[Premium] Europe's Gas: Meeting the Demand

Dependency on imports is often the hot topic when talking about the European gas market, but almost half (46.6% in 2017) of its consumption is in fact covered by domestic production. Norway is the biggest source of European gas, with output at record levels last year and – it is forecast – this year too. The Netherlands and UK meanwhile are running down production. 

And with more efforts to improve energy efficiency and to decarbonise, the demand side of the equation could be falling too. NGW hosted in Brussels a panel of high-level speakers to shed some light on future trends in European natural gas production.

“It’s amazing how much Dutch gas we have already lost, and will still lose,” said Anouk Honore from the Oxford Institute for Energy Studies, who showed that gas extraction in The Netherlands has almost halved in only three years, from 81.5bn m³ in 2013 to 47.4bn m³ in 2016. The government has capped production from the country’s giant peaking Groningen field in response to tremors in the region.

Public opinion now views natural gas as a less desirable fuel in a decarbonising economy and although “the industry is trying hard to also find a role in the energy transition, it is just not being invited to the table at all,” argued Coby van der Linde, Director of the Clingendael International Energy Programme. How is the Netherlands dealing with this situation? It relies on imports from Norway that it then exports to keep its own previously agreed contracts with France, Belgium, and Germany. It is on the path of becoming an importer country by 2030.

The UK also follows a natural decline, and is expected to produce half of what it produces today by 2035. Norway however, is very confident in its gas resources, having recently re-evaluated its reserves upwards and having exported a record high of 122bn m³ in 2017, or about a quarter of EU demand. Lars Erik Aamot, director-general at the energy ministry has hinted that Norway’s export capacities have reached a bottleneck, so either pipelines or LNG facilities will have to be developed. It will depend on whether the EU express definite interest on getting all the Norwegian gas that there is. According to the ministry, only one third of Norway’s gas resources has been produced to date.

From the European Commission, Catharina Sikow-Magny insisted on the importance of the internal gas grid, to reduce vulnerability in case of gas disruptions. In particular, she pointed out that long term contracts between Gazprom and several member states are soon coming to an end, arguing that there is “momentum for looking at other options” such as the Southern Gas Corridor project, linking gas from Caspian and Middle Eastern regions to Europe. That however may also end up carrying some Russian gas through the TransAdriatic Pipeline into Italy or the Balkans.

Southeastern Europe’s gas production is more uncertain at the moment, although it has the potential to bring geopolitical stability to the region if handled well, argued H.E. Olympia Neocleous, Deputy Permanent Representative to the EU of the Republic of Cyprus and Fabio Marchetti, from Italian Eni. In any case, Cyprus and Italy argue that they are well placed to be an entry point to the EU for the Mediterranean gas reserves.

European gas production is often dismissed as “just declining”, although the discussion proves that there is more to that, including other elements that could only be briefly mentioned: the “northern gate” – taking Norwegian gas to the Baltic coast, in particular Poland – and gas production in Ireland and offshore Romania.