Sunday, March 13, 2022

Gas: Spain positions itself as gas hub; wants to revitalize MidCat pipeline

 In view of the war in Ukraine and the sudden turnaround in gas procurement Spain positions itself as gas hub. Indeed it has a direct gas pipeline to Algeria (Medgaz) and has also the biggest LNG stocking capacity in Europe. Spanish government suggest the reconsideration of the MidCat pipeline (planned from Portugal, through Spain and the Pyrenees to France) that was abandoned in 2019 to compensate the unwelcomed gas from Russia, Le Monde:

While Europe seeks to reduce its dependence on Russian gas, Spain intends to position itself as a strategic "hub" to diversify the continent's supply sources. "We can be an alternative to Russian gas," insisted the Ministry of Foreign Affairs, from the beginning of February, even before the invasion in Ukraine. The idea has since caught on. “With its great energy capacity and its great experience in renewable energies, Spain can and will play an important role in supplying Europe, finally confirmed the President of the European Commission, Ursula von der Leyen, on a visit to Madrid. , March 5. And, for this, we must work in the interconnections between the Iberian Peninsula and the rest of the European Union [EU]. »

On the table, a file that we thought was definitively buried has been resurrected: the MidCat. Launched by Spain, Portugal and France in 2003, this gas pipeline project crossing the Pyrenees between Catalonia and the south-west of France was intended to connect the Spanish and Portuguese networks to the European network and help open up the Iberian Peninsula, a real “energy island”, which has less than 5% interconnections – far from the 15% required by Europe.

With an estimated cost of 400 million euros in its first phase of development, the infrastructure had even figured, for a time, among the priority infrastructures of the EU, before being abandoned in 2019, against the backdrop of demonstrations of environmental opponents.

“Failing to complete the MidCat was a strategic mistake, regrets the former Spanish foreign minister from 2011 to 2016, José Manuel Garcia-Margallo. With its other gas pipelines and regasification plants, Spain could have provided a real alternative to Russian gas. But a study commissioned by the European Commission found that the pipeline would be neither profitable nor necessary. In July 2018, Emmanuel Macron acknowledged, during a meeting in Lisbon, that he “had not been convinced of the usefulness” of gas interconnections. For lack of consensus on the distribution of costs, but, above all, of interest on the French side, the project was finally buried, in 2019, by the Energy Regulatory Commission (CRE). Which called into question the benefit-cost relationship of infrastructure and its strategic interest…

This one, now, is hardly in doubt and, bitter, the Spaniards, already disappointed at the time, lament this lost opportunity. “Spain has a regasification capacity which could play a significant role in improving the security of gas supply in Europe, if we had the right and sufficient capacity to export through the Pyrenees. Not counting on it is a serious setback at the moment,” said expert Mariano Marzo, professor emeritus at the University of Earth Sciences in Barcelona.

The kingdom, indeed, does not lack assets. It is connected to Algeria by the Medgaz submarine gas pipeline, with a capacity of 10 billion cubic meters per year. And, until its closure on November 1, 2021, after a crisis between Algeria and Morocco, it was also closed by the Maghreb-Europe gas pipeline. In order to increase the flows, the Spanish government continues to court Algiers: on Sunday March 6, the Socialist Prime Minister, Pedro Sanchez, again called the Algerian President, Abdelmadjid Tebboune.

Spain also has six liquefied natural gas (LNG) regasification plants, representing 27% of the total capacity of the European Union and the United Kingdom included, i.e. 60 billion cubic meters per year. These gas terminals enable it to import gas by LNG carriers from fourteen countries – mainly the United States, but also from countries in sub-Saharan Africa and the Gulf, while Russian gas represents less than 10% of its imports. However, they are only used at half capacity. Finally, Spain is also the European country with the largest LNG storage capacities (35% of the total), ahead of the United Kingdom (22%) and France (14%), according to the association Gas Infrastructure Europe (GIE), which brings together operators from 27 countries.

However, to transport this gas to the rest of Europe and thus take advantage of the Spanish infrastructure, the country has only two gas pipelines. In Larrau, in Navarre, and in Irun, in the Basque Country, they only allow the passage of 8 billion cubic meters per year towards France. Since the last week of February, these two gas pipelines have been sending an average of 40 gigawatt hours each day to France, a limited but significant amount of Spain's willingness to contribute to a solution. Its gas terminals, in particular that of Bilbao, also store LNG intended to be then distributed in other European countries.

Can the energy crisis caused by the war in Ukraine now resuscitate the MidCat project? If the Minister of Foreign Affairs, José Manuel Albares, pleads in this direction, the Minister of Ecological Transition, Teresa Ribera, tempers. “This must not end in a dead end. It is important that there is an adequate connection in France, she explained, Tuesday March 8, in the Council of Ministers. The debate is not whether Spain wants or does not want to bet on European interconnections, but how to articulate a European effort. »

For the minister, such an infrastructure should be financed "as a project of European interest, not by Spanish users", since its main objective is the security of gas supply to the countries of the north and east of the EU. 'Europe. “If we want to make available to Europe our storage capacities, which are above 60%, while they are on average 30% in the EU, it is not Spain but Europe which must finance it”, added Mr. Sanchez, during an informal conversation with a group of Spanish journalists accompanying him on a trip to Latvia on Tuesday.

The infrastructure should also have technical characteristics that "allow the transport of biomethane and other biogases, and, in the near future, renewable hydrogen, in order to ensure the long-term commercial viability of the infrastructure", underlined Mrs Ribera. With 6.9 billion euros of European recovery funds devoted to the development of green hydrogen, Spain could thus use, in the future, the MidCat to export its surplus production. Because it is impossible for this infrastructure to provide a short-term solution: Ms. Ribera recalled that the construction of such an infrastructure would take, at best, “five to six years”. And even the most optimistic experts count on a minimum of two to three years…

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