Spain, Portugal emerge as ”energy island” in Europe”s crisis – EQ Mag Pro
Amid the mayhem provoked in the world energy market by Russia’s invasion of Ukraine, Spain and Portugal have emerged in a strategically advantageous position as an “energy island” in Europe, with a relatively low reliance on Russian natural gas.
Leaders in renewable energy thanks to solar, wind and hydraulic power, Spain and Portugal are now poised to reap the benefits of long-term investments in liquefied natural gas, or LNG.
With six LNG plants in Spain — including Europe’s largest, in Barcelona — and one in Portugal, the Iberian neighbours account for one-third of Europe’s LNG processing capacity. The port-based terminals turn boatloads of supercooled LNG back into gas that then flows into homes and businesses.
“Clearly, this infrastructure gives us more flexibility and strengthens our gas distribution system in comparison to those of other European countries that depend on pipelines,” said Claudio Rodríguez, spokesman for Enagás, the company that runs Spain’s natural gas network.
He spoke Tuesday during a rare tour of the huge cylindrical deposits at the LNG plant in Barcelona’s port.
Spain and Portugal are set to receive more gas imports, along with the rest of Europe, after the United States announced last week that it would help its allies reduce their dependence on Russian gas. The U.S. said it will boost LNG exports to Europe by 15 billion cubic meters this year, with even larger shipments coming in the future. The U.S. already surpassed Algeria as Spain’s leading source of natural gas at the start of the year.
Spain appeared to be in a vulnerable position last year after Algeria shut down a gas pipeline that runs through Morocco amid a spat with its fellow North African country. Spain deployed diplomats to secure guarantees from Algeria that it would ship LNG. Now, Russia’s war in Ukraine has put Spain in an envious position.
The war has turned Europe’s dependence on Russian gas into a critical strategic liability. In a rush to find alternatives, European Union leaders want to accelerate mid-to long-term goals to shift further into renewable energy, while finding alternative sources of natural gas in the meantime. Russia has kept the gas flowing for now but has turned off the taps in the past during spats with Ukraine and Belarus.
The crisis also has shown that the EU, despite being a common market for 27 nations, has major internal bottlenecks in its energy distribution system. There are scant energy connections between Spain and Portugal and rest of Europe. That is behind an unprecedented shift in EU policy last week when the Iberian countries were allowed to propose their own price control mechanisms to tackle soaring energy costs across the continent. Spanish Prime Minister Pedro Sánchez and his Portuguese counterpart, António Costa, successfully argued that the relative isolation of their countries from the rest of the EU market, forming what Sánchez’s government calls an “energy island,” and their high use of renewables meant that they should be temporarily released from the common market rules.
The LNG arriving to Spain could in theory be sent on to needier neighbours further east, but there’s no easy way to get it there. Spain and France share two small gas pipelines that can transport the equivalent of seven boatloads of LNG each month, while Spain received 27 boatloads at its terminals in March, in addition to natural gas pumped through an Algerian pipeline, according to Enagas. There is talk in Madrid and Brussels about reviving a plan to build a larger pipeline for gas and green hydrogen energy to cross the Pyrenees, but even if that gets funding, it would take several years to start working. And there would still need to be more work in France to help get the gas to where it’s really needed.
In the meantime, Rodríguez said Spain’s LNG terminals could be used to send along ships of LNG to other European ports to “reinforce Europe’s gas and energy systems.” Experts agree, however, that if Europe wants energy autonomy, it must strengthen its connections.
“Spain is part of the solution, but, unfortunately, it is limited in what it can do,” said Gonzalo Escribano, energy and climate analyst of Spain’s Elcano Institute think tank.
“For years, Spain has been issuing warnings to other member states on their dependence on Russia … (now) we want to turn off the Russian tap, and, dear sirs, we can’t.”