ispi dossier 23 february 2020 the great game of gas · actors and geopolitics. from the shale gas...

ISPI DOSSIER 23 February 2020

THE GREAT GAME OF GAS:GEOPOLITICS & NEW TECHNOLOGIESedited by Alberto Belladonna, Alessandro Gili ISPI Centre on Infrastructure

ITALIAN INSTITUTE FOR INTERNATIONAL POLITICAL STUDIES

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DOSSIER23 February 2020

Of all fossil fuels, natural gas is experiencing the largest growth worldwide. At the same time, tech innovations are making the extraction and transportation of natural gas easier, cheaper and more efficient. These trends are already

transforming the global energy landscape and soon, analysts say, natural gas might be at the core of the transition towards a carbon neutral economy. Is natural gas about to become a game changer in international relations? Who are the main players in the “great game of gas”? What are their interests and ambitions? And what impact is the surge of natural gas going to have on global geopolitics and economic trends?

ACTORS AND GEOPOLITICS

1. THE GEOPOLITICS OF GAS: MAIN PLAYERS AND DYNAMICSManfred Hafner (Sciences Po, Johns Hopkins University and Fondazione Enrico Mattei)

2. USA: A NEW DISRUPTIVE ACTOR IN THE GAS MARKET Samantha Gross (Brookings Institution)

3. GAS IN THE GULF: A TRANSITIONAL FUEL ON THE PATH TO DIVERSIFICATIONLapo Pistelli (Eni)

4. THE REDUNDANCY OF ENERGY SECURITY IN THE EUMassimo Nicolazzi (ISPI)

5. THE GEOPOLITICS OF GAS IN THE EUROPEAN UNIONAlberto Belladonna, Alessandro Gili (ISPI)

6. THE 3 SEAS INITIATIVE: NATURAL GAS IN CENTRAL EUROPEAN FOREIGN POLICYPawel Musialek (Cracow University and Klubu Jiagiellonskiego)

7. EASTERN MEDITERRANEAN GAS: WHAT PROSPECTS FOR THE NEW DECADE?Simone Tagliapietra (Bruegel, Università Cattolica and Fondazione Enrico Mattei)

8. THE ROAD TO CHINA: AN OPPORTUNITY FOR RUSSIAN GASIlya Razlomalin and Ilya Sushin (McKinsey & Company)

9. NEW GAS DISCOVERIES IN SUB-SAHARAN AFRICA: A SOURCE OF DEVELOPMENT?Philippe Copinschi (Sciences Po)


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TECHNOLOGY AND FUTURE TRENDS

10. LEADING THE WAY TOWARDS A SUCCESSFUL ENERGY TRANSITION: THE ROLE OF LNGStefano Cao (Saipem)

11. THE GAS CLEAN TECH: ENABLING SUSTAINABLE DEVELOPMENTMenelaos Ydreos (Gas Union)

12. LNG: A TOOL TO DECARBONISE THE MARITIME SECTORAlexio Picco (Circle Group)

13. THE USE OF NATURAL GAS FOR SUSTAINABLE TRANSPORTATIONSusanna Dorigoni (Università Bocconi)

14. HYDROGEN: UNLOCKING THE POTENTIAL OF GREEN GASRuggero Corrias, (Snam)

This Dossier is published by ISPI with the support of the Italian Ministry of Foreign Affairs and International Cooperation, in accordance with Article 23- bis of the Decree of the President of the Italian Republic 18/1967. The opinions expressed are those of the authors. They do not reflect the opinions or views of the Italian Ministry of Foreign Affairs and International Cooperation.

ACTORS AND GEOPOLITICS

From the shale gas revolution in the United States to the geopolitical role of Russian pipelines in supplying both the European Union and China. From the new gas discoveries in Africa and the eastern Mediterranean to the rising tensions behind the exploitation in the Middle East. A complex, tangled and crowded game for the forthcoming future.



The Geopolitics of Gas: Main Players and Dynamics

Manfred HafnerSciences Po, Johns Hopkins University-SAIS, and Fondazione Enrico Mattei

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Manfred Hafner, Professor of international energy studies and teaches at the Johns Hopkins University School of Advanced International Studies (SAIS-Europe) and at Sciences Po Paris School of International Affairs (PSIA)


COMMENTARY23 February 2020

International natural gas markets are, thanks to technological progress and the emergence of new major global players, undergoing a major

shift from regional to global markets. Part of these tectonic shifts are due to the dramatic US shale gas revolution which started about a decade ago, but it is also due to the strong development of LNG (liquified natural gas) markets. Indeed, after the very strong increase in Qatar’s LNG export capacity some ten years ago, catapulting it by far into first place, most recent developments have seen Australia overtaking Qatar and in the future we may see three countries (Qatar, Australia and the US) each exporting LNG volumes well above 100 bcm. Russia, which has always been a large pipeline gas exporter to Europe, is also emerging as a major LNG exporter, as potentially are some African countries. As far as gas demand is concerned, it is increasingly shifting to Asia, in particular Japan, China, South Korea, India and other Southeast Asian countries, even though Europe has also recently increased its LNG imports.

Moreover, the contractual set-up of gas markets is also changing with an increasing decoupling of the

ISPI | 6The "Great Game" of Gas: Geopolitics and New Technologies

must also mention the recent commercial tensions between the US and China which, depending on how they evolve, may have a considerable impact on future US LNG exports to China.

In Europe, we may see a battleground for Russian pipeline gas and US LNG exports. In the Middle East we must mention the recent political conflict be-tween Saudi Arabia, the UAE and Egypt on the one side and Qatar on the other, as well as the bellicose attitude of the US and Saudi Arabia on the one side, and Iran on the other. All of this has implications

on gas markets. Let us just remember that Iran has the second largest gas reserves in the world and with the absence of sanctions could also become a major LNG exporter. It is clear that economic and competitiveness considerations alone are insufficient to explain future international gas market and trade evolutions as there is again an increasingly major geopolitical component involved.

Of all fossil fuels, natural gas is the one experiencing the largest growth worldwide: since 1990 the global natural gas demand has doubled reaching 3,849 bcm in 2018 (annual average growth rate of 2.5%, to be compared to an annual average growth rate of 1.9% for coal and 1.3% for oil over the same period). While the share of oil in total primary energy demand declined from 40% in 1990 to 33.6% in 2018, the share of coal still represents some 27% (due to China it increased to 30% in 2010, but is now declining rapidly), the share of natural gas has increased from 20% in 1990 to almost 24% today. Most forecasts expect natural gas’ share to overtake coal’s share before 2025 and the oil share around 2040-45.

Even more impressive has been dramatic LNG growth ,with average annual increases of 6.6% over the last two decades. This dramatic growth rate can also be appreciated by the following figures: while back in 1990, LNG represented 16% of the global gas trade, presently it already represents 46%. The International Energy Agency expects LNG trade to double by 2040 reaching some 730 bcm (350 bcm in 2018), representing by then about two thirds of global gas trade.

During the present and next decade, we expect three countries to dominate LNG exports: Qatar,

oil and gas price linkage, elimination of destination clauses, reduction of the take-or-pay contracts, the increasing role of spot pricing and the emergence of specific financial markets (future contracts) making gas markets increasingly look like oil markets. Indeed, while gas markets had traditionally been regional with relatively little interaction among the different continents, they are increasingly becoming global.

All of this has important geopolitical implications. We should mention the repeated gas crises between Russia and Ukraine which had their origin in the break-up of the Soviet Union twenty years ago. We must obviously also mention the political crises between Russia and the EU following the annexation of Crimea and subsequent Western sanctions on Russia, all of which have considerably worsened gas relations between Russia and Europe, making energy supply security again a top priority for European policymaking together with its climate policies which are aimed at decarbonizing the EU by mid-century and therefore questioning the long-term role of natural gas in its energy mix. But we

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ISPI | 7The Geopolitics of Gas: Main Players and Dynamics

Australia and the US, though Russia has the ambition to progressively also become part of this group of major LNG exporting nations. So far, Russia has mainly been a major (the largest) pipeline gas exporter, with most of its pipelines going to Europe, thus having a major security of demand issue.

Qatar’s main objective is to remain the world’s number one LNG exporter, and for this it has some major competitive advantages: huge reserves, very low production costs, favourable geography allowing Qatar to arbitrate between the Atlantic and the Pacific gas markets. Due to competition from Australia, Qatar recently eliminated its self-imposed moratorium of 77 Mt and announced it will increase its export potential to 126 Mt/y (some 165 bcm/y) by 2027, i.e. 6 additional LNG liquefaction trains of 7.8 Mt each.

Australia has tremendously increased its LNG production capacity during recent years, overtaking Qatar last year, but these LNG export projects have been sanctioned at a time when oil (and thus gas) prices were still very high, thus pre-2015. Australian LNG exports, which are high cost, are principally destined for Asian markets and at the current lower energy prices it will be difficult to sanction added greenfield LNG export projects.

With depleting conventional gas fields, the US expected in the 1990s to progressively run out of natural gas and therefore planned to import massive quantities of LNG. But then during the 2000s, thanks to the spectacular development of shale gas (520 bcm in 2018), the US has become the world’s largest gas producer (ahead of Russia) and is expected to become a major LNG exporter during the 2020

decade, potentially at a level similar to Qatar and Australia. The importance of US LNG for the global gas markets is, however, not only related to the huge size of potential export volumes, but also to its original and very flexible contractual arrangements, which may revolutionize the whole LNG industry.

Presently, the EU is the world’s largest gas importer, ahead of China, but going forward we expect China to dramatically increase its gas imports due both to the huge size of its economy, which will continue to grow, and to an increasingly larger share of gas in its energy mix at the expense of coal. China imports gas mainly from Kazakhstan, Myanmar, and recently also Russia (thanks to the recently built Power of Siberia pipeline). In addition, China is developing a huge LNG regasification capacity on its coast allowing it to import increasingly important LNG volumes. There would in principle be a strong complementarity with the US to import high volumes of US LNG. In fact, this would make it possible to somewhat balance out the highly unequal trade relations between the two countries, but the increasingly bellicose sanction politics of the present US administration may discourage China from relying on large-scale US LNG imports.

Natural gas has an important role in the EU’s energy mix representing a share of some 23%. Some 321 bcm of natural gas were imported in 2018, meaning an import dependency ratio of some 60%. As EU domestic production will continue to fall, short- to medium-term imports are expected to increase, also taking into account that the EU wants to decarbonize and therefore first reduce its coal consumption. The question concerns longer-term natural gas

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demand, because as the EU decarbonizes further, it will eventually also need to massively reduce its use of natural gas. Traditionally, the EU’s gas supply was assured by an oligopoly consisting principally of Russia, Norway and Algeria, with in recent years Qatari LNG and other LNG adding to the equation. Going forward, we expect a major battleground between Russian pipeline gas and US LNG in Europe (none of the other suppliers can add significant quantities of gas on EU markets). This competition will for sure be profitable for European consumers as it will provide a downward pressure on prices.

Russian gas has always been controversial (staring in the late 1970s when Europe started to import Soviet Union gas) and continues to be controversial (in particular after the two Ukrainian gas crises of January 2006 and January 2009): some stakeholders/observers accuse Russia of using the gas as a political weapon, others argue that Russia is just a commercial player. The truth is probably somewhere in between. In any case, since Europe has a regasification capacity of about 213 bcm,

which in recent years has been used between 20% and 30%, some 150-170 bcm of unused capacity is available, which is about the figure for EU gas imports from Russia during recent years. Last year, the EU’s LNG imports strongly increased, but even with a 50% utilization rate there is still more than 100 bcm of idle capacity. This is to say that, should Russian supply routes be interrupted for whatever technical or political reason, there is enough alternative LNG import capacity available to provide sufficient supply security to European consumers. Indeed, since the last Ukrainian crisis of some ten years ago, huge efforts have been made to strongly improve the internal gas market thus allowing gas to be moved from one part of the continent to another. No market player, not even Russia, can any longer play a dominant role and impose its market power on parts of Europe. Thus the US and other LNG supplies, which are much more flexible than pipeline gas, will act as a guarantee for future supply security, but this does not imply that Europe should necessarily need to diversify away from Russia if other gas is more expensive than Russian gas.

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USA: A New Disruptive Actor in the Gas Market

Samantha GrossBrookings Institution

ISPI | 9Samantha Gross, Research Fellow in the Cross-Brookings Initiative on Energy and Climate at Brookings Institution


COMMENTARY23.02.2020

US oil and gas production has been booming, changing domestic markets and the role of U.S. production in the world. President Trump

talks about “energy dominance” and about oil and gas as a driver for growth and exports. The term “dominance” isn’t accurate, but the United States is now the world’s largest gas producer and a global player in gas markets.

US TECHNOLOGY CHANGES GLOBAL GAS MARKET

Before the early 2000s, oil and gas production in the United States had been declining for years. A fleet of LNG terminals was planned in the United States, preparing for the day when domestic gas production couldn’t meet demand. But then an important change happened, thanks to optimistic drillers who combined horizontal drilling and hydraulic fracturing to produce oil and gas from formations that were previously uneconomic. Beginning around 2005, natural gas production in the United States took off, increasing nearly 70% from 2005 to 2018.1 The United States is now a net exporter of natural gas, through


Data source: United States Energy Information Administration

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ISPI | 11USA: A New Disruptive Actor In the Gas Market

pipelines to Mexico and as LNG around the world. The boom will continue, fueled by exports – projects due by the mid 2020s will bring US LNG export capacity to five times its current level.

When the world expected the United States to become a significant natural gas importer, companies invested heavily in LNG liquefaction, especially in Qatar, the Middle East, and Africa, to supply the U S market. The U S natural gas production boom left this gas looking for a home. As a result, the LNG market has become more competitive and transparent. Contracts have become less restrictive, with minimum required volumes and restrictions on resale of gas becoming less common. US LNG is also changing pricing norms. LNG has frequently been priced based on crude oil, based on the lack of a liquid gas market to allow price discovery. However, US LNG is priced based on Henry Hub, the delivery and pricing point for gas contracts on the New York Mercantile Exchange (NYMEX). This pricing is based on fundamentals in the US gas market and allows international buyers to access the US market, albeit with added cost for liquefaction and shipping.

US BOOM GIVES EUROPE LEVERAGE WITH RUSSIA

These change in market dynamics have had important implications in Europe. The countries of the European Union import about 78% of their natural gas,3 with Russia providing nearly 40% of imported gas.4 Importing Russian gas makes geographic and economic sense – there is significant pipeline capacity to serve European markets with inexpensive

Russian gas, and the Nord Stream 2 and Turkstream projects are increasing that capacity and giving Russia more delivery options.

However, the Russians have used gas supply as a political weapon and the potential for such interference is increasing with additional pipeline capacity. Russia has twice shut down European gas supply during disputes with Ukraine. In 2014 the EU also imposed sanctions on Russia after it annexed Crimea, further clouding the situation. Some argue that the Russians need revenue from gas sales to Europe as much as Europe needs the gas. Nonetheless, many in Europe see Russia as an unreliable supplier and one not afraid to use its energy resources for political gain.

Growing US LNG exports open more options for Europe. Europe can import US LNG, although volumes are small today and more expensive than Russian pipeline gas. Instead, the most important impact for Europe is the development of a buyers’ market for gas with the surging supply. More supply and more flexible terms put Europe in a better negotiating position with Russia and reduce Russia’s ability to politicize its gas supply.

OIL AND GAS BOOM BRINGS OPPORTUNITIES FOR POLITICIZATION

Russia is not alone in its use of energy for political ends. Historically, a number of countries have used their oil and gas resources in this way, but the United States has not been among them. The US industry is entirely in the hands of private entities making individual business decisions. However, the surge in US oil and gas production and President Trump’s

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“energy dominance” rhetoric has raised the question of whether the United States is moving in this direction.

US oil production certainly made recent sanctions on Iran and Venezuela more politically palatable, by softening their impact on global oil markets. Gas supply has been politicized in the United States’ ongoing trade battle with China, the world’s second largest importer of LNG and the world’s largest gas market. The Trump administration has pushed for China to import more oil and gas to reduce the UStrade deficit with China. However, China responded to US tariffs on Chinese goods by slapping tariffs on US oil and gas. In January 2020, China promised to increase its imports of oil and gas as part of a preliminary trade deal, but did not remove the tariffs.5 Energy is sure to remain a bargaining chip in further negotiations.

MINIMIZING METHANE EMISSIONS AND FLARING ARE KEY TO ACHIEVING EMISSION REDUCTIONS

Natural gas is the lowest-carbon fossil fuel – it can have climate benefits when substituted for higher-carbon fuels like coal or oil. Its lower carbon content also makes carbon capture and storage easier, a useful quality as the world strives for deeper decarbonization. However, minimizing

methane emissions and flaring in US gas production are crucial to the climate benefits of gas and for marketing US gas in countries most concerned about climate.

Methane, the primary component of natural gas, is a particularly potent GHG. Methane emissions are particularly concerning at the wellhead. Advancing technology has made it easier and cheaper to identify leaks, but the Trump administration is in the process of rolling back Obama-era rules requiring leak detection and repair and other technologies to reduce methane emissions during production.

Flaring is another avoidable source of GHG emissions in oil and gas production. Natural gas is often produced along with oil, but natural gas prices are very low in the United States today and in some cases there is neither infrastructure nor economic incentive to transport the gas away from the well for sale. In these cases, gas is flared at the wellhead. Natural gas infrastructure has not kept up with the rapid expansion of oil production in some areas, resulting in a 50% increase in flaring in 2018 compared to the previous year.6 Increasing LNG export capacity is likely to improve this situation over time, providing an outlet for plentiful US natural gas to be sold abroad, rather than wastefully burned.

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Gas in the Gulf: A Transitional Fuel on the Path to Diversification

Lapo PistelliEni

ISPI | 13Lapo Pistelli, Executive Vice President, Director of the International Affairs Department, Eni



The Gulf, which is the world’s O&G center of gravity, is facing growing uncertainties. Some are prompted by traditional rivalries, recently

strained by the US strategy of “maximum pressure” on Iran and by several asymmetric attacks occurred in the region. Some others are connected with the challenges that the energy transition poses to those States that based their economic fortune and their own domestic stability on oil revenues.

Since 2014, following the collapse in crude oil prices, Arab monarchies have realized the need to diversify their economies and their energy mix – each one at a different pace. Owing to price volatility, and confronted with the need to invest to stimulate sectors alternative to the O&G as well as boost youth employment in private sector, the Gulf sovereign wealth funds rapidly deflated.

The economic strategies at the core of the ambitious Vision 20211, 20302 or 20403 are not only driven by “survival reasons”: the global commitment towards a low-carbon future also binds Gulf countries to carve out an important role along the path to decarbonisation4.


The shift towards gas as transitional fuel is common to many Gulf countries, where it represents the main driver of diversification from oil, although with different strategies and at different paces mainly due to the structural shortage of gas or limited investments launched so far in the gas sector. In fact, although the Gulf is the second region in the world for gas reserves after Eurasia5, production only represents 11% of the total global output, with differentiated national contexts as regards gas exploitation6.

Natural gas is the almost exclusive component of the primary energy mix in many countries in the area, such as Qatar, UAE, Oman and Bahrain (more than 85% of domestic demand for primary energy7). These countries, in recent years, have strongly committed to search for the optimal allocation of their resources on the domestic market, by subsidizing the demand and intervening on energy efficiency, favoring gas both in the thermoelectric sector and as an economic lever in the industrial initiatives (petrochemical and refining).

Other large Gulf producers, such as Saudi Arabia and Kuwait, instead, remain significantly anchored to oil for their domestic consumption (around 50% of primary demand)8, mainly due to the failure to implement structural reforms in the energy sector, to economic distortions and to the absence of internal competitiveness. Although the thermoelectric system is able to increase the production of electricity from gas, moving away from oil, the availability of “cleaner fuel” is conditioned to the insufficiency of the infrastructures, of the investments and the know-how in those countries

that still privilege the use of gas in reinjection in order to maintain oil production levels. Saudi Arabia’s and Kuwait’s limited capacity in the gas sector forced the two countries to shape their Visions almost entirely around the target of renewables and nuclear energy: Riyadh aims to reach +40 GW in the next 10 years (26% of the power mix).

Due to the growing energy demand also driven by huge industrial, logistic and infrastructural projects (new ports and special economic zones), needed to divert Gulf economies away from oil, some Arab monarchies are developing indigenous gas resources. This appears to be pivotal also to abide by contractual commitments for exporting LNG to the Asian markets, as it is the case particularly for Oman and the UAE.

These two countries are trying to boost offshore hydrocarbon research to develop sour or tight/shale gas, using advanced technologies. The region is an interesting global laboratory for innovative strategies. In this light, Abu Dhabi is an example of experimenting and applying on an industrial scale those techniques and high-tech processes, such as the Carbon Capture Utilization and Storage (CCUS) and the “drone application for seismic”. In addition, many Gulf countries are prone to developing unconventional resources. However, replicating the fortune of shale gas outside the US represents an enormous gamble for the region, due to its technical and commercial features as well as for the environmental impact of this business.

Eni’s recent expansion in the Gulf aims at gathering the important momentum of energy development in the region. Since 2018, in 16 months, Eni has signed

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ISPI | 15Gas in the Gulf: A Transitional Fuel On the Path to Diversification

16 contracts in three different countries (UAE – in the emirates of Abu Dhabi, Sharjah and Ras Al-Khaimah – Bahrain and Oman), where the Company is present through the whole value chain. The Gulf indeed is a natural platform interconnecting the routes from the new Asian giants to the European market and across the Horn of Africa. It developed sophisticated financial services and has attracted investments from the new global players, like China and India, which are seeking to invest their political and economic resources. By entering the region, Eni is at the forefront in seizing the opportunities of an area that sees international partnerships as a lever for the development of its resources.

In order to satisfy the growing domestic energy demand, Gulf countries have also resorted to LNG imports, thanks to the favorable conjuncture on international markets. Saudi Arabia, being limited in its gas resources availability, is evaluating importing LNG on its western coast. Kuwait is building a new regasification plant on shore in Al-Zour, in addition to the existing floating regasificator essential for the Country’s summer peak of power and desalinization demand. Bahrein as well is starting importing LNG in the second half of 2020.

In such a heterogeneous context, only Qatar is able to export significant LNG volumes. Challenging the rising output in the US and Australia, Doha strongly committed to become the world’s top LNG supplier by 20279. Qatar already supplies gas to Oman and the UAE through the Dolphin pipeline and in February it signed a new agreement to supply liquefied natural gas to Kuwait. Riyadh and Manama, instead, are reluctant to import from Qatar due to the

political reasons connected to the embargo imposed to Doha in 2017.

In recent years, strained political relations in the area has led to the suspension of several projects of regional gas sale10. Muscat strategy, which is part of the Omani Vision 2040, aims at recovering the historic interconnection between the countries of the Arabian Peninsula – through the energy infrastructures as well – but has not been fully implemented precisely because of the intra-GCC tensions.

Beyond boosting strategic investments in the gas sector, UAE and Oman have also implemented significant policies to follow through along the path of renewal. The Omani program Tanfeedh11, for instance, aims to reach 93% of the GDP incomes for non-oil sectors. The same applies to the effort Abu Dhabi is placing over circular economy12.

Overall, smaller monarchies appear more resilient to change than countries such as Saudi Arabia, as they have more resources to distribute per capita and because they launched their plans for the post-oil era well before 2014. That said, all Gulf countries – with due differences – will likely continue to deal with the hard sustainability of their ambitious Visions, not only in terms of energy diversification, but rather in the socio-economic context of fiscal and labor policies13, whose implementation occurs very slowly, for fear of altering the social contract. Beyond rethinking their development models, these countries will in fact have to introduce measures to review public spending and to reform their welfare systems, in particular by cutting energy subsidies or introducing forms of taxation14.

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Furthermore, forecasts predict that in the next 15 years over 500,000 young graduates in the six Gulf countries will enter the labor market without being able to be absorbed by the public sector15. This perspective is forcing governments to boost the private sector while promoting policies to reduce the dependence on foreign workers (expats in the UAE and Qatar represent 88% of the population16). Those dynamics are likely to further alter consolidated domestic socio-political balances.

1. The United Arab Emirates launched in 2010 the UAE

Vision 2021, which has been strengthened in 2017 by the

launch of the UAE Energy Strategy 2050 aiming to increase

the contribution of clean energy in the total energy mix

from 25% to 50% and reduce carbon footprint of power

generation by 70%.

2. Saudi Arabia, Bahrain and Qatar have launched their

own Vision 2030 to attain strategic goals in diversifying the

economies away from their reliance from oil, enhancing

the private sector and attracting foreign investments, with

a special focus on innovation and education.

3. Oman has committed to implement its Vision 2040

focusing on heritage as a top-down driver of economic

transformation (since it plays a bridge role between

tradition and future) as well as heritage as a means of

promoting regional connectivity and cooperation.

4. The 10th Assembly of the International Renewable

Energy Agency (IRENA) took place in Jan. 2020 in Abu

Dhabi focusing on renewable energy, recognized as

playing a central role in the achievement of several UN

Sustainable Development Goals (SDGs) including energy

access.

5. Renewable energy market analysis: GCC 2019, p. 26,

International Renewable Energy Agency (IRENA).

6. The Gulf Cooperation Council's Shift to Gas. Avoiding

Another Fossil Fuel Trap, p.7-10, Nicolò Sartori, Istituto Affari

Internazionali (IAI), Dec. 2018.

7. IEA/Enerdata database.

8. Diversification in Gulf hydrocarbon economies and

interactions with energy subsidy reform: lessons from Kuwait,

p. 6, The Oxford Institute for Energy Studies (OIES), April

2019.

9. Middle East diverges on energy transition, Jan. 2020,

Energy Intelligence.

10. The Future of Gas in the Gulf: continuity and change, J.

Stern, p. 1-5, Oxford Institute for Energy Studies (OIES),

2019.

11. Tanfeedh: National Programme for Enhancing

Economic Diversification. To implement the national plans

promoted through Vision 2040, Sultan Qaboos had started

diversifyng the economy by focusing on strategic sectors

alternative to O&G (logistics, infrastructure, tourism and

industrial production – also thanks to the transformation

of its ports into regional maritime hubs and the creation

of special economic zones to attract foreign investments)

but also by supporting privatization and public-private

partnerships, education, digitization and technological

innovation and by promoting labor policies such as

“Omanization” (to encourage the insertion of young

nationals in the private sector).

12. For instance, the UAE have included integrated waste

management among the main strategic targets of Vision

2021 and the country is working to strengthen partnerships

between the government and the private sector and

to launch initiatives that aim to transform waste from

an environmental burden into an economic resource,

focusing on recycling and on the transformation of waste

into energy (power and bio-fuels).

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ISPI | 17Gas in the Gulf: A Transitional Fuel On the Path to Diversification

13. Unsustainable: but why?, Giacomo Luciani, p. 5-7, Oxford Institute for Energy Studies (OIES), June 2019.14. Bahrain, Saudi Arabia and the UAE recently introduced VAT, while Oman, Kuwait and Qatar plan to implement it by 2021.15. Economic diversification and job creation in the

Arabian Gulf: a value chain perspective, Martin Hvdit, p. 36-39, Oxford Institute for Energy Studies (OIES), June 2019.16. CIA data (2019).

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The Redundancy of Energy Security in the EU

Massimo NicolazziCentrex Italia and ISPI

ISPI | 18Massimo Nicolazzi, Chairman of Centrex Italia SpA and Senior Advisor of ISPI's Energy Security Program



Whenever the security of gas supplies is at stake, the shared EU mantra calls for “diversification”. We cry wolf, and the

wolf happens to be Russian. The more we cry wolf, however, the more we import volumes of Russian gas. It could just be that when it comes to buying, prices prevail over policies and that in the UE a gas market with transparent prices is finally emerging.

Security since 1973 has been mostly viewed as a consumer issue, i.e. in terms of having access to the needed supplies at reasonable terms. Diversification of the producers meant in this context avoiding the potential political risk and unilateral price-setting connected with having a single or dominant supplier. Are those issues still controlling?

The political risk first. Traditionally, the fear that supplies could be used as a political weapon to force via blackmail or otherwise the policy choices of the importer. Would that be possible in the current environment? Perhaps not impossible, but to say the least hard. Russia’s revenues are largely dependent on natural resources (hydrocarbons)

ISPI | 19The Redundancy of Energy Security in the EU

and Russia remembers the economic crisis that followed the major plummeting of oil prices. Less resource revenue means less revenue available for public spending, including welfare and other social amenities. In other words, Russia is no longer (if it ever had been) free not to sell. The security of being supplied becomes balanced by the exporter’s need for supply security.

Next, pricing. The EU gas market has consistently evolved mainly via gas hubs towards transparency and gas -to-gas pricing. It is still far from being as liquid as the oil market; but also thanks to LNG it is narrowing the gap. LNG via hub pricing (and assuming material spare capacity exists) becomes a sort of price security against our assumed dependency. The market situation has evolved so that long-term pipeline gas (from wherever) has become the price taker; and spot gas and LNG the price makers. The dominant supplier does not and cannot practice unilateral price-setting.

Two caveats before we fall into over-optimism. Political and price risks, it may be argued, go (relatively) away to the extent (and only to the extent) that we have alternative suppliers available; and that we have enough infrastructural capacity to accommodate alternative supplies.

Alternative suppliers. In perspective they all bear a potential risk. And the risk has nothing or little to do with a political or pricing risk. Let us call it, for the sake of the argument, a “geological” risk; i.e. the availability in future of volumes of gas for export. Here at least as far as pipeline gas is concerned the future looks cloudy. Norway at current prices may run into a reserve replacement issue; Algeria

(net of potential production issues) plans a gas-based internal development that may not leave much for export; Libya has issues with maintaining production, and replacement looks for the time being impracticable. Add the agony of Groningen and the declining of EU production, and a shortfall in pipeline supply may materialize in a not too distant future. Only Russia, amidst our current exporters, seems to retain spare production and potential for an increase. All others seem to be declining. Natural gas consumption in the EU is not projected to very significantly ramp up. But diversification may be mandated not by the necessities of consumption, but by the need to replace volumes of existing imports. Seen through the lens of what we have improperly defined the geological risk, the gas pipeline paradox is that it mandates to diversify from and substitute for non Russian gas.

Can LNG make up for the shortfall? The issue could be argued at length. All we can venture saying is that for the time being LNG comes to EU spot and that spot LNG goes where price takes it. When Asian prices go down we get more; and vice-versa. Assuming you want security over a minimum flow of volumes, then the dear old pipeline remains the only way to inextricably link a production site to a specific market territory. In discussing diversification, this should be taken into some account.

Now for infrastructure. Or, if you prefer, redundancy. Instead of dressing security with geopolitics, try to consider it as a function of your ability to take out insurance. Insurance is a matter of degree of risk; and of the money you need to cover it. If you want to insure against the temperature falling below 0 in

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northern Italy for two consecutive weeks in May, to have available the gas in case necessary for heating you will have to build up and fill a tremendous storage capacity. If you settle for no later than mid-March, the required investment will be fractional. Likewise if you want to insure against a whole winter without supplies from Russia, or settle instead for just two weeks. If you want to insure against Algeria shutting down exports from 2021 on, you should better hurry to build new import infrastructure; if you want instead to protect against a shutdown in 10 years, a new pipeline can wait.

We may need to diversify to replace what is declining; or we may do it to increase our security. Where security becomes a synonym for the ability to switch producer and/or to resort to storage or some other available spare capacity so as to avoid in terms of available gas the consequences of major disruptions, be they of a technical, political or whatever nature. Adding security means investing in

the cure of the market’s pathologies; and spending money that it would not be necessary to spend should pathologies not arise.

How much security you get, i.e. from which pathologies you want to get insured, is finally a function of how much you are ready to invest in redundancies. You can approach it as a cost/benefit, or a risk management exercise, or otherwise. Always keeping in mind, however, that investing in redundancies is not as a rule a market practice; and that therefore some public help (be it through financing, or a guaranteed tariff, or other) may be required (and as a rule is). And also that, one way or another, the cost of the redundancy will end up in the price of the commodity to the final consumer. The greater the security, the higher the (relative) price of natural gas.

Security may be a geopolitical issue; but as to its costs may the taxpayer beware.

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The Geopolitics of Gas in the European UnionAlberto Belladonna, Alessandro GiliISPI

ISPI | 21

Alberto Belladonna, Research Fellow at the ISPI Centre on Infrastructure and Business ScenariosAlessandro Gili, Research Assistant at the ISPI Centre on Infrastructure and Business Scenarios



When on December 31 2019, Russia and Ukraine reached a tense and difficult five-year gas supply deal, in Brussels

they heaved a sigh of relief, with the EU energy Commissioner Maros Sevcovic addressing the agreement as "great news for Europe's energy security”1. Indeed, about 16.3% of the European Union's annual natural gas consumption comes from Russia via Ukraine and the agreement should prevent a repeat of the so-called gas wars that previously disrupted supplies and caused real energy problems for several EU member states.

Natural gas is currently the second source of energy in the EU energy mix (23%).2 Domestic production is progressively decreasing and accounts for 22.1% of total EU energy consumption.3 Russia is the major supplier (40.5%), followed by Norway (35.1%), Algeria (11.2%), Qatar (5.4%) and Nigeria (3%).4 A situation that is currently playing a major role in influencing the external action of the European Union and its member states in their national foreign policies, which are not always consistent with the interests put forward in Brussels.


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ISPI | 23The Geopolitics of Gas in the European Union

EU SECURITY OF SUPPLY

Soon after the second Russia-Ukraine gas crisis of 2009, the EU enacted several reforms aimed at reducing dependency on a single supplier.5 In 2010, the new EU regulation on security of gas supplies included new standards, a solidarity mechanism in case of emergency, and the requirement for each member state to rely on three different sources of gas supply. In 2014, the adoption of the European Energy Security Strategy6 accelerated the creation of international interconnections among member countries, in order to create a full-fledged integrated market. Furthermore, the creation of a single market, the diversification of supply sources and the increase in strategic reserves in European countries have contributed to reducing risks in the event of an external shock.7

PIPELINES AND CORRIDORS

To cut natural gas prices, increase strategic autonomy and differentiate supply sources, the European Union has fostered and also funded the construction of gas pipelines that connect the southern European countries with North Africa. The EU is currently connected to the southern Mediterranean through two main gas pipelines reaching Italy (the Green Stream, and the Trans-Med)8 and two pipelines reaching Spain (the Medgaz and the Maghreb-Europe gas pipeline)9. Furthermore, the EU has individuated four main gas corridors which, when completed, will boost diversification capacity for EU member countries.

These corridors are:

• The ‘NSI West Gas’: new gas pipelines intended to increase gas transit in the north-south direction in Western Europe, further diversify the sources of supply and increase short-term gas deliverability.

• The NSI East Gas’: new pipelines between and within the Baltic Sea, the Adriatic Sea, the Aegean Sea, the Eastern Mediterranean and the Black Sea, intended to strengthen supply security.

• The Southern Gas Corridor (‘SGC’): for the transmission of gas from the Caspian Basin, Central Asia, Middle East and eastern Mediterranean Basin to the EU.

• The ‘BEMIP Gas’: Infrastructure aimed at connecting the three Baltic States and Finland to the EU gas network and end their dependency on a single supplier.

TAP AND EAST-MED

In the SGC corridor a central role in changing the European gas scenario will be played by two EU Projects of Common Interest (PCIs): The Trans-Adriatic Pipeline (TAP) and the East-Med. The first pipeline, under construction and almost completed, will allow gas from Azerbaijan to reach Italy (in Apulia through Greece and Albania), connecting to the Trans Anatolian Pipeline (TANAP) and to the South Caucasus Pipeline. The EastMed,10 on the other side, will connect the European grid to the recently discovered offshore gas fields in Cyprus, Egypt and Israel. The economic viability of the latter pipeline

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is a source of concern: high costs of construction and low prospected revenues cast doubts about the return on investment. However, the project has a political and strategic rationale, besides the economic. The European Union has a strong interest in enhancing its energy security, bypassing Russia but also Turkey for gas supplies. Secondly, the new pipeline may be a fundamental geopolitical tool to strengthen economic and political ties with the EU’s traditional allies in the region, such as Israel and Egypt. Finally, the EastMed is essential to ensure Cyprus’ diversification of gas supplies, connecting the gas network of Cyprus with the European.

THREE SEAS INITIATIVE

The great game of gas, however, is not limited to the Mediterranean area. In Central Europe the Three Seas Initiative,11 a forum of political and economic dialogue that gathers 12 EU countries in Central and Eastern Europe (from the Baltic, Adriatic and Black Seas), is playing a key role. The focus of the initiative is to counteract Russia’s increasing presence in the region by strengthening regional energy and infrastructure cooperation and increasing the economic partnership with the United States with more liquefied natural gas (LNG) supplies from Washington.

NORD STREAM 2

Against this backdrop, however, the dependency of the EU on a single supplier (Russia) has remained stable and could eventually increase when the Nord Stream 2, a new €9.5 billion undersea pipeline between Germany and Russia is completed.

Envisaged in 2011, the project has the full support of German and Russian governments but is facing opposition from both the European Union and the United States, alongside Poland and Ukraine. Brussels insists that the new pipeline will increase dependency on a single supplier and does not comply with EU gas market rules and with the primary goal of diversification. Washington, on the other side, argues that the project would weaken the Ukrainian bargaining power with Russia,12 as it will not be the only reliable pipeline to transport Russian gas to Europe. To stop the project, Washington even enacted sanctions against companies working on the Nord Stream 2 infrastructures: a move that can also be regarded as an attempt to help US exports of LNG into Europe.13

LNG TO EUROPE

LNG supplies indeed have traditionally been more flexible but more expensive. In this scenario, the LNG revolution – started in 2007 with the exploitation of shale gas in the United States – has had important repercussions for Europe. The new source of gas, threatening the traditional dominance of Russian and Norwegian suppliers, has triggered a significant reduction in European gas prices. In particular, prices for Norwegian and Russian natural gas in Europe fell by 41% and 32% respectively between 2015 and 2018. So far, however, Russian gas is still cheaper than any other competitors’ and its share of gas to the EU increased also in the LNG sector, becoming the second supplier with a market share of 20% after Qatar (27%).

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A GAS BREXIT?

Up until recently, the UK with its North Sea reservoirs has been one of the major European producers of natural gas and at the core of the EU’s liberalized energy market. Brexit will result in the UK being outside the EU energy market. What this entails will depend mostly on the final deal between the EU and UK, ranging from a soft Brexit with virtually no changes to a hard Brexit. However, as underlined by Thierry Bros from Oxford Energy,14 the UK would need to reshape its energy diplomacy, which has in the last decade increasingly been handled by Brussels but will also become more dependent on foreign sources especially in cold periods, given its limited storage capacity and dwindling domestic production. What will be more complex, however, is the situation of Ireland, which with Brexit would be effectively cut off from the EU system of pipelines since the only connection it has nowadays passes through UK, from which Ireland has been getting 97% of its gas.

FUTURE PERSPECTIVES

All the aforementioned geopolitical issues could significantly evolve over the next decade, and the role of natural gas in the EU energy mix could dramatically change in the context of the EU’s transition to a low-carbon economy. The EU, as confirmed by the International Energy Authority

(IEA),15 has some of the greatest potential in the world for switching to gas power generation, in terms of reduction of greenhouse emissions, especially for those member states heavily reliant on coal such as Eastern Europe and Germany. Natural gas is also considered the most flexible solution for an energy mix made with a growing role of renewables due to storing capacity that grants continuity in energy supply.

As a matter of fact, according to recent studies,16 the share of natural gas in the European energy mix is set to remain stable up to 2030 as the second main source of energy.

However, the role of natural gas in the future of Europe will be highly affected by policy decisions concerning greenhouse gas reduction. Achieving net-zero greenhouse emissions by 2050 as envisioned in the newly labelled EU Commission’s green deal would entail bold decisions concerning new, affordable and efficient solutions, reliable alternative energy sources and consistent investment in carbon capture and storage technology: issues whose feasibility is still under hot debate. Under these circumstances, the timeliness of investments is crucial: investing in new infrastructure should be the result of a clear, long-term political vision at the European level in order to avoid the risk of creating potentially stranded assets.

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1. Gazprom is expected to ship at least 65 billion cubic

meters of natural gas via Ukraine next year and at least 40

billion per year from 2021 to 2024.

2. EU energy in figures, Statistical pocketbook, 2018,

https://op.europa.eu/en/publication-detail/-/

publication/99fc30eb-c06d-11e8-9893-01aa75ed71a1/

language-en/format-PDF/source-77059768

3. Eurostat Statistic Explained, Natural Gas Supply Statistics,

May 2019, https://ec.europa.eu/eurostat/statistics-

explained/index.php?title=Natural_gas_supply_statistics.

4. Eurostat Statistic Explained, EU imports of energy

products - recent developments, May 2020, https://

ec.europa.eu/eurostat/statistics-explained/

pdfscache/46126.pdf

5. European Commission, Secure Gas Supplies, 20 February

2020, https://ec.europa.eu/energy/en/topics/energy-

security/secure-gas-supplies

6. Communication from the Commission to the European

Parliament and the Council, European Energy Security

Strategy, {SWD(2014) 330 final} Brussels, 28 May 2014,

COM(2014) 330 final, https://www.eesc.europa.eu/

resources/docs/european-energy-security-strategy.pdf

7. The Connecting Europe Facility (CEF)’s mandate has

provided it with €5.35 billion (€4.18 billion in the EU-27) for

energy security, although this is insufficient to cover the

€70 billion of investment needed just in the gas sector (the

most recent proposal for the new Multiannual Financial

Framework 2021-2027 foresees a 83% funds increase for

CEF Energy to €7.67 billion).

8. The Green Stream originates in Mellitah (Libya) and goes

to the Italian grid in Gela (Sicily); Trans-Med starts in Algeria,

runs through Tunisia and ends in Mazzara del Vallo (Sicily).

9. Medgaz runs from Algeria (Beni Saf) to Almeria and the

Maghreb-Europe gas from Algeria runs through Morocco

and reaches Cordoba.

10. S. Tagliapietra, Eastern Mediterranean Gas: What

Prospects for the New Decade?, Commentary, ISPI, 21

February 2020, https://www.ispionline.it/it/pubblicazione/

eastern-mediterranean-gas-what-prospects-new-

decade-25102

11. P. Musialek, The Three Seas Initiative: Natural Gas

in Central European Foreign Policy, 21 February 2020,

Commentary, ISPI, https://www.ispionline.it/it/

pubblicazione/three-seas-initiative-and-role-natural-gas-

central-european-foreign-policy-25128

12. G. Chazan, "US envoy defends Nord Stream 2 sanctions

as ‘pro-European’", Financial Times, 22 December 2019,

https://www.ft.com/content/21535ebe-23dc-11ea-9a4f-

963f0ec7e134

13. T. Buck and G. Chazan, "Germany hits back at US

pipeline sanction threat", Financial Times, 12 December

2019, https://www.ft.com/content/a1678124-1cee-11ea-

97df-cc63de1d73f4

14. T. Bros, Brexit’s impact on gas markets: Brexit and security

of supply for the UK and Ireland, The Oxford Institute

for Energy Studies, https://www.oxfordenergy.org/

publications/brexits-impact-gas-markets-brext-security-

supply-uk-ireland/?v=cd32106bcb6d

15. IEA, The Role of Gas in Today's Energy Transitions,

World Energy Outlook special report, July 2019,

https://webcache.googleusercontent.com/

search?q=cache:z7bHp1GLxHYJ:https://www.iea.org/

reports/the-role-of-gas-in-todays-energy-transitions+&cd

=2&hl=it&ct=clnk&gl=it&client=firefox-b-d

16. M. Cătuţi, C. Egenhofer and M. Elkerbout The future of

gas in Europe: Review of recent studies on the future of gas,

CEPS, 3 August 2019, https://www.ceps.eu/wp-content/

uploads/2019/08/RR2019-03_Future-of-gas-in-Europe.

pdf

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The Three Seas Initiative: Natural Gas in Central European Foreign PolicyPawel MusialekJiagiellonian Club and Cracow University

ISPI | 28Pawel Musialek, Managing Director at Center for Analysis of Jagiellonian Club and Professor at the Cracow University of Economics



The Three Seas Initiative (TSI) was established in 2015 as a forum for political and economic dialogue that gathers together 12 EU

countries in Central and Eastern Europe (from the Baltic, Adriatic and Black Seas), with a focus on energy and infrastructure. Cooperation under the Three Seas was intended to be an additional format for regional discussion and coordination covering all the countries of Central and Eastern Europe that are EU members. As such, it was supposed to complement, not replace, other formats, such as cooperation within the Visegrad Group. Covering such a large and diverse group of countries in many respects resulted from the assumption that they all share a common denominator. It is the community of fate that caused them to face similar development challenges, including still underdeveloped infrastructure. The paradox is, in turn, that their shared history has not affected the level of integration in the region, which is still weak. This was mainly due to the lack of infrastructure connections, and therefore also economic and social ties. The process of European integration has

ISPI | 29The Three Seas Initiative: Natural Gas in Central European Foreign Policy

focused investments on connections on the east-west axis, rather than north-south, which makes the latter much less communicated.

Transport, energy and digital economy were listed among the most promising areas with high added value. It should be emphasized that a large part of the projects that were identified as priorities before the Three Seas were created. This applies to, among others gas cooperation. The construction of a north-south gas corridor was planned before 2015. It was to enable gas transmission between the Polish LNG terminal in Świnoujście and the Croatian gas terminal on the island of Krk. Duplication of a large part of previously identified projects is not a disadvantage of the TSI. The new format helped to accelerate cooperation by raising the status of projects, as well as to find the necessary financing. The basic reason for the lack of sufficient infrastructure was not a deficit of concept or political will, but of funds. By establishing the Three Seas Initiative Investment Fund, the Three Seas is also to be a financial vehicle enabling the replenishment of the missing capital. Its purpose is to help attract foreign direct investment into TSI members. First success seems to be come fast. During the 56th Munich Security Conference (MSC) in Munic U.S. Secretary of State Mike Pompeo announced a commitment one bilion dollars in project defined by TSI.

It is worth emphasizing that in its intention, and this is confirmed by declarations from subsequent summits, the TSI is not only not to be the seedbed of the EU or the "Union in the Union", but on the contrary, it is to make a significant contribution to the development of the EU through the integration of areas that have been poorly integrated. Thus,

the Three Seas does not have a geopolitical character understood as building an alliance having a coherent, coordinated policy towards key international actors. It rather provides a platform for pragmatic cooperation aimed at seeking added value for the widest possible range of countries of Central and Eastern Europe in individual sectors

However, it should be emphasized that the implementation of projects defined at the Three Seas summits as priorities will have significant long-term political effects. Increasing integration will naturally overlap the interests of these countries, which in the long run can consolidate the voice of the entire region and increase its position in the EU. It should be added that among the goals listed in subsequent statements from the summits, the strengthening of transatlantic ties was included, which can be seen as the great openness of the Three Seas to cooperation with the United States. This aspect is "geopolitically" important because in the era of significant tensions in EU-US relations, Central and Eastern Europe appear to be a region declaring greater closeness to Washington than Western European countries. The role of the Three Seas as a format conducive to strengthening transatlantic cooperation has been appreciated by the American administration. This can be seen in the presence of President Trump at the Three Seas Summit in Warsaw in 2017 and talks about the capital involvement of American entities in financing investments in the EEC.

Among the multilateral gas projects defined by the TSI as strategic are: 1) GIPL gas pipeline (Poland-Lithuania), 2) BRUA gas connection (Bulgaria-Romania-Hungary-Austria, 3) Eastring

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gas pipeline (Slovakia-Hungary-Romania-Bulgaria), 4) Romania-Hungary interconnector, 5) Baltic Pipe (Norway-Denmark-Poland and Poland-Slovakia and Poland-Ukraine gas interconnections), 6) IAP gas pipeline (Croatia, Montenegro, Albania), 8) LNG terminal on the island of KRK (Croatia). They all fit into the ideas of integrating EU gas markets. That is why they received financial support from EU funds. Project implementation would allow full integration not only of the EEC countries, but also with the well-integrated gas markets of Western European countries.

The aforesaid projects are difficult to assess from an economic point of view. Low gas consumption in the region raises a significant risk that the gas pipelines being built will not be fully used and will not be amortized. This risk meant that operators had a problem finding financing for the investment. On the other hand, the construction of connections may lead to an increase in gas demand due to its greater availability. The need to move away from coal in the EU due to energy and climate policy will create more demand for gas as an alternative energy source. In addition, thanks to the connections being built, it will be possible to freely flow gas in accordance with market signals, which will minimize the difference in gas prices in individual countries, and thus de facto lower prices in Central and Eastern Europe. Decisions from the countries in the region are driven not only by economic but also by security factors. The construction of planned gas pipelines will allow the countries of the region to achieve a satisfactory level of diversification of supplies.

It should be emphasized that the above-mentioned projects create not only synergy, but to some extent competition, which is not discussed in public debate. The subject of rivalry is the role of the transit state, which provides numerous benefits, including the revenues of the transmission system operator. The problematic issue is that at least some countries have the ambition to play such a role and therefore they promote projects that set their country as a gas hub. The main goal of Poland is gas transmission from the North Gate, which is the LNG terminal in Świnoujście and soon the Baltic Pipe gas pipeline, to the south. In this concept, Poland is a country exporting gas to Czech Republic and Slovakia. The most profitable gas corridor for the Czech Republic is the competitive one that goes through Germany via the Czech Republic to other countries of the region. Moreover, there are also differences between countries regarding the assessment of the role of Russian gas. Poland supports the minimization of the share of Russian gas in Europe, especially in the region of Central and Eastern Europe, and the Czech Republic does not see a problem in cooperation with Gazprom, especially in the era of integration of EU gas markets and high levels of supply security. The disagreement referred to the differentiated assessment of the Nord Stream 2 gas pipeline. Poland strongly criticized the project, and the Czech Republic informally supported it, seeing significant benefits in the project. However, these differences are not great enough to lead to the inhibition of gas cooperation, which is one of the most promising areas where the Three Seas can play a positive role.

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Eastern Mediterranean Gas: What Prospects for the New Decade?Simone TagliapietraBruegel, Catholic University, and Fondazione Enrico Mattei

ISPI | 31

Simone Tagliapietra, Research Fellow at Bruegel, Adjunct Professor at the Johns Hopkins University SAIS Europe, Senior Researcher at the Fondazione Eni Enrico Mattel, and Lecturer at the Faculty of the Social Sciences at the Catholic University (ASERI).



The last decade has seen the eastern Mediterranean region become a hotspot of the global natural gas industry, attracting

increasing attention from multiple stakeholders also as a result of its high geopolitical stakes. Notwithstanding this momentum, progress has been bumpy.

The eastern Mediterranean gas saga started in 2009-2011, with the discovery of the Tamar and Leviathan fields off the shore of Israel and the Aphrodite field off the shore of Cyprus. To exploit this potential, an increasing number of export options were progressively put on the table, ranging from pipelines (one to Greece, another to Turkey) to LNG plants (respectively in Cyprus, Israel and Egypt). Great expectations characterised those years, as the new gas discoveries were also promoted as a tool to foster a new era of economic and political stability in the region.

But the initial high expectations have since then been dampened. In Israel a long-lasting internal political debate on the management of gas


resources created a climate of uncertainty that contributed to the delay of key investment decisions. In Cyprus – where the gas discovery was welcomed as a godsend to relieve the country of its financial troubles – the initial enthusiasm was cooled by successive downward revisions of the expected resources. These developments raised scepticism of the general idea that the eastern Mediterranean might become a gas-exporting region.

2015 represented a turning point, as initial high hopes suddenly bounced back when the Italian energy company ENI discovered the Zohr gas field off the shore of Egypt – the largest gas discovery ever made in the Mediterranean. Due to an unprecedented fast-track development, gas production at Zohr started in December 2017, allowing Egypt to recover its self-sufficiency in gas after turbulent years. Zohr also marked a new phase of exploration activities in the country’s offshore waters, leading to the discovery of other important fields. All this allowed Egypt to also resume some gas exports, notably to Jordan.

The significance of Zohr and other offshore fields goes well beyond Egypt’s boundaries, as geographical proximity with other fields off the shores of Israel and Cyprus can put in place a competitive regional gas-export infrastructure based on the existing Egyptian LNG export facilities in Idku and Damietta. The two facilities have a combined capacity of 19 billion cubic metres per year, which roughly represents – to put it into perspective – twice the capacity of the Trans-Adriatic Pipeline (TAP).

This option would enable prompt exportation of substantial volumes of gas from Egyptian, Israeli and Cypriot fields once all domestic needs are covered. Developers would also enjoy flexibility in this manner, as LNG can be directed to any market and not just to the region or to Europe. In addition, should additional volumes of gas become available for export in the future, both LNG plants could be expanded.

In January 2019, the energy ministers of Cyprus, Egypt, Greece and Jordan, along with representatives of Italy and the Palestinian Authority, met in Cairo to discuss how to foster regional cooperation in the development of offshore gas discoveries in the eastern Mediterranean. The result was the establishment of the Eastern Mediterranean Gas Forum (EMGF), a platform aimed at developing a regional gas market, starting by taking advantage of the existing LNG infrastructure in Egypt. Throughout the year, additional meetings contributed to further developing the initiative, seeking its upgrade to the level of an international organisation, and expanding it to either state and/or private energy companies from member countries. After nearly a decade of speculation about the potential export options for the region’s gas resources, all this represented an important step in the right direction.

Meanwhile, in January 2020 Israel commenced to export its gas to Egypt in the framework of a large deal entailing the delivery - through existing pipelines - of 85 billion cubic metres of gas over 15 years, for a total estimated value of $US 19 billion. This gas is primarily aimed at feeding Egypt’s domestic market, but it could also feed Egypt’s

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ISPI | 33Eastern Mediterranean Gas: What Prospects for the New Decade?

LNG exports in coming years. This is the first deal of its kind and scope since the 1979 Egypt–Israel Peace Treaty, and goes in tandem with the two countries’ rising security cooperation in the Sinai Peninsula, aimed at fighting ISIS terrorists and also at preventing attacks on the regional gas pipeline infrastructure.

Over the last few years, another regional gas export project has increasingly attracted international attention: the EastMed pipeline. At first glance the project is an impressive idea. The pipeline would transport 10 billion cubic metres per year (i.e. the same volume as TAP) of gas from eastern Mediterranean gas fields to Greece, where another pipeline would finally link the whole infrastructure to Italy. About 1900km long, and reaching depths below 3km, it would be the world’s longest and deepest subsea pipeline. The estimated cost goes beyond €6 billion. In January 2020, Israel, Cyprus and Greece signed an inter-governmental agreement anchoring the commitment of the three countries to the establishment of the EastMed project. The absence of Italy must be outlined, as the Italian government seems doubtful about the economic and environmental viability of the initiative. In any case, such political declarations can do little to advance a project like the EastMed. The pipeline project must prove that it can attract the necessary capital for its construction and be economically sustainable – also considering that no financing can be obtained from the EU institutions any more. Back in 2015, the project was included in the EU’s list of Projects of Common Interest (under which the EU financed the project’s feasibility studies), but today

the situation is different. In times of the European Green Deal, there is indeed no room for public support for fossil-fuel projects any longer in Europe. The pipeline project must also prove that it can be competitive vis-à-vis other sources of gas to Europe, starting with Russian supplies.

In addition to all this, the role of Turkey should also be taken into consideration. Since the dawn of the eastern Mediterranean gas saga, Turkey has indeed tried to play a role in regional developments through a double action: i) pursuing its own gas exploration activities offshore of Cyprus, activities considered illegal by the EU; ii) promoting itself as a corridor for regional gas supplies to Europe, in line with its classic geopolitical and energy narrative. However, this vision proved to be unrealistic, and regional players (from Israel to Cyprus, from Greece to Egypt) indeed moved forward with their respective strategies and activities without being influenced by Turkey. The signature of a maritime border agreement between Turkey and Libya in January 2020 opened a new chapter in Ankara’s attempts to influence the regional gas developments. The deal, considered illegal by the EU and the US, primarily aims at preventing the EastMed pipeline project from being developed. However, as previously illustrated, economic and commercial factors are likely to prevent the EastMed project from being implemented, not Turkey. The move with Libya might then simply end up being another ineffective attempt by Turkey to influence regional gas dynamics.

So, all in all the plan of creating an eastern Mediterranean gas market based on the existing

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LNG infrastructure in Egypt does look like the most logical course, as it would present economic and commercial benefits for all regional players involved – and as it would also avoid unnecessary geopolitical tensions. Such an approach would also offer eastern Mediterranean gas suppliers flexibility in terms of destination markets in the future, a key element considering the uncertain role of gas in the decarbonising EU energy system.

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The Road to China: An Opportunity for Russian GasIlya Razlomalin, Ilya SushinMc Kinsey & Company

ISPI | 35Ilya Razlomalin, Specialist in McKinsey’s Moscow officeIlya Sushin, McKinsey's Moscow Associate Partner



On 2 December 2019, Russia and China inaugurated the Power of Siberia pipeline, a new gas infrastructure that will boost

diversification in China’s gas supply and ensure an enhanced role for Russian gas on the Chinese market. The new, 3000-km pipeline will probably reduce the weight of Turkmenistan and Australia in China’s foreign gas supplies, currently at 35% and 25.7% of total gas imports respectively ,and cover China’s rising demand for additional gas.

China represents the fastest growing market in the world for natural gas. According to the International Energy Agency (IEA), between 2018 and 2024 Beijing will account for 40% of global growth in natural gas. The increase is strictly connected with the energy policies embraced by the Chinese government, which considers a priority the reduction of coal consumption in the national energy mix, currently at 58%. The use of natural gas underpins the National Air Pollution Action Plan, adopted in 2013 and updated in 2018. Accordingly, in 2018, China’s natural gas consumption rose by 17% compared to the previous year, and imports increased by 30.8%.


Demand in China will more than double by 2035, and it will continue to grow, largely driven by strong air-quality policies. Where will the gas for China come from?

In 2018, 55% of Chinese demand was covered by domestic supply. Local supply could grow from 153 bcm in 2017 to 230 bcm in 2035, resulting in a decline in the domestic supply share to 45%.

An additional 27% comes from piped gas, mostly from Turkmenistan via the Central Asia–China pipeline (35 bcm per annum [bcma]) and Myanmar (three bcma). This share is increasing as Russia’s Power of Siberia pipeline came online in 2019 and reaches its full capacity of 38 bcma by 2025. There is also growth in utilization of the Central Asia–China pipeline (current capacity is 55 bcma) and construction of the fourth pipeline, line D, from Turkmenistan, with a capacity of 30 bcma. Liquefied natural gas (LNG) projects provided 18% in 2018 and balanced the market.

In the future, all balancing volumes may come as LNG or via new pipelines. The demand yet to be met is projected at about 50 bcm in 2025 and about 100 bcm in 2035 (excluding demand already covered by current LNG supply).

There is a promising option for delivering additional Russian gas to the Chinese market through expansion of the Power of Siberia pipeline and competition with LNG to conquer market share:

• Russia has abundant gas reserves in western and eastern Siberia.

• Compared with LNG cargoes, Russian natural gas delivered to China has a competitive cost, including all additional capital expenditures.

• Alternative monetization options for Russian gas (for example, gas to chemicals and fertilizers) have less scale and do not allow for extensive development of the abundant resource base.

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ISPI | 37The Road to China: An Opportunity for Russian Gas

In 2018, Russia produced 669 mtoe of gas; 58.4% (390.8 mtoe) of this was consumed domestically, and the rest was exported, mainly to Europe by pipeline. Russia’s LNG exports grew by 62% to 25 bcm in 2018, while pipeline exports grew by only 1.5%. Russia has 70 trillion cubic meters of recoverable gas reserves and a reserves-to-production ratio of

about 100 years. The main natural gas production region is the Yamalo-Nenets Autonomous Okrug (YaNAO) in western Siberia, accounting for 80% of production and 55% of reserves. Another promising area with significant gas reserves is eastern Siberia (Krasnoyarsk, Irkutsk, and Yakutia).

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The cost of legacy gas production in Russia is $.50 to $1.00 per million British thermal units (mmbtu) at the wellhead, including capital expenditures and the

mineral-extraction tax. New supply from eastern Siberia is more expensive (Exhibit 4).

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Currently there is no pipeline taking natural gas from YaNAO to eastern Siberia and further to China, but the Power of Siberia pipeline managed to connect China with eastern Siberia in 2019 (Exhibit 5). The additional distance of approximately 1,500

kilometers (half the length of the current Power of Siberia pipeline) should be covered by a new pipeline to connect western and eastern Siberia (the Tomsk and Irkutsk regions, respectively).

*On December 2, 2019, Power of Siberia was brought into operation and the first-ever pipeline supplies of Russian gas to China were launched.

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The total cost of natural gas delivered to China through the potential new pipeline from Russia is about $6 per mmbtu for eastern Siberian gas and $6 to $7 per mmbtu for western Siberian gas, including the cost of transportation from YaNAO to Tomsk, the new Tomsk–Irkutsk pipeline capital expenditures,

and all taxes. This is $1 to $2 per mmbtu lower than the future full cost of key LNG players (excluding Qatar). When we add about $1 per mmbtu as a transportation tariff from the Russian border to the demand center in eastern China, Russian gas remains one of the cheapest options.

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This makes extra gas volumes from Russia potentially competitive against future LNG cargoes. Another 50 to 70 bcma of Russian natural gas could find its way to China in 15 to 30 years, providing up to a $3 billion shareable surplus per year to Russian producers and Chinese customers.

The main alternative monetization option for Russian gas from YaNAO is LNG: even without tax allowances, the full cost of LNG from the Yamal peninsula in China is $6 to $7 per mmbtu, depending on the shipping route (the Northern Sea Route is cheaper). At the same time, LNG is not a viable option for the landlocked resource base of eastern Siberia. Alternatives are ammonia and urea production, methanol and derivates production, and gas to liquids. Proven technologies for these options

are capital-expenditure intensive ($1.0 billion to $1.5 billion per one bcma of gas feedstock) and support a maximum unit capacity of 1.5 to 3.0 bcma, which is not comparable with the typical pipeline capacity of ten to 30 bcma.

The possibility of delivering additional gas volumes from Russia to China through an expanded Power of Siberia pipeline should be considered by Russian and Chinese oil and gas companies as well as by global LNG players in their strategic perspectives.

*This contribution is an update of a McKinsey's article titled: "The Road to China: an opportunity for Russian Gas to Play Out"

COMMENTARY

New Gas Discoveries in Sub-Saharan Africa: A Source of Development?Philippe CopinschiSciences Po

ISPI | 42

Philippe Copinschi teaches courses on the Geopolitics of Energy in Africa and on the Political Economy of Sub Saharan African, and is a Seminar Leader in World Politics at Sciences Po Paris



Sub-Saharan Africa made its appearance on the oil and gas map quite recently when compared with other regions of the world1

and although it seems marginal on the global oil and gas markets (it represents less than 5% of global oil production, around 2% of global gas production, just above 3% of both global oil and gas reserves2), it accounts for a quarter to a third of the activities of all the major international oil companies (and even half of Italian ENI’s global activities).

While Africa is key for private international oil and gas companies, the continent also remains dependent on those companies for the development of its hydrocarbon resources, as no country ever managed (or even attempted) to play a central role in the local oil and gas industry, leaving the entire sector to foreign (mostly private) companies. Therefore, the development of the oil and gas industry in sub-Saharan Africa always depended on the interests of the international oil business.

Until quite recently, international oil companies

ISPI | 43New Gas Discoveries in Sub-Saharan Africa: A Source of Development?

operating in sub-Saharan Africa showed no real interest in developing gas production, which explains why the gas sector stayed marginal for so long. Very little exploration specifically targeted gas, and associated gas (unavoidably extracted with crude oil) has been considered an unwanted by-product of oil. The gas was (and still is) mostly vented or flared on site (some part being re-injected into the fields to enhance their productivity), despite the serious direct and indirect impacts of flaring on human health, soil, vegetation and the atmosphere. From the companies’ point of view, the local markets were too small and the distances to major market centers (Europe, North America and Asia) too great to make gas production and its associated transportation infrastructures (pipeline and liquefaction plants)

economically viable. Long restricted by the lack of infrastructure to monetize natural gas being flared, the sub-Saharan African natural gas sector eventually emerged in the late 1990s when the first LNG plant came on stream in 1999 in Nigeria, followed by Equatorial Guinea (2007), Angola (2013) and Cameroon (2018), finally connecting the region to the global gas market. In 2018, Nigeria’s production accounted for 7% of globally traded LNG and ranks the country among the world's top five LNG exporters behind Qatar, Australia, Malaysia and the US. In the other oil producer countries (Congo, Gabon, etc.), most of natural gas production is re-injected into oil fields or flared, with only a small part of it being commercially used, mostly in gas-fueled power plants.

Natural gas production and proved reserves in Sub-Saharan Africa, 2018

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EAST AFRICA, THE NEW GAS FRONTIER

For many years, East Africa has been virtually igno-red by international gas players. The presence of gas has been known in Mozambique and Tanzania since the 1960s, but at the time oil companies were exclusively looking for oil and few geologists belie-ved in the region’s potential. A new era began in the late 2000s when major oil companies were awarded exploration blocks in the offshore Rovuma Basin, straddling the maritime borders of Mozambique and Tanzania. From 2009 onwards, a series of huge na-tural gas discoveries, large enough to support LNG projects, were made and changed the oil and gas industry’s interest in the whole region.

Given the size of the discoveries (3000 to 5000 bil-lion cubic meters (bcm) in Mozambique, and 1000 to 1700 bcm in Tanzania), license-holders are moving ahead on plans to build LNG trains, especially in Mo-zambique where initial LNG production is expected by 2022 and the commissioning of the main lique-faction plant in 2024. As oil companies tend to work by imitation, more offshore exploration has been carried out all around the continent, leading to si-gnificant discoveries made offshore of Senegal and Mauritania (500 to 1000 bcm), and in South Africa in 2019, just to name a few.

CHALLENGES AHEAD

Africa has the potential to emerge as a key sup-plier to the global gas market in the near future. The existing LNG capacities (exclusively located in West Africa) amount to 33 million tonnes per annum (Mtpa), and the likely first phase of LNG projects in East Africa and Senegal/Mauritania will take total

capacity in sub-Saharan Africa to 60 to 75 Mtpa over the next decade. Estimates vary but suggest that East Africa’s reserve base could theoretically support an output of up to 100 Mtpa (the equivalent of Qatar’s current production). Developing LNG on such a scale, however, could take 20 years or more to accomplish, and a number of issues might com-plicate the future, including growing competition on the global LNG market, uncertainty about the share of gas production that African governments will want to keep for local development, and security threats (including piracy, both in the Indian Ocean and in the Gulf of Guinea).

The issue of local consumption is crucial. While international investors tend to prioritize LNG, local governments in the new gas-producing countries aim to diversify the use of their gas reserves and to develop gas-fired generation capacities that could address power deficits without having to rely exclusively on hydropower. In the long term, this is certainly desirable to ensure that the people of gas-producing countries fully enjoy the benefits of gas production. For companies this could also be positive as this could help maintain a climate of political stability, as (negatively) illustrated by the case of Nigeria, a country particularly affected by the so-called “resource curse”. Despite its huge oil and gas resources, Nigeria remains one of the poorest countries in Africa (and the world), profoundly affli-cted by social and political instability and plagued with deep corruption. Given the carelessness of local as well as federal authorities, the local popu-lation in the oil-producing Niger Delta region tends to turn straight to oil companies to obtain the fruits

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ISPI | 45New Gas Discoveries in Sub-Saharan Africa: A Source of Development?

of what they consider to be “their” oil. Regularly and in a more and more violent way, they demonstrate their hostility to the oil companies through sabotage of pipelines, kidnapping of employees, occupation of installations (including shallow water platforms), etc. These actions seriously complicate and sometimes even prevent companies’ activities.

Stabilizing the political and social situation in Nigeria and avoiding repeating the same mistakes in Mo-zambique and Tanzania are probably the biggest challenges facing the gas industry in sub-Saharan Africa as well as the main conditions for develop-ment of the region’s full potential.

1. It was only in the 1960s that oil production started, after

discoveries were made in Nigeria (1956), Angola (1955) and

Gabon (1956), followed by Congo-Brazzaville and Camero-

on (1970s). Although the Gulf of Guinea remains the central

point of focus for oil and gas players in sub-Saharan Africa,

exploration and production has spread out since the 1990s

across the whole continent, both offshore, with discoveries

made in Mauritania, Senegal, Ghana, Equatorial Guinea,

Mozambique, Tanzania, etc., and onshore (Chad, Sudan

and South Sudan, Uganda, Kenya, Niger, etc.).

2. Source : Enerdata, year 2018.

COMMENTARY

TECHNOLOGIES AND FUTURE TRENDS

New environmental laws are giving natural gas a new centrality in the energy mix of major countries since it is seen as the transition energy towards a carbon-neutral economy. How are cleaner solutions and new technologies leading the way? How can natural gas be combined to produce cleaner energy for the future?



Leading the Way Towards a Successful Energy Transition: The Role of LNGStefano CaoSaipem

ISPI | 47Stefano Cao, Chief Executive Officer at Saipem SpA



For the first time in the history of the World Economic Forum Global Risks Perception Survey, this year’s top five global risks in terms

of likelihood of occurrence are all environmental. Climate change awareness is re-shaping social behaviors and industry business models by applying pressure at different levels. On the financial level, for example, institutions are on the edge of a fundamental reallocation of capital since climate risk is perceived as investment risk. On the political level, environmental awareness is rising in the priorities of institutional agendas. In this context, the European Green New Deal appears to be the most ambitious initiative globally, but others surely will follow.

In such a scenario, the energy industry, more than others, is facing unprecedented pressure to prove its business model capable of leading the way toward a successful energy transition in line with Paris Agreement. This is happening within a challenging scenario where protracted weakness and volatility in commodity prices have taken their toll on oil and gas companies. Driving the energy transition in this context therefore requires flexibility and new approaches.


The energy transition can be best defined as a gradual shift from a system mostly based on fossil resources to a more sustainable and renewable energy mix. Such a process necessarily involves many stakeholders and is already taking place, in part spontaneously, led by economic convenience and technological progress and in part driven by political and regulatory decisions. A process of this size can only be gradual to match growing energy demand while reducing the use of conventional sources that still satisfy more than 80% of the world’s primary energy consumption. Furthermore,

gradualness is needed to gain the necessary time to build the infrastructures for renewable energy’s production and distribution.

The energy transition is a process and, like every process, it encompasses phases. At present, natural gas plays a fundamental role in bridging fuel toward a low carbon economy. Most energy scenarios, even the greener, forecast a gas market in expansion for at least 15-20 years, replacing coal in power generation.

Two main elements explain this trend. The first is the competitiveness of gas resources, both from

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ISPI | 49Leading the Way Towards a Successful Energy Transition: The Role of LNG

conventional reserves and from unconventional (i.e. shale gas). The second is gas’ environmental compatibility, especially considering its advantages over other fossil sources in terms of emissions and programmability. Moreover, natural gas remains the resource that best combines with intermittent renewable sources to ensure continuity of electricity

production. It also represents a viable alternative to fossil fuels in several sectors such as marine transportation due to its cost effectiveness and compliance with international emission regulations.

In this scenario, liquefied natural gas (LNG) represents a global commodity driven by steady

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growth in demand also due to strong imports by Europe, China and other Asian countries. In 2019 signs of acceleration in investment decisions were visible, with many initiatives being approved. This trend is expected to continue over the following years, although with a lower intensity than in 2019. Such important LNG investment flow will also reshape energy routes, with new countries playing significant roles in energy geographies.

In terms of change in the energy mix and diversification, Africa is setting the path with its significant gas reserves. Projects like Total LNG in Mozambique, Zhor in Egypt and Nigeria LNG will significantly contribute to unleashing the potential of African economies while boosting the energy transition in markets like Europe. This trend is confirmed by other LNG developments now in the execution phase such as in Tangguh LNG in Indonesia, Arctic LNG in Russia and other investments still to be approved. Saipem is proud to play an important role as an energy transition enabler in many of these transformative projects.

The growing importance of gas is also visible in international relations where multilateral platforms such as the East Mediterranean Gas Forum began fostering public-private cooperation among key players. In this context, Italian companies are key partners for LNG countries and their proven track record in developing technologies may contribute to further growth of LNG allowing cost reductions and increasing efficiency. For instance, the Italian LNG

value chain is in the process of developing solutions to enhance sustainable mobility such as Small-scale LNG and Floating LNG.

However, relying only on a transition fuel like gas is not enough. Innovation and integration are the keywords guiding every player in the sector who wishes to actively contribute to energy transition and transformation. To target decarbonization and CO2 reduction it is important to build technology portfolios able to improve the entire CO2 value chain: from Carbon Capture & Storage to innovative hybrid solutions integrating energy storage concepts for renewables with conventional oil and gas use. Energy players will need to devote their best and brightest minds to developing and improving solutions with disruptive potential such as offshore solar and windfarms, marine technologies, the next generation of biorefineries and the green hydrogen value chain.

Accompanying 8 billion people toward the energy transition requires a fundamental step: building technological bridges between energy systems to maximize the efficiency of existing infrastructures while lowering their carbon footprint.

Amory Lovins once wrote that fire made us human and fossil fuel made us modern. Now we need a fire that will make us enduring. It’s hard to say which energy source will be predominant in this new fire. What we can is predict is the spark that will ignite the flames: LNG.

COMMENTARY

The Gas Clean Tech: Enabling Sustainable DevelopmentMenelaos YdreosInternational Gas Union

ISPI | 51Menelaos (Mel) Ydreos, Executive Director, Public Affairs for the International Gas Union



The world is currently experiencing a period of dramatic innovation in its energy systems. How energy is supplied and consumed

shows significant potential to be disrupted in the coming decades. Indeed, it is essential that such disruption does occur for the world to fulfill the commitment of the Paris Accord and achieve the UN Sustainable Development Goals.

Cleantech solutions in power generation and electrification of energy consumption are often the focus of discussion on the theme of energy innovation. However, as recent research from the International Gas Union (The research was conducted by IGU, Snam, BP, and the Boston Consulting Group) demonstrates, clean technology development and innovation in natural gas value chains are of equal significance and offer the potential for similar transformative impact. While gas technologies are already mature in many instances, ongoing advances show potential to reduce the costs of gas combustion by 30% or more, cut the capital investment required to access gas by half, and dramatically improve the flexibility of gas power generation.


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ISPI | 53The Gas Clean Tech: Enabling Sustainable Development

Even more significant innovation is occurring in low carbon gas technologies, including renewable gas, low carbon hydrogen, and carbon capture, utilization, and storage (CCUS). While the costs of these technologies are high today and deployment is limited, a combination of fundamental technology breakthroughs as well and scale and experience driven impacts indicate the potential to cut these costs in less than half over the next one to two decades.

As a result of the ongoing and newly emerging developments in gas technologies, the potential market for natural gas can be much greater than it is today. Factoring in these improvements along with the value that gas provides from reducing greenhouse gas emissions and localized pollution relative to other fuels, the IGU and its partners have found that the global market for gas could be 2.5 times its current size today at its maximum economic potential in 2040.

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ISPI | 55The Gas Clean Tech: Enabling Sustainable Development

Achieving the maximum economic potential for the adoption of gas technologies would in turn offer substantial environmental and social benefits. Under such a scenario, gas technologies could mitigate up to one third of global energy sector greenhouse gas emissions, reduce emissions of pollutants such as nitrogen oxide by up to 30%, and enable access to clean cooking fuels to 1 billion more people by 2040. And when considering the relative costs of other technologies, gas technologies provide the lowest cost means of reducing emissions in many instances, particularly in the buildings, industry, and transport sectors.

Such an outcome is far from assured, however. Lessons from the development and adoption of gas technologies in the past, as well as other cleantech solutions, indicate that three drivers are essential for the further development and deployment of gas technologies:

• First, government policy support is essential for promoting sustained R&D in gas technologies while ensuring their environmental and social value are reflected, for example through the implementation of carbon

• Second, substantial investment is required to enable access to gas, deploy technologies for gas consumption, and scale up the supply of low carbon gas; achieving the maximum economic potential for gas and the associated benefits would require $400-800 billion of annual

• Third, innovation by the gas industry is required, particularly through investment in R&D and early stage deployment while also developing new business models and new applications of technologies to reduce deployment barriers and speed

Transforming the global energy system to simultaneously enable action on climate change, promote sustainable cities and communities, and provide access to affordable and clean energy will require sustained innovation across the breadth of energy applications around the world. As the IGU and its partners demonstrate, innovation in gas technologies are already enabling these outcomes and offer substantial incremental potential to do so in the coming decades.

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LNG: A Tool to Decarbonise the Maritime SectorAlexio PiccoCircle Group

ISPI | 56Alexio Picco, founder of the Circle Group Spa, and Chief Consultant for the European Coordinators for Motorways of the Sea (MoS)



The shipping sector, responsible for 2% to 3% of annual global greenhouse gas emissions, has been seen as not doing enough to reduce its

share of emissions. Since last year, the International Maritime Organization (IMO) has introduced a goal to cut greenhouse gas emissions by at least 50% from 2008 levels by 2050 and enact more stringent rules on sulphur emissions as of January 2020 as part of regulatory steps to clean up the sector’s environmental footprint.

In addition to the IMO’s efforts, the European Commission has expressed a need for more ambitious targets in the new European Green Deal, which, among all the suggestions foreseen include setting up a Carbon Border Tax, revising the Energy Taxation Directive and extending the Emissions Trading System to the maritime sector. The International Renewable Energy Agency (IRENA) concluded in a recent report that reaching these targets will require a combination of approaches, including alternative fuels, upgrading onshore infrastructure and improving operational performance.

ISPI | 57LNG: A Tool to Decarbonise the Maritime Sector

POLICY AND LEGISLATIVE FRAMEWORK

Adopted in 2014, the Alternative Fuels Infrastructure Directive requires EU member states to put in place “an appropriate number” of LNG refuelling stations for ships in ports – by the end of 2025 for maritime ports belonging to the TEN-T Core Network, and by the end of 2030 for inland ports (also from the TEN-T Core Network). A Delegated Regulation supplementing the Directive, with the aim of specifying some technical requirements for LNG refuelling stations1 for sea-going ships, was published on 22 October 2019.

In accordance with Article 3 of the Directive, member states had to notify the Commission by 18 November 2016 about their National Policy Frameworks (NPFs) for the development of the alternative fuels market in the transport sector (incl. LNG for shipping) and deployment of the relevant infrastructure. According to the European Commission’s assessment (published in February 2019), 20 member states2 have not yet defined alternative fuels infrastructure targets for all mandatory fuels/modes or do not meet the requirements of Art.3 of the Directive. The Commission warns that six NPFs3 do not contain targets for LNG refuelling points in maritime ports, and four4 do not contain targets for LNG refuelling points in inland ports.

A Commission Communication from November 2017 titled “Towards the broadest use of alternative fuels – an Action Plan on Alternative Fuels Infrastructure" underlined that, in order to achieve the EU’s commitments to the Paris Climate Agreement, decarbonisation of the transport sector must be accelerated to ensure that greenhouse gases

and air pollutant emissions are firmly on the path towards zero-emission by mid-century. Overall, the document acknowledged that the number of vessels running on alternative energy in the EU is too low and that persistent problems create market barriers to their use – including a lack of infrastructure for refuelling.

To further foster the decarbonisation and energy diversification of the EU transport sector, the revised Renewable Energy Directive introduces an obligation for an increasing share of renewable and low-carbon fuels such as advanced biofuels, hydrogen, biogas and renewable electricity.

THE USE OF LNG

Throughout the 2014-2017 period, thirteen projects were funded under the Motorways of the Sea programme that specifically dealt with LNG. Out of these projects, eleven are still ongoing, while two of them (ReaLNG and HEKLA) were completed – in September 2017 and June 2018, respectively. ReaLNG and HEKLA mainly aimed at ensuring the further deployment of LNG in the North Sea-Baltic Sea regions.

The main objectives of the 13 LNG-related projects are to ensure the deployment and use of alternative fuels, efficient energy sources, and reduction of air pollution from maritime transport. However, most of this funding went to North Sea and Baltic Sea countries – as opposed to the Mediterranean region. A situation that is progressively changing in order to ensure a balanced deployment of LNG infrastructure and technology throughout the European Union.

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FUTURE-PROOFING THE LNG SECTOR

A growing interest in LNG over the last couple of years has influenced world market prices significantly and on the energy basis LNG production is expected to reach 10% of global crude natural gas production by 2020. However, as the global pressure to address climate change is increasing, biogas is significantly increasing in importance. Biogas production has seen significant growth in the last years in Europe, mainly driven by the support schemes in place in several European Union member states. A major challenge for the liquefaction process for biogas is its scale, as biogas rarely is produced in large quantities. A great opportunity provided by biogas, on the other hand, is the fact that it can be used in existing (and coming) natural gas pipelines and LNG infrastructure. In technical terms, the raw material used to produce the transport fuel makes no difference. As such, biogas can be injected into the national gas grid and from there a blend of biomethane and fossil methane can be liquefied. This provides a convenient way of gradually using an increasing amount of a renewable fuel.

Biogas production could increase from the extended use of various organic waste streams, such as food waste, crop residue, sewage sludge from wastewater treatment or algae. It can also contribute to the development of rural areas and even result in negative GHG emissions when biogas is produced from feedstocks (e.g. manure) which otherwise would emit methane during decomposition. Despite this, biogas production is low in many member states and its potential is largely unused.

Blending hydrogen into the natural gas pipeline network has also been proposed as a means to reduce greenhouse gas emissions whilst using existing infrastructure. Experts say that it currently is possible at low concentrations, however, a full swap is not feasible due to the durability of existing pipelines. This is not to say it would be impossible, they say. European developers are in fact leading in developing the technology that could be used in existing gas infrastructure.

LOOKING AHEAD

In the framework of the European Green Deal, the new EU Executive has indicated its willingness to put the EU on the path to carbon neutrality (net-zero emissions) by 2050. This increased climate ambition can be expected to further raise the momentum around the need to switch from conventional to alternative shipping fuels. However, there is mounting concern about a potential mismatch between the EU’s climate ambition and the continuous allocation of EU funding to LNG and gas infrastructure projects – which are still fossil fuel based. The European Parliament’s reaction to a recently published 4th list of energy infrastructure Projects of Common Interest (PCIs)5 is illustrative of the pressure to decrease the emphasis on gas. While the share of gas projects (versus electricity projects) in those lists has decreased over the years6, the proposed 4th list still includes too many gas projects, it is claimed. The recent decision7 by the European Investment Bank (EIB) to terminate financing to unabated fossil fuel energy projects (including gas) from the end of 2021 onwards is widely seen as a strong signal sent to the market.

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ISPI | 59LNG: A Tool to Decarbonise the Maritime Sector

1. For refuelling points for inland waterway vessels or sea-

going ships, referred to in point 3.1 of Annex II to Directive

2014/94/EU, the following technical specifications shall

apply: For seagoing ships, which are not covered by the

International Code of the Construction and Equipment

of Ships Carrying Liquefied Gases in Bulk (IGC Code), the

refuelling points for LNG shall comply with standard EN

ISO 20519. For inland navigation vessels, the refuelling

points for LNG shall comply with standard EN ISO 20519

(parts 5.3 to 5.7) for interoperability purposes only.

2. Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia,

Greece, Spain, Croatia, Hungary, Ireland, Lithuania,

Luxembourg, Latvia, Malta, Poland, Portugal, Romania,

Sweden, Slovenia and Slovakia.

3. Cyprus, Denmark, Ireland, Latvia, Malta and Sweden.

4. The Czech Republic, Luxembourg, Portugal, and

Sweden.

5. PCIs are energy infrastructure projects considered of

strategic importance for the completion of the EU’s single

energy market. These include electricity interconnectors,

smart grids, gas pipelines, and carbon capture and storage

(CCS) /CO2 transport networks. The 4th PCIs list features

151 projects; it is available here.

6. In the proposed 4th PCIs list, electricity and smart grids

account for more than 70% of the projects, mirroring the

increasing role of renewable electricity in the energy

system and the need for network reinforcements enabling

the integration of renewables and more cross-border

trade. Meanwhile, the number of gas projects decreased

from 53 (in the 3rd PCIs list published two years ago) to

32, or 21% of all projects on the new list. The gas projects

include new LNG terminals in Greece, Cyprus and

Poland, as well as two particularly controversial terminals

in Krk in Croatia and Shannon in Ireland, where natural

gas produced by hydraulic fracturing is expected to be

imported from the US to Europe.

7. See EIB press release of 14 November 2019 on the

Bank’s new energy lending policy

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The Use of Natural Gas for Sustainable TransportationSusanna DorigoniGreen - Bocconi University

ISPI | 60Susanna Dorigoni, Professor at the Department of Earth and Environmental Sciences - DISAT l of the Bocconi University in Milan



In her inaugural speech, the new President of the European Commission Ursula von der Leyen set up a new growth strategy that aims to transform

the EU into a fair and prosperous society, with a resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050. Under these circumstances, in order to make the so-called “European green deal” effective, the terrestrial transport sector is among those that are set to undergo major changes.

Indeed, while overall greenhouse gas emissions decreased by 22% and 23% between 1990 and 2016, those from the transport sector increased by 27% and 2%, respectively, in the European Union and Italy1, highlighting the environmental criticalities of this sector compared to others. Transport is also responsible for the progressive deterioration of air quality in urban centers and constitutes a primary field of intervention for compliance with European and national commitments relating to the reduction of local pollutant emissions, as stated in the "Clean air" package2 aimed at reducing the impact of air pollution on health by about 50% by 2030.

ISPI | 61The Use of Natural Gas for Sustainable Transportation

To counter this trend, both supranational and national policies have been aimed at promoting the use of natural gas in transport. The EU recently approved a Directive on the development of infrastructure for alternative fuels3 while the Italian Annex II of the National Energy Strategy (SEN 2017) contains the indications for construction of a network of small-sized coastal deposits4 for Liquefied Natural Gas (LNG) meant to be used in heavy road transport. The National Integrated Climate Energy Plan (PNIEC) also specifies how methane should play a fundamental role in the hybrid electric-gas system in the mobility sector, defining a strategy for the reduction of oil derivate -fueled vehicles through the allocation of huge financial resources for the renewal of the industrial vehicle fleet.

This development is expected to continue thanks to the environmental advantages of natural gas, which are emphasized when assessed with the Life Cycle Assessment (LCA) approach in place of the traditional Well-to-Tank and/or Tank-to-Wheel methodology. By assessing the environmental impacts "from the cradle to the grave", that is, not only with reference to the production phase (in this case the combustion inside the engine), but considering the entire value chain, starting from the supply of the raw material (gas), passing through consumption and use, up to the disposal of the vehicle, it can be observed that natural gas, in addition to allowing a significant reduction in global emissions, is competitive with respect to diesel and also to the electric carrier, considering the environmental impact of battery production and disposal, and the current generation mix5. As regards local pollutants, and by limiting the comparison to EURO 6 standards, natural gas is better than

competing fuels in terms of particulates, sulfur, benzene and nitrogen oxides.

The above mentioned environmental advantages are also destined to increase due to the massive investments in technologies aimed at containing emissions relating to the upstream part of the logistic chain (gas extraction and long-distance transport) and to the development of biomethane, whose production/use is encouraged through a mechanism based on the Certificates of Release for Consumption (CIC) and on the withdrawal of biomethane at a pre-determined price by the Gestore dei Servizi Energetici (Energy Services Manager - GSE) for ten years6.

An increased consumption of the latter would also contribute to the use of renewable energy sources (RES) in the transport sector, a goal that is synergistic with that of reducing CO2 emissions7. In particular, the EU has set an aggregate target of RES penetration on total final energy consumption of 32% by 2030, which should be met also by a specific target for the transport sector, for the same time horizon, recently raised to 14% by Directive 2018/20018 and, at national level, to 21.6% by the PNIEC.

Blending renewable methane with fossil gas would lead to a macroscopic reduction of emissions, making it less polluting than the electric carrier: with a 30% blend, expected on the basis of the requests for connection to the national network already accepted by the Italian TSO9, the global effects of natural gas would become significantly lower than those of the electric car10, and comparable to those of the latter also in the hypothesis of achieving the objectives of the PNIEC in terms of evolution of the generation mix11.

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Global environmental impact of different cars in the C segment12

(in grams of CO2eq per kilometer)

Italy ranks first in Europe in terms of circulating fleet and number of fueling stations13 and the use of compressed natural gas (CNG) in the automotive sector can boast over 60 years of tradition and a consolidated organizational system, while, albeit marginal at the moment, the demand for LNG for heavy-duty vehicles is increasing14 due to the greater difficulties encountered in this sector by the use of propulsion with electric engines.

According to the previous considerations, and based

on the historical dynamic of natural gas fueled vehicle registrations and the development of new LNG refueling stations, it is possible to quantify a size of the natural gas market in the terrestrial transport sector15 in Italy as between 3.4 and 4.7 billion cubic meters by 2030, forecasting growth of more than 4 times the current consumption levels16.

Such development is to be considered appropriate in order to accelerate the energy transition for those transport modes (such as heavy road transport)

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ISPI | 63The Use of Natural Gas for Sustainable Transportation

in which no other alternatives to oil are currently available, and to achieve a sustainable and decarbonized mobility system by focusing, at least in the short and medium term, on a mix of different solutions, even with different introduction timing, rather than on a single technology.

1. Annual European Union Greenhouse gas inventory 1990–

2016 and inventory report 2018, European Energy Agency

– EEA.

2. (COM (2013) 918 final).

3. Directive 2014/94/EU, so called DAFI, (Deployment of

Alternative Fuels Infrastructure).

4. Small Scale Liquified Natural Gas (SSLNG).

5. See L. De Paoli, S. Dorigoni, A. Sileo, Le prospettive di

mercato del gas naturale liquefatto e compresso nel settore

dei trasporti in Italia: vincoli e opportunità, GREEN, Bocconi

University, 2019.

6. As of inter-ministerial Decree 2 March 2018.

7. The target set by the EU for the reduction or GHG is

represented by a 30% decrease by 2030 (compared to year

2005) for non-ETS sectors including transport.

8. So called RED II.

9. Transmission System Operator, Snam SpA.

10. Considering the current national generation mix.

11. That is a contribution of RES of 55.4%.

12. So called “Medium Cars”, the type mostly used by

families.

13. The number of circulating CNG vehicles is currently

above one million, while filling stations on the national

territory are about 1,300.

14. With more than 1,300 heavy duty vehicles and 60 LNG

filling stations.

15. Light and heavy road transport.

16. See again De Paoli et al, 2019.

The consolidation and expansion of the natural gas market in the land transport sector would also make Italy the undisputed leader in the sector at European level and would represent an excellent opportunity for economic and employment growth.

COMMENTARY

Hydrogen: Unlocking the Potential of Green GasRuggero CorriasSnam

ISPI | 64Ruggero Corrias, Head of International Relations, Snam



Hydrogen is enjoying an unprecedented momentum on policy makers’ and industries’ agendas. The international community is also

demonstrating a solid commitment to tackle climate change, putting in place various solutions to achieve an energy strategy that aims for climate neutrality. In this context the European Union leads the way.

The long-term strategy for a carbon neutral economy to 2050 and the European Green New Deal have been developed in accordance to the Paris Agreement objective to limit the rise of global temperature to well below 2 °C and pursue efforts to keep it to 1,5 °C1. In the National Energy Plans presented by Member States on how to achieve these targets, hydrogen has emerged as a relevant option to deliver a clean energy transition.

In line with these trends, in 2019 the International Energy Agency was asked by the G20 Japan Presidency to produce a report to assess the current status of hydrogen at international level and to suggest ways to further foster its deployment. Meanwhile, hydrogen-based initiatives have been

ISPI | 65Hydrogen: Unlocking the Potential of Green Gas

flourishing in numerous international forums, including the World Economic Forum (WEF), the International Renewable Energy Agency (IRENA) amongst others2.

Despite being the most abundant element in the universe, hydrogen is not present in nature in its essential form. When it is produced through water electrolysis, a chemical process powered by renewable energy sources, which splits H2O into hydrogen and oxygen, and which generates zero carbon emission, the final product is labelled as “green hydrogen”. However, nowadays only “approximately 4 to 5% of global hydrogen is obtained in this way”3, and this production process remains more expensive when compared with the more commonly used extraction process, which involves fossil fuels4.

Yet recent trends in energy production, most importantly the decreasing cost of renewable electricity, offer a unique window of opportunity to scale up the production of all the necessary technologies (such as fuel cells, refuelling equipment and electrolysers) to bring down costs and accelerate a wider utilise of green hydrogen.

In a 95% decarbonisation scenario5 the cost reduction trends open to a wider use of hydrogen in many sectors. Thanks to a higher energy density, hydrogen may provide a solution to many of the electrification’s challenges, playing a key role in reducing carbon emissions even in “hard-to-abate” sectors6.

These include: heavy and long-range transport7, heating, and high-temperature industrial

manufacturing. Applying hydrogen to these sectors would also contribute to making the green gas competitive with fossil fuels and to double “its final energy demand by 2030, compared to today, reaching about 23% of total final energy consumption by 2050”8.

Another key feature of hydrogen is its flexibility. This means that Hydrogen can be directly blended with natural gas (up to ~10% mix) in the existing high-pressure pipeline or be stored in the depleted gas fields and injected into the grid to respond to peaks in winter energy demand. Acting as an energy carrier hydrogen can dispatch power where it is needed, contributing to the stability and security of the entire power system.

ITALY AS A HYDROGEN HUB

The potential to transport hydrogen for long distances would link neighbouring countries, encouraging them cooperate in a global decarbonisation effort. Interdependence is a key feature of energy market and, in an interconnected power system, resources should be allocated where they can have the highest impact on efficiency9.

From a Mediterranean regional perspective, the energy transition toward a higher share of renewables generation, accompanied by a decreasing demand of fossil fuel in the European Union, in the long term would influence the stability of North African countries. The loss of rents from fossil fuel export weakens governments’ capacity to stabilise a low resilience economic system10 and internal turmoil would then spill across national borders and affect the Mediterranean basin and

COMMENTARY


therefore European stability. Here too, Hydrogen could represent a solution for both shores of the Mediterranean, stabilising the imbalances that can emerge from the shift to a decarbonised economy.

Investing in photovoltaic electricity generation in North Africa would allow to exploit the higher amount of sunshine hours of the region (80% more than in Germany, for example) and to generate up to an additional 50% of energy in comparison with Central Europe, for the same amount of investments. Such a strategy would later open up the possibility of adding electrolysers nearby, to produce green hydrogen and gear up the power to gas generation in the region.

In this context, a comprehensive approach is needed to maximise the effectiveness of energy investments, while coordinating the flow of funds from Europe with the energy plans of North African countries. These efforts would not only result in the strengthening of the local economic systems but could also have a positive impact on wider dynamics such as political instability and migratory pressure11.

Within the network that would emerge, thanks to its geographical position and its infrastructure assets, Italy has the potential to become a key hydrogen hub. As in the case of the North Sea region, where a consortium of transmission system operators (TSO) has proposed to implement projects to convert the offshore wind into gas power12, hydrogen generated in North Africa could be imported to Italy, at a cost of 14% below domestic production, and then injected in the European grid via the existing infrastructure.

To date, gas pipelines connecting the two regions have a spare capacity of ~30/33bcm/year and could

be used without significant additional investments. In this scenario, Italy would therefore become the cornerstone of an inclusive dialogue, which would involve all the relevant actors, governments, private companies, TSO and national regulatory authorities from both sides of the Mediterranean Sea.

In the European energy transition scenarios, blending hydrogen into gas pipelines can allow the European Union to cope with its energy demand while decarbonising the energy mix. Furthermore, the establishment of a stable import route from Northern Africa would contribute to the diversification of the energy supply routes, significantly improving the energy security and resilience of the European energy strategy.

UNLOCKING HYDROGEN’S POTENTIAL

The challenges faced for unlocking hydrogen’s potential are cross-sectoral and, to overcome, require close cooperation between policy makers and relevant private stakeholders.

Although the cost of technologies necessary for the production of green hydrogen have declined significantly13, but there is still the need to ramp up electrolysers and fuel cells industries. Early measures are being adopted, including incentives to stimulate commercial demand for clean hydrogen as well as guarantees to limit the risks for first movers; but these dedicated policy mechanisms should be extended to support private sector investments.

European countries and main international stakeholders should also align together and support national champions in the creation of a “Hydrogen

COMMENTARY

ISPI | 67Hydrogen: Unlocking the Potential of Green Gas

Alliance”, a single group of like-minded actors at an international level which can foster capacity building and attract manufacturing capacities around a single hub. This would result in decreasing decrease in the cost of equipment and would represent a pivotal step in implementing the vision of making green hydrogen competitive with fossil fuels in some applications already by 2030.

Furthermore, a supportive legislative and regulatory framework, and uniform technical standards, will be necessary to ensure the achievement of the carbon neutrality targets and to advance the development of the entire hydrogen value chain at European level.

Finally, at a global level, the development of an integrated international hydrogen market will need to involve not only producer and consumer countries, but also international organisations such as OPEC, IEA and IRENA. From this perspective, a higher degree of interdependence could foster cooperation and contribute to strengthening the global effort against climate change14.

1. Cfr. EU, 2050 long-term strategy, Climate Action – Euro-

pean Commission, https://ec.europa.eu/clima/policies/

strategies/2050_en

2. Cfr. IEA, The Future of Hydrogen, June 2019, https://

www.iea.org/reports/the-future-of-hydrogen; Snam, The

hydrogen challenge the potential of hydrogen in Italy, October

2019, https://www.snam.it/en/hydrogen_challenge/, and

IRENA, Hydrogen: A renewable energy perspective, Septem-

ber 2019, https://www.irena.org/publications/2019/Sep/

Hydrogen-A-renewable-energy-perspective

3. Cfr. Snam, Hydrogen for the energy transition, https://www.

snam.it/en/hydrogen_challenge/hydrogen_energy_tran-

sition/

4. Currently the largest part of hydrogen is produced

through chemical and physical processes from natural gas

for industrial use generating significant carbon emission.

This kind of hydrogen is labelled as “grey hydrogen” while

“blue hydrogen” is produced via steam reforming throu-

gh application of CO2 Carbon capture and storage (CSS)

technologies.

5. Needed to reach the 1.5 °C degree threshold.

6. Snam, The Hydrogen Challenge..., cit.

7. By 2030 hydrogen-based mobility solution for heavy

transport can become cost competitive with alternative

technology (diesel, electric, LNG) while Hydrogen-based

fuels (ammonia) are expected to become cost competitive

in 2040-50 with alternative fuels. Cfr Snam, The Hydrogen

Challenge..., cit.

8. Snam, The Hydrogen Challenge..., cit.

9. M. Alverà, Generation H - Healing the climate with hydro-

gen, Milano, Mondadori, 2019, p. 57.

10. Cfr. IRENA, A New World – The Geopolitics of the Energy

Transformation, January 2019, https://www.irena.org/-/

media/Files/IRENA/Agency/Publication/2019/Jan/Glo-

bal_commission_geopolitics_new_world_2019.pd

11. M. Alverà (2019), p. 56.

12. “The project named Element One will entail the con-

version into gas of offshore wind power mostly from the

North Sea and is planned to be gradually connected to the

network from 2022”; M. Alverà (2019), p. 61.

13. Bloomberg Surveillance, How Snam Is Transitioning

to Green Energy, Sustainability, January 2020, https://

www.bloomberg.com/news/videos/2020-01-16/

how-snam-is-transitioning-to-green-energy-sustainabili-

ty-video

14. M. Alverà (2019), p. 65.

COMMENTARY

ispi dossier 23 february 2020 the great game of gas · actors and geopolitics. from the shale gas...

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