The European Commission's proposals for a "European Energy Union" give priority to securing energy supply. This brings to the fore the issue of natural gas, for which the European Union is highly dependent on imports.
The European Union is forecast to import 80% of its natural gas in 2020, with most coming from Russia. To reduce this dependence, the Commission has put forward a three-pronged strategy:
- Diversify supply sources, notably by increasing imports of liquefied natural gas (lng)LNG is composed almost entirely of methane. Liquefying the gas reduces its initial volume by a factor of around 600... (LNG).
- Improve interconnections among E.U. countries to present a more united front.
- Increase gas storage capacities to create strategic reserves in the event of a crisis.
Diversifying supply sources
Europe depends on Russia for a large share of its natural gas imports. Including Turkey, Europe consumed a total of around 460 billion cubic meters of gas in 2014, with Russia alone supplying some 30%, followed by Norway (21%) and Algeria (5%). These figures are based solely on gas delivered by gas pipelinePipeline used to transport gas over a long distance, either on land or on the seabed., except for LNG deliveries from Norway and Algeria1.
While unlikely to change in the short term2, this situation began to alarm the European Commission after tensions flared with Russia over the Ukraine crisis. Even managing pipelines between Europe and Russia has become complicated, with several projects in the continent's south-east being abandoned (see Close-Up: "Energy and Geopolitics: Russian Gas Transit").
The Commission's goal is to establish "strategic energy partnerships" with other suppliers, primarily countries in the Caspian Sea region (via Turkey) and in North Africa. This requires pursuing new – and costly – pipeline projects in Europe's south. Among these, the most emblematic is a project consisting of two new pipelines linked together, the Trans-Anatolian Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP). Once completed, it would give Europe direct access to gas from Azerbaijan via the eastern Mediterranean and Turkey, bypassing Russia.
More importantly, however, diversifying gas supply to Europe requires making greater use of LNG which, when shipped by tankerVessel used to transport bulk liquids in huge tanks. The best-known tankers are oil tankers, which carry crude oil., removes the infrastructure constraints associated with pipelines. There are a number of current and potential suppliers all over the world, including Algeria and other African countries, Qatar, Australia, several South-East Asian nations and, soon, the United States.
While Europe's use of LNG has sharply declined in recent years due to strong demand in Asia, the trend is expected to reverse in 2016, with an upturn in LNG imports to Europe. The explanation for this lies primarily in plummeting energy prices and the shrinking price differential, which until now had allowed Asia to divert substantial volumes initially intended for Europe to its own profit. Regardless of how the situation evolves, the European Commission has called for greater development of regasification terminals, from which LNG can be delivered via the gas transmission network.
33%: The share of E.U. gas imports sourced from Russia in 2014
Dependence on Russian gas varies greatly from one European country to another, but the most exposed are the former Eastern Bloc countries, particularly the Baltic States, Bulgaria and Slovakia. In response, the Commission has recommended building the "missing links" in Europe's internal gas pipeline network, and allocated E.U. funds to this end. The first gas interconnector between Poland and Lithuania was announced in early 2015, and should end the Baltic region's gas isolation by late 2019.
Interconnection capacity between France and Spain has also been tripled since 2010 as part of plans to deliver southern gas to Europe via France, whose strategic location could turn it into a major European energy corridor.
Increasing Storage Capacity
Gas has long been stored in depleted gas fields, salt caverns and aquifers. Traditionally, this was done to "smooth" price variations by buying and storing gas in the summer when demand and prices were low, and selling it in the winter when they rose again. Now the European Union is encouraging Member States to increase their gas storage capacities to support greater cooperation in the event of a supply crisis.
France, Germany, Austria and Italy plan to develop large storage capacities equal to around 20% or more of their annual consumption, whereas in most other countries storage capacity rarely exceeds 5%.