A key part of ensuring secure and affordable supplies of energy to Europeans involves diversifying supply routes. This includes identifying and building new routes that decrease the dependence of EU countries on a single supplier of natural gas and other energy resources.
The Southern Gas Corridor
A number of countries in South East Europe had s a strong dependence on a single supplier for natural gas deliveries. To help these countries diversify their supplies, the Southern Gas Corridor provides a pipeline infrastructure bringing gas to the EU from the Caspian Basin.
Commissioned at the end of 2020, the Southern Gas Corridor delivered 8.1 billion cubic meters (bcm) of gas to Europe in 2021, and 11.4 bcm in 2022, representing respectively 2.4% and 3.4% of total EU gas imports. It is expected that gas deliveries via the Southern Gas Corridor will remain at the level of 12 bcm of gas in 2023.
The establishment of the Southern Gas Corridor (SGC) has benefitted from sizable political and financial support from the EU, such as
- The Trans Adriatic Pipeline (TAP) section of the SGC: it was the largest project finance deal agreed upon for a European infrastructure project. Via the EIB Direct Facility, the project benefitted from a €688 million guarantee under the European Fund for Strategic Investments (EFSI). The EBRD provided €500 million in loans and another €500 million in B loans funded by commercial banks. As Projects of Common Interest, TAP-related projects also benefitted from €14 million as Connecting Europe Facility grant for feasibility studies.
- The Trans Anatolian Pipeline (TANAP) section of the SGC: the EIB and EBRD also funded TANAP with €270 million and €500 million loans respectively. The TANAP section of the SGC was also awarded €13.1 million in grants for feasibility studies funded under the Connecting Europe Facility.
- The South Caucasus section of the SGC: it benefitted from a €60 million loan from the EBRD.
EU support for further expansion
The EU is carrying out a number of actions to support the further expansion of the Southern Gas Corridor (SGC) and acknowledge its important role in diversifying the EU gas supply, as reflected in the REPowerEU plan and a new Memorandum of Understanding on a Strategic Partnership in the field of energy, concluded by President von der Leyen and President Aliyev in Baku on 18 July 2022.
By enlisting related projects in the 5th Union list of Projects of Common Interest (PCIs), in particular the Adriatica and the Matagiola-Massafra gas pipeline projects in Italy, the EU recognises the importance of enhancing the internal EU network to accommodate a possible enlargement of the SGC.
In the same direction of supporting a future expansion, is necessary to upgrade the gas infrastructure in the Southern Europe Region. This includes a cluster of infrastructure, development and enhancement projects enabling the flow of gas from the SGC to Bulgaria and onwards: the Interconnection Greece – Bulgaria; the rehabilitation, modernisation and expansion of the Bulgarian transmission system; and the gas interconnection Bulgaria – Serbia.
Developing the Mediterranean hub
The creation of a Mediterranean gas hub in the South of Europe will help diversify EU's energy suppliers and routes. To this end, the EU is engaged in an active energy dialogue at political level with North African and Eastern Mediterranean partners.
Taking into account the huge potential of Algeria, both for conventional and unconventional gas resources, as well as the new gas resources in the East Mediterranean and the associated infrastructure development plans, the Mediterranean area can act as a key source and route for supplying gas to the EU.
Israel, Egypt and Cyprus, because of their significant offshore gas reserve, make the Eastern Mediterranean region a strategic partner for the EU in its effort to diversify its gas supply routes. There are several options to bring natural gas from the region to the EU and the world market either by pipeline or as LNG. Notably, there are two Projects of Common Interest (PCIs) in gas involving the Cyprus East Med Pipeline and CyprusGas2EU LNG terminal, where the latter granted significant Connecting Europe Facility (CEF) grants at the end of 2017.
Liquefied natural gas terminals
Liquefied natural gas (LNG) imported to Europe through LNG terminals is a source of diversification that contributes to competition in the gas market and security of supply. To adapt to this evolution of the world gas market, in February 2016, the European Commission presented an EU strategy (COM(2016) 49 final) for LNG and gas storage.
New LNG supplies from North America, Australia, Qatar, and East Africa are increasing the size of the global LNG market, and some of these volumes have already reached the European market.
Considering that most of the existing capacity is located in Western Europe, and that internal bottlenecks exist from the Atlantic coast to the East, the EU strategy has identified a limited number of essential ‘projects of common interest’, mainly interconnectors, that would allow market players from all corners of the EU to benefit from LNG. In addition, as is the case in the Baltics and in South-East Europe, a number of LNG regasification units have been identified as Projects of Common Interest under the Regulation on guidelines for trans-European energy infrastructure ((EU) 347/2013).