European Energy Giants Active in North American Energy Sector

The rapidly developing internationalization of the energy sector was in full view in the U.S. last week when two major development-related announcements were made by European energy giants E.ON and Gazprom.

E.ON, the German energy giant, has completed a 781 megawatt wind project west of Fort Worth, Texas. Steve Trenholm, E.ON Climate and Renewables chief executive, said, "Completing the world's biggest wind farm took more than a $1 billion investment, coordination with more than 300 landowners, and management of more than 500 workers."

Meanwhile, Gazprom, Russia's largest company, has started trading and marketing natural gas in North America, a development that marks the company's first entry into the United States. "The development of new markets and products is key to Gazprom Group's global energy strategy," Vitaly Vasiliev, CEO of Gazprom U.K., said. "We have now achieved our goal of bringing the world's largest gas company into the world's largest gas market [the U.S.]. Our U.S. affiliate is now off and running, and we look forward to significant growth and profitability from our expanding geographical base."

E.ON has been active in the North American market for some years now, but Gazprom is just getting started. These announcements underscore the fact that energy professionals are very likely, in the course of their careers, to work for non-North American based companies. The energy sector is no longer primarily the domain of a handful of U.S. and U.K. companies -- it's a full blown world market now. And this means major opportunities for those who understand that studying in environments where cross culturalism is embraced -- such as DU -- will likely have an advantage over others for whom these developments are a total surprise.

Russia's Gazprom and Nigeria Agree to a Major Gas-Related Joint Venture

Gazprom, the Russian owned gas giant, and the government of Nigeria have agreed to set up a joint venture to develop the west African country's enormous gas reserves.

According to a story yesterday in the Financial Times ("Gazprom's $2.5 Billion Gas Deal With Nigeria Raises European Concerns"), Gazprom will invest up to $2.5 billion in exploration and development projects.   Russian President Dmitry Medvedev said Russia hopes that the two nations will become "major energy partners."

You can imagine that this caused eyebrows to rise all over the European Union, which has had difficult relations regarding energy issues with the Russians over the past several winters.  The EU, whether it likes it or not, depends on free flowing gas from Russia to power its industries and warm its homes.  The last couple of winters, the Russians have either threatened to or actually turned off the gas spigots in their on-going spats with the Ukraine. Some of the gas involved was bound for the EU, and Brussels has not be thrilled about this.

This week's announcement of the Gazprom-Nigeria tie-up was characterized this way in the FT report:

"Gazprom's action to secure a foothold in Nigeria, where western groups have led the development of the oil industry for half a century, has given rise to concerns in Europe that Moscow is seeking to gain control of Nigerian reserves to tighten its grip on the European Union's gas supplies."

Now surely Moscow wouldn't be thinking the same thing, could they?  Of course they are.

There is also word that Gazprom is interested in helping fund at least part of the proposed trans-Saharan pipeline that would transport gas from Nigeria to Europe.

Curious, isn't it, that the EU seems rather subdued these days about Russia's so-called human rights violations.  A little concern about gas for the winter has a way of putting a damper on the EU's human rights campaigns.

And one more comment about Gazprom: Nigeria isn't the only place where the Russian giant is involved.  They have their fingers in many places in the world including Bolivia, Venezuela, and even the UK (where they operate a carbon trading firm).  We will be hearing more about Gazprom, particularly as the price of gas increases and they have even more money to invest.