Natural gas is a key factor in ensuring a flexible, secure and competitive energy supply in the EU, say industry experts

A panel of experts meeting today in Barcelona have stressed the need to support natural gas, especially LNG, to improve the flexibility and reliability of energy supplies in the European Union.

Over two round tables, the meeting organised by the Gas Natural Fenosa Foundation also discussed the need to reinforce international gas supply connections in order to ensure a diversified supply.

Today in Barcelona the Chairman of GAS NATURAL FENOSA, Salvador Gabarró, the Minister for Industry, Energy and Tourism, José Manuel Soria, the EU Commissioner for Energy and Climate Action, Miguel Arias Cañete, and the Generalitat de Cataluña's Councillor for Enterprise and Employment, Felip Puig, opened the seminar “Natural gas and energy security in Europe”, organised by the Gas Natural Fenosa Foundation.

The closing address was given by the CEO of GAS NATURAL FENOSA, Rafael Villaseca, and the Director of the Gas Natural Fenosa Foundation, Martí Solà. The seminar was attended by more than 350 professionals from the world of business, engineering, universities and government.

During the event, the speakers discussed the challenge of availability, energy security and energy prices in the European Union, elements with a decisive effect on the economic competitiveness of the continent and the quality of life of its people. Two panels of leading international experts discussed the importance of natural gas and the need to strengthen international gas supply connections, where Spain can play a decisive role.

The Chairman of GAS NATURAL FENOSA, Salvador Gabarró, remarked during his address that “Spain must take advantage of its strategic location, its energy infrastructure and its capacity to import LNG, and make them available to Europe, with the ultimate goal of a real internal energy market in the EU, which will be more fluid, transparent and interconnected.”

Salvador Gabarró also recalled the need for the eurozone to work “to continue lowering the costs which can improve the activity of our companies, promoting a culture of competition and structural reforms.”

The future of natural gas

According to the International Energy Agency (IEA), the demand for natural gas will grow around the world in the coming years, especially in Asia and in emerging economies. Also, the weight of LNG will practically double, and it will be the fastest growing supply source over the next decade. This can be explained by the characteristics of this energy source.

It provides flexibility and reliability of supply: there are currently over 19 exporting countries, all of which are accessible by sea, with no restrictions. It is the most versatile fossil fuel, suitable for use in power generation (where it is also needed to back up renewable energy), in transport, in industry and for domestic use, and the one with the lowest emissions. And the technology continues to develop new uses, such as CNG for use in road transport, and LNG for ships and lorries.

The assembled experts highlighted that the advantages of natural gas will probably mean most of Europe's electricity will be gas-fired over the long term. According to the IEA, even with the problematic economy of 2014, around 130 bcm of gas were used for power generation on our continent.

Security of supply

Europe currently imports 53% of its energy at a cost of 400 million euros a year, making it the world's largest energy importer. Also, only 10% of the gas is imported as LNG, while the rest arrives via gas pipelines. This situation, which represents a risk for energy supply security, mainly affects Eastern European countries, who overwhelmingly import gas from Russia.

Exploiting the reserves available in North Africa could be one way to diversify Europe's energy supply. As GAS NATURAL FENOSA's CEO Rafael Villaseca pointed out in his address, “greater equilibrium in the region would let its potential be put to good use,” noting the need to establish long-term agreements and alliances to contribute to stability in the area and attract investment. He also explained that in the future, much of the LNG supply will come from developed western countries, bringing stability to the system.

In Spain, the situation is more favourable because nearly 50% of imports are in the form of LNG transported by ship, they come from more than 8 countries, and arrive in our country via 6 different points of entry (regasification plants). Also, the situation will improve even more with the entrance of new exporters such as the USA, in 2016. However, the speakers at the seminar emphasised that the European Union (and also Spain) must develop more projects to extract their own natural gas, both on land and offshore, and support prospecting and innovation in extraction technology, such as developing shale gas extraction.

The role of the energy companies

The Magritte Group, created in 2013 by 11 large European energy companies to promote a common market for energy in Europe, states that energy supply security must basically be reinforced in three ways: interconnections, integrating LNG and developing storage facilities.

The group, of which GAS NATURAL FENOSA is a member, believes that the gas markets should work transparently in all European countries, and that a balanced supply policy must support gas production within Europe, through a rigorous economic and environmental assessment of the different options.

Natural gas infrastructure in Europe

The debate on natural gas infrastructure was moderated by the Chairman of Sedigas, Antoni Peris, with the participation of the Director of Redes Energéticas Nacionais, María José Clara, the Chairman of Enagás, Antonio Llardén, and the President of TIGF Investissements, Monique Delamare, who talked about the infrastructure situation in their respective countries (Portugal, Spain and France).

According to the speakers, one of the key aspects for the European natural gas market is the development of infrastructure, because this will contribute decisively to reducing dependence on Russian gas and increase energy supply security. Enagás is presently working on the development of the Midcat and the Trans Adriatic Pipeline (TAP), new gas corridors which will make alternative supply routes possible for the European Union.

Transformation of the natural gas market

The debate on the transformation of the natural gas market was moderated by GAS NATURAL FENOSA's Director of Energy Planning, José María Egea, with the participation of the head of the International Energy Agency's Gas, Coal and Power Division, Rodrigo Pinto, the Assistant Director of Nigeria LNG, Isa M. Inuwa, the Executive Vice President of Marketing at Cheniere, Meg Gentle, and the President of Dow Chemical Ibérica and the Spanish Chemical Industry Business Federation (FEIQUE), Antón Valero.

The speakers explained that diversification of the imported gas supply to Europe has grown enormously over the last decade thanks to the global development of LNG, and that a greater volume of gas is now traded in transparent markets (such as the European hubs and the global LNG spot market). The political model of liberalisation, since its introduction in the late 1990s, has successfully permitted competition among suppliers, and the current European Commission is promoting it with initiatives such as the Energy Union.

Barcelona (Spain), 5 Oct 2015

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