Portugal No coal mines, no oil wells, no gas fields.that impressive hydro power This year’s drought has reduced production. The country’s long-term disconnect with the rest of Europe’s energy networks has also earned it the status of an ‘energy island’.
But as Russia withholds natural gas from countries opposed to invading Ukraine, Portugal’s tiny coastal state is poised to suddenly play a key role in managing Europe’s looming energy crisis. .
For many years, the Iberian Peninsula was cut off from a network of pipelines and a large supply of cheap Russian gas that powers much of Europe.and with Portugal Spain It had to invest heavily in renewable energy sources such as wind, solar, and hydropower, and establish elaborate systems for importing gas from North Africa, West Africa, the United States, and elsewhere.
Access to these alternative energy sources is now taking on new importance. The changed situation has altered the balance of power among the EU’s 27 member states, as the bloc seeks to counter Russia’s energy clout, manage the renewable energy transition and decide on infrastructure investment. It creates opportunities and political tensions.
This week shows the urgency of the European mission. On Wednesday, Russian energy monopoly Gazprom once again suspended deliveries of already curtailed gas to Germany via the Nord Stream 1 pipeline.With natural gas prices nearly ten times what they were a year ago, the European Union emergency meeting energy minister next week.
The possibility of pumping more gas into Europe through Portugal and Spain is gaining attention as Brussels tries to find ways to manage the crisis.
Portugal and Spain were among the first European countries to build processing terminals of the kind needed to receive large amounts of natural gas in its liquefied form and turn it back into steam that can be piped to homes and businesses.
This imported liquefied natural gas (LNG) was more expensive than the type much of Europe piped from Russia. But as Germany, Italy, Finland and other European nations race to replace Russian gas with alternatives shipped by sea from the United States, North Africa and the Middle East, this disadvantage turns into an advantage. is.
Spain and Portugal together account for one-third of Europe’s LNG processing capacity, although Portugal is the most strategically located while Spain has the most and the largest bases.
Sines’ terminal is the closest terminal in Europe to the United States and the Panama Canal. In 2016 he was the first port in Europe to receive LNG from the US.Even before the war in Ukraine, Washington called it strategically important gateway for energy imports to the rest of Europe.
Spain also has an extensive network of pipelines carrying natural gas from Algeria and Nigeria, as well as extensive storage facilities.
Making sense of US gas price declines
The peninsula’s resilient energy network is one reason why dormant discussions about building gas and electricity connections through France have suddenly revived. And now, there are unexpectedly loud supporters. Germany, which has long associated its energy destiny with Russia. Spanish Prime Minister Pedro Sánchez and German Chancellor Olaf Scholz met this week to discuss Europe’s dizzying energy prices.
Portuguese Prime Minister Antonio Costa Said A new gas pipeline from Sines to the Spanish border could enable processing of green hydrogen and could help make Europe ‘energy self-sufficient’.
An underground natural gas pipeline across the Pyrenees that was supposed to connect Spain and France was abandoned three years ago after regulators in both countries decided it was unnecessary and too costly.
France was particularly opposed to the project, according to Simone Tagliapietra, senior fellow at the Brussels research group Bruegel. France wanted to protect its energy producers and its strong nuclear industry from competition.
Tagliapietra said the pipeline’s construction would help solve “one of Europe’s major energy bottlenecks” and provide an alternative route for gas to enter Germany, the continent’s largest economy, and elsewhere. said it would provide.
However, developing a unified energy policy among countries with such different resources, needs and priorities remains a thorny political issue.
France still opposes new gas pipelines, at least for now. Portugal and Spain are also outraged by some proposals coming out of Brussels. The two countries are among the first to oppose the European Commission’s July proposal to cut its use of natural gas by 15%. Spain’s energy minister has condemned countries that have “lived more than they should in terms of energy”. Portugal’s energy secretary has urged Europe, reluctant to invest in building a shared energy network that could lower the cost of Iberia Airlines, to Portugal and Spain to share the pain in case of shortages. pointed out that there is Why should their citizens suffer higher prices now?
European Union member states eventually agreed to phase out voluntary cuts. Tagliapietra called it an “unprecedented step forward” in EU coordination. But this episode shows how difficult such an arrangement can be to negotiate.
Portugal’s energy and environment minister, Duarte Cordeiro, has praised the EU for being more responsive to its own concerns in recent years, but there used to be a harmful “imbalance” in priorities, with southern Europe neglected. He added that he had come.
His office estimated the cost of improving LNG transport capacity from Sines to Central Europe at €12 million, or about $12 million. Gas His pipelines connecting the Spanish network and ports will cost him €300 million to €350 million.
Read More About Oil and Gas Prices
Carlos Torres Diaz, head of gas and electricity market research at Norwegian consultancy Rystad Energy, said national priorities sometimes conflict with efforts to build a more integrated energy system. rice field.
Such a system could mean, for example, that over-produced electricity, mainly from wind power in Portugal and solar power in Spain, would ease power shortages elsewhere in Europe.
Portugal has sent electricity to Spain in the past that it doesn’t use at night, Jaime Silva, chief technology officer of Portuguese company Fusion Fuel, said in August. $10 million grant To develop green hydrogen projects in Sines from the government. The company’s offices occupy the site of a closed Siemens transformer factory. On the front lawn is a model of a solar-powered hydrogen generator.
He said it would be relatively easy and quick to install an electrical cable in France that could send that energy further north.
“Before this crisis, only Portugal and Spain said ‘we want to sell energy’, but the French response was ‘no, no, no,'” Silva said.
“Now Portugal and Spain say they want to sell and others say they need to buy,” he said.
“If France doesn’t want to buy it,” Silva added. just now. “
Portugal and Spain’s ability to generate cheap electricity from wind, solar and water is putting pressure on Europe’s energy markets in another way. They argue that the European Union needs to reconfigure the system that currently bases the price of electricity on the price of gas. Designed to facilitate. However, the surge in gas prices has caused electricity prices to explode.
Under pressure from Portugal and Spain, the European Union announced in June the so-called “Iberian exception”: Both countries can cap the price of electricity and decouple it from the price of gas for one year.
The deal was denounced by critics as sabotaging the market, but other leaders have since joined forces to reform the price structure.
European Commission President Ursula von der Leyen said on Monday that the current system would not work. “We have to reform it,” she said. “We have to adapt to the new realities of the renewable energy space.”
“It was developed under completely different circumstances and for a completely different purpose,” she added.
Michael E. Weber, professor of energy resources at the University of Texas at Austin, said the transition was the most difficult. “You have to think a lot to find a solution to a very complex problem,” he said, adding, “The solution will take him two to five years, but the crisis is now. It is,” he added.
Meanwhile, Europe is “as chaotic as can be”, he said.