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Gas sources for the CZ

The growing demand for gas in strategic sectors (heating and electricity industries) brings the risk of greater dependence of the Czech Republic on foreign raw materials. Only 2% of gas on the Czech market comes from domestic production; the rest of the consumption was covered by imports, mainly from Russia (physically almost 100%, in terms of trading around 64%). Import dependence would not decrease significantly with the greater utilization of domestic non-conventional sources of gas.

The results of analyses show that domestic production could be increased by approximately 1.9TWh (183 mcm) of synthetic methane, produced by P2G technology. Such a level requires the maximum development of renewable (in particular photovoltaic) sources, for which the inclusion of seasonal accumulation is necessary. The use of biomethane is also possible. Injection of biomethane is not assumed in The Long-term Balance. However, it could be 8TWh (750 mcm) of energy. Shale gas reserves have not been determined in the Czech Republic yet, and therefore it is unlikely that they would significantly influence the dependence of the Czech Republic on gas imports in the examined horizon.

In 2017, the twenty-year contract on imports of Norwegian gas has already expired. However, in recent years, Norwegian gas has contributed to imports only in minimal volumes, and it has been profitable to buy gas for the Czech Republic at European hubs. The share of gas from traditional European producers, like Norway, the Netherlands and Great Britain, will begin to decrease at the European level due to diminishing production. The potential growth of demand for natural gas will be covered to a greater extent by gas supplied from Russia and gas in the form of LNG. The increased demand for Russian gas will have to be adapted to transmission routes. One of the major unknowns is the future of the transmission route going through Ukraine.

Synthetic methane and domestic production

UNIT GAS TYPE VARIANT 2018 2020 2025 2030 2035 2040 2045 2050
mcm Domestic production
(without shaft gas)
 Conceptual 148  148  148  148  148  148  148  148 
 EU – Energy Savings 111  111  111  111  111  111  111  111 
 EU – Low-Emission Sources 185  185  185  185  185  185  185  185 
Synthetic methane  EU – Energy Savings 52  62 
 EU – Low-Emission Sources 24  87  183 
 GWh Domestic production
(without shaft gas)
 Conceptual 1,570  1,570  1,570  1,570  1,570  1,570  1,570  1,570 
 EU – Energy Savings 1,177  1,177  1,177  1,177  1,177  1,177  1,177  1,177 
 EU – Low-Emission Sources 1,962  1,962  1,962  1,962  1,962  1,962  1,962  1,962 
Synthetic methane  EU – Energy Savings 551  661 
 EU – Low-Emission Sources 42 255  919  1,943 

Medium-term horizon

By 2020, Russia will be supplying natural gas to EU countries using all the currently available major transit routes. After 2020, they will limit the transit of gas through Ukraine to a level that will depend on the new transmission routes (Nord Stream II and TurkStream) and the demand for Russian gas in the EU. Nevertheless, analyses show that at the anticipated level of demand in the EU, Ukrainian transit will still be used until 2030 in all three scenarios of the development of transmission routes. In terms of supplying gas to the Czech Republic, this situation does not pose a significant security risk. The majority of natural gas for the needs of the Czech Republic is already being supplied from west, i.e. without using the Ukrainian transmission route. From a financial point of view, the termination of or a reduction in Ukrainian transit would bring advantages to the operators of the Czech transmission system due to the redirection of supplies to Italy and Austria via the Czech Republic.

An access to LNG terminals in Poland (Świnoujście) and Croatia (Adria) may be beneficial for the Czech Republic in terms of the expansion of the source portfolio, but given the parity price of LNG and Russian gas in Europe, interest of traders in supplying the Czech Republic from these terminals is very unlikely. In the event of a crisis (e.g. disruption of supply from Russia), the provision of gas from the LNG terminals in Świnoujście and Adria to the Czech Republic could only occur hypothetically. The joint capacity of both terminals will reach 13 bcm a year at most, while the consumption of the countries associated to the North-South corridor – Croatia, Slovakia, Hungary, Austria, the Czech Republic and Poland – is around 48 bcm a year (of which only Poland consumes 17 bcm). Because Poland does not have any significant gas storage capacities (3 bcm); its consumption in case of crisis would be covered most likely from the Świnoujście terminal. On the other hand, Slovakia, Hungary and Austria have high storage capacity (18 bcm in total) when related to their annual consumption (23 bcm in total). Therefore, in a crisis, they could cover their consumption using their gas storages.

Long-term horizon

In the long-term horizon, the utilization of gas sources for the needs of the Czech Republic will depend significantly on the situation on European markets. A greater share of LNG supplies is anticipated, also from the areas so far not used (the US, Canada), together with supplies of gas from Russia. If all three stages of the Southern Gas Corridor are finished successfully, the offer on European markets, including the Czech Republic, could be supplemented by gas from the areas of the Caspian Sea and the Middle East. In terms of volume, until 2050 the supply of gas to the Czech Republic is not threatened, even given the greatest development of demand according to the Conceptual case study. In terms of diversification of transmission routes for gas supplies to the Czech Republic, there is a risk of growing dependence on Russian gas if the North-South corridor and the connecting foreign transmission routes are not built.