Burning questions about gas supply

Gas plays a major role in Europe’s energy mix, and will be even more important in the future, but there are concerns about network inefficiency.

As temperatures fell across Europe this month, a sudden drop in gas supplies from Russia sparked fears that the 2009 gas crisis would be repeated. But the European Commission did not break sweat. New rules require member states to have adequate reserves of gas, it insisted, and transactions within the EU market can cope with a temporary shortage.

The confidence was justified: Russian gas supplies returned to normal levels even before temperatures reverted to seasonal norms this week. Member states worked out deals with one another, with Poland taking some Russian gas that had been bound for Germany. So does that mean gas-market liberalisation is bearing fruit?

The goal of market liberalisation, which began ten years ago, is to create a single European market for gas. The latest round of liberalisation, passed in the summer of 2009, requires member states to unbundle energy-supply companies from energy- transmission networks.

Some effects are already visible. GDF Suez, for example, has taken advantage of liberalisation to expand into the gas markets of Germany, Hungary, Italy, Romania, Spain and the UK. Because of the new rules, all gas companies in Europe will have to renegotiate their agreements within five years. “We have moved from big companies which have a monopoly in their countries to companies playing all around Europe with higher competition,” says one industry insider.

But a truly European gas market is still a long way off. The Commission says many member states have still not transposed the liberalisation laws, and few experts think all member states will meet the 2014 goal to open up their domestic gas markets. Governments have resisted efforts to give the EU more control over authorisation of cross-border projects. On Tuesday (14 February), national energy ministers blasted the Commission’s proposals for speeding up the granting of permits.

Günther Oettinger, the European commissioner for energy, appears increasingly frustrated by foot-dragging from member states. “Either we do it at European level or we don’t do it at all,” he told the energy ministers.

“We’ve lost too much time and had far too many discussions. I’m pleading with you not to come up with reservations but with general support.”

A gas future

Getting the gas network right is important because gas is on course to become by far Europe’s most important non-renewable source of energy. Natural gas already has a larger share of the European energy mix than any other source, and its share of the market is rising. Gas is relatively more plentiful than oil and when burned in power plants emits up to 60% less carbon dioxide. Modern gas power plants are better suited than oil and coal plants to being used alongside renewable sources of energy.

That said, the imperfections of the gas market – a lack of competition and a disjointed network – remain problematic. The EU is self-reliant for only 38% of its gas needs, according to 2007 figures from Eurogas. Nearly a quarter of gas consumed in the EU comes from Russia, 18% from Norway and 10% from Algeria. Some member states are entirely dependent on Russia for gas imports, with Russian oil giant Gazprom the only supplier for their pipelines.

Both the gas industry and environmental campaigners say national authorities can inhibit improvements. Astrid Dolak, of Gas Infrastructure Europe, says: “When it comes to infrastructure investment, the market works, but it needs the right signals and a good climate.”

New technology

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To manage the gas network of tomorrow, new technologies are needed to take account of speed, pressure, temperature, soil conditions and price. The network also has to be adjusted to accommodate such new fuels as liquefied natural gas and biogas.

Researchers at the technical university in Delft are devising technical solutions for the network to increase efficiency, making sure that Europe benefits from all the gas it produces and imports and reducing wastage.

“Gas suppliers can use the mathematical models that we develop to ‘tune’ the gas lines much more precisely in terms of the amount and value of the gas that is to flow through them,” says Kees Vuik, who is working on the project. “The tuning is done by opening and closing valves and by switching compressors on and off.”

A combination of new supply routes and improving Europe’s internal gas network should reduce uncertainty. But if Europe is to meet its climate-change targets of lower carbon emissions, which will require a further shift from oil to gas, swift action is needed. Otherwise, vast areas of northern, central and eastern Europe will still be vulnerable to supply fluctuations in 2020.