Europe Set to Increase Gas Reliance On Russia
Europe is set to remain reliant on Russia, as production in the Netherlands and Denmark will further decrease, wrote the International Energy Agency in its review of EU energy policy.
‘The European Union will continue to depend on Russian pipeline gas imports for the foreseeable future’ the IEA warned on Monday.
The Agency sees a central role of LNG, but noted that European LNG supplies are re-exported to Asia. As a consequence, Europe registers about 70% of spare capacity in the LNG segment.
‘This is the result of project delays in global LNG investment, strong Asian gas demand, pushing up import prices and reverting LNG to Asia and the unavailability of supplies from North Africa. The return of LNG supplies to Europe will depend on future price differentials and new liquefaction development in supplier countries. New US LNG is largely contracted by Asian markets and has limited swing capacity or market incentive to serve EU markets in the medium term.’
The Paris-based agency advised European countries to move on with their market liberalisation plans, also considering a change in their stance on indigenous production.
‘Reducing dependence will require policy action across different sectors: to complete the gas market liberalisation; to re-evaluate the potential of natural gas production in the European Union; and even to reduce the role of gas, where possible, by continuing the deployment of low-carbon technologies, including renewable energies; and to promote energy efficiency.’
The IEA wrote that LNG imports are essential, but suggested to enhance gas market integration to increase the efficiency of the facilities already built around the continent.
Brussels and national governments have to pay special attention to a higher degree of integration in Eastern and Southern Europe, capitalising on the opportunities stemming from the Southern gas corridor.
‘Importantly, the European Union has to boost its engagement in international co-operation, in the dialogue with producer, transit and consumer regions, and be fast to adapt to changing global markets. To be successful, the European Union needs to achieve greater negotiating power and consistency in its external energy policy.’
Last month, the IEA said that global demand for gas is expected to be more than 50% higher in 2040, while Europe will lag behind.
UKRAINE - EIB
Also on Monday, Ukraine and the European Investment Bank clinched a contract to modernise the Urengoi-Pomary-Uzhgorod pipeline.
‘Following the signing ceremony, Arseniy Yatsenyuk has briefed that the total amount of the loan from the European Investment Bank for the pipeline’s reconstruction is EUR 150 million. The European Bank for Reconstruction and Development could provide up to $200 million’ reads a note referring to the meeting between Ukraine’s PM Arseniy Yatsenyuk and EIB’s President Werner Hoyer.
The project will take four years in the making, while Ukraine will have 19 years to repay the funds given to replace 120 km of pipes and modernise two compressor stations.