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Oz suppliers' Europe bonanza

WITH Australia's LNG construction boom winding down, oil and gas supply chain players are being u...

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Austrade's Senior Trade Commissioner for Central Europe, Steve Rank, told Energy News there were 53 pipelines and 23 other gas projects already on offer for work in what he calls "Emerging Europe", a region with strong economic growth without the regulatory baggage developing nations often carry.

It's all part of the European Commission's Connecting Europe Facility program aimed at boosting energy infrastructure, much of which is ageing, to ultimately reduce the cost of transitioning to a low-carbon economy.

The ball is already rolling after the EC committed €187.5 million ($A273.56 million) alone into building the first gas pipeline between Estonia and Finland in August, in a step towards uniting the continent's energy markets to end Finland's gas isolation and develop the Baltic regional gas market.

The EU says upgrading existing and developing new energy transmission infrastructures of "European importance" will need about €140 billion in electricity and at least €70 billion in gas.

Rank believes there is some €70 billion worth of projects on offer for Australian companies,

They will also need oil supply connections in landlocked central eastern Europe which currently depends on limited supply routes, and the EC wants to create the "Central Eastern European Oil Pipeline Ring" by establishing links between the North and South Druzhba pipelines both in the west and the east.

This will give central eastern Europe access to the Baltic, Black and Adriatic seas, ensuring continuous oil flows to the dependent refineries in case of a supply disruption in the conventional supply route.

"This challenge and its urgency are unprecedented, as they combine cyclical reinvestment needs with new requirements - mainly due to rapidly increasing amounts of electricity generated from variable sources - arising from the EU's energy and climate policy objectives for 2020 and beyond," the EC said in its landmark document spelling out the Connecting Europe program.

"Between now and 2020, investment volumes in the different member states will be multiplied by two, or even three compared to the last decade."

While Central Europe includes the Baltic Sea down to Greece and the Balkan region, Rank said the best opportunities were in Poland and Croatia.

"The heart of it is in Poland, Hungary, Czech and Slovak republics which have very good economic and growth record," Rank said.

"Poland, with a population of 38 million, is a bit like Australia, in that it hasn't slipped into recession in the last 20 years and is still on a pretty good growth trajectory," Rank said.

The opportunities for Australian companies extend to:

  • Pipeline integrity and repair - anti-corrosion maintenance and monitoring;
  • Education and training - geoscience, safety and offshore operations;
  • Gas treatment, processing, compression, storage and monitoring;
  • Environmental and risk management, monitoring and evaluation;
  • LNG industry research, education and training;
  • Subsea pipeline design and construction;
  • Pipeline construction fault reduction; and
  • Front end engineering and design.

Maintenance

Another area of interest is maintenance.

Rank said there was already a large existing network across Europe of gas pipelines - Poland has about 10,300km of high pressure pipes and an existing larger network of about 187,000km of pipes - and failure sometimes comes into play.

"Some of the research in Europe shows 28% of this is due to third party interference, with construction causing 16%, then corrosion and other factors [also affecting safety]," Rank said.

Unless companies have the great advantage of an existing base in Europe, they need to build relationships with major existing EPC contractors and sub-contractors and transmission operators.

"While they can do that initially by visits, sooner or later they'll need boots on the ground; and a good strategy is joint ventures in the market that can help access the customers," Rank said.

"An advantage is that all these prospects need to comply with EU tender guidelines, which are generally in English."

While English is widely spoken, local partners become more important for local language knowledge the further down the supply chain you go, particularly deep in the regional areas.

"Local content matters are also important," Rank said.

"While it's not a tender requirement, most local contractors are keen to contribute to the local community in which they're working. So the ability of Australian companies to work with local employees is essential."

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