Spain’s golden opportunity to become the gas hub of Europe

gas grid<p>gas grid</p>

Someone should refrain Vladimir Putin’s obsession to coerce their peers with gas supply cuts everytime an opportunity comes up. Before pre-civil climate Ukraine currently goes through, the EU has something up its sleeve:  Spain’s gas diversified network.

“Spain has a huge and singular gas import infrastructures” expert in energy at Norbolsa Isabel Mera commented.

In the 90’s when economic buoyancy was at its peak, Spain developed a complex gas infrastructure that allowed the country to receive gas supply from Algeria’s reserves by Medgaz and Duran Farrell pipelines, via cities of Almería and Tarifa respectively.  Thus the country became independent from Russia’s imports.

Furthermore, seven LNG regasification plants were built to turn liquefied natural gas coming from other ten different countries around the world. The gas is then put on tankers and shipped to its EU neighbors.

However, there is a loophole in this long grid.

A third infrastructure called Midcat linking Spanish Mediterranean corridor with France remains unfinished, partly because of objections from France and Germany. Midcat should join Holtalric, where Spanish Enagás’s pipe ends totally operating, to  France’s Larrau. It runs a 109 km tube which could transport 7.5 bcm of gas yearly. With this pipeline Spain could replace 10% of what Europe currently receives from Russia, according to Spanish gas association’s figures.

French and German barriers

Sixty years after the EU was born, the region lacks a single energy policy. This is one of the reasons explaining the barriers that both France and Germany have poised to refrain Midcat’s project expansion. As France’s energy mix has been focused on nuclear power and has a sufficient stock of gas, Germany holds a supply contract with Russian company Gazprom. But now things have changed after Ukraine crisis sparked and the whole EU is under Putin’s threats to suffer gas supply cuts.

The European Commision was the first actor to speak out loud about this issue. At a March summit, European Council chairman Herman Van Rompuy talked of the need for more national and regional gas interconnectors to be built, specifying that those should include the Iberian peninsula and the Mediterranean area. Specifically, the EC wants France to revise its working schedule in order to bring foreseen works by 2018 forward to 2015.

“It is a fact that Europe needs a lot of gas interconnections to diversify their sources of gas supply. Permissions to undertake the projects need time, but France has been specially slow in granting them,” analyst Isabel Mera said.

To finish Midcat Spanish span, investments would reach an estimated €120 M, although for France would be higher since works are behind schedule.

The use of this Spain’s safe and diversified gas system as alternative to Russia’s  gas imports would also help reactivate infrastructures which cost billions of euros and currently remain sort of useless due to the shortage of demand.

About the Author

Julia Pastor
Julia Pastor has broad experience in business writing for Consejeros Media Group at Consejeros, Consenso del Mercado and The Corner. Previously, she worked for the financial news agency GBA and contributed to El País Business. She holds a Master's in Financial Journalism and a degree in English from the Complutense University in Madrid.

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