CERAWeek: Gas to play key role in transitioning Europe

Natural gas will play a growing role in the energy transition in Germany, Romania, and Greece as they move away from coal, according to speakers at CERAWeek by IHS Markit.

With a planned deepsea gas exploration project called Neptun Deep, net importer Romania is getting ready to become a net exporter. Bulgaria and Germany are expecting to add supplies via pipeline while Greece plans to import both LNG and pipeline gas.

Greece, Romania phase out coal

A need to transition, as well as a requirement to bring gas networks to underserved areas, is driving the gas build-out in Greece, said Maria Rita Galli, Chief Executive Officer at DESFA, the national gas transmission system operator in Greece.

"Coming to Greece, one of the priorities that the company is trying to accelerate at this moment is the completion of the … gas network reaching some areas of the country that were not in the past connected, and we're excited by the decision of the government to phase out lignite [coal]," said Galli.

"Of course, this now makes the need to replace coal with gas an absolute necessity," she added.

DESFA maintains part of the Trans Adriatic Pipeline (TAP) pipeline, completed last year, which imports gas from Azerbaijan to Greece, Albania, and Italy via Turkey.

DESFA is also the part-owner of Greek company Gastrade, which plans to import gas as LNG through the under-development floating storage and regasification unit (FSRU) Alexandroupolis.

In a connected project, DESFA has a stake in the gas Interconnector Greece-Bulgaria (IGB Pipeline) through its joint venture IGI Poseidon, expected to be completed in 2021, said Galli.

The projects allow for Central European gas imports from Israel, the US, and other sources.

The US-sourced gas from the Alexandroupolis FSRU will be exported from Greece to Bulgaria via the IGB pipeline. "There are a lot of developments that will enable … Greece to play quite a crucial role as an entry point for many different sources of supply to the Balkans," said Galli.

"With the opening of the IGB, later this year, hopefully, and then subsequently with the construction of the Alexandroupolis FSRU on the coast, we would expect more and more flows of LNG and gas from Greece to the north," she added.

Romania is also increasing its supply levels to replace its coal-fired power generation fleet. Extraction at the offshore Neptun Deep gas field is expected to finally advance under a 2021 revision of offshore laws that have been discouraging development. The project should begin production in 2025.

Romania also completed the first phase of the BRUA gas pipeline connecting Bulgaria, Romania, Hungary, and Austria late last year.

"I think if you look at Romania, the role of gas is actually very important, both for the energy transition and for economic security, as well as for the climate change agenda," said Christina Verchere, chief executive officer and president of the executive board at Romanian integrated oil company OMV Petrom. The company is a subsidiary of Austrian oil and gas company OMV.

As part of Romania's climate change agenda, it will look to replace the 15% to 20% of its power that comes from coal with gas as well as renewables, Verchere said.

Romania is faced with the task not only of transitioning its energy sector, but also growing its economy. "This is a country that has about 4.5% GDP growth, but also has one of the lowest GDPs per capita in all of the 27 EU member states. So economic prosperity is, I think, an important factor at play here as well," said Verchere.

Germany wants Nord Stream II gas

While Greece expands its LNG sourced from the US, the US touched off a dispute over Germany's decision to import gas from Russia via the under-construction Nord Stream II pipeline. The US Senate authorized sanctions against companies involved in the project in January.

Minister of State for Germany's Federal Foreign Office Niels Annen told the CERAWeek panel that the Nord Stream II pipeline would not make Germany dependent on Russian gas and hoped Germany would share information with the US that would change the course of events.

"I hope I'm not overly optimistic, but it really helps that in the new Biden administration we can maybe find counterparts who are willing to work with us and take a second look at what is really happening, because we don't believe that Nord Stream II is increasing our dependency," said Annen.

Germany is one of the biggest success stories of energy transition in Europe. It has dramatically reduced its fossil fuel consumption and renewables make up about half of its installed power generation capacity.

The pipeline is also part of Germany's transition plan as it phases out both coal and nuclear power generation. "The context is that we are in the midst of our energy transition. And we are making progress in terms of renewables. So the question is, what is the proper bridging technology? And we believe that gas is an obvious choice," said Annen.

Posted 03 March 2021 by Cristina Brooks, Senior Journalist, Climate and Sustainability