Interconnection Gas Capacity in Europe

SUMMARY

Overview

Introduction

As gas consumption increases throughout Europe, more efficient interconnection capacity is needed. By analysing the present state of the European gas market, it is possible to understand exactly what is required to achieve higher interconnection capacity.

Scope

• Insight and analysis of forecasted developments in European gas demand.
• A detailed investigation into the major import pipeline investments taking place in Europe.
• A comparison of major European energy markets and their level of development in terms of gas interconnection capacity.

Highlights

Italy has a large gas market, and the country is undertaking significant investments in future import capacity. Investment in interconnection capacity is insufficient to keep pace, however, which will limit Italy's ability to serve as a transportation hub for neighbouring markets.

Because of falling domestic gas production, European gas imports are projected to increase from 61% in 2005 to 80% by 2030. Investment in import capacity will be vital to facilitate this increasing import scenario.

Without adequate investment in storage facilities, efficient gas use and transportation will be compromised. With gas penetration increasing, utilization of storage capacity is key to mitigating the effects of demand fluctuations.

Reasons to Purchase

• Understand how the Nord Stream project will positively influence the north European gas market.
• Gain insight into the increasingly significant role of Africa in supplying Europe with natural gas.
• Identify how established and highly developed bi-directional interconnectors closely follow market signals.

TABLE OF CONTENTS

• DATAMONITOR VIEW
  • CATALYST
• ANALYSIS
  • Import capacity has priority over interconnection capacity
  • High pipeline import capacity will spur European gas market development
  • Investments in storage facilities will enhance interconnection
  • The EU must play a more visible role in ensuring adequate gas interconnectionImport capacity has priority over interconnection capacity
  • Import capacity has priority over interconnection capacity
    • As a net importer of gas, investment in gas import infrastructure is vital
    • Investment in interconnection capacity is necessary to facilitate efficient gas transportation
    • The EU emphasizes import capacity over interconnection
  • High pipeline import capacity will spur European gas market development
    • Russia will consolidate its position as a major exporter
    • North Africa will play a greater role in European gas supply
    • Southeast Europe will become a major corridor for gas transportation
    • Italy will become a significant gas player as import capacity increases
    • Higher imports necessitate greater interconnection capacity
  • Investments in storage facilities will enhance interconnection
    • Storage facilities enhance interconnection capacity
    • Greater emphasis is needed on storage investment
    • Storage investment is needed to enhance Italy's position as a transportation hub
  • For example, over 90bcm of import pipelines are connected to Italy, yet only 2.5bcm of storage capacity has been committed for construction by 2015.The EU must play a more visible role in ensuring adequate gas interconnection
  • The EU must play a more visible role in ensuring adequate gas interconnection
    • Increased gas penetration demands enhanced gas interconnection
    • Established interconnections follow commodity price signals
    • Commodity price signals necessitate a bi-directional BBL pipeline
    • The lack of common national consensus on energy issues impedes the further development of gas interconnection
    • Establishing standardized European gas qualities is fundamental
  • Appendix
    • Definitions
    • Datamonitor Consultancy
    • Ask the Analyst
    • Disclaimer
  • List of Figures
    • Figure 1: European 2005-30 gas production/import scenario
    • Figure 2: Share of natural gas in final energy consumption, 2006
    • Figure 3: The Nord Stream project will deliver 55bcm of gas per annum into Europe by 2015
    • Figure 4: Algeria will deliver over 30bcm per annum of gas through various pipeline connections
    • Figure 5: The Nabucco pipeline project will deliver over 8bcm per annum of gas into Europe by 2012
    • Figure 6: Italy will become a significant gas player as import capacity increases
    • Figure 7: Relationship between gas inflows and outflows and the size of the domestic gas market, 2006
    • Figure 8: Italy has 16bcm of storage capacity, but only an additional 2.5bcm committed by 2015
    • Figure 9: Bi-directional gas flows into and out of the UK gas market closely follow market prices
    • Figure 10: The BBL pipeline is underpinned by along-term off-take agreement, but it will inevitably respond to cross-border economics