Ukraine crisis: How Spain could ease Europe's energy woes
The simmering standoff in eastern Ukraine following Russia鈥檚 annexation of Crimea in March has European policymakers looking for alternatives to Russian gas imports. One obvious strategy would be to boost liquid natural gas (LNG) imports, and when U.S. President Barack Obama visited Europe last month, officials lobbied him to open the floodgates of U.S. LNG as a way to help American allies and weaken Russia鈥檚 position.
Leaving aside the fact that LNG from the U.S.听, over the long-term, Europe could certainly boost its LNG purchases as a way to avoid having to deal with an unreliable Russian source.
What would that look like? Where and how would the LNG enter Europe?
The first country that comes to mind is the Netherlands, which is a major player in the world of natural gas. It is听听in the European Union (Norway produces more but is not a member of EU), and its Groningen field is in the top 10 largest gas fields in the world.听
But declining production has the Dutch government trying to reposition itself as the 鈥済as hub鈥� of Europe, a role that would see it importing, processing, storing and trading gas to its neighbors. Its听听is one of the few ports that can handle the world鈥檚 largest LNG ships. (Related Article:听)
Another source for LNG would be Spain. When thinking of key energy players, Spain is not an obvious choice. Its production of natural gas has been essentially nil for quite some time. Desperate to boost Spain鈥檚 moribund economy, Prime Minster Mariano Rajoy is hoping to change that, and has aggressively supported measures to allow the gas industry to begin exploration of听听
Rajoy鈥檚 government is pushing hard to overturn bans on hydraulic fracking that have been issued by several provinces, including Cantabria, La Rioja, Navarra and Catalonia. If successful, Spain could at some point in the future produce substantial volumes of shale gas. But that scenario is years away.
Where Spain does play an active role is as an importer of LNG; it is听听in the world. Spain has听听already in operation. Its strategic geographic position on the Mediterranean allows it to get around听听from its close neighbor, Algeria, and the rest from a variety of countries, including听. As a result, Spain is independent from reliance on Russian gas. (Related Article:听)
Spain鈥檚 sophisticated natural gas infrastructure 鈥� the largest liquefaction capacity in Europe and a good distribution system 鈥� could allow Spain to come to Europe鈥檚 rescue, according to Sedigas, the country鈥檚 gas association.
鈥淪pain has one of the safest and most diversified gas systems in Europe. We want to offer our capacity to the rest of the continent,鈥� Antoni Peris, chairman of the Sedigas,听.
However, Spain is not well connected to France via natural gas pipelines, which means it can鈥檛 supply the rest of Europe with re-gasified LNG. That has Sedigas pushing hard in Brussels for the European Commission to prioritize the MidCat pipeline, a proposed 109 kilometer pipeline that would connect Spain and France and carry听听of natural gas per year. The pipeline would run along the Mediterranean Coast and over the Pyrenees.
Spain has argued in favor of the pipeline for years, but France鈥檚听, stalling the project. High projected costs have not helped, but supporters of the pipeline see a window of opportunity with the renewed determination in Brussels to accelerate energy interconnections and harden Europe鈥檚 energy security.
Sedigas is also hoping another pipeline will be constructed that connects Spain鈥檚 Basque country to France. If completed, it would add another听听per year in potential gas trade.
The Spanish gas association sees MidCat as a no-brainer, arguing that, with the right interconnections, Spain could go a long way toward answering the EU鈥檚 hopes of reducing its energy reliance on Moscow. 鈥淲ith this pipeline,鈥� said Sedigas鈥� Peris, 鈥淪pain could replace 10 percent of what Europe currently receives from Russia.鈥�
Source:听
