INTERVIEW: Energy security, Green Deal key priorities for European gas industry

European gas industry group Eurogas will continue to engage with policymakers on a wide range of issues including energy security, the Green Deal, and the uptake of green gases, its new president Cristian Signoretto said in an interview.

Signoretto -- who took over as Eurogas president from Didier Holleaux at the end of May -- also said the group would still advocate for market-based solutions to handle unexpected events.

One of the group's short-term priorities is to work with the European Commission on the implementation of the new EU regulation on methane emissions, which was formally adopted in May.

The aim of the regulation is to reduce energy sector methane emissions both in Europe and in global supply chains, and includes a methane transparency requirement on imports.

"It is crucial for us and our members to understand what needs to be done to be able to continue to import gas into Europe and meet our supply security goals," Signoretto said.

"We also need to make sure that we engage with the producing countries," he said, citing global LNG exporters and pipeline gas suppliers in North Africa as examples.

Some gas exporters have historically been more successful than others in measuring, reporting and fixing methane leakage in their upstream and midstream sectors.

Signoretto said it would be important for methane emission reduction goals to be "achievable and reasonable" to ensure Europe can work with its suppliers to be able to continue importing gas.

"It takes two to tango -- we need to make sure we move in the right direction together," he said, adding that the EC should also be involved in a follow up on the legislation with supplier countries so that they understand their obligations.

Gas affordability

Along with supply security and tackling emissions, the affordability of gas also remains a key issue for Europe, Signoretto said.

"Europe understands that the price of energy is key to its competitiveness -- more today than before," he said.

"It's important for our market functioning and the ability to import gas from multiple sources to have a price that is compatible with our goals in terms of competitiveness."

Signoretto said gas prices had come down to close to pre-war levels, proving that the European gas market was working well.

He said there was still room for prices to further reduce sometime after the next 12-18 months, which would be helpful for Europe to improve its competitiveness.

Platts, part of S&P Global Commodity Insights, assessed the benchmark Dutch TTF month-ahead price on July 2 at Eur33.55/MWh.

European gas consumption has fallen sharply since Russia's invasion of Ukraine, partly due to demand reduction efforts and mild weather, but also price-related demand destruction in the industrial sector.

"We've seen some of the industrial demand come back, but not all of it," Signoretto said.

He said price was a factor, but uncertainty around the European legislative framework also played a role.

"When you look at some of the industrial sectors -- more energy-intensive sectors -- there is some uncertainty around the implementation of the framework," he said.

Eurogas also continues to support the use of market-based tools to deal with disruptions, rather than political intervention.

"We believe that a well-designed and well-functioning market can provide the answers to events," he said.

During the energy crisis in 2022, the EU introduced a number of emergency measures, including demand reduction targets, a gas price cap mechanism, storage filling obligations and a joint purchasing tool.

Signoretto said the demand reduction target was a good policy given that the market remains "finely balanced."

"Next winter could still be a bit tricky," he said, given competition from Asia for LNG cargoes and the expiry of the Russia-Ukraine gas transit deal.

Signoretto said other measures, which may have been useful during the major disruptions seen in 2022, should be withdrawn once the market is back to normal. "We don't need those policies to be permanent in the market."

On storage, Signoretto also said a number of countries in Europe -- such as Italy and France -- already had regulations to promote filling using market-based mechanisms before the EU imposed filling targets in 2022.

"In Italy and France, you could get storage filled without any imposition. And if for some reason the market forces are not enough to fill storages, we think you should incentivize the market instead," he said.

Green gases

Signoretto said Europe was also focused on the promotion of low-carbon gases. "We want to make sure we have a system of low-carbon gas and hydrogen that supports trading and interconnectivity," he said.

Eurogas is also keen to understand in the medium-term the development of CCS legislation. "This will be very important to meet the decarbonization targets," he said.

He added that Eurogas believes that all technologies should be allowed to contribute to decarbonization using a technology-neutral approach.

"Low-carbon gases should be recognized and supported given their contribution to emissions reduction," he said, adding that he hoped the EC would find suitable mechanisms to promote these gases, including targets for greenhouse gas emission reduction and low-carbon gas targets.

On biomethane, Signoretto said he hoped to engage with the EC on production targets and cross-border trade.

"We are still struggling for biomethane being produced in a country being freely exported to any other country and being recognized as a green gas," he said.

And in the longer term, Signoretto said a combination of different gases would still be in the European energy mix.

"There will be natural gas too in 2050, undoubtedly in smaller volumes than today and still respecting the 2050 net zero targets," he said.

"It will be used as a feedstock for industry, in power generation to complement renewables and for the production of low-carbon hydrogen, with CCS one of the technologies that is proven and readily deployed.

"2050 will be a mix of biomethane, hydrogen, and natural gas with CCS."