France, Spain, Portugal Agree to Build BarMar Pipeline
- October 21, 2022
- Posted by: Quatro Strategies
- Category: Energy
France, Spain and Portugal agreed on Thursday to build an underwater pipeline to carry hydrogen and natural gas from Barcelona to Marseille, substituting the previously proposed MidCat pipeline across the Pyrenees, which France opposed. The pipeline, called BarMar, is set to be used to carry green hydrogen and other renewable gases in the long term but will also be used temporarily to deliver natural gas to help ease Europe’s energy crisis. Europe has been scrambling to secure alternative energy supplies since Russia has progressively slashed gas exports in response to Western sanctions.
The pipeline “is a response to calls for solidarity from our European partners in the face of Putin’s blackmail”, Spanish Prime Minister Sanchez said in Brussels, where the three leaders met on Thursday.
French President Macron said it was “imperative that Europe remains united”.
“It’s good news, one of Europe’s oldest blockades has been overcome,” Portuguese Prime Minister Costa said, referring to a stand-off between Portugal and Spain vs. France regarding the MidCat pipeline. The two Iberian nations wanted to extend the pipeline so they could sell gas to Central Europe, but France has opposed it arguing it would take too long to build to resolve short term supply issues.
Spain and France also agreed to speed up an electricity interconnection through the Bay of Biscay and identify and work on other connections between the two national grids, according to a joint statement.
The three leaders also agreed to meet again in Spain on Dec. 9 to decide on a construction timeline and funding options.
Amid resistance from France, Spain and Italy had previously broached the idea of building an underwater pipeline between the two countries.
In the meantime, Spain had been pushing for France to accept the MidCat project, which would have required the construction of 100 km of pipeline to the French border.
Spain had argued that the extension of the pipeline could be completed in less than a year while France said it expected the construction would take several years.
Spain is one of the world leaders in green hydrogen investments, accounting for 20% of global investment announcements in the first quarter of 2022, second only the United States.
Among the Spanish companies developing green hydrogen is oil and gas group Cepsa, which will spend €7-8 billion to transition its business to low-carbon energy sources by 2030.
As for natural gas, Spain has six terminals allowing it to bring in LNG and convert it into its gas form, and three storage facilities, while Portugal has one.
They are all near full capacity as consumer demand for gas on the Iberian peninsula has been lower-than-expected due to an unseasonably warm autumn.
Spain has the biggest regasification capacity in the European Union, accounting for 33% of all LNG and 44% of LNG storage capacity. The United States and Nigeria are among key suppliers of LNG to Spain, which also receives piped gas from Algeria.
As demand has been low and storages full, gas prices in the Iberian peninsula fell to their lowest in almost six months. The peninsula also doesn’t have the pipeline infrastructure to deliver gas to other parts of central Europe where there is demand.
Countries which have been historically more exposed to Russian flows, including Germany, have been looking to replace the volumes lost because of Russia’s decision to cut supply.
Germany received first direct gas deliveries from France through a pipeline link under a deal aimed at helping both countries cope with current energy supply problems.
France is less exposed to Russian imports than Germany. Most of its gas comes from Norway and via LNG shipments. France will at first deliver 31 GWh per day, using a pipeline in the Moselle region.
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