June 15, 2016 / 6:00 AM / 3 years ago

French regulator doubts need for France-Spain Midcat gas pipeline

PARIS, June 15 (Reuters) - A new gas pipeline between France and Spain would not boost the security of French or European gas supply and could raise gas prices for consumers, French regulator CRE said on Wednesday.

In a report about France’s cross-border gas and power interconnections, CRE said it saw little need for a new pipeline, which the European Union says would help reduce Europe’s dependence on Russian gas imports by relieving a gas bottleneck across the Pyrenees between the two countries.

Italian gas transport group Snam has said its French unit, TIGF, wants to invest in a new Midi-Catalonia (Midcat) interconnector in the eastern Pyrenees that would more than double the cross-border gas exchange capacity.

The Commission de Regulation de l’Energie (CRE) said the Midcat project would cost nearly 3 billion euros ($3.36 billion), of which 2 billion euros for France, to boost the gas import-export capacity to about 15 percent of gas consumption in France and Spain.

“In light of stable demand and overcapacity in recent years, such a costly project should not create excessive risk for consumers,” CRE said.

The CRE said gas grid operators should establish whether there is a need for new infrastructure capacity, which it said is unlikely given the current market environment.

It also said costs and benefits for each country should be outlined and that each should allocate financial support proportional to the benefits they could expect from the project.

CRE president Philippe de Ladoucette told Reuters that in the past five years Spain had not exported one single cubic metre of gas to France.

“The Spanish energy commissioner pushes this project, but today there is no economic need for it,” he said, adding that Midcat would also not boost the security of EU gas supply.

EU Climate and Energy Commissioner Miguel Arias Canete, a Spanish national, met with French and Spanish energy ministers in Paris last year to discuss new power and gas infrastructure across the French-Spanish border.

Spain has the potential to reduce Europe’s reliance on Russian gas, as its chain of LNG terminals and its gas pipelines from Africa have a combined import capacity of about 80 billion cubic metres (bcm) of gas per year, more than three times Spain’s annual consumption.

Spanish energy companies have long complained that France is not doing enough to boost interconnections across the Pyrenees.

The CRE plays a key role in setting tariffs for gas and power grids as well as the financial returns of grid operators. ($1 = 0.8925 euros) (Reporting by Geert De Clercq; Editing by Ed Davies)

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