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    Energy Union Depends on Efficiency and Security: Sefcovic

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Summary

All gas operators are faced with a new reality, says head of Energy Union, Maros Sefcovic, who notes that LNG's bringing new competition to the markets.

by: Drew S. Leifheit

Posted in:

Top Stories, Security of Supply, Energy Union, Political, Infrastructure, Liquefied Natural Gas (LNG), Nord Stream 2, Lithuania, Russia

Energy Union Depends on Efficiency and Security: Sefcovic

In the wake of the adoption of the energy security regulations just a couple of weeks ago, European Commission's head of Energy Union, Maros Sefcovic, addressed the participants at the Natural Gas Europe event “The EU Strategy for LNG and Gas Storage” March 2 in Brussels, Belgium.

In his remarks Sefcovic said that the LNG and storage proposal set out by the EC has a direct impact on both energy security and on energy efficiency – two dimensions which are crucial for the success of the Energy Union, he said.

The EC, he added, had also assessed the Paris climate talks agreement and would propose how measures to tackle climate change should be implemented in the member states of the European Union, to be discussed eventually among those countries' environmental ministers.

“Paris was an historical agreement in the sense that it sent a very strong signal," he told attendees. "We see it as a clear marker paving the way and confirming our efforts as a global community towards decarbonisation, towards the global clean energy transition and, therefore, we see Europe and other global players will have to adjust their policies and strategies to implement what was agreed in Paris in their national and regional frameworks.”

This mandates developing the proper technologies and to use the proper transitional fuels, according to Sefcovic. “We see the key role of gas in this respect, because gas can pave the way to the low carbon economy, which we need to develop not only in Europe but across the world.”

For this reason, he said, much emphasis is being placed on energy security in the Energy Union; with domestic production falling, gas consumption in Europe is also falling, but this pointed to the need for the stable import of natural gas from outside of Europe.

Sefcovic also spoke of numerous scenarios for predicting Europe's gas consumption by 2030, taking into consideration its abiity to displace coal or heavy fuel oil or marine gasoil. Consumption is set to remain at roughly the same level, in a range of around 380-450bn m3/yr.

Mentioning the discrepancies in infrastructure development between western Europe and, for example central and eastern Europe, he said it is clear that the latter region pays more for gas. “It's because of more competition in the west, better interconnection, more liquid gas hubs and better performance of the market.”

Taking lessons learnt from western Europe, he said those should be applied in central and eastern Europe.

Offering the perspective of the European Parliament, MEP Jerzy Buzek, who chairs the Industry, Research and Energy Committee, discussed the place of gas in the scenario that Europe's electricity market is based on renewable sources. “We don't have any other reliable [...] backup better than gas, so this is good news for you,” he said to the dozens of members of the gas community in the room.

A reliable electricity market, according to Buzek, requires security of gas supply for gas-fired power stations. “We need to make gas supply more secure; more diversified."

Speaking about the Nord Stream 2 pipeline project, Buzek came right out and said, “We've got some problems with Nord Stream 2, and it's not easy to accept, and from the point of view of the European Parliament it is not acceptable – simply speaking.”

Noting Sefcovic's approving mention of Lithuania's LNG terminal, Natural Gas Europe editor William Powell, who moderated the meeting, noted that Gazprom had recently announced plans to auction gas delivery on the Lithuania-Belarus border, in addition to deliveries under long-term contracts. He asked Sefcovic what he thought about Gazprom's move towards more market-based activities as more LNG is ready to come to Europe from more sources.

Sefcovic replied, “I think that all gas operators are faced with a new reality. "Gazprom, just like other players, is realising there's new competition and is fighting for market share." Of course that LNG's bringing new competition to the markets. I think our countries in Europe are better interconnected; there's much more reverse flow. I think we will see in the future a much more important role for gas hub pricing for gas trading, and I see that even long-term contracts reflect very much this new phenomenon of gas hub pricing.”

 

Drew Leifheit