WRITTEN QUESTION E-2008/01

by Renato Brunetta (PPE-DE) to the Commission

(6 July 2001)

Subject: Modus operandi as regards the supply of natural gas to the European internal market

According to the figures in the European Investment Bank study entitled The Western European gas market, 1996, the European market's dependence on sources outside the Community will increase from 31 % in 1995 to 45 % in 2010.

If such quantities are to be supplied, a variety of long-term supply contracts will need to be administered, and pipelines built and managed as efficiently as possible to enable the gas supplied to be conveyed to the consumer markets. When devising solutions of this kind, the operation of the gas transmission networks has to be treated as a priority strategic issue.

In the light of the foregoing: What steps has the Commission taken or will it take to make the supply of natural gas from sources outside Union territory (which will become the main sources) as reliable and dependable as possible? In particular, what forms of organisation should suppliers and distributors in general adopt to enable them, at the operational level, to reduce the consequences that might ensue if serious incidents were to occur - as they could - at natural gas transmission facilities or producer countries were to cut off the supply?

Answer given by Mrs de Palacio on behalf of the Commission

(6 September 2001)

Community natural gas demand is expected to increase over the coming decades while domestic Community gas production in the medium to longer term is expected to decline. The Community's dependence on non-European sources of gas is therefore expected to increase over the next 20-30 years.

The increasing demand for imported gas confirms the need for strong political and physical links with external suppliers and a diversified supply portfolio. Key strategic issues related to the security of the Community's energy supply were identified in the Commission's Green Paper Towards a European strategy for the security of energy supply(1) including possible geopolitical implications of the expected increase in import dependency from external gas suppliers such as Algeria and Russia.

While it should be noted, that the continuity of supplies from the former Soviet Union, and then Russia, being the main external gas supplier to the Community has been exemplary over the last 25 years, strengthened co-operation both technically and politically with external suppliers is in the mutual long-term strategic interest.

The best recipe to reduce or manage geopolitical risks and to ensure security of supply for Europe is clearly one based on free trade; integration of open markets and closer co-operation with external suppliers and transit countries. A reciprocal integration and opening of upstream and downstream markets will also attract capital to undertake necessary investments in production and transportation infrastructure.

On the occasion of the Union-Russian Summit of 30 October 2000 in Paris, it was agreed to institute an energy dialogue on a regular basis between the Community and Russia to enable progress to be made in the definition and arrangements for a Union-Russian Energy Partnership. Its overall objective is to improve energy relations, while ensuring that the policies of opening and integrating energy markets are pursued.

With a view to enhancing the reliability of energy supply between Russia and the Community, the Joint Statement from the Russia-Union Summit held in Moscow on 17 May 2001 identified an assessment of the reliability of the existing energy transport infrastructure as a priority.

Community gas suppliers have a range of instruments available to ensure security of supply in case of disruption of supplies, including underground gas storage. The Community's storage capacity has increased significantly these last years. Continued diversification of supply including from liquified natural gas is also a key objective. Being surrounded by around 80 % of the world's total proven gas reserves within an economic distance, the Community is in a relatively comfortable gas supply situation and world gas reserves are considered to be abundant.

The potential of domestic Community gas production should, however, not be underestimated either. The Commission is currently examining, in close liaison with gas producers, both internal and external gas supply prospects with a view to ensuring continued security of supply of gas to Europe and an appropriate and stable framework conducive to investments in the gas sector.

In recognition of the strategic importance of security of supply, the Commission is recommending in its proposal for amending the existing internal market Directive for gas(2) that Member States shall designate a body to monitor security of supply issues, and in particular the supply/demand balance in its national market and the level of expected future demand and available supplies.

(1) COM(2000) 769 final.

(2) COM(2001) 125 final.