEU Plan and help Europe to end its dependency on Russian gas. Based on the strengthened energy cooperation, Azerbaijan is already now increasing deliveries of natural gas to the EU, from 8.1 billion cubic metres in 2021 to an expected 12 bcm in 2022. commonspace.eu political editor said in a comment that "EU-Azerbaijan relations need to continue to be build, based on mutual respect and recognising the importance of people to people contacts for the future of the relationship. The EU on its part, especially now that the stakes are higher, needs to put more efforts in supporting lasting peace in the region. The energy agenda has its specific importance and aspects, but it cannot be seen in isolation of wider issues."

On July 12, a Russian court in Southern Krasnodar upheld an appeal by the Caspian Pipeline Consortium (CPC) after a previous ruling made last week by a district court ordered the oil transporter to cease operations due to ecological concerns. The initial decision led Kazakhstan’s President Kassym-Jomart Tokayev to look toward new routes for Kazakh energy exports. While the decision will suit Kazakhstan’s energy sector in the short-term, the persistent instability since Russia’s invasion of Ukraine is likely to result in Kazakhstan seeking to free itself from Russian dependence for the export of its energy resources in the medium to long term. For the Kremlin, Nur-Sultan’s willingness to engage with Western countries is a cause for concern and could signal the weakening of Russian hegemony in Central Asia. Kazakh oil may be flowing again from Novorossiysk but the damage to Russian-Kazakh relations has been done.

There are reports that the US may be about to broker a deal between Israel and Lebanon, resolving a long-standing dispute about their maritime border and the exploitation of two large oil and gas fields in the Levantine Basin. Amos Hochstein, the US Senior Advisor for Energy Security, this month mediated indirect talks between the two countries, who technically are still at war with each other, and have no formal diplomatic relations in an attempt to resolve the issue. After his meetings in Lebanon last week, it seemed that a breakthrough had finally been reached, when the Lebanese president, Michel Aoun, reportedly presented a unified position on behalf of the government, which offered the prospect for a compromise This new proposal would create an S shaped maritime border, granting Lebanon access to the whole of the Qana field, while leaving Israel the entirety of Karish. In the past, the lack of agreement within the Lebanese government, and its unwillingness to compromise had been the key factors holding back negotiations, and this new approach led Hochstein to strike an optimistic note, saying that Lebanon had taken “a very strong step forward”. The US Energy advisor will now relay the offer to Israel and await a response. Both countries stand to gain from a swift and peaceful resolution to this decade long problem which has prevented them from extracting any value out of the fields.