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Submission to the European Commission: Consultation on a EU strategy for liquefied natural gas and gas storage

CEPS Energy Climate House submission to the European Commission on the consultation on a EU strategy for liquefied natural gas and storage.

The European Commission committed itself in the Energy Union Communication to “explore the full potential of liquefied natural gas (LNG), including as a back-up in crisis situations when insufficient gas is coming into Europe through the existing pipeline system” and to address the potential of gas storage in Europe by developing a comprehensive LNG and storage strategy by the end of 2015/beginning of 2016.

This is a comprehensible move in the current context. Geopolitical tensions between the EU and Russia explain the EU’s willingness to further diversify its natural gas supply sources to reinforce its long-term energy security on one hand, and to increase its crisis-solving ability on the other hand. Moreover, the current market dynamics could support diversification towards LNG. Increasing flexibility of LNG trade, decreasing LNG prices and LNG charter rates and an apparent price convergence between the European and the Asia-Pacific LNG imports would all reinforce the economic viability of such strategy.

This response to the EC consultation makes three points:

  • For the LNG and gas storage strategy to work it needs to be embedded in the realities of the natural gas market; 
  • The key for success is sufficient infrastructure;
  • The LNG strategy needs an innovation component.

This text was subsequently published as CEPS Policy Brief No. 333, October 2015.

 

Gergely Molnar was a Research Assistant at CEPS; Arno Behrens is Head of the Energy research unit and Research Fellow at CEPS;  Christian Egenhofer is Director of CEPS Energy Climate House and Head of the Energy and Climate unit at CEPS; Fabio Genoese was Research Fellow at CEPS 

Authors

Former CEPS Energy Climate House Research Assistant
Senior Research Fellow, CEPS Energy Climate House
Former CEPS Energy Climate House Research Fellow