The International Group of Liquefied Natural Gas Importers has calculated that in 2021 the European Union and the United Kingdom combined imported 68 million tonnes of Liquified Natural Gas (LNG). To reach the European Commission’s targets and decrease the bloc’s dependency on Russian fossil fuels, we would need to import further 37 million tonnes, which is equivalent to 10 per cent of the global energy market, in other words, the export of Egypt, Algeria and Nigeria combined. Not a small number.
On the sidelines of the 37th International Scientific and Expert Meeting of Gas Professionals which took place in Opatija on 11–13 May, CEENERGYNEWS spoke with Andrea Stegher, Vice President and the elected future president of the International Gas Union (IGU) about the feasibility of increasing LNG imports, where these new flows should come from and especially, how to not make the same mistake again, relying on one source only.
“Today, the situation is indeed worse than one year ago when demand was recovering after COVID-19 and flows were starting to lag behind it with prices tensing,” Mr Stegher begins. “Europe comes from 50 years of mutually positive interdependency on Russian energy. Yes, some crises happened in the past, but the current one is unprecedented.”
Thus, Europe is looking at the United States, Asia and Africa as potential new sources, Mr Stegher reminds us that today it is also important to go back to talk about infrastructure and interconnections. Indeed, countries like Germany and the Netherlands are trying to focus on Floating Storage Regasification Units (FSRUs) but for Mr Stegher we also need to consider potential additional infrastructures to improve connectivity for countries, especially if they are landlocked (like Czechia or Slovakia).
“Especially, looking at Central and Eastern Europe, there are a lot of diversification investments to do especially in a region that used to be dependent on one supplier only,” he says. “A necessary but not sufficient condition.”
“In Europe, we have been used to a well-established and well-supplied market, reducing the appetite for long-term contracts which have been the backbone for stimulating a good relationship between supply and demand. Long-term in the recent past became 12 months. Now we have to find a new balance.”
He goes on to mention other countries, potential gas suppliers, like Qatar, Azerbaijan, Egypt and Nigeria that also have other factors that we must take into account as they can also face growing domestic demand.
“In Nigeria, the population grew from 120 million to 200 million in the last 20 years,” Mr Stegher points out. “In Egypt, growth was more than 30 million people. So, there is also a huge local energy demand. And they have to find a balance between this local demand and their role of exporters.”
At the same time, we cannot forget about the energy transition and we have to combine it with energy security.
“And for this, we cannot opt-out of any technology or innovation, we simply cannot afford it,” he adds. “To bet on only one solution – be it hydrogen or other options – is wrong and we must progressively combine different solutions in a realistic manner to meet the 2050 goals while being ready for this coming winter. We have to maintain energy security and affordability today and tomorrow while investing for the future with pragmatism.”
He mentions, for example, biomethane, recalling having first spoken about it in 2014, when the industry was not ready yet to consider it as one of the options.
“The future requires start-ups and innovation but substantially needs huge investments and strong implementation capabilities to have scalable initiatives also recalling that the world will not end in 2050 and we have to think about 2060 and 2070 too,” he continues.
“For this reason we have to take into consideration all the colours of hydrogen, biomethane, CCS, energy efficiency, reducing methane emissions at the same time. And we have to remember once again that CO2 emissions are a global problem.”
Indeed, Europe can be a front-runner but cannot solve it all by itself and here’s where international cooperation becomes crucial also with those countries that we used to call developing or emerging economies. Andrea Stegher doesn’t believe that countries like China or India will abandon coal today. So Europe’s role is also to help other countries to develop clean energy sources. A topic that leads to the aspect of energy poverty.
“A concept that we are used to linking to energy access, so in countries in South America, Africa, South East Asia,” IGU’s Vice President says. “However, as the European Commission says, 9 per cent of the EU population suffers from winter thermal discomfort, a polite way of saying they are not able to heat according to their needs. So it is something we also have to consider today in our homes, especially after the recent high prices.”
Finally, he mentions that to guarantee energy security, storage has a key role to play. The Commission is expecting Member States to fill their storage capacity up to 80 per cent by November. However, like with technology, Mr Stegher underlines that capacity – which must be made available – needs commodity (gas molecules) to be part of the answer to the energy crisis.
“And storage – especially for strategic reasons – can be an effective tool to manage emergencies,” he says. “It is like our cars’ insurance: we have it, it safeguards us, but we hope to never use it. At the same time, storage capacities will be an essential tool in the energy transition perspective: not only for hydrogen but also for CO2.”
And for all of this to work, not only international cooperation is important but especially local ones, between different players, policymakers, legislators, industry and financial institutions, which are crucial for fostering the needed investments.
“Financing institutions, like the European Investment Bank (EIB), the World Bank, the International Monetary Fund (IMF) have a huge responsibility,” he concludes. “To support innovation is essential but we also have to find a reasonable way to continue promoting gas projects as these can serve well both the economic growth and a progressively reduced environmental footprint of the energy sector. Other alternatives possibly leading to higher costs and less energy available for consumers.”