1. The LNG role to improve SoS in Europe
Rocío Prieto – CEER LNG TF co-chair
27th Madrid Forum
20-21 April 2015

2. The LNG role to improve SoS in Europe
A workshop was held on the 17th March in Madrid to collect stakeholders views.
Changes in global market dynamics (demand vs offer), in the last 5 years:
Asian demand increased since 2011 (now moderated- no price spread between Europe and Asia)
USA developments of shale gas
Australia and USA developing new projects to be large producers in 2020.
LNG from the technical point of view:
Technology available with high safety standards
Europe has a capacity of 200 bcm/y with available capacity 163 bcm/y.
Networks are not designed to flow gas from Western LNG terminals to the East, where it might be needed in case of a disruption
European terminals have diversified the services offered to consumers
New technical solutions: Virtual Gas Pipelines, FSRU, small scale, transport
Southern East Europe depends on small number of sources.
According with stress test a long disruption will call for more LNG in Europe
Transmission capacity seems to be a limiting factor for Eastern Europe together with finding LNG in the World market at competitive prices

3. The LNG role to improve SoS in Europe
Good news!
More liquidity in the global LNG market is foreseen:
Increase in spot cargoes vs long term contracts
Less oil indexation
Less destinations restrictions
Prices futures do not foresee changes in current situation (no arbitrage)
New producers are more stable countries
LNG has already demonstrated that it is an effective tool to cope with SoS: Japan, Chile, Brazil, Israel, Jordan
Western Europe with LNG available capacity can free up pipe-gas by using more LNG to their own supply. Existing and future terminals are key: they are flexible and prepared
Also the average gas storage in LNG terminals was 2,7 bcm last year
Lithuanian, Greek and future Polish terminals will be prepared and closer
Polish terminal operational by end of 2015 (5 bcm/7,5 bcm), plus 9 bcm of Western interconnection

4. The LNG role to improve SoS in Europe
and proposals…
The consultation on Regulation 994/2010 is focused on prevention and mitigation measures: reverse flow, joint regional plans, enhance cooperation, storage obligations and LNG
The question was: are well functioning markets enough for delivering SoS or do we need alternative measures?
Price references per country/region are needed to attract LNG (GTM implementation)
LNG offers flexibility: time to deliver vs storage opportunities
Gas procurement: Tenders in illiquid markets
To know parties in advance: master agreements signed (preventive)
LNG swaps, re-routing of cargoes negotiated in advance
Measures to have good level of LNG storage, where needed
Are more LNG terminals needed? A FRSU could be built in less than 2 years
Removal of any type of barrier that prevent gas flows (bidirectional flows)
Demand side flexibility: industrial customers empowerment, interruptible contracts switching fuels, firm load shedding… on voluntary basis with low administrative cost

5. The LNG role to improve SoS in Europe
and proposals…
Regional cooperation / solidarity in case of crisis
Emergency plans or combined programmed responses have to be prepared in advance in a coordinated way.
Measures to improve SoS, such as diversification obligations or strategic stocks need to be applied to all markets agents in a non discriminatory way.
Source: IEA
14/11/2018

6. Thank you for your attention!