1. Analyse EU natural gas demand growth including composition by major categories of consumers (to allow discussion of natural gas demand flexibility).

2. Analyse available natural gas resources within economic reach of the EU and potential supplies to the EU market by respectively pipelines and LNG.

3. Categorize events that may give rise to physical natural gas supply shocks, including accidents, acts of God, EU and government policies, domestic or international armed conflict, and non-governmental use of violence; affecting production and/or key logistic links.

4. Build scenarios with probability estimates and analyse the quantitative impact of each scenario on physical natural gas supplies; define, on this basis, a credible maximum physical supply shock to size remedies.

5. Build quantitative natural gas vulnerability risk indicators for the different scenarios estimated in WP4.

Task 1: Quantitative analysis of EU vulnerability to natural gas risks 

Lead: OME; all WP5.2 participants

Based on the scenarios built in Work Package 4 and the discussion in other tasks below, this task aims at estimating the vulnerability of the EU to natural gas supply risks. This consists in evaluating the cost of supply disruptions in the short and long terms based on the incidence and flexibility of natural gas use. This vulnerability will be discussed regarding the level and flexibility of demand as assessed based on the POLES model; and flexibility of supply and ability of the internal EU natural gas network to redirect flows in the event of an emergency. Cost of mitigation methods such as natural gas storage or dual fuel capability will be quantified.

Task 2: Natural gas availability to Europe and geopolitical issues

Lead: GRCF; all WP5.2 participants

Europe is surrounded by abundant natural gas resources and physical availability is not in question. However, actual availability may be hindered by the policies of producing or transit countries, or by the impact of domestic or international conflict or the use of force by non-governmental actors. Finally, the impact of accidents or acts of God must also be considered.
The task will analytically consider each of these factors in the light of historical records in order to reach quantitative estimates of maximum physical supply shocks.

Task 3: Technical risks

Lead: RAMBOLL; all WP5.2 participants

Considering the nature of natural gas supply chains, technical incidents can have some damaging impacts on supply at a local or regional level, especially in high demand seasons. In this task, the vulnerability to technical risks including supply disruptions due to exceptional weather conditions, incidents on assets such as cut of a platform or pipeline or explosion on an LNG plant – like the one which occurred on Algeria’s Skikda liquefaction plant – will be reviewed. It will also assess the role of downstream infrastructure such as storage facilities in technical risk mitigation will also be analysed for all the different levels of demand as estimated in the WP4 scenarios.

Natural gas competitiveness compared to other fuels has been a key element of natural gas consumption development in Europe. The dynamics of liberalisation have modified pricing mechanisms in some countries with a progressive move from oil indexed wholesale prices to natural gas indexes based on gas-to-gas competition. Liberalisation has also induced a structural change in the organisation of the natural gas industry by unbundling of transmission, storage and distribution from supply. The objective is to assess and compare the different levels of risks related to supply, pricing, industrial organisation and regulation. That will translate into a short term (prices shocks and market power abuse) and long term (anticipations of operators and investment strategies) index.
In addition we propose to develop a vertical integration index for pipeline and LNG industry, respectively. The index will yield a representative measure of the economic functioning in these markets, and allows drawing policy conclusions to improve the transparency and functioning of these markets.

Task 5: Comparison of risks, impact and mitigation possibilities

Lead: RAMBOLL; all WP5.2 participants

The identified risks, their impact and mitigation possibilities will be compared and ranked.