Challenges & opportunities for the future of gas

Ashley Pilipiszyn's picture
Ashley Pilipiszyn, Guest Reporter, The Graduate Institute Geneva
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With new supplies, routes, infrastructure and investment comes many avenues for both challenges and opportunities in the future of gas for Europe. High level representatives from this industry shared their views on the specific costs and benefits during the European Autumn Gas Conference in Geneva 17-19 November, 2015.

According to Wim Groenendijk, Vice-President International & Regulatory Affairs at N.V. Nederlandse Gasunie, more gas imports are needed and thus more infrastructure is needed to structure this imports. Overall, there is a lot of space capacity in Europe and a lot of the infrastructure investments are linked to the security supply. The EU gas market is a complex situation with a regulatory patchwork of regulatory regimes in each Member State, which further complicates things. At the same time, there is a need for more cooperation between states and regions. Furthermore, the security of supply needs to be looked at in terms of flexibility, specifically with regards to price.

Julio Castro, Chief Regulatory Officer at Iberdrola centered his argument on the change of the corporate landscape of electricity in Europe and the need to reinforce cross-border trade within Europe. For this to work, there needs to be an availability of natural gas reserves, availability of markets and reliable prices.

Offering a third perspective, Francisco de la Flor, Director of Regulation at Enagas said that the most important thing that needs to be focused on within the European gas market is increasing interconnection capacity. He supported this argument by providing a few telling statistics: According to the EC Communication on the Energy Union 2015, the benefits of an EU integrated energy market is worth $30 billion/year and this lack of intervention is at a cost to the citizens. According the ACER Market Monitoring 2014, the lack of wholesale gas market integration amounts to $7 billion in losses/year. In sum, there needs to be an integrated continent-wide system where energy flows freely across borders otherwise there is a loss of efficiency at a financial cost to a country’s citizens.

At the end of the day, the efficiency of the European gas market and its ability to satisfy the needs of its consumers will rely on the coordinated efforts between Member States to implement a trans-boundary energy system.

How can Europe’s gas industry increase interconnection capacity? Please leave your comments below.

European Autumn Gas Conference – Connecting European gas markets with new global opportunities

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