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Poland’s Shale Prospects Dim Again, Sanctions Ground Russian Low-Cost Carrier

Plus, Bulgaria finally chooses between Russia and the West for a new nuke project, and more Lithuanians embrace NATO troops on their soil.

by Piers Lawson, Ioana Caloianu, Jeremy Druker, and Barbara Frye 4 August 2014

1. More bad news for Poland’s shale industry

 

In another blow to initially buoyant expectations about Poland’s shale gas reserves, Polish Environment Minister Maciej Grabowski has told Reuters that fewer wells would be drilled in 2014, significantly reducing an estimate he made just several months ago.

 

Maciej Grabowski
Grabowski put the number of exploratory wells at around 80 to 85, while in June his projection was 100.

 

The development of shale gas reserves has been a priority in Eastern Europe, which relies heavily on Russian energy giant Gazprom for its supplies. The EU has been trying to break Gazprom’s vertical monopoly in the region and Ukraine has been aggressive about shale exploration in efforts to free itself from expensive Russian gas.

 

With the conflict in Ukraine and the ramping up of sanctions against Russia, the urgency has only increased in recent months.

 

Back in the heyday of overly enthusiastic expectations, Foreign Minister Radoslaw Sikorski surmised that Poland could have the energy powerhouse potential to become “the next Norway.”

 

Polish President Bronislaw Komorowski said during his election

campaign in 2010 that “if we find out that we have enough shale gas, we want to have the right to renegotiate the deal with Russia, or maybe we will step aside from it.”

 

According to Reuters, the U.S. Energy Information Administration in 2011 estimated Polish shale gas reserves at 5.3 trillion cubic meters, which would have been enough to cover domestic demand for a few hundred years.

 

But even the government had to drastically cut the numbers within a year, with the new estimate at about one-tenth of that figure. Big commercial companies, such as ExxonMobil and Total, have apparently given up for now, and exploration also hit a snag in 2013, when the European Court of Justice ruled that production licenses issued by the government without open tenders violated EU competition rules.

 

Despite all this, earlier this year natural gas and oil company San Leon announced that test results at wells in northern Poland showed potential for commercial production.

 

Grabowski insisted that commercial production would commence this year. “However, extracting gas on an industrial scale, and clearly perceptible to the economy, is not a matter of this year or next,” he said, according to Reuters.

 

The American Interest, a conservative U.S. publication and proponent of shale exploration, bemoaned the latest setback.

 

“This goes to show just how unique the American shale boom is. So many different factors need to come together, some natural and others not, for shale gas or tight oil to start flowing. Poland seems to have one of the few clear-headed energy policies in Europe, but so far it’s finding little reward.”

 

2. Budget Russian airline suspended because of EU sanctions

 

A low-cost subsidiary of Russia's flagship air carrier, Aeroflot, has suspended operations because of European Union-imposed sanctions over the crisis in Ukraine, Britain’s Telegraph reports.

 

Launched in October as a domestic airline, Dobrolet (Good Flight) made its first flight in June to the Crimean capital, Simferopol, which was its only destination at that time.

 

Dobrolet barely got off the ground before sanctions scuttled its aircraft leasing contracts. Photo by Andrew W. Sieber/flickr.

 

The recently annexed peninsula is going through a disastrous tourism season this year with a 35 percent drop in tourists since its annexation by Russia.

 

But Dobrolet has had to cancel all its flights because sanctions forced the cancelation of leasing contracts on its Boeing 737-800 planes, according to a company statement. In addition, “European firms had refused to provide services, including flight information, repair and maintenance,” according to The Telegraph.

 

The United States and EU have announced a series of sanctions against Russia, which include asset freezes, travel bans, and restrictions on goods and technologies exported for the development of Russia's energy sector.

 

Customers who bought tickets for future Dobrolet flights between Moscow and Simferopol and on one domestic route will be transported by Orenair, another budget subsidiary of Aeroflot, while travelers between other destinations will receive a ticket refund, the company said.

 

3. Bulgaria chooses Westinghouse to build new nuke

 

After years of hand-wringing, Bulgaria has chosen Westinghouse to build a new nuclear reactor at its Kozloduy nuclear power plant near the border with Romania, Reuters reports. The decision will chip away at Bulgaria's reliance on Russian energy, which provides virtually all of the country’s natural gas and all of the fuel for the two Soviet-made reactors already running at Kozloduy.

 

The deal, announced 1 August, has had a painful birthing process. Bulgaria was required to close four units at Kozloduy after joining the EU in 2007. It was a politically unpopular decision, and successive governments had planned to build a second nuclear power plant, for which they hired Russia's Atomstroyexport. Those plans were shelved in 2012 over cost concerns.

 

Bulgarians have divided loyalties between Russia and the West, and the nuclear issue has long served as a proxy for those disagreements, with leftist governments generally favoring Russian manufacturing and center-right governments looking West.

 

But that alignment was skewed last year when Dragomir Stoynev, the economy and energy minister under the Socialist government, visited the United States and became a fan of Westinghouse's technology.

 

Under the deal, Westinghouse will function as a general contractor and will call for bids for construction of the 1,000 megawatt reactor within the year, a company statement said. The company will also provide all the fuel for the new unit, which is expected to be running by 2023, according to the statement.

 

Construction costs are estimated at more than $5 billion, according to the The Wall Street Journal, which reports that Westinghouse will get a 30 percent stake in the project.

 

The Socialists are on their way out of government and the agreement must still be ratified by their successors, but Michael Kirst, Westinghouse vice president for Central and Eastern Europe, said it had been vetted by all of Bulgaria's major political parties, according to The Journal.

 

4. Support for NATO rises in Lithuania, poll finds

 

Most Lithuanians support a permanent NATO presence in their country, according to a widely reported opinion poll conducted by the country’s Defense Ministry.

 

The overwhelming majority of respondents – 85 percent – “completely or partially agree” that the presence of troops from the alliance helps ensure Lithuania’s security, LRT, Lithuania’s public broadcaster, reports.

 

The number of those in favor of continued NATO membership has risen significantly since 2013, when a similar survey was conducted.

 

“The total number of supportive respondents grew by more than 12 percent year-on-year, from 70 percent to 82.5 percent,” the paper reports.

 

The poll of 1,010 people comes as analysts warn that a security crisis in the Baltic states is the biggest threat to NATO and that the alliance must strengthen its presence in Lithuania, Latvia, and Estonia to deter Russia.

 

“The safety and security that we have taken for granted since the end of the Cold War now hangs on their fate,” British analyst Edward Lucas told the telling the U.S. Senate’s Foreign Relations Committee in July, according to the Lithuania Tribune.

 

As NATO mulls its response to Russian President Vladimir Putin’s support for eastern Ukraine’s rebel movement, an alliance summit in Wales on 4 and 5 September is “being billed as the most important since the end of the Cold War,” the Guardian’s Richard Norton-Taylor and Hugh Macaskill write in a blog.

 

“There are genuine concerns about whether Putin will encourage Russian-speaking communities in Latvia, Estonia, and Lithuania to agitate, destabilizing those new NATO countries in the Baltic,” they write.

 

Evidence of that tension was clearly seen on 1 August when Polish Mig fighters were scrambled to escort Russian airplanes flying close to the Estonian coast of the Baltic Sea, according to the Baltic News Service.

Lithuania first began contributing to NATO operations in 1994, shortly after its independence, and became a fully fledged member of the alliance in 2004.

 

Over the last decade NATO countries have taken turns sending their air forces to patrol Lithuanian air space, but this year warplanes from the United States, Poland, and the UK have been temporarily based there, Canada.com reported last month.

 

NATO conducted large-scale naval and land maneuvers in June in the Baltic region.

 

5. Moves to compensate Czech victims of forced sterilizations

 

Moves may go ahead to compensate thousands of Czech women – predominantly from the Roma community – who were forcibly sterilized between the early 1970s and the early 1980s, Radio Praha reports.

 

Victims could be awarded up to 150,000 crowns ($7,280) each under legislation being drafted by the country’s human rights minister and the nongovernmental Czech Helsinki Committee, the news agency reports.

 

But Helsinki Committee director Lucie Rybova said a huge public information campaign would be required if all the victims of the policy are to be compensated, and no government ministry is taking responsibility for doing so.

 

She pointed out that it might be difficult for some victims to prove that they have been sterilized against their will, according to Radio Praha.

 

“Another problem is that we have cases where, because of flooding, some health records disappeared. At least, that’s what the hospitals say,” she said.

 

Rybova also questioned whether the sums being suggested as compensation are sufficient considering the suffering of the victims.

 

The Romedia Foundation in Hungary says that between 1971 and 1991 “the reduction of the Roma population” through forced sterilizations was often performed without the knowledge of the affected women during Caesarean operations or abortions.

 

About 90,000 women were forcibly sterilized in the Czech Republic over the past 40 years. Some were presented with consent forms while they were in labor or on the operating table undergoing Caesarean sections. They were misled about what they were agreeing to, according to various accounts.

 

“They sometimes were offered financial compensation or material benefits like furniture from social services – though it was not explicitly stated what this compensation was for,” the Romedia foundation says.  

Piers Lawson is a TOL contributing editor. Jeremy Druker is TOL's executive director. Barbara Frye is TOL's managing editor. Ioana Caloianu is a TOL editorial assistant.
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