Cirelli: Exemption for Nord Stream II Wouldn't Be Anything New
Natural Gas Europe had the pleasure to speak with Jean-François Cirelli, Vice Chairman and President of GDF Suez.
We spoke about the Nord Stream II project and the role of the European Commission.
"It is in the interest of Europe to have less transit countries, and more direct flows" Cirelli said, adding that if the Turkish Stream will be materialised, it will be more a complementary project to Nord Stream II rather than a competitor.
In this interview made on September 17, Jean-François Cirelli argued that Europe will not have problems with Russian gas over the next winter.
The European Commission made it clear: for Brussels, the Nord Stream II project is not a priority. How do you see this statement in the broader picture, keeping in mind what companies involved are advocating (E.ON making the case for exemption from TPA for OPAL). What are your thoughts? As some have already said - is the European Commission is overly politicised or is it just a matter of priorities and funding?
First of all, I would say that almost all the last big infrastructures, if not all of them, that have been built in Europe have obtained exemptions to the TPA. I think that an exemption for Nord Stream II would not be something special, but the normality.
Miguel Arias Cañete, the Commissioner for Energy and Climate Action, has clearly stated that Nord Stream II should fully comply with the European legislation.
Yes, I think that by definition we should comply with the legislation. I think it would be a mistake not to say that Nord Stream II is not a priority. I think it will help Europe to cope with big issues - to be sure that the gas is flowing from East to West without being trapped into political difficulties that we have seen in the recent past in Ukraine. I just see that producers try to avoid transit countries. It is in the interest of Europe to have less transit countries, and more direct flows. In that respect, the Nord Stream II project is good. Finally, I think it is up to the companies to decide if it is in their economical interest to build and you have a lot of European companies participating to this project.This means that they have an interest in building this infrastructure. So I think that, not overly politicising the question, if companies - which are listed and have shareholders - think it is good for them, why not to let them to do their normal job, which is investing in gas?
Commissioner Cañete questioned the commerciality of the project. Don’t you see any possible competition between Nord Stream II project and proposed Turkish Stream project? Do you see the two pipelines as competitors or as complementary projects?
I see them more as complementary projects, if this Turkish Stream is already on the table. For the time being, it is more a discussion. If, at one stage, it will be materialised, it will be more a complementary project to Nord Stream II rather than a competitor. I obviously respect the Commissioner, but it is up to the company to say if it is commercial or not.
The message of Messrs. Cañete and Sefčovič is coherent with a political message that has been delivered to Ukraine. The European Commission’s vision of enlarging its sphere of influence also requires some form of commitment. Recently, the Ukrainian government said that in case of Nord Stream II project, Kiev would lose 2 billion a year in revenues. What’s your position?
What I can say is that some years ago, there was a project to internationalise the network in Ukraine. I think that if this project would have been put in place, it would certainly have changed the picture. Finally, I think that the industry is always reluctant to use gas as a political weapon. There is a lot of geo-strategy with gas by definition - because it entails many relations among countries - but at the end what we want is really something based on market rules, and market definition. So, if you are telling me today “we want to use the gas to help or do something”, it is complicated for the industry to cope with that position.
Reading through the lines, your statement says that Russian gas is set to remain, and that Russia is set to remain an important player for Europe. Is this correct?
Europe needs Russian gas for sure, because it is the easiest gas. Infrastructure is there, there is a lot of production, and it is cheap to produce gas compared to other gas coming from other countries. So it is in the interest of Europe to develop its partnership with Europe.
Can we think of your company and other E&P companies acting as a sort of mediator? Do you think that companies are trying to overcome this stalemate between Russia and Europe?
What we need is to have more facilities to sell gas from West to East. There are a lot of things that have not been done in the past for political reasons too, and we are now paying the price. So there are several things to be done to expand the European market, because the question raised by Central European countries are legitimate questions. By the same token, it is important to strengthen and build trust.
So you don’t see problems with Russian gas.
No.
Over the next winter?
Hopefully not.
Does your position hold also in case the European Commission’s approach to Gazprom was starker?
That has to be seen. It is difficult to comment. But, as explained by ENGIE, E.ON and Wintershall in a recent conference, we don’t say that security of supply is not on the agenda anymore, but a good job has been done to strengthen security of supply. The problem is now for the European authorities to have policies more amenable to gas. The problem today is security of demand.
Your message was also: “European companies should co-ordinate better on priorities.”
To defend the case of gas which is indispensable for the energy transition.
Do you see any company that does not follow this golden rule?
No, no. But we have not been successful enough vis-a-vis policy makers. So we have to continue.
There is much ado about operations in the Arctic. GDF - ENGIE - is not interested in operations in the Far North as it seemed one year ago. Do you see any changes?
Not for the time being.
Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci