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European Commission report questions viability of gas pipeline plans

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LNG Industry,

Reuters are reporting that a report prepared for the European Commission has questioned the economic viability of plans to build a gas pipeline connecting Spain and France, designed in part to help reduce Europe’s reliance on Russian piped gas.

The Commission has long backed the €3 billion (US$3.7 billion) Midi-Catalonia (Midcat) pipeline that would more than double the amount of gas that can be piped across the Pyrenees mountains that border the two nations.

French pipeline operator Terega, owned by Italy’s Snam, and Spain’s Enagas want to invest in the project, which they say would give Europe greater access to Spain’s numerous LNG terminals.

Midcat is also supported by European Union Climate Commissioner Miguel Arias Canete, a Spanish national.

But the project has faced opposition from French energy regulator CRE, who says Midcat would push up consumer prices without improving security. French gas network firm Engie-owned GRTgaz has also questioned the need for the pipeline.

Now a study by Poyry, a consultancy appointed to assess the first phase of Midcat for the Commission, indicates the project is unlikely to be economically viable.

It said it would only achieve “financially viability ... in scenarios with a tight LNG market”.

It said such tightness in the gas market could be caused by a sharp fall in Algerian gas supplies to Europe.

Experts said existing gas infrastructure across the Pyrenees is already underutilised, even during periods of high demand.

A spokeswoman for Terega said: “The project is in line with European objectives to reinforce flexibility and security.”

The project has attracted criticism from politicians and environmental activists.

“By pouring billions of public money into new fossil gas infrastructure, Europe would wave goodbye to the Paris agreement,” Friends of the Earth Europe’s Antoine Simon said.

Spanish European Parliament member Xabier Benito Ziluaga said Madrid backed the plan to support its gas industry.

His French colleague Michele Rivasi, who also opposes the plans,said: “The Midcat project is not coherent with the European Union’s climate commitments and its promises to reduce reliance on fossil energies.”

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