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ENERGY

Spain, France and Portugal agree on gas pipeline link

Spanish Prime Minister Pedro Sánchez said Spain, France and Portugal had agreed Thursday to build an energy pipeline linking the Iberian peninsula to the rest of Europe, reviving a project long-resisted by Paris.

Spain, France and Portugal agree on gas pipeline link
French President Emmanuel Macron (C), Spain's Prime Minister Pedro Sánchez and Portugal's Prime Minister Antonio Costa (R) pose ahead of their meeting on the sideline of a EU leaders Summit in Brussels on October 20th, 2022. (Photo by Ludovic MARIN / AFP)

The new project, which Sanchez dubbed a Green Energy Corridor, would replace an earlier plan dubbed MidCat that emerged a decade ago but was dropped in 2019 over regulatory and funding issues.

But, with Russia withholding gas deliveries to most of Europe in reaction to sanctions over its invasion of Ukraine, there has been a resurgence of interest in a link to bring in much-needed supplies from Spain to the rest of the continent.

With energy prices soaring, Madrid pushed hard for the revival of the project, with the full backing of Berlin, which has seen Russian gas deliveries via a key pipeline shut off for the indefinite future.

“We have agreed to… a new project to be called the Green Energy Corridor to link the Iberian Peninsula to France and therefore to the European energy market between Barcelona and Marseille,” Sanchez explained on his arrival for an EU summit on the energy crisis.

Sánchez said that the pipeline would move hydrogen and gas “during a transition period needed by the European energy market.”

Spain currently has six liquefied natural gas (LNG) terminals for processing gas that arrives by sea which could help the EU boost imports with a better link.

But it only has two low-capacity links to France’s gas network, which has connections to the rest of Europe.

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ENERGY

‘It’s a joke’: Spain slams EU gas price cap

The Spanish government on Wednesday lambasted the European Commission's proposed price cap on wholesale natural gas, set so high that critics have questioned if it would ever be used.

'It's a joke': Spain slams EU gas price cap

The EU executive on Tuesday unveiled a gas “safety ceiling” of €275 per megawatt hour as the bloc grapples with high energy prices spurred by Moscow’s war in Ukraine and supply cuts.

But the conditions meant the cap would only kick in when EU gas prices breach that threshold for two weeks running, calculated on advance purchases through the bloc’s main gas price benchmark, TTF.

The cap was also contingent on the TTF price for liquefied natural gas – an easily transportable form of gas that can be shipped worldwide — exceeding €58 for 10 days within that same two-week period.

The only time the TTF gas price has gone above the €275 limit was between August 22nd and 29th this year.

It was running at around €120 in trading on Tuesday.

Spanish ecological transition minister Teresa Ribera called the commission’s proposal a “joke”, saying it would cause steeper price hikes and hamper efforts to tame decades-high inflation.

The French energy transition ministry criticised an “insufficient” scheme that “does not respond to the reality of the market”.

“The commission must propose an operational text, not simply a text that is political grandstanding and may have negative or no effects,” it said.

Spanish Prime Minister Pedro Sánchez has also expressed his opposition to the plan, with Ribera saying most EU members were against it as the bloc’s energy ministers prepare to meet on Thursday.

Spain could stop supporting other proposals on matters important to the commission if another “serious” text is not forthcoming, Ribera added.

A commission spokeswoman said the mechanism was designed “to anticipate and prevent this situation happening in the future”, but admitted even August’s price spike would not have triggered it.

The cap, if adopted, would come into force in January and came after months of wrangling between EU countries.

It runs alongside a plan by member states to voluntarily cut natural gas use by 15 percent over the northern hemisphere winter.

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