Germany's nuclear decision leads to RWE-Gazprom deal
by Daniel Mason
15 July 2011
Germany's decision to phase-out nuclear power over the next decade looks set to increase Europe's reliance on Russian energy as the two countries' biggest utility companies moved closer to a deal to work jointly on coal and gas ventures.
In a move which could also have implications for one of Europe's key projects to improve its energy security, German utility RWE and Russian giant Gazprom yesterday signed a memorandum of understanding which will see them enter exclusive negotiations aimed at working together on new and existing gas and coal power plants in Germany, the United Kingdom and the Benelux countries.
The deal could secure a competitive gas supply to RWE and lead to "mutually fruitful growth opportunities," according to Juergen Grossman, its chief exectutive. Gazprom's chief executive officer Alexey Miller, emphasising the importance of its European operations, said: "In light of recent decisions by the German government to reduce their nuclear power programmes, we see good prospects for the construction of new modern gas-fired power plants in Germany." Angela Merkel, the German Chancellor, announced in May that the country would reduce then abandon nuclear power by 2022 in the wake of the Fukushima crisis in Japan.
Meanwhile RWE is the main partner in the Nabucco pipeline project, specifically designed to reduce Europe's reliance on Russian gas by connecting the continent's energy network to the Caspian region. Though RWE has reaffirmed its commitment to the project, its relations with Gazprom – which is separately constructing the rival South Stream pipeline to bypass Ukraine, as well as another pipeline through the Baltic – could lead to questions about the project's viability. Nabucco is already controversial, with its budget of €7.9bn under review and potentially rising as high as €15bn according to some analysts.
The Nabucco project is supported by the European Union and will, when complete in 2017, have a capacity of 31 billion cubic metres of gas every year. As well as Germany's RWE, partners include Bulgarian, Turkish, Hungarian, Austrian and Romanian energy companies. The RWE-Gazprom deal is likely to be a topic of conversation at upcoming talks between Merkel and the Russian President Dmitry Medvedev – as commerical relations between the two countries have recently widened significantly.
In a move which could also have implications for one of Europe's key projects to improve its energy security, German utility RWE and Russian giant Gazprom yesterday signed a memorandum of understanding which will see them enter exclusive negotiations aimed at working together on new and existing gas and coal power plants in Germany, the United Kingdom and the Benelux countries.
The deal could secure a competitive gas supply to RWE and lead to "mutually fruitful growth opportunities," according to Juergen Grossman, its chief exectutive. Gazprom's chief executive officer Alexey Miller, emphasising the importance of its European operations, said: "In light of recent decisions by the German government to reduce their nuclear power programmes, we see good prospects for the construction of new modern gas-fired power plants in Germany." Angela Merkel, the German Chancellor, announced in May that the country would reduce then abandon nuclear power by 2022 in the wake of the Fukushima crisis in Japan.
Meanwhile RWE is the main partner in the Nabucco pipeline project, specifically designed to reduce Europe's reliance on Russian gas by connecting the continent's energy network to the Caspian region. Though RWE has reaffirmed its commitment to the project, its relations with Gazprom – which is separately constructing the rival South Stream pipeline to bypass Ukraine, as well as another pipeline through the Baltic – could lead to questions about the project's viability. Nabucco is already controversial, with its budget of €7.9bn under review and potentially rising as high as €15bn according to some analysts.
The Nabucco project is supported by the European Union and will, when complete in 2017, have a capacity of 31 billion cubic metres of gas every year. As well as Germany's RWE, partners include Bulgarian, Turkish, Hungarian, Austrian and Romanian energy companies. The RWE-Gazprom deal is likely to be a topic of conversation at upcoming talks between Merkel and the Russian President Dmitry Medvedev – as commerical relations between the two countries have recently widened significantly.
COMMENTS
In the 1930s, we also had a pact between Germany and Russia - the USSR. It was called the Molotov - Ribbentrop-pact. Today we have an unstable Russia controlling the energy situation of Europe's industrial engine - Germany.
Defending democracy in Russia from a common European level will not be an issue any longer. Who dares to complain to a landlord, if there is a risk that he will turn off your electricity and gas? This new pact is a Molotov-cocktail right into the heart of Europe's - not only energy - but also security policy. We need NATO and Finlands NPPs more then ever .
Mats L.G. Rosen - Kävlinge, Sweden, Group of Swedish Communities with Nuclear Energy Facilities
