EU NEEDS NEW GAS POLICY POST 2020 TO ENSURE SECURE SUPPLY

Leading experts on energy market deregulation said Thursday that continued promotion of cross-border gas interconnection capacity, as well as evolution of the single market, will help ensure secure gas supplies in the EU. The experts were speaking on a panel on security of energy supply, the third and nascent pillar of EU energy policy, taking place in Florence during the second-annual  State of the Union conference organized by the European University Institute.

Recent cases in the European Court of Justice are sewing ambiguity in how security of energy supply is understood and handled in the EU, said Leigh Hancher, Professor of European Law at the University of Tilburg. Citing recent case decided by the Court that gave wide discretion to member states to define the meaning of the term.

Despite the slow opening of the gas market versus that for electricity, some panelists see the gas market making a leap forward in the short term once the backlog in transposing the current third package of EU internal market regulations is cleared up. "Our biggest problem in electricity and gas is organizational and software. Most of the hardware is done."  "In two to three years, we will have a much smaller share of gas tied to oil, maybe a third. Much more short to medium-term commitments, and more signals set by market prices and less by long-term contracts," said Walter Boltz, Executive Director of E-Control.

While the EU market gas  seems well supplied through 2020, the scenario beyond the coming decade needs reflection, said former energy regulator Jacques de Jong.  He said the issues that must be treated long term range from the growing imbalance between the 3 to 1 ratio in EU refinery production of gasoline versus diesel as its major buyer, the US will not need the additional supplies in 10 years' time, the role of gas in the energy mix, gas to power conversions, and perhaps power to gas conversions as well.

To continue fostering  development of a single gas market and to increase import capacity, greater cross-border pipeline interconnection capacity between countries will be required, said Francisco de la Flor, President of gas infrastructure organization GLE.