Prospects for LNG in the Danube RegionUploaded: 26 of May, 2016

The EU published its LNG and gas storage strategy on 16 February with the main conclusion that the creation of liquid and competitive markets to enable LNG is indispensable to achieving a real Energy Union. The document also stated that while some Member States already enjoy mature and liquid gas markets, Central and South-Eastern Europe is heavily dependent on a single supplier and is vulnerable to supply interruptions. The Ministry of Foreign Affairs and Trade commissioned REKK to analyse, how the Danube Region could participate in the global gas market by gaining access to the LNG sources.
First, the price effect of increasing LNG flows to Europe in 2016 and 2020 reference scenarios are calculated and compared using REKK’s dedicated European Gas Market Model (EGMM). Then infrastructure scenarios for 2020 are grouped, modelled and evaluated. The groupings consist of existing infrastructure, the CESEC group priority projects and other related PCIs with 2020 commissioning dates. We show how additional projects affect utilization rates of existing and new infrastructure and we calculate the social NPV of the new projects and clusters in this context.
We find that under current conditions, the global surplus of LNG will bring price relief to Europe but the DR will only experience limited benefits. As more LNG reaches Europe, the price difference between Western Europe and the DR will also increase. This is due to a lack of proximal LNG terminals, missing interconnectors and underutilization of existing infrastructure due to exorbitant tariffs.
A few projects could however bring benefit6 to the region with positive social NPV in the assessment: IGB (GR-BG), IGB plus TAP, Croatian LNG alone and Croatian LNG plus HR-HU at low tariffs.
Péter Kaderják presented the results of the study 26 of May, at the Danube Region PA 2 Stakeholder Seminar in Brussels.