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Perspectives of the European Gas Balance

Analysis of EU 28 and Switzerland

In the next years, the natural gas demand of the European Union and Switzerland are likely to remain at the same level. This is the result an EU study arrives at and which serves as the basis of Prognos’ analyses. However, the gas reserves in the EU are being depleted. Until 2025, the EU’s gas extraction is expected to decrease by about 41 billion m³. This means that the EU will increasingly depend on imports. In addition, Ukraine is not supplied by Russia any longer, but receives gas from the West. All in all, the gas imports of the EU, Switzerland and Ukraine will increase by 48 billion m³ until 2025.

Gas import demand EU 28 / Switzerland and Ukraine

Possible origins of the gas, stated in billion m³

Source: Prognos

Looking at gas supplying countries that are important to Europe today, such as Norway and Algeria, we can see that they will supply less gas in the future. Where will the natural gas come from in the future? There are mainly two options. On the one hand, global LNG (Liquefied Natural Gas) markets experience a growth period that the EU could benefit from. Europe has sufficient LNG import terminals, and LNG is shipped to Europe, for instance from Nigeria or, in the future, from the US. On the other hand, Russia does not only have the largest gas reserves worldwide, but also a network infrastructure that is mainly directed towards Europe.

“Due to the decreasing supply from Norway and Algeria, we expect the gas imports from the LNG world market and from Russia to increase by 76 billion m³ until 2025. Part of these new gas imports could be supplied through the planned Nord Stream 2 pipeline,” says Jens Hobohm, Head of Energy Industry at Prognos.

Obviously, the expected development could take a different course; for instance, if European consumers saved more energy or replaced gas with renewable energies or other energy sources. Therefore, Prognos analysed opportunities and risks of diverging developments (“sensitivity analysis”).

It becomes evident that risks will dominate until 2025, particularly regarding a continued transit arrangement between Ukraine and Russia, with the current agreement ending on 31 December 2019. Based on the transit agreement between these two parties, a total of 48 billion m3 was transported into the EU in 2015.

Opportunities for the European gas balance are more likely to arise after 2025. At that point, gas consumption could decrease due to the EU’s energy and climate policy. A prerequisite for this would be the implementation of effective political measures that will still have to be adopted though.

Autor: Jens Hobohm, Hanno Falkenberg, Sylvie Koziel, Stefan Mellahn

Kunde: Nord Stream 2 AG, Zug

Jahr: 2017

Typ: Report

Tags: renewably energy, Europe