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Reliable, affordable, flexible: industry leaders discuss LNG in Europe at the Budapest LNG Summit

Today’s fourth edition of the Budapest LNG Summit saw industry leaders and policymakers discuss the current and future LNG landscape in Europe ahead of a supply-strained winter season.

Kicking off the conference, Hungary’s Foreign Affairs and Trade Minister Petér Szijjárto highlighted Europe’s gas challenges in the coming months related to strained supplies, following further cuts to Russian energy supplies and China’s reopening. “The upcoming winter should be much more complicated,” he said.

Amid the EU’s plans to reinforce its LNG infrastructure whilst an ongoing war in Ukraine and Asia’s increased demand for LNG, Imran Mohammed, Gas Transportation and Storage Analyst from the Gas Exporting Countries Forum unpacked Europe’s spike in LNG imports – “Western Europe countries accounted for the bulk incremental increase,” he noted.

Talking about the industry’s approach to LNG, Gergely Szabó, Regional Chairman at MET Central Europe highlighted the importance of affordability in decision-making today, alongside energy security and reliability. “Right now, I think it is the time where affordability beats everything,” he said.  

What does the future hold for pipeline gas?

During the first panel discussion, energy leaders discussed the prospects for the European LNG market. Ivan Fugas, Director of Operations and Technical Affairs at LNG Croatia, provided insights into the Krk terminal’s priorities during the energy crisis last year. “Our response was a capacity increase. We decided to increase the capacity, almost to double it,” he said. Mr Fugas said that the decision to increase the capacity, by upgrading the existing FSRU was a good decision for Croatia and the whole country.

Looking to south-east Europe, Teodora Georgieva, Executive Officer and Board Member at Interconnector Greece Bulgaria (ICGB) highlighted that the construction of the ICGB pipeline “is a key infrastructure for energy security and energy independence.”

“I remember when it was a dream to import LNG from Croatia,” said John Shoobridge, Vice President of LNG Origination EMEA at Cheniere, reflecting on the progress made in the past couple of years.

Whilst the panel praised the positive contribution of the new infrastructure to tackle the energy crisis, the experts raised their concerns regarding the next heating season. “Looking forward to the upcoming heating season, I think we need to be worried about demand and supply,” said Franck Neel, Member of the Executive Board at OMV Petrom. However, Mr Neel noted that the new measures in areas such as energy efficiency are certainly positive signs going forward.  

“LNG is the star and will be the star for the upcoming years,” said László Fritsch, CEO of MVM CEEnergy. Mr Fritsch said that he expects LNG to be on the market in the next 10-15 years.

Looking north, Andrzej Kensbok, Vice President of GAZ-SYSTEM, gave insights into Poland’s recent developments in strengthening its LNG capacities and gas supplies. “[Baltic Pipe] has proven to be not only successful from day one of the operation but also instrumental in supplying gas throughout last winter,” he said.

A deeper dive into strategic infrastructure

The next panel took a deeper dive into the development of strategic LNG infrastructure. Starting off, Ion Sterian, Director General of Transgaz provided insights into Romania’s current and planned gas interconnectors. “We are not connected with Serbia, but we are finalising negotiations,” he said. “At the end of 2021, we finalised the construction to be able to receive gas from the Turkish corridor, which has 6 terminals,” he underlined.

Subsequently, Robert Bosnjak, Member of the Development and Investment Division at Pilnacro noted Croatia’s projects, both before and after its accession to the EU in 2013, to ensure stable security of supply in the country. “We are building a new underground gas storage,” said Mr Bosnjak regarding Croatia’s projects going forward.

“We are interconnected with 6 of 7 neighbouring companies,” said Gábor Szokodi, Director of Trading and Business Development, FGSZ Hungarian Gas TSO. Discussing the future of financing for gas projects, Mr Szokodi said that the focus should be on investments in the security of supply. “Regarding the financing, I believe it’s a tricky situation because it’s not easy to expect traders to have 10 or 15 years capacity booking in these volatile times as you already,” he noted.

Looking more closely at infrastructure gaps in the EU, Peter Pčola, Commercial Director at Eustream in Slovakia, said that an increase in capacity from Hungary is an important missing element. “We are ready to start the development of the Hungarian expansion,” said.

Turning back to the east of Europe, Olga Bielkova, Director of Government and International Affairs at GTSOU said that LNG is “an important addition to Ukraine,” not least for domestic production but also in the area of gas storage for Europe.

In a separate keynote speech, Ukraine’s Deputy Energy Minister, Mykola Kolisnyk also highlighted Ukraine’s competitive gas storage facilities and praised Europe’s actions in recent months. “We once again welcome the intention of European companies to cut consumption,” he added.

Moving to another expert panel, this time on key disruptors and evolving business models of the LNG sector. “We know we can provide the energy, but there are just small problems,” said Keith Mason, Vice President at Maralex International, as he highlighted the increased export capacity of US LNG supplies. On this note, Mr Mason highlighted the reliability and security of LNG supplies coming from across the Atlantic.

Separately, Esther Ang said Head of LNG at MET International mentioned the importance of upstream investments – “is there going to be enough LNG? is there enough investment to allow such supplies?” she asked. She also mentioned the importance of long-term contracts in securing LNG supplies. “If timelines are not meeting each other, it makes it very difficult to secure such a supply even if there is the willingness on both sides.”

Despite significant Russian energy supplies, LNG has provided much security, said Attila Ságodi, Partner at Dentons Europe Consulting. “LNG brought reliability and security…By reliable supply, it has also contributed to affordability,” he highlighted. Ságodi also said that Hungary needs to strengthen its interconnections in the southeast and southwest of Europe. “Lot of activities need to be done for Hungary to increase the security of supply,” he said.

“The new thing we are targeting, what the government is focusing on, is to have access to regasification terminals,” said Marián Široký, Vice Chairman of the Board of Directors and Vice president of Business Development and Trading at SPP. Mr Široký noted that talks are ongoing with Croatia, Poland and other players in the region.

“Our goal is to get gas from all directions,” said Dóra Zombori, Deputy State Secretary for Energy Security of Hungary regarding the government’s perspective on the country’s security supply. The race is not only for supplies but also for the infrastructure, she highlighted.

The increasing role of LNG in transport

“Across the Commercial Road Transport sector, LNG can already be used to reduce carbon emissions. Depending on the engine type, Shell customers fuelling with LNG already benefit from up to 18 per cent GHG reduction on a well-to-wheel basis, alongside lower particulates, nitrogen oxides, sulphur emissions and quieter performing engines, compared to conventional diesel. Across Europe, we are already offering drivers using LNG trucks access to our operated and partner network of more than 130 sites. And we are aiming for a fuel that offers significant CO2 emissions reduction on a lifecycle basis in our LNG network, through a high blend of Shell BioLNG,” said Shell’s Thomas de Boer,  Vice President, Commercial Road Transport (Sectors and Decarbonisation).

The conference also hosted an agreement signing initiated by Shell Hungary with multiple energy and transport stakeholders, including Waberer’s International, MVM CEEnergy, MVM Mobiliti, ECO-Tech vision, Volvo Trucks Hungary and Scania Hungária. The goal is to accelerate the energy transition and reduce carbon emissions in the commercial road transport sector.

Subsequently, leaders took part in discussions on the role of small-scale LNG in Europe today and an experts’ panel on LNG in the transport sector. As part of this, energy leaders also discussed the importance of the emerging hydrogen sector on the existing European LNG landscape.

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