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03/12/2016

Ample gas in store for winter, says French grid operator

Energy

Ample gas in store for winter, says French grid operator

Oil pipeline, Ukraine. [Shutterstock]

French gas storage levels at three-year highs make shortages this winter unlikely, grid operator GRTGaz said in a report on Wednesday (12 November). However the operator urged companies to be ready to raise LNG imports should there be any disruption to Russian supplies.

In a cold snap scenario, with temperatures at levels seen only every 50 years for three consecutive days, France could count on a surplus of 372 gigawatt-hour per day (GWH/d), the gas grid operator said in its winter outlook report.

However, this would turn into a 20 GWh/d deficit if Russian supplies were cut from the Obergailbach pipeline entry point on the German border, it added.

“Anticipations by some of a Russian-Ukrainian crisis have probably pushed operators to take more precautions this year,” GRTGaz head Thierry Trouve told reporters in a news conference.

The ample gas situation this year contrasts with the 2013/14 winter, when depleted inventories pushed GRTGaz to raise the alarm, prompting tighter government regulation.

Trouve said France relied on Russian gas imports for only 15 to 20% of consumption and would not struggle to find alternatives should Russian gas flows be interrupted.

Trouve also said lower demand for liquefied natural gas (LNG) shipments from Asia, in part due to lower Brent crude prices to which Japanese imports are linked, had increased LNG supplies at France’s LNG terminals.

This has reduced the spread between gas prices in the north and south of France to zero for the first time in a year, down from a record €12 last winter.

France is divided into three gas hubs, but pipeline bottlenecks between the Northern hub and the southeastern hub prevent Norwegian and Russian pipeline imports from flowing to the south of the country.

The grid is planning a €750 million investment to increase capacity between the two zones, the Val de Saone project, expected to be completed by the end of 2018.

But GRTGaz failed to obtain a €165 million subsidy from the European Commission in October, a “rather incomprehensible decision”, Trouve said, adding he hoped to convince EU authorities before taking a final investment decision.

Background

The European Union has imposed sanctions on Moscow over the conflict in Ukraine, increasing the need for gas from elsewhere.

Russia is currently Europe's biggest supplier of natural gas, meeting a third of its demand worth $80 billion a year.

Reduced gas flows from Russia to Poland, Slovakia, Austria and Romania have underlined both the threat and the need for countries in Central and Southeastern Europe to forge their own energy independence.

Poland has taken the lead and is taking steps towards creating a gas trading and transit hub in Central and Eastern Europe.

>> Read: Poland masterminds gas trading hub for Central Europe

Internal EU energy security documents also describe plans to tap new non-European gas import sources in central Asia, including Iran.

>> Read: EU turns to Iran as alternative to Russian gas

Further Reading

GRTgaz