Earlier in April, the European Network of Transmission System Operators for Gas (ENTSOG) published its Summer Supply Outlook 2023 and the accompanying Review of Summer Supply 2022.
Overall, the assessment showed that in the cases of minimised Russian gas imports and of a full Russian pipeline supply disruption, reaching 90 per cent storage filling levels by the end of summer is possible in both cases, enabled by efficient cooperation between the countries.
On the sidelines of the Gas Infrastructure Europe (GIE) annual conference in Riga, we sat down with Piotr Kuś, ENTSOG General Director, to discuss the challenges ahead for this summer and next winter, the upcoming projects (if any) in the CEE region and the role that electricity and gas can play if working closely.
“We cannot properly plan the transition without addressing the here and now and the security of supply,” he begins. “It is an intensive time for infrastructure operators: it is thanks to them that we mitigated the crisis situation, stabilised the market and the volatile prices.”
According to Mr Kuś, countries are on track to reach 90 per cent storage filling levels by the end of summer. At the time of the interview, on 14 June, the average EU storage levels recorded were at 73 per cent.
Then, in a worst-case scenario, that of a very cold winter and a full supply disruption from Russia, countries will be more or less exposed to the crisis situation.
Mr Kuś recalls several cases in which countries maximised the capacity or increased gas supply flow. Like between Germany and Benelux and France, or between Italy and Austria. Or in Central and Eastern Europe as well between Bulgaria and Romania, while there are still ongoing discussions on how to supply Moldova.
“The major game changer was liquified natural gas (LNG),” Mr Kuś continues. “Before the war, 30 per cent of gas came from Russia. After one year, Russian pipeline gas is down to around 7 per cent while usually over 30 per cent is LNG from different sources. And we have seen increased regasification capacity in Germany, the Netherlands and Finland as well as new connections in Bulgaria.”
“We are fully aware that it is mainly northwestern Europe so it is still an issue to address landlocked countries in CEE. We see that there are some capacity limitations to bring more gas to CEE, to cooperate. A solution we are contemplating is transporting gas via the Ukrainian gas transmission system for more flexibility as it connects Hungary, Poland, Slovakia and Romania.”
Indeed, ENTSOG found that the gas infrastructure, including new projects commissioned last year, can efficiently reduce the dependence on Russian supply due to enhanced cooperation.
Among new infrastructures that have been commissioned, we find numerous projects from the CEE region, like the new interconnectors between Poland and Lithuania (Gas Interconnection Poland-Lithuania – GIPL), Poland and Slovakia (Poland-Slovakia Gas Interconnection), Greece and Bulgaria (Greece-Bulgaria Gas Interconnector – ICGB) as well as Norway to Denmark and from Denmark to Poland (both Baltic Pipe). Actions have also been implemented to improve available capacity between Lithuania and Latvia, France to Germany and Spain to France (under certain conditions) and Romania to Hungary.
“We have the goal to be independent of Russian gas in 2027 and we are on track with this,” Mr Kuś points out. “Support for TEN-E [Trans-European Networks for Energy] and PCI [Projects of Common Interest] projects happened last year. ICGB, for example, was a game changer for the southern Balkans and the new capacity between Romania and Hungary made a huge difference.”
However, he underlines that now the situation is different, many other things must be taken into account and there is not much place for natural gas projects in the future.
“The Polish LNG FSRU terminal is one of the last PCI projects,” he continues.
“We have to think beyond natural gas. It will mean repurposing existing pipelines and optimising existing capacities towards new gases, like hydrogen, low carbon gases and biogas, as well as accommodate CO2 transportation.”
Diversifying sources has been something that the whole of Europe (and CEE) has done quite well over the past year (for example the growing imports of LNG). Now the continent (and CEE) must decrease its gas demand, as another response to possible supply disruptions.
“The voluntary decrease target [of reducing natural gas consumption by 15 per cent] has been prolonged by Member States and the lower demand is helping to fill the storage,” Mr Kuś highlights. “While the demand will decrease by law or regulation, the market has reacted, for example by importing ammonia instead of natural gas or heavy-intensive energy industry lowered the demand. This is especially important during summer, to cope with next winter.”
Also, we have to think that electricity and natural gas have to come together and work closer. Mr Kuś agrees that, as things are now, electricity and gas must form a partnership as both sides face challenges and one side can provide solutions to the other.
“It is a cooperation that starts with short-term measures, for example, during winter when there are fewer renewables and gas can help balance the electricity supply,” he explains. “Our work is based on the principles of energy system integration, so we look at the evolution of the energy system taking into account both electrons and molecules (all molecules, also biogas, biomethane, hydrogen).”
He tells us that we are going to see a growing role in electrification, but we can all agree that an all-electric scenario is not feasible or possible. Even the most optimistic scenarios leave around 40 per cent role for gas in the energy mix.
“We have to design them together as a joint narrative towards a zero carbon future,” Mr Kuś continues.
However, he says it is not possible to forecast the conditions for the next winter, because many things can happen, with regard to weather conditions, market disruptions and price developments.
“We still need to be vigilant and very cautious,” he concludes. “To fill storages and be prepared as much as possible for next year.”
