Europe’s dash for gas fraught with uncertainties: The EU’s energy response to Russia’s invasion of Ukraine is aiming for a two-thirds reduction by the end of this year in the approximate 150 billion cubic meters per year (bcm/year) of gas currently imported from Russia. The proposed REPowerEU programme, to be presented in full next month, includes demand-side measures but its targeting of around 60 bcm in new LNG and piped gas imports has triggered a frenzy of activity from national governments, the gas industry, and the European Commission. Many industry analysts have expressed doubts over how this supply diversification can be achieved in practice and at what cost given tight global gas supply and a host of other uncertain factors. Industry group Gas Infrastructure Europe has recognised these challenges but called for “political will” in order to “go beyond business as usual”. Gas campaigners and climate advocates fear that beyond business as usual has already arrived and that there is no “clear direction of travel” emanating from Brussels, Washington D.C. and other national capitals. One analysis has shown that a war footing deployment of clean energy technology could end EU imports of Russian gas by 2025 if such measures don’t continue to be marginalized in the current crisis conditions. (European Commission, Politico, Financial Times, S&P Global, E3G et al) 

Joint gas buying efforts underway in Brussels and Texas: The European Commission and member state officials have started to engage in a platform to jointly buy gas, LNG, and hydrogen from diversified, non-Russian suppliers. The Commission hopes the voluntary initiative, the EU Energy Purchase Platform, will be able to attract supply “at stable prices that reflect the predictability and the size of the common EU market,” it announced on April 8. Germany in particular has faced criticism for the bilateral approach to deal-making it has pursued with various countries as it seeks to wean itself off Russian gas. On April 6, it was reported that senior officials from nine EU countries and the UK had flocked to Texas to discuss with US shale gas executives how to increase US LNG exports to Europe. (European Commission, Reuters, Reuters)

Drumbeats grow stronger for revival of MidCat and EastMed: In February and prior to Russia’s invasion of Ukraine, the Spanish newspaper La Vanguardia reported that NATO had begun efforts to revive the Midi-Catalonia gas pipeline, a megaproject to connect Catalonia, Spain and France which was cancelled by national regulators in 2019. While MidCat would take years to complete, the emergency need to reduce the EU’s reliance on Russian gas and to better connect the Iberian Peninsula to the continent’s wider gas network has inspired major new interest. In March, Spain’s Prime Minister Pedro Sánchez called on the EU to finance the pipeline, and France has said it is willing to discuss the project’s viability. The prospects for one of Europe’s other gas megaprojects, the EastMed pipeline, also appear to have been boosted by the gas crisis, although a final investment decision remains uncertain. In January, the US withdrew its support for the €6 billion project citing “financial viability” as one of its reasons, and a European Commission source commented in April that EastMed’s destiny “will depend on its commercial viability and its ability to contribute to the EU Green Deal goals.” Egypt and Greece are also discussing an alternative routing which would cut out the need for an offshore pipeline to Cyprus from Israel’s Leviathan gas field. (Morning Star, EURACTIV, Bloomberg | Quint, EURACTIV)

European Parliament backs gas projects: On March 10, EU lawmakers approved the fifth Projects of Common Interest (PCI) list of priority cross-border energy projects, giving 30 new PCI gas projects worth €13 billion the opportunity to benefit from accelerated authorisation procedures and European funding. The European Parliament vote saw 177 MEPs reject the new PCI list, with 497 voting in favour. Campaign group Food and Water Action Europe said that the parliament had chosen “to lock the EU further into fossil gas dependency, amidst an unprecedented gas crisis and the need to get Europe off all gas.” The revised Trans-European Networks for Energy (TEN-E) regulation, which will govern the sixth PCI list (expected in 2023) and not allow the inclusion of oil and gas projects, was also passed by the European Parliament on April 5 despite speculation in advance of the vote that the energy security crisis might require a rethink on excluding gas projects. The new regulation now awaits final approval from the European Council. (EURACTIV, Food and Water Action Europe) 

LNG debacle unfolding in Cyprus: A floating import terminal which was originally intended to start receiving 0.8 bcm/y of LNG at the port of Vasilikos in 2021 is beset with construction problems, and is now delayed until July 2023 at the earliest. In what is being described by Cypriot media as an ‘LNG debacle’, contractual problems have arisen for the Cyprus LNG Terminal,  illegally dumped toxic and radioactive chemicals have been discovered recently at the project site, and the project’s Chinese contractors may lack the expertise to build it. The terminal has been included on the fifth PCI list and has already received €331 million in publicly funded grants and loans. Questions are being raised about the due diligence carried out by the project’s financial backers, the European Commission, the European Investment Bank and the European Bank for Reconstruction and Development. (Cyprus Mail, GEM.wiki)

Europe number five in the world for gas power expansion plans: Based on the release of the Global Gas Plant Tracker’s first comprehensive dataset, a report from Global Energy Monitor (GEM) has identified a global boom in gas power plant development which is now larger on a capacity basis than the build-out of new coal capacity. These development plans are spread globally. In Europe, and despite policy pledges to reduce emissions, GEM data show 65,000 MW of gas plant capacity in development at an estimated cost of US$61 billion. In terms of capacity buildout plans, Europe is the fifth ranking region behind East Asia, Southeast Asia, Middle East and North Africa, and Latin America and the Caribbean. (Global Gas Plant Tracker, Global Energy Monitor, Bloomberg)

Baltics: After Lithuania took the lead in becoming the first EU member state to stop importing Russian gas, Estonia and Latvia quickly followed suit in early April, with underground gas storage reserves in Latvia currently serving the regional market. 

Belgium: A proposed gas power plant near Brussels has been shelved following the Belgian government’s decision to extend the lifetime of its remaining two nuclear reactors by ten years.

Bulgaria: A ten-year gas contract with Gazprom, due to expire at the end of 2022, will not be renewed as Bulgaria’s government seeks to replace its almost 90% dependency on Russian gas with higher priced LNG imports from Greece and Turkey and increased piped volumes from Azerbaijan.

Europe: Green groups have called on the European Commission to use the Ecodesign Directive to end the sale of new gas boilers by 2025, and to take action to increase the uptake of electric heat pumps. 

Germany: State-backed plans to build new LNG terminals as quickly as possible in northern Germany face a ‘Herculean task’ to overcome complex approval procedures, according to a commercial law firm in Hamburg, as well as challenges in the courts and from campaigners.

Greece: Prime Minister Kyriakos Mitsotakis announced the country's first test drilling for gas in more than two decades, with seismic surveys to be carried out in one onshore and five offshore areas by March 2023. 

Israel: The start up of production in the Karish-Tanin field in September could see new supplies of Israeli gas to Europe via a liquefaction plant in Egypt, according to government officials.

Italy: Ecology Transition Minister Roberto Cingolani has said that pipeline deals with Algeria, Libya and Azerbaijan are expected to secure an additional 10 bcm of gas this year, rising to 20 bcm by 2024 when new flows come on line.

Norway: A joint declaration issued in mid-March outlined plans for a feasibility study on the transport of green hydrogen from Norway to Germany via pipeline. Norwegian energy companies are angling to supply blue hydrogen in an initial ‘transition period’.

Russia: Gazprombank is lining up a bid for a potential US$2 billion contract to provide South Africa with LNG for various planned gas power projects. 

Southeast Europe: The US Energy Association and the US Agency for International Development have projected that by 2030 the region’s 11 countries will require investment of US$50 billion to develop 9 gigawatts of gas-fired power generation to replace retired coal capacity. 

UK: Pledges to hold a new licensing round for North Sea oil and gas, and to commission a new scientific study into fracking, make up part of the UK government’s newly announced energy security strategy. 

World’s second-largest reinsurer to exit new oil and gas projects: Swiss Re, one of the world’s top risk managers, announced in March that it would no longer re/insure or directly invest in new oil and gas field projects after 2022. The policy enhancement includes certain exceptions but makes the company the first major insurer to adopt a policy that excludes insurance for most new oil and gas projects. Campaign group Insure Our Future’s Global Coordinator Peter Bosshard said that the policy “sends a strong message to fossil fuel companies, investors and governments: oil and gas operations need to be phased out in accordance with climate science or they may become uninsurable by the end of the decade.” Two other major global reinsurers, Hannover Re and MAPFRE, also adopted significant oil and gas policies in March. (Swiss Re [pdf], Insure Our Future, Hannover Re [pdf], MAPFRE [pdf])

Paris-aligned oil and gas majors plan to spend over US$1 trillion on new fields: New analysis from Global Witness and Oil Change International reveals that the world’s 20 largest fossil fuel producers who claim to support the Paris Agreement have plans to invest US$932 billion in new oil and gas fields by end of decade. Using projections from Rystad Energy, the collective capital expenditure figure rises to US$1.5 trillion by the end of 2040. For exploring and developing new gas fields, the projected spend by 2030 is US$505 billion. (Global Witness, Sky News) 

War and rising gas prices likely to hit blue hydrogen hopes: Szabolcs Ferencz, the chairman-CEO of Hungary’s transmission system operator FGSZ Natural Gas Transmission Ltd, told the Budapest Hydrogen Summit in mid-March that gas-derived blue hydrogen projects “will be harder to implement” due to the war in Ukraine and the prospect of long term inflated gas prices in the EU. As a result, green hydrogen may be in high demand much sooner than expected, although the summit also heard of the conflict’s debilitating impact on the renewable hydrogen aspirations of Ukraine which features as a ‘priority partner’ in the EU Hydrogen Strategy. A December 2021 paper from the Oxford Institute for Energy Studies warned that “the EU-supported aspiration to export-oriented hydrogen production could cut across Ukraine’s domestic decarbonisation requirements.” (Renewables Now, Renewables Now, Oxford Institute for Energy Studies [pdf])

TotalEnergies plows on for now in Russian LNG projects: Unlike the self-sanctioning and dumping of toxic Russian assets by Shell, BP, Eni and other western majors, France’s TotalEnergies has faced accusations of ‘complicity in war crimes’ as a result of the less than full exit from Russia that the company has taken. Although it has said it will no longer provide capital for new projects in Russia, attention has fallen on TotalEnergies’ ties with Russia’s biggest private gas producer Novatek, which is closely aligned with the Kremlin. The French company remains the second biggest shareholder in Novatek, and has stakes in Novatek’s operating Yamal LNG Terminal as well as the Arctic LNG 2 Terminal planned to start operating next year. TotalEnergies also announced that it will provide no further capital for Arctic LNG 2. The 27 bcm/y project’s future and Russia’s overall LNG strategy have been thrown into further doubt following the EU’s fifth round of sanctions which prohibits delivery of EU-sourced equipment required for gas liquefaction. (LNG Prime, S&P Global, Reuters)

Gazprom subsidiary nationalized as Nord Stream 2 lies dead in the water: In early April the German government took control of Gazprom Germania, the owner of energy supplier Wingas and a gas storage firm. The temporary nationalization until the end of September was taken to maintain security of supply, according to Economics and Climate Protection Minister Robert Habeck, who said that it was vital to “not expose energy infrastructure in Germany to arbitrary decisions by the Kremlin.” The Gazprom-led Nord Stream 2 (NS2) pipeline is now shelved, though not officially cancelled, following Chancellor Olaf Scholz’s cancellation of its certification process at the outset of Russia’s invasion of Ukraine and the exit of all Gazprom’s project partners. The German government and most analyst opinion do not see the US$11 billion NS2 pipeline being revived, even to transport hydrogen. While Berlin has scrambled in recent weeks to make deals with new gas suppliers including Norway and Qatar, a resident of the village of Lubmin where NS2 emerges from the Baltic Sea told the Financial Times, “We did not need this whole thing.” (EURACTIV, CNBC, Financial Times)

Europe’s top banks maintain heavy oil and gas financing despite pledges: Since signing up to the UN-backed Net-Zero Banking Alliance last April and committing to set emissions reduction targets for their energy portfolios, 25 of Europe’s leading banks provided at least US$38 billion in financing to the top 50 upstream oil and gas expansion companies, according to an analysis from ShareAction in February. Half of this total was provided by Barclays, BNP Paribas, Deutsche Bank, and HSBC, four of the alliance’s founders. The eleventh ranked bank, Dutch giant ING, announced in March that it will no longer finance new oil and gas fields, making it the biggest bank to announce such a commitment. BankTrack pointed out that the new policy does not exclude ING’s existing oil and gas clients with plans for expansion. (Share Action [pdf], The Guardian, ING, BankTrack)

Poland’s Energy Dilemma, Carbon Tracker, February 2022.

This 32-page analyst note finds that while Poland is planning to replace coal-fired power with gas-fired power to bring down emissions, the planned new gas plants due to open in the next five years are already more costly than new wind or solar per megawatt hour, will undermine EU climate targets, could cost Polish taxpayers billions, and expose the country to pressure from foreign gas suppliers. 

Energy Supply Security in Germany Can Be Guaranteed even without Natural Gas from Russia, German Institute for Economic Research (DIW), April 2022.

This nine-page study finds that by winter 2022/2023 gas supply in Germany can be secured without Russian gas through increased supply from Norway, the Netherlands, Belgium, and France, as well as from enhanced gas storage and energy savings. The authors state that “The construction of LNG import terminals on the coast does not make sense due to the long construction times and the sharp decline in natural gas demand in the medium term”.

Future of EU Gas Demand: Implications for the US LNG Sector, E3G, April 2022.

This 5-page briefing discusses the discrepancy between the projected major reductions in EU gas demand under EU and member state policies and the medium to long term plans to build US LNG terminals for exporting to Europe. 

Oil and Gas Policy Tracker, Reclaim Finance.

This new finance tool assesses and scores the policy measures taken by banks, insurers, and investors to restrict and phase out support for the oil and gas sector.