EU gas regulations, systems need modifications, speakers say

Doris Leblond
OGJ Correspondent

PARIS, Mar. 20 -- The European Union must adapt its rules and regulations and its gas systems to better deal with tensions developing in the gas market, according to speakers at an industry conference Mar. 17 in Paris. The conference was organized by the Enerpresse publishing group.

Such new thoughts were put forward in the aftermath of the January 2009 Russia-Ukraine gas crisis, which deprived a number of Eastern and Central EU countries of Russian gas and rendered increasingly urgent Europe's gas supply security problem.

Jean-Marie Daugier, deputy vice-president of global gas and LNG for major EU gas operator, GDF Suez, strongly advocated the forming of consortiums of EU gas buyers as once was the case before the EU forbad the practice under its competition rules.

"Community rules, he pointed out, were made at a time when gas was considered abundant. But the January gas crisis has shown once again that more attention must be given to supply safety." This can only be achieved by giving gas operators more clout to deal with suppliers, he believed.

Gas is still abundant, he said, but competition to gain access to resources is growing, and competition from other regions, namely Asia, will increase. "The matter must be dealt with urgently," he insisted, "as the Chinese, Indians, and Russians don't wait." Ultimately, the EU must improve its attractiveness through greater stability of its system which, so far, has been steadily changing, he said.

Two high-level General Directorate for Energy and Climate Change civil servants involved in the process revealed a similar viewpoint at the conference. It is in a report the French government soon will publish on its 2009-20 investments in the gas industry.

The report advocates adapting the gas infrastructures of France and Europe to reflect the increasing tensions on the international gas market, drawing lessons from the recent Russia-Ukraine crisis, which France fears could be repeated.

Philippe Geiger, subdirector of supply security and new energy products at the Ecology and Energy Ministry, said the planned investments to complete the gas supply facilities in France involve underground storage, LNG terminals, transport gas lines, and interconnections with neighboring countries.

Pointing out that France imports practically all of its gas, Geiger insisted that the country's gas system "is increasingly conditioned by Europe's gas networks." And Europe, he said, was facing two challenges, the 40% decrease by 2020 of its indigenous gas production and the rising competitive demand of neighboring regions, namely Asia, where, according to the International Energy Agency, gas consumption is expected to increase by 600 million tonnes of oil equivalent by 2020.

The report, therefore, advocates investments in energy savings and the development of alternative energies as provided in the EU energy-climate package adopted by member states Dec. 12, 2008.

However, Geiger cautioned that such measures would not be enough to "seriously reduce imported gas supplies for France and the EU within the next 10 years." This means that Europe must adapt its infrastructure. "Development of the internal market will provide more competitivity, more reliability and should further bolster our infrastructures," he said.

Among lessons to be drawn from the Russian crisis, he saw the need for regional emergency plans among operators, the possibility or reversing gas flows in certain gas lines, and a re-examination of the emergency mechanisms.

This was the occasion for Eurogas Secretary General Jean-Marie Devos to outline to the conference the important role that Europe's gas industry played, first in setting up "in 3 days a high-level monitoring team" to solve the Ukraine-Russia technical problems and then in doing much to ease the crisis for gas-deprived countries. During Jan. 9-19, he explained, industry in cooperation with national administrations urgently reacted through use of stocks, reversed gas flows, and use of supplies by other producers.

Devos' main comment on the strength of this action was that "a number of targeted interconnections must be improved." However, he added, the crisis has shown that interconnections do work well, even if improvements are needed on certain segments, especially in reversing flows and building international gas lines.

"This is why everyone should pull together to improve the legal, regulatory, and communication conditions to help carry out projects in favor of Europe's economy" but keeping to a commercial type approach, Devos said.

"There is a supply security pole which has also a political character, but also a viability pole at commercial level," he insisted.