By Sara Stefanini | @SaraStefaninii | Send tips to sstefanini@politico.eu| Subscribe for this daily column http://politico.eu/registration | If you prefer to read this on your desktop click here Hello and welcome to POLITICO Pro’s Morning Energy. Iran locks up some LNG technology, Russia tightens its grip on Europe and turns up the Asian charm, and Miguel Arias Cañete lands in Papua New Guinea. — WHAT’S HAPPENING: BON BONN: The week-long climate negotiations in Bonn may have done little to pare down the 80-plus pages of text that will form the basis for a deal to reached at the COP21 summit in December, but leaders stressed they did make progress. The meeting’s two co-chairs said they will issue a slimmer draft of the agreement in the first week of October. The final negotiating session before the Paris climate summit is October 19-23. That’s the “crucial phase,” said Laurence Tubiana, France’s ambassador for climate negotiations. “We look at all the pieces of the puzzle, and now everybody knows everything. Now we have to assemble all the pieces of the puzzle.” However, that draft is unlikely to resolve the thorniest issues, including finance and the legal framework of the agreement. Those will be dealt with in Paris. Our POLITICO Pro colleagues in Washington report (paywall): http://politico.pro/1ioorVk and the draft agreement they’ll be taking to the session next month: http://bit.ly/1Ux6K1H — ‘WE’RE ALL FRUSTRATED:’ The pace of the negotiations is not as important as the direction, said Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change. And the good news is the COP21 talks are now underway on three levels: negotiators, ministers, and heads of state, and that’s “quite unique,” Figueres said. “We all want to see this baby born,” she added. “The proof is in the pudding, and the pudding is coming out of the oven in Paris.” — BRING THE COFFEE: NGOs agree that the ball is now rolling. But the talks are still focused on figuring out larger issues “rather than substance,” Greenpeace’s Jasper Inventor said in a press briefing Friday. On climate financing, the divide between rich and poor countries “remains unbridged.” Negotiators should be “ ready to drink lots of coffee and negotiate until the early hours of the morning” during the upcoming October sessions, Inventor said. DEVIL IN THE TEXT: That was the lesson learned from the COP15 summit in Copenhagen in 2009, said Connie Hedegaard, the EU climate commissioner between 2010 and 2014 and Denmark’s COP15 minister. Back in September 2009, “most people thought, as most people think today, that of course it would be possible to get an agreement,” she told us. “But we learned that many obstacles lie in the text.” One concern is that the issue of a so-called firewall — the division of burdens between developed and developing countries — remains a sticking point. “Time is short, and despite all the good will, we have seen how difficult it can be if there are too many square brackets when you get to Paris,” Hedegaard said. KEEP CHECKING BACK: There is increasing support among parties for putting a five-year review clause in the final COP21 deal, which would allow states to boost their ambitions over time, NGOs said. But it’s still unclear how such a mechanism would work in the EU’s case. The bloc’s 2030 energy and climate commitments were only agreed after months of divisive negotiations over numbers and processes. EU members would sit down in 2025, potentially the first review year, to review their ambitions. Asked about this, Elina Bardram, the EU’s chief negotiator, reiterated the bloc’s support for a review clause. She emphasized that it would be good for the world, but dodged the details of how it would work internally. Arias Cañete’s statement: http://bit.ly/1UyUXQo LIQUID IRAN: Germany’s Linde has secured a foothold in Iran’s (potential) future liquefied natural gas (LNG) exports, Argus Media reports. The company has reached a deal with state-run National Iranian Gas Export (NIGEC) to provide liquefaction technology for a plant with a capacity to export 10.8 millions tons per year of LNG. The licenses and some of the facilities needed for the Iranian LNG plant have already been purchased, but sanctions have kept them from being delivered, said NIGEC general manager Mostafa Sharif. Linde representatives joined German Economy Minister Sigmar Gabriel on a visit to Iran soon after July’s tentative agreement to block Iran from building a nuclear bomb. http://bit.ly/1PPKb7c — WHAT THE MAJORS THINK: Representatives from some of Europe’s biggest energy companies met with Arias Cañete on Friday and told him they expect Iranian gas exports Europe to mostly come in the form of LNG, rather than via pipeline, we hear. However, they said to expect oil exports first, and gas in the medium term. For now, companies are keen to get involved in energy saving and power generation projects in the country. GAZPROM SQUEEZES ITS FIST: The Russian major’s agreement with European peers to expand the Nord Stream gas pipeline to Germany, reached at the Eastern Economic Forum in Vladivostok Friday, sits awkwardly with the EU’s effort to diversify its gas away from Russia. It comes as Moscow pushes to bypass Ukraine as a gas transit route. “If completed, this might imply lower (or no) gas transit revenues for Ukraine, and possibly higher gas prices,” said Georg Zachmann from Bruegel Research. If Russia stops sending gas through Ukraine to Central and Eastern Europe, it could also make Ukraine more dependent on Russian gas. That’s because Ukraine currently receives so-called reverse flows — Russian gas that goes to neighbors like Slovakia, and then travels back to Ukraine. “Absent transits through Ukraine, Slovakia might not be in a position any more to provide cheap reverse flows back to Ukraine,” said Zachmann. — STILL NO TURKISH DELIGHT: The Nord Stream II project isn’t Russia’s only plan for diverting its European exports away from Ukraine; there’s also the planned Turkish Stream, which would land at the Turkish-Greek border. But the Russian and Turkish governments have yet to come to a final agreement to proceed. “Building both Nord Stream II and a full-blow 63 billion cubic meter per year TurkStream makes no sense for Gazprom,” said Zachmann. Instead, Moscow may choose to go with a smaller version that supplies Turkey and the Balkans, which currently receive gas delivered through Ukraine, he added. Kalina reports: http://politi.co/1Fnumz2 LET’S SWAP THIS: Besides making waves with its Nord Stream 2 announcement, Gazprom also made news for deciding to revive a multi-billion euro asset swap with German chemical group BASF, only months after the agreement was scrapped due to the conflict in Ukraine, the FT reports. Under the deal, Gazprom will take full control of a jointly-operated European gas trading and storage business, including the biggest underground gas storage facility in Western Europe. It will also receive a 50 percent stake in BASF subsidiary Wintershall’s North Sea operations. In return, Wintershall will receive stakes in two western Siberian gas fields. The article: http://on.ft.com/1JT3TdA, and the press release: http://on.basf.com/1OgHVFo ON THE BLOCK: In yet more Gazprom news, the company plans on holding three gas auctions this week to defend its European market share. It wants to boost exports to Europe and Turkey by 7 percent to make up for a 30 percent drop in prices. It’s a shift for Gazprom, which until now has relied on long-term take-or-pay contracts with its European customers. The auctions will be for 3.24 billion cubic meters, to be delivered over six months. Bloomberg has more: http://bloom.bg/1O7wAcM CHARM OFFENSIVE: Amid strained with Europe, Russia used the Vladivostok forum to continue its pivot to Asia. In pursuit of new investment to help cope with big debts and low oil prices, Russia is giving Asian companies access to its prized oil and gas assets, the FT reports. State oil major Rosneft, for instance, gave India’s state-run ONGC a 15 percent share of its largest oil and gas field. http://on.ft.com/1JLKsXk — HEADLESS BODY: Russia signed some 30 cooperation agreements with China during President Vladimir Putin’s visit to Beijing on Friday, including several on energy. But most of those are non-binding, so don’t take them too seriously, Bloomberg reports. “Practice shows that out of 10 agreements, we get one or at most two contracts,” said Sergei Tsyplakov from Sberbank. Among those is an agreement for a possible third gas pipeline from the Sakhalin region in Russia’s Far East to China. However, the governments have tempered expectations for the second pipeline, from Siberia to western China, saying not to expect it until 2016. They agreed to the first, the Power of Siberia to eastern China, in May 2014. http://bloom.bg/1fZfaRJ NORTH SEA WORRIES: Big worries that parts of the North Sea may be abandoned if low prices force out some energy companies, leaving the crippling costs of running infrastructure to be shared among a smaller number of companies. Andy Samuel, the head of the new Oil and Gas Authority, told the FT that companies have to do a better job of working together, despite competitive pressures. A report to be released today warns that whole areas of the continental shelf could be shut down if companies can’t do a better job of burden sharing. The story: http://on.ft.com/1VI4fMy TRICKY POWER BALANCE: Meaning electricity, not control. The partial solar eclipse in March put the European electricity sector to the test: If it’s a sunny day, will a grid that is increasingly reliant on renewables (especially in Germany) withstand a solar blackout? Fortunately, cloudy skies in much of Europe limited the effects of the eclipse. But grid operators still had to ramp up their backup electricity supply, just in case, and then deal with a surge in sunshine once it passed. The Economist takes a look at the risk of relying on renewables, and options for storing energy for later. http://econ.st/1JTaaWP RENEWABLE SECURITY: Militaries around the world are turning to energy efficiency and sustainability as a way of bolstering their own security, reducing their reliance on fossil fuels as well as saving money. The U.S. Navy has made the biggest commitment so far, agreeing to build a 210 megawatt solar energy facility, which will supply 14 Navy installations. Construction of the Mesquite Solar 3 plant in California begins this month and should be completed by the end of 2016. Renewable Energy Focus: http://bit.ly/1PUkr9z FLYING LOW: Aircraft emissions are falling short of United Nations fuel efficiency goals by 12 years, according to the International Council on Clean Transportation. The efficiency of commercial jet fuel is improving by an average of 1.1 percent per year, but air traffic is expected to grow much faster — at 4.1 percent per year for 20 years. “When demand for your service grows four times quicker than the fuel efficiency of new planes, you clearly have a CO2 emissions gap,” said Andrew Murphy from the NGO Transport & Environment. Press release: http://bit.ly/1JE1J2l and study: http://bit.ly/1JTdJ3A — WHAT’S COMING: LONG HAUL: Miguel Arias Cañete, climate and energy commissioner, starts the week in Papua New Guinea for the Pacific Islands Forum. He’s there until Friday, where climate action will be on the table once again. The EU has been building a strong alliance with small island states since the COP17 summit in Durban, South Africa, said Hedegaard, who attended the 2013 forum in the Marshall Islands. “I know all the effort it takes the travel there, to prioritize it in a busy schedule, and the fact that Cañete is doing it emphasizes again how much Europe attaches to really understanding the Pacific Islands position and having a dialog with them.” BREAK’S OVER: Just because Bonn’s over doesn’t mean climate discussions are. They resumed yesterday and continue today at an informal ministerial in Paris, organized by the French government. The focus is on finance, technology, loss and damages from climate change, and adaptation, Tubiana said. BACK IN STRASBOURG: The European Parliament is back in session. The Industry, Research and Energy Committee meets tonight from 21:00 to 22:30 and will discuss studies on EU energy governance and the effects of the Transatlantic Trade and Investment Partnership on European energy markets, plus a briefing on energy price trends. Follow it here: http://bit.ly/1OnkzOB _Thanks to Kalina Oroschakoff, Anca Gurzu and Helena O’Rourke-Potocki. _
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