13/7/2007
Andris Piebalgs, Energy Commissioner, Reinforcing the Euro-Mediterranean Energy Cooperation Speech at the conference to promote Trans Saharan Gas Pipeline, Brussels, 9 July 2007

Dear Ministers, Your Excellencies,

Ladies and Gentlemen,

Let me start by congratulating Minister Khelil for the initiative of this Conference which is aimed at presenting the Trans-Saharan Gas Pipeline project in Europe.

Before I start, I would like to wish you all a warm welcome in Brussels and thank Minister Khelil, Minister Mohamed Abdoulahi from Niger and Mr. Sadiq Mahmood, Permanent Secretary from the Ministry of Petroleum resources from Nigeria, as well as Sonatrach, Nigerian National Petroleum Corporation, all other companies and respective delegations for having travelled to Belgium.

I also would also like to thank the organizers for giving me the opportunity to present the main pillars of the EU energy supply security policy as well as reflecting on EU energy cooperation strategy with Mediterranean and Sub-Sahara African countries.

I will start by saying a few words about where we stand today with respect to European Energy policy, a policy which clearly underlines our energy interdependence and gives us new impetus for further enhanced cooperation in the energy field.

Energy has been at the core of the European cooperation and integration process for more than 50 years and much has been achieved. Today however we are facing new challenging times for the world's energy sector and for mankind in general. Energy security and climate change are on the top of the world's political agenda.

Global demand for energy is set to increase by more than 50% by 2030, global population is expected to grow from 6,6 billion to more than 9 billion. If we continue with "business as usual", such a dramatic increase in energy demand will pose a threat to the global economy and to the climate, as energy consumption will be accompanied by a related rise in CO2 emissions. By 2030, this could mean an increase of CO2 emissions of 110%.

In March this year, the European Union took an unprecedented step by agreeing on an integrated climate and energy policy, backed up by a detailed Action Plan. It aims to respond to the challenges of competitiveness, security of supply and sustainability.

This energy package contains a strategic policy objective: an independent EU commitment to reduce greenhouse gases by at least 20 % by 2020, compared to 1990 levels. This commitment will be extended to 30 % if other developed countries commit themselves to comparable emissions reductions.

The Action Plan included in the energy package contains clear indications about the steps to be undertaken:

a 20% increase in energy efficiency by 2020 by means of a number of concrete measures,

a binding target of 20% for renewable energy in the EU energy mix by 2020,

boosting the development of low carbon technology,

agreement to further develop a fully integrated single energy market. The aim is to open the way for new investment, new entrants and new choices for customers,

a set of concrete measures strengthening the solidarity between the member-states,

and, last but not least, developing the external dimension of the EU energy policy. Our strong commitment is to deepen energy partnerships with producers, transit countries and consumers, to build co-operation for our mutual benefit.

Ladies and Gentlemen,

Let me now turn to addressing European energy consumption prospects and recent developments in the external dimension of the EU energy policy.

Fight against climate change is the main driver of the EU energy policy. Emissions trading scheme favours ''cleanest'' technologies, and that means particularly favourable conditions for use of the natural gas.

The EU gas demand will continue to grow steadily, by 1,7% per year, in particularly as the result of significant increase in the use of gas for electricity generation. The EU gas demand is expected to reach 536 bcm by 2010 and 619 bcm by 2020.

The combined effect of increasing primary energy demand for natural gas and declining domestic production will result in a significant growth of import dependency. Consequently, natural gas imports are projected to increase sharply, and may reach 85% of EU gas consumption by 2030 compared to 50% in 2000. In concrete numbers, it would mean gas imports of 331 bcm by 2010 and of around 500 bcm by 2020.

The increasing dependency on natural gas imports raises significant concerns as regards the EU security of supply in the long run. The number of suppliers is limited, global demand for gas is increasing and new infrastructures, including for long distance transport as well as LNG terminals, need to be developed.

Diversification of suppliers and routes is therefore a key part of the EU energy supply security strategy. In order to better diversify its energy supplies, the EU has strengthened cooperation with its neighbouring countries and energy producing regions.

Energy cooperation in the existing Euromed framework and through the soon to be launched EU-Africa Energy Partnership are of special interest to us today.

The European Union is also committed to reinforcing the Euro-Mediterranean energy cooperation in general, and with Algeria in particular. Algeria has been a reliable supplier to the EU for more than 30 years, and we are looking forward to deepening our bilateral ties and cooperation.

Algeria is currently the third largest supplier of gas to the EU. Algerian gas supplies to the EU could increase from the current 70 billion cubic meters per year to approximately 95 bcm per year by 2011, if the common infrastructure projects currently under construction are achieved according to plan. The Medgaz pipeline with a capacity of 8 bcm will connect Algeria to Almeria on the south-east coast of Spain, and the Galsi pipeline, with 8 bcm, will connect Algeria to Cagliari, in Sardinia. A project to increase the capacity of the existing pipeline which links Algeria and Italy through Tunisia could also add 7,5 bcm of gas to current supplies.

As you know, the European Union is committed to continue supporting energy infrastructure projects of common interest in order to complete the electricity and gas rings in the Mediterranean, and the finalisation of these two projects, alongside the establishment of a Memorandum of Understanding on a strategic energy partnership between Algeria and the EU remain our main priorities for bilateral cooperation in the near future.

The European Union is also looking towards enhancing its energy relations with Sub-Sahara Africa. With the Portuguese Presidency, we will launch the EU-Africa Energy Partnership at the EU-Africa Summit in December, in Lisbon. I am convinced that this initiative will help enhancing sustainability and security for both continents. Attention should focus on strengthening the EU Africa dialogue on:

- access to energy and energy security;

- increasing investment in energy infrastructure, including promotion of energy efficiency and renewable energy;

- placing capacity building in the areas of energy and climate change high on our agenda of development aid;

- encouraging the flow of oil and gas revenues into development;

- promoting greater transparency and investment-friendly frameworks;

- and mainstreaming climate change into development cooperation.

In this respect, all sources, supply routes and infrastructures have to be taken into account.

Nigeria has substantial resources not only of oil, but also of gas. Its reserves of gas are estimated at 5 trillion cubic meters and we very much welcome the National Gas Policy to reduce gas flaring by gathering and valuing associated gas. As regards infrastructure, most Nigerian gas reserves are currently dedicated to LNG schemes. These plants are in constant expansion responding to an increasing Transatlantic LNG demand.

Moreover, the West African Gas Pipeline project (WAGP), signed by Togo, Benin, Ghana and Nigeria, as well as the gas supply to Equatorial Guinea are ambitious projects supplying the larger West Africa region with Nigerian gas.

In our view, the available Nigerian gas reserves need to be carefully assessed. Such an assessment should take into consideration not only the current and future LNG needs, but also the West African Gas Pipeline supply needs and local gas demand.

In this context, the Trans-Saharan Gas Pipeline that we discuss here today, is definitely an impressive and ambitious project. Its development has many advantages, but also some risks that need to be analysed carefully.

A gas pipeline of the length and capacity of TSGP needs sufficiently long term planning and stable conditions. The capital expenditure is important, not only for investment costs, but also in terms of operating expenses. All of this should be very carefully assessed.

These are issues that potential investors will certainly be looking at. And they expect precise and convincing answers, based on comprehensive comparative studies, as well as long term environmental impact assessment reports.

At the same time, I am convinced that the Trans-Sahara Gas Pipeline could constitute a promising supply source and route for the EU. The New Partnership for Africa's Development has also identified the Nigeria - Algeria gas pipeline as a priority. Africa needs to develop large infrastructure projects. This project is particularly ambitious from technical and political point of view. But we have examples where realisation of large and complex infrastructure projects bought profits not only to investors but also new development to the region. I could mention the BTC pipeline and development of Azerbaijan and Georgia. And I could emphasize once more that gas demand in the European Union is expected to increase significantly in the coming years, and thus diversifying gas resources' origin and supply routes is for us a strategic decision to take in the frame of our energy supply security policy. That means that we are giving security of demand for investors.

I congratulate Minister Khelil for the initiative of this conference. I know his personal commitment to this challenging project that brings new development perspectives for Africa.

Thank you for your attention and I wish you very fruitful discussions.