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ENTSOG points to EU grid resilience, warns on L-Gas-H-Gas conversion

* Sees infrastructure 'close' to market integration
* Urges conversion of L-gas areas to H-gas
* Some regions still poorly interconnected

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ENTSOG, the European gas TSO association, painted a rosy picture of the state of Europe's gas infrastructure development in its latest long-term outlook, but warned that one particular challenge would be confronting the need for increased conversion from low-calorific gas (L-gas) to high-calorific gas (H-gas) in parts of northwestern Europe.

In this year's Ten-Year Network Development Plan (TYNDP), ENTSOG said that the existing gas infrastructure is already close to achieving the EU goal of a fully functioning internal energy market, and that projects planned to be implemented in the coming years would further improve the situation.

It also said supply security had improved, with current gas infrastructure resilient to most of the route disruption cases investigated.



The TYNDP is used as a key input for the EU to select priority gas infrastructure projects -- the Projects of Common Interest List -- which is set for its third version.

"The TYNDP assessment confirms that the gas infrastructure is close to achieving market integration in most parts of Europe," it said.

"Once the required infrastructure is commissioned, completing the internal energy market will be a matter of fully implementing the Third Package."


GRONINGEN DECLINE


However, it sees a number of challenges in the coming years, including question marks over supply adequacy in northwest Europe given the decline in production from the giant Groningen field -- an L-gas producing facility.

"The decline in European production is an EU-wide concern -- it is even more significant with regard to L-gas production due to the fact L and H-gas are not substitutable and due to the limited number of L-gas production fields," ENTSOG said.

ENTSOG said the countries most affected -- the Netherlands, Belgium, France and Germany -- need to work on conversion plans and that there are only limited connections to the respective neighboring H-gas network.

The combined L-gas demand across the countries is some 600 TWh/year (57 Bcm).

"Considering on one hand the end of the Dutch L-gas exports to Belgium, France and Germany by 2030 [...] and on the other hand the current L-gas demand in Belgium, France and Germany (around 330 TWh/year), it is necessary to engage a continuous process of converting areas currently supplied by L-gas to H-gas," it said.

It said Belgium, France and Germany have already prepared national conversion plans coordinated at bilateral and multilateral levels and that the conversion process is set to include the development of specific gas transmission infrastructure to integrate the L-gas and the H-gas networks.


SUPPLY SECURITY


The European natural gas sector was rocked in 2006 and 2009 by Russian gas supply disruption via Ukraine, and many of the infrastructure policies since then have been designed to improve security of supply.

ENTSOG said Europe's existing gas infrastructure is "already providing sufficient flexibility for transmitting supplies to the demand areas in most of Europe."

"It can stand a high number of route disruption situations as well as for most countries the disruption of the largest single infrastructure, including under a high demand situation," it said.

But, it said, some additional capacity could be needed in a number of areas.

These include: Croatia, if its demand outlook materializes; Romania, if the foreseen increased production is not maintained over time; Poland and the Baltic countries, if supplies via Belarus are disrupted; and countries in southeast Europe to cover the risk of Ukraine route disruption.

--Stuart Elliott, stuart.elliott@spglobal.com
--Edited by Jonathan Fox, jonathan.fox@spglobal.com