NGW Interview: Gas Infrastructure Europe [NGW Magazine]

NGW: From GIE members' experience, which countries have been hardest hit by Covid-19?

GIE: Europe’s gas infrastructure enables one of the most liquid and competitive gas markets in the world. Mature regulation allows for cost-efficient services from a diversified range of suppliers, particularly as domestic production is declining. From the outset of the current pandemic, gas infrastructure operators have established emergency response teams adapting their operations to safeguard their employees and keep the gas flowing.

All European transmission system operators (TSOs) must always ensure security of gas supply across borders and especially during the crisis. Close communications are being kept between all members and authorities on developments and new measures that can be taken. Many European countries rely heavily on natural gas for power generation, therefore priority lies in business continuity: comprehensive protection of employees including extreme examples of base camps for dispatchers and measures for the reliable continuity of pipeline and compressor station operations.

However, the importance of secure energy supplies has shifted in recent weeks into the centre of public attention. Gas infrastructure continues to deliver low emission energy to European industry and citizens. Beyond that, we focus on providing the right conditions for a sustainable economic recovery. The gas infrastructure business has adapted its ways of working to ensure business continuity whilst looking after our employees. In the same spirit, we ensure a continuous dialogue with our stakeholders and the European Commission (EC) to help define a robust Green Deal that ensures achievement of climate goals, on the one hand, and economic resilience of Europe, on the other.

NGW: In practical terms, how have LNG terminals been affected? Does automation mean that there have been no problems leading to delayed deliveries?

GIE: In addition to ensuring business continuity, LNG operators, like other gas infrastructure operators, are united in taking the risks of Covid-19 seriously and are adapting their operations to safeguard employees. LNG terminals have the additional challenge of making sure that their operations do not spread the virus outside the borders of the workplace.

LNG terminals receive vessels from all over the world with internationally diverse crews. It is difficult to avoid contact between the crews and shore teams completely as a certain amount of physical handling is required to administer and run the operations. For example, pilots are required to board the vessels to bring them into the jetties and our teams need to work in co-operation with the ships’ crews to handle the loading and unloading arms and mooring systems.

From a more global view, whilst some other markets are in decline during the crisis, LNG continues to be in high demand. According to the EC, in Q4 2019 LNG became the second source of gas to the EU, covering 28% of the total imports and increasing by 42% year-on-year. The trend is expected to continue in 2020 as well. This shows the important role that gas plays at any point in time in Europe, none less so than during the current challenging period, and demonstrates how LNG contributes to the pairing of economic recovery with Europe’s climate and energy objectives.

NGW: Have there been occasions when the gas system has nearly been or been out of balance owing to an unexpected drop in demand or supply?

GIE: As the Covid-19 period coincides with the winter-summer swing, gas operators have in place a business model that addresses the swings, whether they are due to the weather conditions or economic crisis. Although having an immediate financial impact, such variations are considered in each operators’ risk assessment and mitigation measures are in place. The dispatching departments, whose aim is to offset any imbalance in the grid, were fully functional for the whole crisis period and no disruptions have been reported. Our gas storage facilities and LNG regasification terminals are key to prevent such situations and strategic gas reserves can be used in extreme cases. Excellence in operations was especially important during March and April as gas storage switches from withdrawal to injection mode. Operators need the knowledge and flexibility to meet a wide range of customer requests from intra-hourly up to seasonal needs and react promptly to guarantee energy supplies.

NGW: How will GIE recover the cost both of dealing with the Covid-19 consequences in the near term and in the longer term, from the lower revenues from lower throughput, especially in spring and summer when heating demand is zero and industrial demand very low?

GIE: The [cost] recovery will highly vary depending on the member states decisions and situations. For instance, in Austria an agreement has been set between the industry and the Austrian Chamber of Commerce for accommodating late payments, and discussions are taking place in Poland between the industry and customers on payment defaults.

Through this crisis, Danish TSO Energinet has decided to focus its efforts on securing the critical technical staff for maintenance projects in order to ensure the security of supply. It is worth highlighting that the gas sector has been less affected by this crisis than the electricity sector, thanks to the high resilience of gas infrastructure.

For instance, from the gas storage point of view, as of May 6, European natural gas storage inventories were 65% full: this is the highest ever recorded level for the beginning of May, according to Gas Storage Europe's Aggregated Gas Storage Inventory. Gas storages should therefore be filled by next winter.

NGW: What is the situation with hydrogen and cross-border flows? Are the TSOs aligned in terms of the safety issues, or could one TSO block the transit of hydrogen-added gas?

GIE: At the moment, there is no Network Code to regulate the transit, cross border flows and entry-exit regime for hydrogen blended natural gas in the gas infrastructure. Such a regulation will only come after an update of the gas legislation which is under discussion.

In this regard, the European committee for standardisation (CEN), supported by EC’s Directorate-General for Energy, is preparing the last review of the Wobbe Index final report for new entry/exit standards. The matter will be further discussed as the update is to be presented at the next Madrid Forum in October.

Furthermore, there are also discussions within CEN on Guarantees of Origins (GOs) for hydrogen injected into gas network on whether they should be kept as GOs for hydrogen or turned into GOs for renewable gases. Overall, the establishment of standards for hydrogen blending in the gas infrastructure is still under debate.