CEER: current LNG infrastructure in Europe sufficient

In its response to the European Commission’s LNG strategy, the Council of European Energy Regulators argues that current LNG infrastructure is sufficient to satisfy demand in most regions across Europe.

In its LNG and storage strategy, the Commission calls for the construction of priority infrastructure projects to give all member states access to LNG, either directly via terminals or indirectly via interconnectors or access to liquid hubs.

CEER, however, is calling on the Commission to “clearly differentiate whether the new infrastructure is needed under normal circumstances to supply European gas demand, or only in case of supply disruptions, for security of supply purposes.”

In CEER’s opinion, the sufficiency of current infrastructure, under normal circumstances, is demonstrated by the low level of congestion across Europe.

“Investment in interconnection and regasification capacity in recent years has facilitated gas circulation across the EU. LNG terminals have low utilization rates across Europe currently,” the council adds.

CEER said in its response that the EC should identify precisely where bottlenecks appear when replacing missing gas sources (security of supply crisis), and to what extent they could be addressed by a better access to the LNG market.

“The investments potentially needed to alleviate possible congestion in times of supply crisis should be decided by taking into consideration their cost efficiency regarding the disrupted demand,” the council said.

CEER underlines that any new LNG project willing to receive a PCI (Projects of Common Interest) label and for which there is no market demand should be subject to a cost-benefit analysis, to weigh the additional security of supply benefits (compared to the existing situation) brought by the investment against its costs.

In order to avoid stranded costs, CEER recommends ensuring an efficient use of current infrastructure as much as possible, especially in a context of decreasing gas demand in Europe. On the other hand, when contractual congestions appear, CMP guidelines can guarantee an efficient use of the cross-border capacity.