ENTSOG South-North Corridor GRIP 2017 - Main Report

6.2 Project Rationales

The potential for a new pattern of flows, from the south to the north of Europe, and for the transmission capaci- ty enabling them is strictly linked to the drivers for the role of the Region, introduced in Chapter 5. The South- North Corridor reverse flow projects constitute the physical assets connecting the main European gas markets allowing to grasp benefits both in terms of security of supply and competition. From a security of supply point of view, the advantages which will arise from the completion of the Corridor are linked to: \\ The filling-up of Northern European decreasing gas productions. Traditionally there has been a substantial southward-oriented flow from gas producers in the North Sea and the Netherlands across Switzerland to Italy. With stable to declining Norwegian sources, UK and Dutch productions already going down at a steeper pace than projected, more gas will need to come from other sources. The related infrastructure will have to be put in place to connect new sources of gas with the markets in need of filling the gap between demand and depleted supplies. Probably the most natural and cost-effective option for diversifying supply sources is to create reverse flows, which are mostly using the infrastructure already in place, therefore minimising the economic and environmental im- pacts. \\ The diversification from remaining existing suppliers. As highlighted by ENTSOG TYNDP 2017  4) , the number of supply sources available to European countries is decreasing along time, mainly since the relevance of the indigenous produc- tion is expected to significantly fall down. The supply source dependence on a limited number of producers is at the same time going to increase. Also improving competition and the positive effects on the EU gas markets integra- tion constitute valid drivers for the accomplishment of the South-North Corridor pro- jects: \\ In fact, the diversification of gas sources and routes is not limiting its effects on security of supply, but positively impacts also the competitive environment. In particular Italy, at the southern side of the Corridor, will experience a further increase of import diversification when Azeri gas reaches the country via TAP. The additional demand-supply margins built-up by this new source, together with both North African flows currently benefiting only a few interconnected countries  5) and the potential represented by East-Mediterranean and Middle- East basins can all represent resources that once made available via South- North Corridor capacities can contribute to the enhancement of the level of flexibility and competitiveness of the overall European gas market.

 4) The ENTSOG TYNDP 2017 relevant sections in this regard are 6.3.3.1 “Access to supply sources” and 6.3.3.2 “Supply source dependence”. A worsened diversification rate is detected moving from 2020 to 2030 for near all EU countries (page 170, Figure 6.12 ENTSOG TYNDP 2017), accompanied by an increased dependence on Russian, LNG and Norwegian supplies (excerpts from page 174 ENTSOG TYNDP 2017: “Norwegian, Russian or LNG supplies [which] show an European-level dependence, indicating these sources are needed to achieve the European supply and demand balance. High dependence to Russian supply is both a security of supply and a competition issue” ).  5) “Italy has infrastructure in place allowing the higher diversification degree, which only Slovenia and Croatia can currently benefit from. In the case of Algerian gas, infrastructures in Italy allow Slovenia and Croatia to significantly benefit from this source” (Source: ENTSOG TYNDP 2017, pages 170–171)

South-North Corridor GRIP 2017 |

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