ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)731
Vol.1980/0230

Disclaimer
Conformément aurèglement(CEE,Euratom)n°354/83duConseildu1erfévrier1983
concernantl'ouvertureaupublicdesarchiveshistoriquesdelaCommunauté économique
européenneetdelaCommunautéeuropéennedel'énergieatomique(JOL43du15.2.1983,
p.1),telquemodifiéparlerèglement(CE,Euratom)n°1700/2003du22septembre2003
(JOL243du27.9.2003,p.1),cedossierestouvertaupublic.Lecaséchéant,lesdocuments
classifiésprésentsdanscedossierontétédéclassifiésconformément àl'article5dudit
règlement.
InaccordancewithCouncilRegulation(EEC,Euratom)No354/83of1February1983
concerningtheopeningtothepublicofthehistoricalarchivesoftheEuropeanEconomic
CommunityandtheEuropeanAtomicEnergyCommunity(OJL43,15.2.1983,p.1),as
amendedbyRegulation(EC,Euratom)No1700/2003of22September2003(OJL243,
27.9.2003,p.1),thisfileisopentothepublic.Wherenecessary,classifieddocumentsinthis
filehavebeendeclassified inconformitywithArticle5oftheaforementioned regulation.
InÜbereinstimmung mitderVerordnung(EWG,Euratom)Nr.354/83desRatesvom1.
Februar1983überdieFreigabederhistorischen ArchivederEuropäischen
Wirtschaftsgemeinschaft undderEuropäischen Atomgemeinschaft (ABI.L43vom15.2.1983,
S.1),geändertdurchdieVerordnung(EG,Euratom)Nr.1700/2003vom22.September2003
(ABI.L243vom27.9.2003,S.1),istdieseDateiderÖffentlichkeitzugänglich.Soweit
erforderlich,wurdendieVerschlusssachen indieserDateiinÜbereinstimmung mitArtikel5
dergenanntenVerordnungfreigegeben.

COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(80)731 final
Brussels,21stNovember1980
UPDATING OFTHECOMMISSION COMMUNICATION TOTHECOUNCIL
CONCERNING "COMMUNITY ACTIONINTHENATURAL GASSUPPLYSECTOR"
(COM(80)295finalofthe2ndJune1980)
(Commission communication totheCouncil)
I
<S\
1
C0MC80)731final

COMMISSION COMMUNICATION TO .THE COUNCIL
Updating oftheCommission Communication tothe Council
concerning "Community Action inthenatural gas supply
sector "(C0M(80)295 final ofthe 2ndJune 1980 ).
Because oftime constraints /the Council could only begin toexamine this
Communication atthebeginning ofOctober ,which leads totheneed to '
update the document .
Themodifications proposed concern certain numerical data andtextual
amendments tosections which have become outdated orinappropriate owing
torecent developments .
Thefollowing modifications areproposed bythis updating :
page 2:para 1,line 2replace 4,5%by3,5 %
para 2,line 1:replace "however wehave toexpect asharp decrease "
by"weexpect adecrease "
line 3:replace 1%by2,2%
line 5:replace ''begin todecline "by"tostop growing "
■para 4(2a),line 6:replace "stagnation "by"fall "
**line 7:replace "more rapid decrease "by"further decline "
line 8:replace "by"by"after "
para 5(2b):change title to"Existing importation contracts "
line 2:replace 104by110 .
page 3:Table on"Natural Gas Import Contracts with Third Countries "
•• • -.
Algeria /Million toe/areplace 4?.6by49.5
IThepercentages then become
Algeria 45.0 1 «
"... Norway .22.7 , j
USSR 16.6 ;
- , Iran 7.0 •
V-Nigeria 6.4
Libya .2.3
"*r ■* ' "
i . . •
para 1,line 1:replace "reach "by"maintain "

/
.i!:■
Page3,para1:replacethesentencebeginning
I.■"Takingforexample..."bythesentence"Asupplygapof100to j
150milliontoe/yr-withthegrowthrateinconsumption assumed
isexpectedtodevelopbytheyear2000.
para2(2c),line5:replacethelasttwosentencesbeginning :"For
threecontracts..."by"ForthreecontractswithAlge^iaJ
representing about19milliontoe,S0NATRACH hasinformed
theundertakings concernedthatithasdecidedagainst
:delivering thegasinliquidformduetodifficulties
associatedwithliquefaction .Talksarebeingheld,but
itisnotcertainthatanalternative solutioncanbefound".
para3:beginning"Negotiations areunderway..."
I -deleted
Page4,para1:line2:replace'^patternsandthe1985objectives"by"anddemand"
'replace"problems"by"difficulties "
para3,beginning"If,asforecast..."-deleted.
para4,line3:replace"importsofonefuel"by"oil"
line4:replace,"thesamedependence onimportsofanother"by
"anewdependence onnaturalgas". v
para6,line1:replace"haschargedindependent expertstopursue"
by"ispursuing".
Page5,para2(4a),line4:replace140by136,delete"after1985" i
Rage6,para1(v):delete(v)andalignparagraphtomargin. !
sectionb:changetitleto"Newimportation contractstoconcludewith
•1
non-member countries
I
introduce betweenthefirstandsecondhyphenanewhyphen,
"-thepricingpolicywhichmaybefollowedbyproducercountries".

III3.
thesecondhyphenbecomes,
"-uncertainty overwhethercountrieswithLargehydrocarbon
sources "willwishtoexporttheirnaturalgas,prefering^to -
exportoilandconserving thegasfortheirownneeds."
addanewparagraphetothebottomofpage6,"Negotiations .
arecurrentlyunderwaybetweencertaingasundertakings ofth'e
Community andtheUSSRfortheimportation bypipelineofabout
934010m/yrofgasfromNorthWestSiberia(theIAMALpeninsular ),
page7>para1lastline:replace"Ortolifund"by"NewCommunityInstrument'
page8,para3:replacethesentencebeginning"Furthermore,gas'prices...by•;
"Gaspricesontheconsumermarketshouldtakeaccountoftheprice
: . - ■. ■iforcompetitive energies." * ;i
TheCommission Communication totheCouncilconcerning"CommunityActionsinthe
paturalgassupplysector(Doc.C0M(80)295finaOof2*^June1980,dulyupdated,,
isannexedtothiscommunication .

COMMUNICATION OFTHECOMMISSION CONCERNING COMMUNITY
ACTION .INTHENATURAL GASSUPPLYSECTOR
*
Introduction .• ..
I '
Atthebeginningof1979,theCommission presentedtotheEnergyCommittee "
adetailedreportentitled"NaturalgassuppliesandprospectsintheCom­
munity".*)TheEnergyCommitteeaskedforexamination ofthereportbyex­
pertsofthegovernments andtheindustryconcerned asthebasisforsubse­
quentproposals bytheCommissiontotheCouncilforactiononaComjnunity
ι
andnationalbasis.ThepresentCommunication takesaccountofthesefurther
consultations .TheCommission jaskstheCounciltoendorseitsconclusions .
/ •
Themainresultsofthisreportareasfollows:
1.TheroleofnaturalgasintheenergysupplyoftheCommunity
•SincetheinceptionoftheCommunity,theshareofnaturalgasintotal
primaryenergyconsumption hascontinually growntoreachacurrentpropor­
tionof18'A,orinabsolutetermsathirty-fold increasefrom6million
toetonearly180milliontoein20years.Naturalgashasalmostreached
thesameproportion intheenergybalancefortheCommunity ascoal.
Oneofthecommonenergypolicyobjectives setbytheCouncilon17.12.74
wasfornaturalgastoachievean18%shareoftotalenergyconsumption
by1985.Thisfigurehasalreadybeenattainedanditisevidentthat
naturalgashelpedsignificantly inreducingthedependenceofthe
Communityonimportedoilby13Xsince1973.
\
<*>Doc.COM/ENER/31/78

• . 1
Upto1985afurtherincreaseinnaturalgasconsumption bytheCommunity |
ofnearly3,5%perannumisforeseen.Sincethegrowthrateintotal [
energyconsumptionislikelybelower,naturalgascouldreacha20%share j
oftotalenergyconsumption in1985,therebycontinuingitsroleinreducingtheu
Community'sdependenceonoilimports.• -I
!' ' ' ■
Bythemid80's,weexpectadecreaseingrowthrates -"*.-
fornaturalgasconsumption .Thenationalobjectivesfor1990oftheMember •
Statesshowanaverageannualgrowthrateof2.2%from1985to1990.Conse-j
quentlytheshareofnaturalgasintheenergybalancefortheCommunityis j
likelytostopgrowing. i
Priorityfornaturalgasusageshouldtherefore begiventopremiumuses(eg.■■
householdandsmallconsumers).TheCouncilDirectiveofthe13thFebruary j
lj?75*)requiringMemberStatestosubmitfoFauthorisation,whichisonlyj
givenundercertainconditions,proposalsforthenewuseofgasinpower ;
stations,isconsistentwiththispolicy._...w J
Thecausesoftheforecastchangesintrendsv'~• ' |
a)DecreaseinproductionwithintheCommunity '}
-* ' i |
Therapidexpansionofnaturalgassuppliesovertwodecades,attimes j
withextremelyhighratesofgrowth,arosechieflyfromtheextensive i
naturalgasdepositsintheCommunityitself,namelyintheNetherlands j
andlaterintheNorthSea.Production fromthemajorgasfieldshas
nowlevelledoffandisshowingthefirstindicationofbeginningtode-•j
cline.The"objectives "oftheMembercountriesindicate afall
innaturalgasproduction intheearlyeightiesanda'further "declineafter
1.985..Bytheendofthecenturytheproduction couldfalltohalfof
thecurrentlevel,ifnewreservesarenotdiscovered .Industryestimatesforna­
turalgasproductionfortheyear2000rangefrom80to130milliontoe.
Evenifthehighestfigureisreachedthisrepresents adeclineof15%
comparedwiththemaximumproductionfigureattainedin1976.
b)Existingimportation contracts 'r-
Theforecastincreaseinnaturalgasconsumption ispartlycoveredby
. _■ . * ■•{
:longtermcontractscurrentlyamountingto110milliontoe/yearoveraperiod !
'of20to25years,whichhavebeenconcludedwiththefollowingcountries,' :!
*OfficialJournalNo.L178ofthe9.7.75.
... i

-3-
Natural 6as,Import Contracts with Third Countries
liLtion toe/a % time
supply
beginssupply
ends
1.
2.
3.
4.
5.
6.Algeria
Norway
USSR
Iran
Nigeria
Libya49.5
25
18.2
7.7
7.0
2.545.0
22.7
16.6
7.0
6.4
2.31966-84
1977 /78
1977 /80
1982
1986
19722000
1997 /98
2000
2004
2006
1992
However ,these contracts alone arenotsufficient tomaintain the20%share of
total energy consumption foreseen for1985 .Asupply gapof100to150million
toe/yr-with thegrowth rate inconsumption assumed -isexpected todevelop
bytheyear 2000 .
c)Certain contracts recently concluded indoubt
Some ofthecontracts listed inthetable ,with anannual quantity ofabout
27million toe,cannolonger beregarded asfirm .Amongst these isthe
contact with theNational Iranian GasComp .forwhich thefuture isdoubtful .
However ,even ifwork wasrestarted ontheproject itiscertain that gas
deliveries could notstart ontime .Forthree contracts with Algeria ,
representing about 19million toe,S0NATRACH hasinformed theundertakings
concerned that it-hasdecided against delivering thegasinliquid form due
todifficulties associated with liquefaction .Talks arebeing held ,but it
isnotcertain that analternative solution canbefound .

Therefore thedanger ofasubstantial gapbetween actual natural
gassupply anddemand ,"leading tosupply difficulties incertain
regions oftheCommunity /cannot beexcluded . –
Security ofsupply
Thesecurity ofnatural gassupply isestimated tobehigh ,mainly due to
thei large gas resources located within Community territory .However ,the
dependence onimports from non-member countries isincreasing very rapidly .
In1975 at6%itwasstill rather' small ;for1980 itisestimated at25%;
I ......
by1985 itisforecast atabout 40% andby1990 ,afigure ofabout 50%
has tobeexpected .
TheCommunity isconfronted with adifficult problem .Thedangerous
dependence onoil imports canbereduced byturning tonatural gasalthough
itmust beensured that thereduction inthedependence onoil isnot
replaced byanewdependence onnatural gas.
•. " •
Therefore efforts have firstly tobedirected tomaintain adequate supplies
from indigenous resources .Although further imports areindispensable ,they
must bekept within acceptable limits .Ahigher degree ofdiversification
should also beattained .Unilateral dependence should beavoided and
supplies from politically stable and'suitable located countries should be
strengthened . * ;
TheCommission ispursuing detailed studies onways ofimproving the
security ofsupply .With thecompletion ofthese studies ,theCommission
will prepare acomprehensive report andsubmit the conclusions made ,
together with suitable proposals ,totheCouncil . ..
Common actions
Themaintenance ofsecure ar)ddurable supplies ofnatural gastothe
Community must bebased onthree main approaches :

-production within theCommunity
-conclusion ofnatural gas import contracts with non-member countries
-development ofsubstitute gases
%
»
r- •
arNatural gasproduction within the Community '
* *
Proven recoverable reserves ofnatural gaswithin theCommunity amount
toabout 3billion toe .Asubstantial increase inproduction based on
these reserves seems tobeunlikely . Onthecontrary thecurrent
production rate ofabout 136million toe will probably fall -
However ,experts estimate thetotal natural gaspotential oftheCommunity
inparticular onthecontinental shelf ,rather optimistically . The
natural gasindustry estimates natural gasreserves intheCommunity ,
recoverable uptotheyear 2000 ,at5to5,5 billion toe.This potential
should beutilised asrapidly aspossible since although asubstantial
increase inproduction isunlikely ,the forecast decline inproduction
canbepostponed .Thefollowing isasummary ofareas ofaction .
•i)There are,particularly intheNorth Sea,many known fields with
associated ornon-associated natural gas,which are notconnected
toexisting gaslines .Theconstruction ofsuitable gathering lines
•could make useofmost ofthese reserves . .
ii)Inspecial cases therecovery ofgasfrom isolated fields canonly be
achieved bytheapplication ofnewtechnologies i.e. liquefaction ,
methanol production orpower generation onplatforms .
iii)There are intheCommunity geological structures with known gas
reserves which cannot beexploited ,because oftheunsuitable pro­
perties ofthe rock stratum .New,butexpensive ,production methods
canextract such gas.
iv)Hopes fornatural gas reserves indeeper geological strata arealso
»
expressed byexperts .However drilling into such statff isvery costly
andrisky . Suitable means should bedeveloped toencourage such
exploration efforts .

TheCommunity'srecoverablenaturalgasreserveswouldbesubstantially
increasedoverthenext10to15years,,iftheaboveactionswerepursued.
ExtendingtheindigenousreservesavailabletotheCommunitywouldimprove
thesecurityofgassupply,andincreasetheirtimespan. ,*v.
' . ' •', *
Newimportationcontractstoconcludewithnon-membercountries **
DespiteeffortstoincreasetheproductionpotentialoftheCommunity/
theconclusionofnewimportationcontractsisinevitable,ifthecontribution
ι ·-
ofnaturalgastotheenergysupplyoftheCommunityistobeexpandedorat–
leastmaintainedinthelongerterm.
.Λ
Knownrecoverable worldgasreservesaresufficienttomeetthegrowing
demand-notonlyforEurope-Untilthenextcentury.However,Srupply
.problemsdonotarisefrominsufficient reservesbutfrom:--,
j «
--transportcostsrpaidlyincreasingwithdistance
-thepricingpolicywhichmaybefollowedbyproducercountries *
-uncertainty overwhethercountrieswithlargehydrocarbon sourceswill
wishtoexporttheirnaturalgas,preferringtoexportoilandconserving
thegasfortheirownneeds.
-theneedtoavoidover-dependence onpolitically unstableregions.
TheCommunityshouldensurethatimportsarediversified asfaraspossible
butdespitetherecentlyconcludedcontractwithNigeriathecurrentdegreeof
diversification cannotberegardedassatisfactory .Furtheropportunities
forincreasingthediversification ofsuppliesinthemediumtermmaybeoffered
bygasfromCamerourvCanada,QatarandsomeothercountriesinthePersianGulf.
%
Fromthepointofviewofgeographical proximityandcloseeconomiccooperation,
Norwaymustberegardedasofferinganexceptionalopportunity,withitscon­
siderablenaturalgasreservesintheNorthSea.TheCommunityishighlyinterested
intheconclusionsoffurtherimportationcontractsofnaturalgaswithNorway........ *
i*
Negotiations arecurrentlyunderwaybetweencertaingasundertakings oftheCon-
93mumtyandtheUSSRfortheimportation bypipelineofaboutAO*10mofgas.
fromNorthWestSiberia(TheIAMALpeninsula).

Accelerateddevelopmentofmajornewimportationprojectssuchasapipe­
linefromtheNorthSea-orpossiblyapipelinecrossingtheMediterranean
fromAlgeria-couldhelptosolvethemediumtermsupplyproblemmen­
tionedunderpoint2c.However,theimplementation oftherequestedinvest
ments,supposeenormousfinancialmeansandcanonlyberealisedifthe
Governmentsandindustriesconcernedworkinclosemutualcooperation,maki
..... VuseofCommunity^suitablefinancinginstrumentsas,forinstanfce,the
EuropeanInvestmentBankandtheNewCommunityInstrument(N.C.I.).
ι ·
!
* *» ♦ . . ... %y
Development ofnaturalgassubstitutes
Evenincreasedeffortonexploration fornewnaturalgasreserveswithin
theCommunity .cannotpreventanincreasingdependence onimports,which
couldreachadangerousdegreebytheendofthecentury.Consequently
the'Communityshouldencouragethedevelopmentof^substitutegasesto
avoidthisover-dependence .
./ ■.•'
l)InthemediumtermLP6(liquefiedpetroleumgas-Propane/Butane)could
makeausefulcontribution .Thesupplyofthishydrocarbonis
likelytoincreaserapidlyinthecomingyears,inparticular
rfromtheMiddleEastandAlgeria,butalsofromtheNorthSea.
Apartfromitsutilisation asafeedstockinthepetrochemical industry,
LPGmaybeemployedontheenergymarketsoftheCommunityinthree
ways:
-asanautomotivefuel
-tosupplyregionsnotconnectedtonaturalgaslines
-forextendingnaturalgassuppliesbymixing
Thefirstuseisonlylikelytoincreasewithmorefavorable
taxationtreatment.Thesecondusecouldreplacesubstantial
quantitiesoffueloil,inparticularinruralregions.Thethird
usecouldincreasenaturalgassupplyby*5to10%foralimited ,
period.Thislastpossibility couldmakeausefulcontribution to
apossibleshortfallinthemid-eighties .
\ •••'\ ^
i)Inthelongterm,coalgasificdion mustbeconsidered.Eventhough
1
'theknowntechnologies arenotyetcommercial,theymustbefurther
<
'developedtogetherwithnewtechnologies,asforexampletheapplica-
«
tionofnuclearheatorhighpressurein"situcoalgasification.

-8-
Indeed the Commission iscurrently supporting anumber ofdemonstration
projects inthis area but auseful contribution togas supplies could only
"bemade bywidespread adoption ofanysuccessfully developed technologies .
Pnce pelicy
i-
Even if .itisdesirable that with respect tosecuring the total energy
ι
supply ofjtheCommunity -natural gassupply should increase oratleast
maintain !itsposition ,natural gasshould beemployed ineneconomic and
rational way . ...r
I
I ' - ■' ' '
Asuitable price policy and 1appropriate tariff structures present ameans
toavoid waste andencourage rational use.Gasprices on.theconsumer market
shouldtakeaccount ofthe^price forcompetitive energies .
The Commission ,incollaboration with national administrations and the gas
industry ,iscurrently preparing appropriate recommendations relating toa
convergence ofprice policies inthenatural gassector ,which will besub­
mitted tothe Council inthe near future .

Conclusions
I
TheCommission proposes that theCouncil should endorse thefollowing guidelines
forCommunity andnational action with respect tothesupply ofnatural gas.
.4).DEVELOPMENT OFINDIGENOUS PRODUCTION
» !Maintain and ifpossible increase theproduction ofnatural gas in
theterritory under the jurisdiction oftheMember States .
This implies :
-anintensification ofexploration effort intheCommunity ,
-development ofgasgathering systems ,inparticular intheNorth Sea,
-the .exploitation ofmarginal fields ofassociated andnon-associated
gasthat areisolated orhave ahigh inert gas content ,
-encouragement forthedevelopment ofvery deep wells and theemployment
oftertiary recovery methods ,
.-theapplication ofnewtechnologies intheareas oftransport andstorage .
b>DIVERSIFICATION OFGAS IMPORTS FROM THIRD COUNTRIES
Increased diversification ofgasimports by
-thedevelopment ofnewgasimportation links with third countries ,
giving thegreatest stability ofsupply anddiversification ofsources
possible ,
-theencouragement ofco-operation between thegovernments ofMember
States andbetween gasundertakings fortherealisation oflarge
importation projects forsupplies from third countries ,
-optimal use ofexisting financial instruments intheCommunity with a
view toaid,asnecessary ,the realisation ofimportation projects with
particularly heavy investment requirements ,such asunder-sea gas
pipelines and long distance LNG chains ,
-thedevelopment ofprogrammes with common interest intheframework of
economic co-operation with producer countries .
v
-thegrowing participation oftheCommunity intheexpansion ofthe
world market inliquefied petroleum gas . *

-10-
»
C).DEVELOPMENT OFSUBSTITUTE GAS /
Increase thecontribution 6fsubstitute gastosupply by:
A
-encouraging thegasification ofcoal ,
-increasing theuseofLPG (butane ,propane )aspeak supply gas
inpublic distribution networks andforsupplying regions without
su&h anetwork . <• i