EC Sees in Storage, ENI Valuable Additions to Energy Security
The European Commission is trying to come up with a gas strategy, turning the spotlight on Italy’s Eni and on storage capacity.
On Wednesday, the European Commissioner for Energy and Climate Action, Miguel Arias Cañete, met Eni’s CEO, Claudio Descalzi, in Rome to discuss the role of the East Mediterranean for Europe’s energy security.
‘Mr Descalzi and Mr Cañete … underlined that Eni’s super giant gas discovery offshore Egypt, along with other important discoveries made in recent years offshore Israel and Cyprus, will allow the East Mediterranean gas hub to contribute significantly to European energy security, enhance the liquidity of the gas market and improve the competitiveness of gas vis-à-vis coal’ reads a note released by Eni on Wednesday.
ROLE OF GAS STORAGE IN ENSURING SECURITY OF SUPPLY
A few hours before, on Tuesday, the European Commission published the report ‘The role of gas storage in internal market an in ensuring security of supply’, saying that gas storage sector in Europe has been growing faster than gas consumption.
‘Between 2006 and 2012, storage Working Gas capacity has grown at a pace of 5% per year, with lower rates in negotiated and higher in regulated regimes. Only after 2012 the growth rate has fallen to about 2% and seems to be the consequence of earlier investment decisions, which have now substantially halted’ reads the analysis.
According to the European Commission, the intention of companies to exploit market fluctuations has triggered investments in faster storage facilities, like salt caverns and LNG tanks.
‘Therefore, the average deliverability rate has increased even more than working gas capacity, and the industry’ flexibility performance has definitely improved.’
On the other hand, the Commission explains that the decline in the gas prices seasonal spread might decrease the attractiveness of investments in storage capacity.
‘Moreover, the role of alternative flexibility tools may be boosted by the more open trading that occurs in increasingly organized, interconnected and transparent gas hubs. The new European regulation, notably the implementation of the Balancing Network Code, could further strengthen such competition.’
All in all, it seems that the storage utilisation has not been significantly affected by this increased competition in the market for flexibility for three main reasons: i. the insurance value of storages against unexpected events, ii. mandatory storage obligations, iii. obligations stemming from long-term contracts.
Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci