EU gas facilities fall short; upgrade plans advance

Doris Leblond
OGJ Correspondent

PARIS, Nov. 18 -- The current state of the European Union's energy facilities falls far short of the three basic aims of its energy policy, which are sustainability, competitiveness, and supply security, said EU Energy Commissioner Andris Piebalgs as he introduced an updated report of the EU's energy system projects.

He pointed to aging installations; insufficient investments in facilities—far short of the €1,800 billion needed to 2030—the risk of temporary supply interruptions; the network access regime; and a lack of network transmission capacities. He referred to the "energy islands" made up of regions, such as the Baltic states or the Iberian peninsula, that are largely cut off from other internal markets.

The EU's trans-European energy network policy (TEN-E) was set up in the mid-1990s to help achieve broader energy policy goals "by identifying the missing links and the bottlenecks in the energy network as well as priority routes which are in need of upgrading," he explained.

The report highlights examples of key European gas structure projects, developments, and needs and illustrates how these goals are being met through an integrated approach.

Based on the TEN-E guidelines, the EU has identified 11 natural gas pipeline projects "of European interest," that cross borders or will, and have a major impact on cross-border transmission capacity.

They are:
-- The Greece-Italy interconnection pipeline.

-- The Nabucco gas transport corridor between Austria and Turkey through Hungary, Romania, and Bulgaria.

-- The interconnecting gasline between the UK, the Netherlands, and Germany linking the main sources and markets of northwestern Europe.

-- The Baltic gas interconnection between Denmark and Sweden.

-- The North European gasline linking Russia, the Baltic states, and Germany.

-- Medgas, the new gasline from Algeria to Spain and France and the related capacity increases of these countries' internal networks.

-- The Algeria-Spain subsea gasline and connecting pipelines to France.

-- The Yamal-Europe II gasline.

-- The Libya-to-Italy gasline.

-- The Turkey-to-Greece gasline.

-- The Algeria-to-Italy gasline via Sardinia, with a branch in Corsica.

Most of these gas pipeline projects are progressing reasonably well, according to the report. No significant delays have been reported for the majority of the projects, and at least 7 of the 11 projects should start operating by 2013, accounting for 80-90 billion cu m (bcm)/year or 16-17% of the EU's estimated gas needs for 2010.

Energy coordinator
An energy coordinator was appointed in September 2007 to boost progress of the natural gas axis linking the Caspian Sea countries with the EU, including the proposed Nabucco project. Coordinator Jozias Johannes van Aarten was needed to deal with the physical and political challenges of a "complex and unique" project.

The appointment of coordinators for difficult projects is but one aspect of the Commission's energy interconnection activities. It also is pursuing a range of cross-cutting measures intended to help develop energy networks, including network planning, which has to be transparent and involve citizens and local authorities. It also includes project-related authorization procedures and a clear investment framework for private investments. With a budget line of €20 million/year, the EU mainly supports feasibility studies.

In 2007, it was proposed to establish a network of transmission system operators who will be responsible for monitoring development of capacities and coordinating the planning of network investments such as gas lines, underground storage, and LNG terminals.

Concerning the crucial matter of the EU's gas supplies to 2030, the report has determined the export potential of the main gas suppliers to the EU, Switzerland, and the Balkan countries. Russia's and Central Asia's export potential should increase to 196 bcm in 2020 from 139 bcm in 2005 and rise to 207 bcm in 2030. Norway should provide 95 bcm in 2020 from 81 bcm in 2005 and about 100 bcm in 2030.

The Middle East's Qatar-UAE-Oman-Yemen should provide 68 bcm in 2020, up from 2 bcm in 2005, and reach 88 bcm in 2030. Algeria's contribution will rise to 110 bcm in 2020 from 57 bcm in 2005 and as much as 115 in 2030, while West Africa should supply 38 bcm in 2020 and 45 bcm in 2030, up from 11 bcm in 2005.

Libya's supplies should jump to 25 bcm in 2020 from 5 bcm in 2005 and rise to 38 bcm in 2030. Iran's contribution should be 35 bcm by 2030, and the Azerbaijan-Uzbekistan supply should be 13 bcm in 2020 and 2030. Iraq should be supplying 320 bcm by 2030 up from 5 in 2020. Trinidad and Tobago andVenezuela should contributed 6 bcm by 2030, up from 1 bcm in 2005.