Russia, EU spar over energy supplies

The ongoing dispute between Russia and the European Union (EU) took another turn in May, as representatives failed to agree on measures to prevent another cutoff of gas supplies to Europe. As reported by the Associated Press, EU leaders said their summit with Russian President Dmitry Medvedev improved a relationship severely strained by Russia’s war with Georgia last summer and a winter gas cutoff of Russian supplies via Ukraine, but there were no major breakthroughs.

Tension over energy supplies and EU overtures to Russia’s neighbors was palpable. Medvedev warned that the EU’s strengthening ties with former Soviet states must not turn into an anti-Russian coalition. The talks “increased our mutual trust, which is very much needed and very important,” said Czech President Vaclav Klaus, whose country holds the EU presidency. Klaus spoke to reporters immediately after the summit in the Russian city of Khabarovsk, located some 3,800 miles east of Moscow. While the tone was warmer than during edgy EU summits with Medvedev’s predecessor, Vladimir Putin, the Russian president sparred with the EU leaders over energy – a sensitive issue because Europe relies on Russia for a quarter of its natural gas imports.

GE says pipeline unit poised for growth. Here’s a bit of good news. GE executives say they expect the conglomerate’s energy pipeline inspection unit to outgrow the industry this year, despite downward pressure on pricing. Energy companies are expected to boost the global new-installed pipeline base by 3% this year, since decisions on such long lead-time projects were taken before the slide in oil prices over the past 12 months. As reported by Dow Jones, John Bucci, head of GE’s PII Pipeline Solutions business, and fellow executive Geoff Foreman said that market share gains would see it outpace the industry, although they declined to forecast a precise growth rate.

Energy infrastructure is a key part of GE’s industrial strategy, and Chief Executive Jeff Immelt has said that the company is targeting double-digit percentage growth in earnings this year from its oil and gas unit. “The next few years, [the industry] is going to be difficult until we get over the world recession and the business comes back,” said Foreman, growth and strategy leader for the Pipeline Solutions unit. While oil prices have moved back above $60 a barrel, investment indicators such as rig counts remain depressed. The most recent BHI rig count showed installed platforms some 50% below year-ago levels and trailing their five-year averages.

Foreman and Bucci said a number of factors are impacting their business, including the global recession, increased competition and falling energy prices that have crimped customer budgets. But Bucci said GE remains committed to the unit because it represents a key service offering within the conglomerate’s overall oil and gas division.

Late start could mean more jobs. Here’s another piece of good news. Although construction of the Alberta Clipper and Southern Lights pipeline projects will begin later than expected, Enbridge Energy says it may hire more workers than expected – up to 3,000 people in coming months, according to Wisconsin Public Radio and the Superior (Wisconsin) Telegram. The company is still awaiting permits from the federal government and the Wisconsin Department of Natural Resources, but Enbridge Energy says it hopes to begin hiring in July. Spokeswoman Denise Hamsher says additional construction and the late start will put more people on the job. “We added more crews so we can split up the pipeline segments and build them simultaneously,” she says. “It could actually put up to 3,000 workers, is the best estimate, to work.” Work is already underway on the Canadian portion of the Alberta Clipper project. That pipeline will span 1,000 miles from Superior to the Alberta Oil sands. The Southern Lights pipeline will cover 674 miles from Chicago to Clearbrook in northwestern Minnesota.

The Backstory. Please join me in welcoming Kevin Parker, who has joined the PGT staff as an executive editor. Kevin has over 20 years of experience as a trade journalist. His column, “The Backstory,” appears (coincidentally enough) at the back of the book, but will provide important context for the major issues confronting the international oil and gas pipeline industry. Welcome Kevin!  n