Friday, 10 March 2017

Why does the EU gas infrastructure development seem to have been following a zigzag course, which is allegedly attributed to the impact of security of supplies?
Greatly curved pipes can be seen in the photos of different parts of the physical facilities through which gas moves in transportation such as transmission pipelines or gas compressor stations. These curved pipes occur where there is nothing that may block to lay the pipes straight. The existence of such curved pipes actually has a reasonable explanation - this design is necessary for technical safety of gas transportation.

Natural gas, while being transported through gas pipelines, needs to be pressurized by means of compressor stations up to a very high pressure, which is required to ensure a specified transportation capacity. The temperature of compressed gas at the exit of compressor station rises to 80-100 °C that creates rather severe operational conditions and may even causes buckling of pipes. Specially curved pipe sections are applied for pipe breakage protection. These zigzag-shaped expansion spools should be capable of compensating for any possible pipeline thermal expansion or contraction throughout the lifetime of the pipelines. As can be seen from the pictures below, expansion pipes are installed at various, sometimes very considerable distance from the compressor stations.

From a technical point of view, it is clear that the requirements regarding safety of gas supplies are the genuine reason for unusual curves of pipelines. The interest in these specific features of pipelines is generated by the fact that somehow such zigzag-shaped gas routes resemble the course of the EU energy policy development aimed at security of gas supplies. However, unlike the technical sphere some zigzag-shaped shifts in the EU’s policy to secure gas supplies virtually have not been provided with a satisfactory explanation.

Brussels energy policy has proven to be particularly elusive, by any means avoiding arguments against the `reasonableness' of the measures for security of gas supplies

In February 2015, the EC published its Framework Strategy for a Resilient Energy Union. One of the most widely discussed projects of the first months in office of the Juncker Commission was the Energy Union package designed specifically to pave a direct way for the creation of an integrated European energy market, which should be built upon the three pillars of security of supply, sustainability and competitiveness.
The proposal to create the EU Energy Union was first made by the former Polish prime minister (now president of the European Council) Donald Tusk in April 2014. He argued that this would prevent "Russia’s energy stranglehold" on Europe. In keeping with this, the security of supplies task in the Energy Union Package has been mainly targeted at reducing EU dependence on Russian gas.

Two years have gone by since then - it is time for summing up some results because now it would be timely to reflect on the Energy Union role and prospects for the future. This is what was discussed in the special press conference of Vice President of the European Commission Maroš Šefčovič held in Brussels in February this year to present the second State of the Energy Union Report.

As regards the results Vice President of the European Commission, in charge of the Energy Union specifically alleged that the EU has taken sufficient steps to reduce import dependency on a single gas supplier - a role generally played by Russia. In general, these measures are already well known. Firstly, according to Vice President Maroš Šefčovič, the Member States are using less electricity and heat energy than before achieving better energy efficiency. Secondly, the volume of renewable types of energy has become more significant and especially in countries dependent on energy imports. Thirdly, another important factor, "we have learnt lessons from recent events, better using interconnectors with their inversion possibilities," Maroš Šefčovič said at a press conference in Brussels.

Energy efficiency improvements, promotion of renewable energy technologies, diversification through embracing LNG exports from alternative suppliers and market integration by building gas interconnections among EU Member States - these things are certainly all contributing to much better provision of primary energy. The current situation on the EU energy market, however, indicates that, the measures mentioned above are still insufficient to meet completely the growing demand for energy. According to the European Network of Transmission System Operators for Gas (ENTSOG) gas provides more than 20% of the EU energy consumption. About half of the energy needs for heat and air conditioning are covered by gas. In recent years, the demand for gas in the EU market has been in a steady state of growth - EU gas demand increased by some 6% in 2016 to around 447 bcm, according to Eurogas, following a rise of around 4% in 2015.

The Eurostat report shows that "natural gas dependency in EU-28 was 69.3 % in 2015, up from 67.4 % in 2014." As to imports from Russia, the EU bought an unprecedented volume of Russian gas in 2016. According to Platts, total volume of Russian gas supplies to Europe including Turkey amounted to 179.3 bcm. As a result, the share of gas from Russia in the energy balance of 28 EU countries in 2016 increased to 33.5% after 31% in 2015.

Meanwhile, the Second Report on the State of the Energy Union presented by the European Commission in February 2017 claimed that "import dependency seems to have stabilized in recent years: since 2005, it has fluctuated between 52 % and 55 %; it was 53.5 % in 2014." Is it valid to use such outdated statistical information in their report? It looks as if Brussels tries by means of such a zigzag-shape survey of key data to interpret the results of its energy policy making deliberately the mistake of confusing the security of gas supplies with reducing European dependence on Russian gas, which actually continued to grow. Whether it is difficult to suppose that a politically motivated maneuvering is aiming at reassuring the EU Member States to step into another level of energy unity where it would be more easily to convince them to escape "Russia’s energy stranglehold", the fatal image of which has been boosted further since Donald Tusk proposal three years ago.

Giving precedence to geopolitical objectives over economic and energy interests of some EU Member States can become a serious risk factor, which would eventually lead to an Energy Union failure

In this case, the first pressing question is whether some EU Member States really want such an Energy Union would oblige them to dodge between deliberate energy policy of Brussels and the economic reality and to call for reducing the dependence on Russian gas. When, to all intents and purposes, a certain number of EU Member States continue actively to increase gas imports from Russia and to benefit from gas transit services or from reverse gas supplies to Ukraine. In January 2017, Europe got 19.1 bcm of gas from Russia, a 26% increase compared with the same period in 2016. At the same time, gas imports from Russia to Germany grew by 23.2%, to Italy by 48.2%, to France - by 68.1%, to Austria - by 123.5%.

Meanwhile, the reserves in the underground gas storage facilities (UGS) in Europe fell to the lowest level – according to Gas Infrastructure Europe (GIE), on 11 February there was only 35.46% working gas volume in storage, as outlined in the diagram below. Last year, by comparison, on 11 February 2016, the UGS in Europe were filled with natural gas by 51.19% and the heating season of 2015-2016 ended in early April when there was 35% working gas volume in storage.

The question that then arises: is not it necessary in the context of the supply of gas security to consider very carefully the historically low winter reserves of natural gas in Europe. That is just what might be a good way to proceed with a joint dialogue of the EU Member States to outline preventive measures to tackle possible difficulties with winter gas reserves.

Zigzagging Polish energy policy - at first Poland had taken initiative for strengthening an energy unity but later this Member State shifted sharply pursuing solely their own interests thereby contravening the very spirit of the Energy Union.
According to Reuters, Russian gas deliveries to Germany via the Opal pipeline fell by around 30 % on 1 February 2017 because Poland despite the fact that this pipeline has nothing to do with its national economy successfully blocked a deal giving company Gazprom a bigger share of the pipeline's capacity. Thus, disregarding the interests of the neighboring Member States Poland just disrupted important additional gas supplies to Germany and Central European countries in the middle of winter. On the side of these countries' citizens, some cannot help but think that if gas supplies via OPAL pipeline in Germany kept going on the same level there would be much less to worry regarding winter gas reserves.

However, unfortunately, it happened otherwise - it turned out that Member States using OPAL pipeline had remaining gas reserve even much below the EU average: on 11 February 2017 there was only 33.71% working gas volume in storage in Germany and 30.12% in Austria. At the same time, Poland kept the remaining UGS reserves almost half full - 47.14%. Therefore, it may be concluded that initiating the blockade of OPAL pipeline, it is Poland, and not someone else can tighten "the Tusk energy stranglehold" on Germans and Austrians.

Nevertheless, time is passing and that it is not favoring the EU. The European Commission led by Jean-Claude Juncker took office on 1 November 2014 to begin serving its five-year term. Before that in his opening statement ahead of the vote, President Juncker presented the new team as the "last chance Commission" pointing out that from the very beginning the Commission would not have any opportunity for wasting time. It was two and a half years ago – now half of a five-year term is already behind.

Why would the European Commission, instead of spending the remaining time on performing often zigzagging political maneuvers around the security of supplies, far better take another path leading to economically justified relations beneficial for all the Member States and for their international partners?

Is this not more short and reasonable path to a sustainable Energy Union?