Gas infrastructure choices

Two energy consultancies are arguing that the majority of proposed new gas supply infrastructure in the EU is not needed – in stark contrast to the headline message in the European Commission’s recent energy security package, which put a strong emphasis on gas and increasing EU Member States’ access to the fuel.

Consultancies Artelys and Climact both say that gas demand is continuing to fall in Europe, and that currently only half of Europe’s existing gas infrastructure is being utilised. Therefore it is wrong for the security aspect of Europe’s Energy Union strategy to focus on gas.

The report – entitled Energy Union choices: A perspective on infrastructure and energy security in the transition – claims that €11.4bn of savings could be made by avoiding the ‘unnecessary development of gas infrastructure’. Gas demand in Europe has fallen by 23% over the last five years, according to the study, which argues that extreme supply disruptions can already be handled with the EU’s existing gas infrastructure. The report also says that no new European import or cross-border gas infrastructure is needed to secure supply, and that phasing out coal also does not lead to gas security of supply issues – even with higher gas use.

It does make an exception for selected gas projects in south-eastern Europe to secure that region against a severe Russian-Ukraine gas supply disruption case. However, large projects like Nord Stream 2, the Southern Gas Corridor and the list of smaller projects in the EU’s Projects of Common Interest list are associated with a high risk of creating stranded assets, says the report.

These projects could become redundant as gas demand in Europe falls further due to increasing energy efficiency in buildings, more electrification as well as better integrated infrastructure planning. Even today, only around 32% of existing LNG terminals and 58% of pipeline capacity is being utilised, says the analysis. In the future, further energy efficiency enhancements and a regional approach to infrastructure planning could reduce gas imports by 100bn cm – around a third of current imports, it argues.