With domestic production falling, Europe is increasingly more dependent on natural gas imports. Where is the gas supply coming from? As most of the countries have been affected by mild temperatures, lockdown measures due to the coronavirus pandemic and higher shares of renewables in power generation, the supply’s diversification is more important than ever.
Norway is the Northern source, with 30.2 per cent of natural gas entering the European Union. Russia still detains a big piece of the East, due to gas flowing from different countries (Russia, Ukraine and Belarus) but with the same origin, bringing Russian gas imports at 47.1 per cent.
New routes from the South represent today the highest hope of diversification. The Trans Adriatic Pipeline (TAP) is almost fully operational bringing gas from Azerbaijan to Southeastern Europe. The Turkstream pipeline in Turkey has been already delivering gas for the past two months, especially in the Western Balkans.
However, expectations might differ from reality due to a lot of new and unprecedented issues.
“The fact that the European Commission is getting greener and greener, more than everybody expected, or how to address environmental challenges are among the issues that the LNG infrastructure has to address,” underlined Walter Boltz, Chairman of the Supervisory Board of Ukraine’s transmission system operator opening a panel discussion at Flame, Europe’s largest and most influential meeting place for the global gas industry.
From up North: the controversial case of Nord Stream 2
Diversification was on everyone’s lips. However, Russia’s role cannot simply disappear. Aleksei Grivach, Deputy director general for new gas consulting projects at Russia’s National Energy Security Fund, argued that the cost of transporting gas through Ukraine is not very competitive from a commercial point of view compared to the Nord Stream pipeline running at full capacity. That might be true from a point of view, but let’s not forget the huge controversy surrounding the Nord Stream 2. Just a few days prior to Flame, Poland’s anti-monopoly authority imposed a fine on Gazprom and its Western partners (Engie Energy, Uniper, OMV, Shell and Wintershall) engaged in the Nord Stream 2 project because they circumvented the competition laws concerning mergers.
Earlier in August, the environmental group Environmental Action Germany (DUH) demanded a fuller accounting of the project’s potential greenhouse gas (GHG) emissions. It argued that a 2018 assessment of the pipeline’s impact did not consider new findings of methane leaks associated with the extraction, transport and processing of natural gas linked to the operation of Nord Stream 2. Also, the United States is threatening sanctions against companies involved in the pipeline, saying that North Stream 2 undermines European security by making the bloc more reliant on Russian energy.
From the South: the TAP and TurkStream pipelines
Let’s turn South. After almost four and a half years since the start of construction, the Trans Adriatic Pipeline is substantially complete. The TAP pipeline has been filled with natural gas from the Greek-Turkish border up to the pipeline receiving terminal in Southern Italy. TAP is currently finalising preparations for launching the commercial operations and offering capacity to the market in alignment with the adjacent Transmission System Operators (TSOs).
“Climate change is the most pressing challenge of our time, but we cannot achieve these ambitious targets without natural gas so the infrastructure plays a significant role,” emphasised Marija Savova, TAP’s Head of Commercial Development during Flame’s panel discussion.
She reminded that the energy transition will not happen in the same form everywhere and we have to look at where TAP is passing through so that we can see how it will play a crucial role in facilitating the energy transition.
For Sander van Rootselaar, Deputy Head Communications at TurkStream, the pipeline is an obvious benefit for the Balkans because they do not have to depend on other nations for Russia’s gas supply.
“The market is challenging at the moment,” he said. “Turkey has diversified its gas supply, increasing LNG import capacity while the economic situation is not great and the consumption has dropped.”
Furthermore, while the European Union is really going forward with its ambitious Green Deal, Turkey is investing in new coal-fired power plants.
“Seventy per cent of new Europe’s coal plants are basically in Turkey,” Mr van Rootselaar underlined. “It can influence Turkstream and other imports projects. In fact, in the Balkans, there is more support for the Green Deal and natural gas usage just for electricity generation and heating.”
The dual purpose of gas infrastructure: the role of hydrogen
Either way, the future of energy is green. As coal regions can play an active role in the energy transition, turning coal mines into wind and solar PV sites, also the gas infrastructure can serve a dual purpose, transporting new gases such as hydrogen.
TAP already has this vision for the future but, as explained by Mrs Savova, at the moment they are focusing on how much hydrogen or green gases can be carried without any infrastructural or with only minor infrastructural changes.
“At this stage, the infrastructure is only used for natural gas (for high-pressure), added Mr van Rootselaar speaking about the TurkStream. “For the low-pressure ones, these changes can be easily realised.”