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Europe’s Gas Distribution in Need of Evolution

Europe is in transition toward a low-carbon economy in which fossil fuels’ share of the energy mix is projected to fall from nearly 75% in 2017 to 59% in 2040, according to BP’s latest Energy Outlook, due mainly to declining coal power generation in many countries.   

The Nord Stream 2 route.

In the short term, the decline in North Sea’s gas output, phasing out of coal and nuclear power plants and the increasing use of gas-peaking plants, should increase the demand for natural gas by 20 Bcm, which is enough to satisfy one-third of Europe’s market need in 2025.    

However, by mid-century, improved energy efficiency measures by industry, buildings and transport, growth in renewables combined with energy storage, should see a 2% reduction in the share of natural gas in the power sector.   

Nevertheless, according to IEA forecasts, European imports of 195 Bcm of natural gas today are set to rise by a significant 71 Bcm between 2018 and 2040. This will mean that Europe’s distribution network capacity will have to be improved, especially during peak winter demand in the northern hemisphere.    

Europe currently enjoys a diversity of suppliers. Pipeline gas is received from Central Asia, Russia and North Africa. More expensive LNG imports, though currently relatively low and relatively expensive, arrive by tanker from the Eastern Mediterranean, Russia, West Africa and, more recently, from North America.   

Russia is, however, Europe’s main supplier of gas and is likely to remain dominant until at least 2040, when it is forecast to supply one third of the EU’s gas needs, according to the 2019 IEA World Economic Outlook. LNG imports will grow in coming decades as new suppliers come on line in North America, Latin America and Africa.  

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