PART ONE: Are existing infrastructures being suitably exploited? No! The sketchy European pipeline network. What is needed to set up a truly European gas market.
In the midst of the 2014 Ukraine crisis, concerns about a potential politically motivated disruption of all European Union gas supplies from Russia, and especially those that pass through Ukraine, triggered a discussion about creating an EU energy union to counter such threats. The discussions lifted energy issues to the top of the agenda of the European Commission under its president, Jean-Claude Juncker.
The high priority given to gas supplies arose because gas represents about one-quarter of the EU energy mix; about one-third of this gas is imported from Russia; and, in contrast to oil or coal, it is not possible to transport large amounts of gas to where it is needed if the corresponding infrastructure is not in place.
The European Union’s vulnerability to gas import disruptions will continue, even assuming a stagnant outlook for EU gas demand, because import requirements will likely grow due to rapidly declining domestic production. In the Netherlands, the European Union’s key domestic producer, gas production dropped from 70 billion cubic metres (bcm) in 2010 to 56 bcm in 2014 and will further decrease in future due to frequent earthquakes in the main extracting area. The United Kingdom’s volume of gas production declined from 57 bcm in 2010 to 37 bcm in 2014, mainly due to the rapid depletion of resources in the North Sea. With this in mind, the International Energy Agency predicts in all of its scenarios that the European Union’s import requirements will increase in the coming decades. This forecast is not encouraging, but a closer look at the EU gas infrastructure system might provide some reasons for optimism.
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