Report from the Commission - 1998 Report on energy investment projects of Community interest
Date: 2000-07-24
Institutions: European Commission
Subjects: energy policy, investment project, report, statistics

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 24.07.2000
COM(2000) 449 final

REPORT FROM THE COMMISSION

1998 Report on Energy Investment Projects of Community Interest

Table of Contents

1.

PART A. - SUMMARY OF INFORMATION RECEIVED ........................................... 3

1.1.

General – Relation to the Community’s Energy Policy Objectives ........................ 3

1.2.

Investments in the Petroleum Sector ..................................................................... 3

1.2.1. Atmospheric Distillation Capacity......................................................................... 4

1.2.2. Conversion Capacity............................................................................................. 5

1.2.3. Desulphurization Capacity and Improving Octane Rating ..................................... 5

1.3.

Investments in the Natural Gas Sector................................................................... 6

1.3.1. The Length of Pipelines ........................................................................................ 6

1.3.2. Storage Capacity and Maximum Regasification Capacity...................................... 6

1.3.3. Storage Facilities .................................................................................................. 6

1.4.

Investments in the Electricity Sector ..................................................................... 7

1.4.1. Conventional Thermal Power Stations .................................................................. 7

1.4.2. Nuclear Power Stations......................................................................................... 7

1.4.3. Hydro-electric Power Stations............................................................................... 8

1.4.4. Transmission Lines and Cables ............................................................................. 8

2.

PART B. - LIST OF ANNEXES .................................................................................... 9

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1.

PART A. - SUMMARY OF INFORMATION RECEIVED

1.1.

General – Relation to the Community’s Energy Policy Objectives

This report is based on the Council Regulation 736/961 which requires the Member
States to communicate to the Commission annually investment projects relating to
the production, transport, storage and distribution of petroleum, natural gas and
electric power. Relevant projects are those due to start within 3 years (petroleum and
natural gas) or within 5 years (electricity). Withdrawals from service of installations
or parts of installations also need to be communicated. The aim of the Regulation is
to enable the Commission to have an overall view of planned changes in the
Community energy capacity and infrastructure.

All these results contribute to a better knowledge concerning the achievement of the
Community’s three priority energy policy objectives – security of supply,
competitiveness and protection of the environment – which were established by a
Green Paper “For a European Union Energy Policy”2 and further elaborated by a
White Paper “An Energy Policy for the EU3”. These objectives have been endorsed
by the Member States and other actors in the energy field. In order them to be
effective, these objectives need to be integrated in the launching of new energy
policy initiatives as well as in the carrying out the already existing actions. This will
be well illustrated in the forthcoming Commission’s Green Paper on the Security of
Energy Supply, a priority action for the year 2000. Energy infrastructure is further
developing to improve the functioning of the internal energy market. Furthermore,
the gas capacity enlargement will contribute to combating CO2 emission increase.

The Regulation requires the Commission to present to the Council a synthesis of the
information obtained from the Member States. An effort has been made to compare
the information given in this report with that of the 1997 report4. Albeit some
comparisons can indeed be made, it would still be premature to draw any conclusions
of the investment trends within the Member States.

The Commission will submit to the Council a report on the implementation of the
Regulation by the end of 2001. This report will aim to present a more complete
picture of the forthcoming Community energy investment developments as well as to
evaluate how the Regulation has contributed to the objectives pursued.

1.2.

Investments in the Petroleum Sector

In the petroleum sector the following types of investment projects relating to
refining need to be communicated:

• distillation plants with a capacity of not less than 1,000,000 tonnes a year;

1

2

3

4

Council Regulation (EC) No 736/96 of 22 April 1996 on notifying the Commission of investment
projects of interest to the Community in the petroleum, natural gas and electricity sectors, OJ L 102,
25.4.1996.
COM(94) 659 final, 11 January 1995.
COM(95) 682 final, 13 December 1995.
1997 Report on Energy Investment Projects of Community Interest (SEC(1998) 1419 final).

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• extension of a distilling capacity beyond 1,000,000 tonnes a year;

• reforming/cracking plants with a minimum capacity of 500 tonnes a day; and

• desulphurization plants for residual fuel oil/gas oil/feedstock/other petroleum

products.

During 1996 - 1998 a number of mergers, acquisitions and alliances took place in the
petroleum industry. In the energy market characterised at that time by exceptionally
low petroleum prices, these operations all aimed at profiting from the synergies,
avoidance of duplication and cost minimisation. They also reflected the historic
weakness of the European Union’s refinery margins arising from the excess
conversion capacity and the imbalance of domestic supply and demand for particular
products. In addition to these, some refineries were closed down during the period of
1996-1998.

On the other hand, large investments are expected by the year 2005 to satisfy the
tightening Community fuel standards and product specifications.

Consequently, a positive investment tendency is to be expected in the field of hydro-
cracking distillates and residues as well as in the field of conversion following the
evolution of the market in both quantity and quality. This tendency was already
observed in 1997.

Furthermore, investment at several refineries is expected on units to improve octane
rating and desulphurisation.

1.2.1.

Atmospheric Distillation Capacity

Between 1 January 1997 and 1 January 1998 the total atmospheric distillation
capacity of the European Union (capacity in service) decreased slightly from 642 to
639 millions tonnes/year.

In 1997, three refineries in the European Union ceased activity :

(1)

(2)

(3)

KPR at Gulfhavn in Denmark (capacity of 2.9 Mt/year);

The Leuna refinery in Germany (capacity of 5 Mt/year); and

Gulf at Milford Haven in the United Kingdom (capacity of 5.6 Mt/year).

These capacity reductions were partly compensated for by the bringing into operation
on 1 November 1997 of a new refinery in Leuna in Germany with an initial capacity
of 8.7 Mt/year.

There were also both capacity decreases and increases in a number of existing
refineries.

The utilisation rate of atmospheric distillation capacity has increased constantly.
For crude oil, the utilisation rate rose from 91 % in 1996 to 92 % in 1997 (71 % in
1986/87). This resulted from a favourable economic situation that led to a small
progress in refining margins, low crude oil prices, intensification of the refinery
activities as well as the export of excess production, in particular petrol to the USA.

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According to the information received, a slight reduction of about 3 million tonnes
in the distillation capacity was expected in the European Union between 1 January
1998 and 1 January 1999. The 2.3 Mt/year decrease of capacity announced by Shell
of its refinery in Berre in Southern France is included in these figures. Furthermore, a
slight downward tendency regarding the European Union’s distillation capacity is
foreseen for the period of 1999 - 2000. This takes account of the announcement of
Shell of its intention to close Shell Haven refinery in the United Kingdom with a
capacity of 4.6 Mt/year.

1.2.2. Conversion Capacity

The conversion capacity decreased by 5.6 Mt or by 2.4 % between 1 January 1997
and 1 January 1998 resulting mainly from the refinery closures mentioned under the
previous chapter.

At 1 January 1998,
the total conversion capacity amounted to 232 Mt and
represented about 32 % of the distillation capacity, the same percentage as in the
previous year.

A downward tendency in visbreaking and thermal cracking in the European Union
the capacity of hydro-cracking
level has occurred since 1995. Conversely,
increased and according to the information received this tendency should continue
during 1999 – 2000.

Overproduction of petrol continued. However, the total capacity of catalytic cracking
conversion remained almost unchanged between 1 January 1997 and 1 January 1998.

1.2.3. Desulphurization Capacity and Improving Octane Rating

During the last few years the European refinery industry has made considerable
investments in the desulphurisation capacities in order to satisfy the Community
obligation of diesel fuel at 0.05 % sulphur. The middle distillate desulphurization
capacity hence increased by about 15 % in the European Union between 1 January
1995 and 1 January 1998.

In the coming years, new investments should occur:

• to satisfy the Community obligations of the sulphur content of petrol and diesel

fuel within the period of 2000 – 2005; and

• to reduce the content of sulphur in liquefied fuels (heavy fuel oil and heating

gasoil) during the coming decade.

In this context, a further increase in the European Union’s desulphurization capacity
is foreseen. This capacity increase could, within the period of 1999 – 2000 reach a
higher level than the announced 7.6 Mt.

The capacity relating to improving octane rating covers catalytic reforming,
isomerisation, alkylation and combined oxygen (MTBE, ETBE) units.

Catalytic reforming decreased by 5.4 Mt or 6 % in the European Union in 1997,
partly because of the refinery closures mentioned earlier.

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The capacity of alkylation and composed oxygen units, important in improving
the quality of petrol, increased more than 7 % during 1997. This tendency should
strengthen in the course of the coming years corresponding to the obligation to
satisfy the new Community fuel specifications, in particular the reduction of benzene
and other aromatics in the fuels within the period of 2000 – 2005.

1.3.

Investments in the Natural Gas Sector

As far as gas transport and/or distribution is concerned, the Member States are
required to communicate the following types of investment projects:

• transfrontier gas pipelines and projects of common interest
guidelines established under Article 155 of the EC Treaty;

identified in the

• terminals for the importation of liquefied natural gas; and

• investment projects concerning underground storage installations with a capacity

of not less than 150,000,000 m³ .

1.3.1.

The Length of Pipelines

The length of existing pipelines in kilometres with diameter above 300mm
communicated to the Commission was 20,420 kilometres which showed an increase
of 8.4 % when compared to the figures of the 1997 report.

There were 6,285 kilometres of pipelines under construction or planned. This
corresponded to 30 % of the existing pipelines and showed an increase of 47 %
when compared to the figures of the 1997 report. This could have resulted from the
increase in gas consumption in the European Union.

1.3.2.

Storage Capacity and Maximum Regasification Capacity

The communicated existing infrastructure of Community interest was 495,000m³ of
LNG storage capacity and 1,930,000m³/hour of maximum regasification capacity.

A substantial increase of LNG storage plants is expected with 1,025,000m³ and
2,975,800m³/hour of capacity under construction or planned.

No withdrawals from service of infrastructure were notified.

1.3.3.

Storage Facilities

The notified existing storage capacity for the EU was 53.6bcm. This represented an
increase of 12.4 % to the last years report.

According to the notifications,
the storage capacity under construction was
15.8bcm and the planned storage capacity was 11.9bcm. This showed an increase
of 55 % in relation to the existing capacity.

No withdrawals from service of storage were notified.

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1.4.

Investments in the Electricity Sector

The Member States need to inform the Commission of the following types of
investment projects concerning electricity production:

• thermal power stations (generations with a unit capacity of 200 MW or more); and

• hydro-electric power stations (power stations having a capacity of 50 MW or

more).

Furthermore, investment projects regarding electricity transport need to be
informed as follows:

• overhead transmission lines, if they have been designed for a voltage of 345 kV or

more;

• underground and submarine transmission cables, if they have been designed for a
links in national or

voltage of 100 kV or more and constitute essential
international interconnecting networks; and

• projects of common interest identified in the guidelines established under Article

155 of the EC Treaty.

1.4.1. Conventional Thermal Power Stations

The investments in the conventional thermal power stations under construction or
planned to be commenced by 2002 were widely spread within the European Union.
The main part of the investments would be carried out in Germany (27% of the
total), in Italy (17%) and in the United Kingdom (17%). Except for France and
Spain, all the Member States of the European Union announced investment projects
in this sector. When compared to 1997, one could observe that the number of
projects had increased in Germany (+1,9 GW) and in Italy (+1,5 GW) whereas the
United Kingdom communicated a cancellation of total 2,0 GW of projects.

Of the 16,7 GW conventional thermal power stations to be commenced by 2002,
80,9% (13,5 GW) are thermal monovalent centres representing the same share as in
1997 (82,3%).

Gas seemed to be the dominant fuel as 72,6% (121,1 GW) of the capacity under
construction or planned to be in service by 2001 could burn natural gas. The number
of projects based on thermal monovalent centres burning lignite increased as well
(3,9 GW on 1.1.1998 compared to 1,4 GW in 1997).

1.4.2. Nuclear Power Stations

The total nuclear capacity in service in the European Union on 1 January 1998
remained at about 130,3 GW. Except for some adjustments to the existing capacity in
service, no modifications regarding this capacity were foreseen to be carried out.

One nuclear station was under construction in France. No other new stations were
planned.

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1.4.3. Hydro-electric Power Stations

The total hydro-electric capacity under construction or planned by 2002 has
increased to 2496 MW of which 635 MW were planned to be put in service in 1998.
This capacity increased by almost 70 % when compared to the previous year’s
information. A great part of this increase was due to the investment projects to be
carried out in Germany (+1060Mwe).

Of the 2496 MW under construction or planned, 1460 MW (58,5 %) were mixed
pumped storage and 1036 (41,5%) were primary conversion.

These projects were centred in five Member States i.e. Germany (42,5 %), Italy
(22,9 %), Greece (22,4 %), Portugal (9,6 %) and Austria (2,6 %).

1.4.4.

Transmission Lines and Cables

The total capacity of high voltage lines under construction or planned by 2002
amounted for 7726 km representing an equivalent level to the one notified in 1997.
The investment projects were spread largely across the European Union although
33 % of the projects were situated in Spain and Italy.

Overhead lines represented 81 % of the projects (6237 km). Most part of the projects
were 380 kV (57 % of the overhead lines) and 400 kV (43 %) lines.

Underground cables represented 7 % of the projects (539 km). The share of this kind
of investments concerning essentially short distance liaisons increased by 35 % when
compared to the previous year.

The total share of submarine cables represented 12 % of the projects (950 km).

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2.

PART B. - LIST OF ANNEXES5

Annex 1

Oil – Refining Capacity in the EU

Annex 2

Annex 3

Oil – Evolution of Conversion and Distillation Capacities at EU-15
Level

Oil – Desulphurisation, Alkylation and Etherification Capacities in
the EU

Annex 4

Oil – Future Changes in the Refining Capacities at EU – 15 Level

Annex 5

Annex 6

Natural Gas – Length of Pipelines in kilometres, diameter above
300mm

Natural Gas – LNG Plants, LNG storage in m³/max. regasification
Capacity in m³/hour

Annex 7

Natural Gas – Storage Facilities, Useful Capacity in bcm.

Annex 8a

Electricity – All Plants under Construction or Planned

Annex 8b

Electricity – Conventional Thermal Plants

Annex 8c

Electricity – Nuclear Plants

Annex 8d

Electricity – Hydro Plants

Annex 8e

Electricity – Transmission Lines and Cables

Annex 9a

Electricity – Conventional Thermal Plants by Country

Annex 9b

Electricity – Conventional Thermal Plants by Category

Annex 10a

Electricity – Nuclear Plants by Country

Annex 10b

Electricity – Nuclear Plants by Category

Annex 11a

Electricity – Hydro-Electric Power Plants by Country

Annex 11b

Electricity – Hydro-Electric Power Plants by Category

Annex 12a

Electricity- Transmission Lines and Cables by Country

Annex 12b

Electricity – Transmission Lines and Cables by Category

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SEC(2000) 1180 - Commission staff working paper - Report from the Commission - 1998 Report on
Energy Investment Projects of Community Interest - Part B – Annexes.

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