Development of international European gas transportation network EU priority

On October 14, 2013 the European Commission approved a list of 250 Projects of Common Interest (PCI), which from 2014 to 2020could receive subsidies worth $5.85 billion from the European Fund. 40% of those projects are related to gas transport.

None of the project of gas deliveries from Russia, including Nord Stream, which Gasprom planned to expand and South Stream, which must be built, are on the list.

The EU list includes only three import projects – South Corridor (delivery of 23 billion cub.m. of gas a year from Turkmenistan and Azerbaijan), pipeline from Algeria to Italy (7.5 billion cub.m.) and from Cyprus to Greece (8 billion cub.m.)

But Turkmenistan has already contracted a significant gas volume for China and the project of the gas pipeline construction to the west – via the Caspian Sea bottom – is blocked by Russia. Therefore, only Azerbaijan will be able to deliver gas via the Southern Corridor. The gas pipeline from Algeria (Galsi project) is under discussion since 2002, but its construction has not started yet, because of lack of free gas. The perspectives of the gas pipeline from Cyprus are clouded by the disputes with Turkey and uncertain volume of resources. 

Therefore, gas production in Europe goes down. According to the forecast of the International Energy Agency (IEA), by 2020 gas production in EU will drop by more than 40 billion cub.m. a year to 250 billion cub.m. mainly at the expense of exhaustion of the fields on the North Sea. Judging by all, Brussels is going to compensate the decline mainly at the expense of the liquefied natural gas (LNG) import.

PCI also includes about 20 terminals receiving LNG. But the internal European gas transportation network is the priority: two thirds of the projects are connected with the gas exchange between the EU member-states, first of all in Central  and Eastern Europe. The market should consist of several zones, within which gas will be traded at the virtual trade points.—0-