Spain worries about gas with pipeline to shut as winter nears

Will Spain have enough gas to heat homes this winter and at what price? Those questions are troubling Spanish authorities as a key pipeline is due to shut this weekend.

Flames of a lit burner of a gas stove

Algeria on Sunday is planning to halt shipments through the Gaz-Maghreb-Europe (GME) pipeline, which has been carrying almost 10 billion cubic metres (bcm) per year.

The pipeline, which traverses Morocco before crossing the Mediterranean at the Strait of Gibraltar, is a victim of the crisis in relations between Algeria and Morocco.

With Algeria having severed diplomatic ties with Morocco in August, a renewal of the pipeline contract that expires on Sunday is unlikely, threatening one of Spain’s main sources of gas.

With technical constraints limiting alternative sources and the risk of further price increases, Spain “finds itself in a complicated situation” even if “the risk of shortages is limited,” said Gonzalo Escribano, an energy expert at the Elcano think tank in Madrid.

He called the decision “bad news … at a bad moment” for Spain, which depends on Algeria for half of its natural gas needs.

Despite a big push into wind and solar, Spain remains dependent on imported energy.

What will the impact of GME’s closure be on Spain?
Spain’s Ecological Transition Minister Teresa Ribera sought to sound reassuring during a meeting in Algiers earlier this week, speaking of  “arrangements taken to continue to assure, in the best way, deliveries of gas through Medgaz according to a well-determined schedule”.

Medgaz is a second pipeline that runs directly between Algeria and Spain under the Mediterranean.

It can carry eight bcm a year, and planned works could see its capacity reach 10.5 bcm.

Algeria also proposes increasing deliveries of liquefied natural gas (LNG) by sea.

‘Theory and practice’
“On paper, it is enough to ensure the same level of deliveries. But there is theory and practice, and Spain isn’t safe from bad surprises,” said Thierry Bros, a specialist on the geopolitics of energy who teaches at Sciences Po university in Paris.

Work on increasing the capacity of Medgaz is expected to last into December.

“Valves need to be changed, tests conducted … You can’t rule out delays,” Bros said.

But he believes the main problem to be with LNG, which is transported by special ships that keep the gas very cold so it remains condensed in liquid form. 

“It could be complicated to find such ships, especially at the moment when there is strong demand for gas in Asia” and shipowners prefer the most profitable routes, Bros said.

And given that Spain has limited storage capacity but plenty of LNG gas terminals, the risk is less about a shortage than the price paid.

“The country will manage to cope” with potential supply problems, “but that will have an impact on the price”, said Escribano, noting that gas transported by ship is more expensive than that by pipelines.

In recent months natural gas and LNG prices have soared as the global economy gears back up.

In addition to homes linked to the gas network for heating and cooking, Spain is also reliant on gas-fired power plants and electricity prices have already shot higher.

Soaring energy prices are weighing on Spanish consumers who have already been battered by the coronavirus pandemic, and the government has already moved to temporarily lower electricity taxes.

In one sign the situation is concerning, Spain has recently reached out to its other LNG suppliers — the United States, Russia and Qatar — in order to ensure deliveries, according to a source close to the discussions.

Meanwhile, local operators are also making preparations to receive additional supplies.

Enagas, which operates four LNG terminals and the national gas grid, has opened up extra slots for ships.

“We are doing everything possible to contribute to the security of gas supplies,” its president, Antonio Llarden, said earlier this week.

Meanwhile the Spanish government is emphasising the preparations that are being made.

“We’ve increased the level of reserves” and “the capacity to receive LNG ships”, Ribera said in a radio interview on Friday.

Ribera said she believes the risk of electricity blackouts this winter to be “very limited”.

READ ALSO: Energy costs push Spain’s inflation to 29-year high

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Sweden to stop local governments blocking wind parks in final stages

Sweden's government has proposed a new law which will remove local municipalities' power to block wind parks in the final stages of the planning process, as part of a four-point plan to speed up the expansion of wind power.

Sweden to stop local governments blocking wind parks in final stages

“We are doing this to meet the increased need for electricity which is going to come as a result of our green industrial revolution,” Strandhäll said at a press conference. 

“It is important to strengthen Sweden by rapidly breaking our dependence on fossil fuels, building out our energy production and restructuring our industry. The Swedish people should not be dependent on countries like Russia to drive their cars or warm their homes.”

“We are going to make sure that municipalities who say “yes” to wind power get increased benefits,” she added in a press statement. “In addition, we are going to increase the speed with which wind power is built far offshore, which can generally neither be seen or heard from land.” 

While municipalities will retain a veto over wind power projects on their territory under the proposed new law, they will have to take their decision earlier in the planning process to prevent wind power developers wasting time and effort obtaining approvals only for the local government to block projects at the final stags. 

“For the local area, it’s mostly about making sure that those who feel that new wind parks noticeably affect their living environment also feel that they see positive impacts on their surroundings as a result of their establishment,” Strandhäll said.  “That might be a new sports field, an improved community hall, or other measures that might make live easier and better in places where wind power is established.” 

According to a report from the Swedish Energy Agency, about half of the wind projects planned since 2014 have managed to get approval. But in recent years opposition has been growing, with the opposition Moderate, Swedish Democrats, and Christian Democrat parties increasingly opposing projects at a municipal level. 

Municipalities frequently block wind park projects right at the end of the planning process following grassroots local campaigns. 

The government a month ago sent a committee report, or remiss, to the Council on Legislation, asking them to develop a law which will limit municipal vetoes to the early stages of the planning process. 

At the same time, the government is launching two inquiries. 

The first will look into what incentives could be given to municipalities to encourage them to allow wind farms on their land, which will deliver its recommendations at the end of March next year. In March, Strandhäll said that municipalities which approve wind farm projects should be given economic incentives to encourage them to accept projects on their land. 

The second will look into how to give the government more power over the approvals process for wind projects under Sweden’s environmental code. This will deliver its recommendations at the end of June next year.