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Security of gas supply

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LNG Industry,

The security of gas supply was one of the most discussed topics at the Intergas Summit, which was recently held in Nice, France.

The EU imports more than half of the energy that it consumes and is highly dependant on crude oil (that is more than 90%) and natural gas (66%). The total bill for imported energy is more than €1 billion/day.

In early 2016, the European Commission presented a proposal for a review of the regulation concerning measures to safeguard the security of gas supply, as part of the Energy Security Package. Francisco Pablo de la Flor, Director of Regulation from Enagas, said: “Basic gas infrastructures (transmission pipelines, storage facilities and LNG regasification terminals) are the fundamentals of the European energy system. They are essential elements to deliver the EU Energy Policy targets, i.e., sustainability, security of supply and competitiveness.”

As gas plays an increasingly important role in the energy sector, it is important to take notice of the fact that well supplied markets do not mean that gas security should be taken for granted. In conclusion, a lack of investments into development could pose the risk of tightening the market for the next decade.

Chair of the GIE Security of Supply Task Force, Christophe Poillion, represented The Stress Tests that were carried out by the European Commission in 2014. The conclusion could be made that some additional infrastructures are still needed in specific regions. As Mr Poillion said: “Solidarity between Member States is necessary to make the best use of existing infrastructures and the various gas supply sources, including LNG”. He also added that the physical availability of gas and, in particular, the level of gas storage across the winter season, is an important factor in the ability to face critical situations.

LNG trade is expanding and the globalisation of gas is increasing. This leads to interactions between gas and the rest of the energy system. It creates an environment where shocks in one region impact another. Therefore, a traditional approach focusing on a particular region, is no longer an option. As Keisuke Sadamori, Director of International Energy Agency (IEA), said: “Today, there is a need for a broader approach to gas market security covering both the security and transparency aspects of the LNG value chain and the demand side aspects of supply security. In this context, the opportunities and limitations for gas security coming from the increased globalisation of gas market must be explored.”

Security of gas supply is a trending topic both globally and in Europe. As Head of Development from, Soren Hansen, said: “The Swedish-Danish energy market is today a part of a well-functioning West-European gas market with more or less same independent gas market prices in UK, Benelux, France, Germany, Sweden and Denmark”. Other CEE markets, such as Poland and Lithuania, are also developing new LNG infrastructure and new integration programmes that secure alternative firm supplies and market prices.

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