Energie : papiers de recherche moissonnés (3/02/2017)

The OPAL Exemption Decision: past, present, and future / Katja Yafimava. Oxford Institute for Energy Studies, Jan. 2017, 43 p. (OIES paper: NG 117) https://www.oxfordenergy.org/publications/opal-exemption-decision-past-present-future/

Since the OPAL pipeline started operating, more than five years ago, Gazprom has been unable to use more than 50 per cent of its capacity – even if such was not required by third parties – due to a regulatory cap imposed by the European Commission (EC) in June 2009. In October 2016 the EC adopted a new decision which removed the cap and attempted to strike a fine balance between the interests of all parties involved: while it allows Gazprom to bid for the remaining 50 per cent of OPAL capacity, it also guarantees that third parties will have access to at least 20 per cent, as Gazprom is not allowed to outbid them for that share. The decision manifests a (belated) recognition on the part of the EC that there was no rationale, rooted in the acquis, for maintaining the OPAL cap, which has become increasingly illogical and prone to criticisms of having being imposed on political grounds. Having recognised that politicisation threatens to undermine the credibility of the EU regulatory gas framework, the EC moved back into the comfort zone of rules-based regulatory decision-making, of which the October 2016 decision is an example. Poland’s legal challenge to this decision is an attempt to move in the opposite direction and risks creating a precedent in which political objectives are allowed to override regulatory rules.
As such the October 2016 decision signifies an important turning point in how Russian gas will be transported to Europe in the future. It could serve as an enabler for finding a new contractual arrangement between Gazprom and Naftogaz (with mediation from the EC) for continuing transit across Ukraine post-2019 once the existing contract expires, thus reducing the urgency for the construction of Nord Stream 2 and/or the Turkish/South Stream pipelines. However should either the decision or the arrangement with Naftogaz fail or be further delayed by legal proceedings, the opposite could be the case. In any event, the decision could serve as a guidance for future regulatory treatment of onshore extensions of any new Russian transit-diversification pipelines.

The energy sector implications of Brexit / Steve Pye (UCL), Carole Mathieu (Ifri), Paul Deane (UCC). InsightE, Jan. 2017, 9 p. http://www.insightenergy.org/system/publication_files/files/000/000/064/original/HET20_Brexit.pdf?1485766265

On June 23rd, the UK voted 51.9% to 48.1% to leave the European Union. While the referendum outcome was not legally binding, the broad political consensus that has since emerged across both Remain and Brexit camps has been that the will of the majority must be upheld. So while the UK leaving the EU could be considered inevitable, and has continued to be reinforced with the political mantra of ‘Brexit means Brexit’, it not clear what this exit will look like. A recent speech by Theresa May did set out negotiating principles, including not seeking membership of the Single Market. However, this will be a long negotiation with the 27 remaining Member States, with the UK facing at least 2 years of uncertainty regarding the outcome.

Brexit’s impact on gas markets: Brexit and security of supply for the UK and Ireland / Thierry Bros. Oxford Institute for Energy Studies, Jan. 2017, 7 p. (Energy Insight: 2
Brexit’s impact on gas markets series: 1) https://www.oxfordenergy.org/publications/brexits-impact-gas-markets-brext-security-supply-uk-ireland/

The Oxford Institute for Energy Studies is launching a new research theme on the impact of Brexit on gas markets. This publication dealing with Security of Supply is the first of a series that will focus on Brexit as negotiations continue between the UK and the EU. We conclude that: 1) the UK needs to reshape its energy diplomacy that has in the last decade increasingly been handled by Brussels; 2) the three EU-UK interconnector regulations are going to be crucial to the way Brexit impacts on gas markets; 3) Brexit negotiations will have an impact on the NBP-TTF spread.

Oil Price Paths in 2017: Is a Sustained Recovery of the Oil Price Looming? / Andreas Economou, Bassam Fattouh, Paolo Agnolucci, Vincenzo De Lipsis. Oxford Institute for Energy Studies, Jan. 2017, 15 p. (Energy Insight: 1) https://www.oxfordenergy.org/publications/oil-price-paths-2017-sustained-recovery-oil-price-looming/

This paper explores how the oil price path could evolve in 2017 by assessing the various oil price risks under alternative forecast scenarios pertaining to future market conditions. It is shown that even without the OPEC-non-OPEC output cut agreement in November 2016, the three-year long price fall would eventually have come to a halt and stabilized at close to $41/b in 2017 based solely on market forces. The agreement, however, helped accelerate the price recovery by stabilising the oil price near $50/b. That said, the current price at above $50/b already incorporates the bulk of the expected gains from the full enforcement of the production cuts and reflects the positive shift of market sentiment that has been building-up in anticipation of the implementation of the output cut agreement. Thus, for the next year, the oil price path is more sensitive to downside risks depending on the discipline of OPEC and non-OPEC oil producers. In fact, for the price recovery to be sustained in 2017, OPEC efforts must be met by favourable market conditions in the form of an unexpected surge in global oil demand amid a moderate expansion of US shale supply. On the contrary, a deterioration of global economic activity, or an aggressive expansion of US shale supply, or both, could reverse the current momentum. Moreover, a return of oil production from conflict inflicted countries Libya and Nigeria could undermine the OPEC agreement from within. Eventually, whatever scenario plays out, OPEC will continue to assess the market conditions and in the second half of 2017, it can decide on whether to extend the agreement to offset any losses to the anticipated oil price recovery that may arise from changes in oil market conditions or to drop the agreement all together. But regardless which way the decision goes, the latest output cut agreement is critical to resolving fundamental uncertainties about the shock hitting the oil market and OPEC behaviour in a more uncertain world.

Planning for the renewable future: Long-term modelling and tools to expand variable renewable power in emerging economies. Irena, Jan. 201, 136 p. http://www.irena.org/DocumentDownloads/Publications/IRENA_Planning_for_the_Renewable_Future_2017.pdf

The report guides energy planners and modelling practitioners through various modelling practices and use of renewable data to better represent variable renewable energy (VRE) sources in long-term generation expansion planning. The report highlights the findings from AVRIL (“Addressing Variable Renewable Energy in Long-term Energy Planning”), an IRENA project that has identified the best practices in long-term planning and modelling to represent high shares of VRE. The report includes two main parts: Part One (Planning the transition to variable renewables) offers guidance to energy decision makers and planners by providing an overview of key long-term issues and concerns around the large-scale integration of VRE into the power grid. Part Two (Long-term models for energy transition planning) offers guidance to technical practitioners in the field of energy modelling, specifically with a catalogue of practical VRE modelling methodologies for long-term scenario planning. Topics addressed include: temporal and spatial resolution of generation expansion models, calibration of time-slices, capacity credit constraints, flexibility constraints, flexibility balance validation, coupling with production cost models, linking grid expansion needs with VRE expansion, site specific representation of generation, and transmission needs.

BP Energy Outlook. Jan. 2017  http://www.bp.com/en/global/corporate/energy-economics/energy-outlook.html

The Energy Outlook sets out a base case which outlines the ‘most likely’ path for global energy markets until 2035, based on assumptions and judgments about future changes in policy, technology and the economy. The Outlook also develops alternative cases to explore key uncertainties.

Danièle Revel

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