Ref. Ares(2023)813653 - 03/02/2023
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Briefing for Director-General Juul Jørgensen

Request (ENER/6631) – Meeting with Gabriel e Gauthey, TotalEnergies

SCENE SETTER

Who
Ms. Gabrielle Gauthey, Total Energies
When  17 May 2022 at 11:30
Where  08/84
Why
•  Your role: Main interlocutor on DG ENER side
•  Purpose: Discuss the main topics that might be relevant for Total
Energies
Topics
•  Gas security of supply
•  Energy Platform
•  Gas package and regulatory framework
•  Energy prices

KEY MESSAGES
On gas security of supply
•  As decided in the conclusions of the European Council (EUCO) held at the end
of March  in Versail es, the European Union should aim at phasing out its
dependency on Russian gas, oil and coal imports as soon as possible,
bearing in mind national specificities, as set out in the Versail es Declaration.
•  Gazprom’s unilateral decision to stop delivering gas to certain Member States
(Poland and Bulgaria  –  check against time of delivery regarding Finland)  is
Russia’s latest attempt to use energy as an instrument of blackmail. As President
von der Leyen said, “this is unjustified and unacceptable”.
•  We are working on our detailed REPowerEU Plan, which wil  be presented in
the coming weeks.
•  The Commission also brought forward the security of supply and affordable
prices communication of 23 March and a legislative proposal to introduce a
gas storage obligation of 90% - and for this year 80%.
•  The Commission is working with the Member States to reinforce the
preparedness of the EU and its Member States to possible large-scale
disruptions of gas flows from Russia.  A first analysis  of our winter
preparedness for the last winter was done just after the start of the war. We are
now doing  a new review of preparedness ahead and during the winter  to
come.
•  The goal is to reinforce the security of supplies for all Member States. To do
this we have reassessed scenarios of partial and full disruption of gas flows from
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Russia and are helping all Member States revise their gas supply contingency
plans and better coordinate their efforts in a spirit of solidarity.
•  Our preparedness relies on our ability to substantially and effectively
diversify supplies from our main supplier and to fil  our gas storages before the
next winter begins. The more we develop biogas or renewable electricity to
replace natural gas and gas fired power plants, the better it is.
•  In case of partial or full gas disruption from Russia,  LNG  and alternative
pipeline supplies would need to play an even more important role to
replace the missing gas in the short term.

EU Energy Platform
•  The European Council gave a clear mandate to the Commission and Member
States to work together on voluntary common purchase of gas, LNG and
hydrogen, on security of supply and interconnectivity.
•  The Platform is articulated around three pil ars:
o  The first one is the aggregation of gas demand for (joint) purchase to
attract meaningful and timely supply volumes from the global markets;
o  The optimisation of infrastructure usage in the EU, be it LNG terminals,
pipelines and storages in order to maximise contribution to security of
supply, including through the replenishment of storage.
o  The coordinated outreach to international partners in order to prepare
ground for stable long-term cooperation framework with international
partners, looking beyond gas and including hydrogen and renewables.

•  The Platform wil  also consider the specificities of the gas market in various part
of the EU, through the Regional Groups. As a first operational case, a first
Regional Group was established under the Platform in Sofia.
•  When it comes to the aggregation of the demand and the possibility of joint
purchase,  there are  multiple options are currently on the table. Al  of these
options put the companies at the centre of the mechanism.
•  The Platform wil  also include the expertise of the private sector, potentially
through the establishment of a dedicated advisory group. The practicalities in that
respect stil  have to be defined but the inception shall happen in the coming
weeks
•  There is a clear progress on the coordinated outreach  where the dialogue
with the US is already delivering concrete results in terms of LNG deliveries

Gas package and regulatory framework
•  Renewable and low-carbon gases, including biomethane and hydrogen, will
help the EU to decarbonize its gas system.
•  They represent a sustainable alternative to importing fossil gas increasing energy
security and EU’s energy system resilience.
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•  The  Commission  published  last  December  the  Hydrogen  and  Decarbonised
Gas  Package.  These  proposals  cover  the  market  design  for  gases,  including
hydrogen,  and  access  to  existing  natural  gas  networks for  renewable  and  low-
carbon gases.
•  Package has 5 objectives:
o  Enabling  development  of  dedicated  hydrogen  infrastructure  and
market;
o  Facilitate  access  of  renewable  and  low-carbon  gases  to  existing  gas
network;
o  Fostering network planning electricity, gas and hydrogen;
o  Promote consumer protection and engagement in renewable and low-
carbon gas markets;
o  Improve resilience and security of supply.

Energy prices
•  Our goal is to keep energy prices affordable without disrupting supply nor dis-
incentivising investment in the green transition.
•  To address the current extraordinary circumstances, options for emergency
measures to limit the contagion effect of gas prices in electricity prices are
put on the table and discussed.
•  The  REPowerEU Communication of 8th March contains measures to
respond to soaring energy prices. It includes guidance for Member States on
regulating retail prices in exceptional circumstances, as well as redistributing
revenues from high-energy sector profits and emissions trading to consumers.
•  The Commission issued on 23rd March a third Communication setting out
options for emergency measures to deal with the impact of increased
energy prices.  Measures can include a financial compensation  (like the
introduction of a cap price on the fuel price for fossil generators) and or be a
regulatory action without financial compensation (like establishing a regulatory
cap for the maximum price that certain baseload generators can charge).
•  In the meeting of 24 and 25 March, the European Council tasked the
Commission to reach out to the energy stakeholders, and to discuss, if and
how, the options would contribute to reducing the gas price and addressing
its contagion effect on electricity markets, taking into account national
circumstances.
•  We are also looking carefully at the design of our energy markets, assessing
options  to  optimise the electricity market design to reap the benefits from low
cost energy.

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REPowerEU Plan
•  Tomorrow, the Commission wil  adopt a REPowerEU Plan, with further details on how
Europe intends to diversify its energy supplies and infrastructure in the years ahead.
•  It wil  present further measures to (i) phase out dependence on Russian fossil fuels; (i )
limit the impact of  high energy prices and; (i i) accelerate the transition to renewable
energy and become more energy efficient.
•  The European Green Deal wil  remain its central element. Full implementation of the
European Green Deal’s ‘Fit for 55' proposals could reduce our annual fossil gas
consumption by 30% by 2030. Together with additional gas diversification and more
renewable gases, frontloaded energy savings and electrification, we have the potential
to gradually  remove at least 155 bcm of fossil gas use even before  2030, which is
equivalent to the volume imported from Russia in 2021.
•  The REPowerEU Plan would include:
o  a partial update to impact assessments on the renewable energy targets to
support co-legislators as they negotiate the European Green Deal/Fit for 55
package.
o  coordinated actions to increase the production of hydrogen from renewable
energy.
o  a legislative proposal and recommendation on faster permitting, together with a
solar energy strategy, including a European Solar Rooftops Initiative, to support
more projects on renewables. Measures on biomethane are also in the pipeline.
We also foresee an EU-wide energy savings campaign.
o  measures to strengthen the supply chains of electrolysers, solar and wind
technologies and heat pumps. This includes reinforcing the circular economy,
and ensuring sufficient availability of skil ed workers.
o  revised guidance to modify national Recovery and Resilience Plans. [In relation
to this, the 2022 European Semester is likely to address some further country-
specific challenges in the area of energy, taking into account measures in
REPowerEU to curtail dependence on Russian energy and tackle high energy
prices.]
o  a new strategy on EU external energy engagement in a changing world. It wil
explain how the EU intends to implement the external aspects of RePowerEU. It
wil  focus on accelerating the global energy transition, diversifying Europe’s fossil
fuel imports and supporting partners most affected by the impacts of the current
energy crisis. The strategy wil  present global energy priority actions that are
mutually beneficial and reinforcing between the EU and international partners.
•  In view of the electricity market system the Commission wil  carefully analyse the final
ACER Report from 29 April and other contributions on the functioning of the electricity
market and wil  propose a way forward.

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DEFENSIVES

ON STORAGE PROPOSAL
Why is the Commission proposing a minimum gas storage obligation?
•  Current EU rules on the security of gas supplies do not sufficiently equip us with
measures to deal with today's security of supply risks and gas markets volatility.
•  Gas storage has an important role to play in guaranteeing the EU's security of
supply, covering, in a normal winter, 25-30% of gas consumed across the EU.
•  In addition, gas storage sites owned by some third country operators have been
particularly underfil ed.

Why 80% refilling target this year and 90% from next year onwards? How the
Commission came up with intermediate steps?
•  The 90% target reflects average historic EU storage fil ing levels (with an average of
87% in the last few years). This is also the target used by Transmissions System
Operators and the European Network of Transmission System Operators for Gas
when they do contingency planning.
•  For this year, we take into account that Member States wil  have less time to refil
their storage facilities because although we count on your full support to ensure a
quick adoption of our proposal, we do not know exactly when this wil  happen. This is
why we propose that for this year the refil ing target is of 80% on 1 of November.
Can we reach the 80-90% if there is a disruption of Russian gas?
•  This of course depends on the exact circumstances, and I don’t want to speculate on
that.
•  What is clear is that the sooner we start fil ing our gas storage and the sooner we get
close to that fil ing target, the better prepared we are for the next winter.
•  The Commission also stands ready to create a Task Force on common gas
purchases at EU level. This Task Force could be instrumental to help Member States
fill in the storage facilities.
What is the current storage level of gas in Europe?
On 9 May gas storage is at 36.16% in Europe.

RUBLES
Reports say some EU companies have paid in roubles for Russian gas, does this
go against your guidance?
•  First of all, we don’t comment on press reports, as you are aware – in particular
on anonymous comments by sources close to Gazprom.
•  Our advice is for EU companies to continue paying for gas supplies in euros, as
we believe this would stil  be possible in spite of the Russian Decree of 31 March.
•  EU companies could make a clear statement that they intend to fulfil their
obligations under existing contracts and consider their contractual obligations
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regarding the payment already fulfil ed by paying in euros or dollars, in line with
the existing contracts.
How does this decree breach our sanctions?
•  The Decree introduces a new payment procedure, whereby Euros or Dollars need to
be converted into roubles  for EU companies to be deemed to have fulfil ed their
contractual obligations
•  This process is entirely in the hands of the Russian authorities and would allow
Russia to involve the Russian Central Bank in the process.
•  This is prohibited under the EU sanctions.

DIVERSIFICATION
How much additional LNG can we expect and where would it come from?
•  Our assessment is that it’s possible to ramp up LNG supplies by 50 bcm a year. We
have already seen a significant increase in LNG deliveries, which reached record-
breaking 10bcm in January and remained historically high in February.

GAS PACKAGE (Unbundling)

What is the objective of unbundling?
•  Our objective is to create a hydrogen market with several players competing on a
level playing field, with transparent and free access to the network, ensuring the
most competitive price for consumers.
•  To get there, we need to ensure that no one can use an initial position of advantage
to acquire a market power that wil  prevent other players to get into the market or to
set prices in an arbitrary way.
•  This requires a clear separation of competitive activities, like supply or production,
from natural monopoly, like transport through the network.
Wil  gas network companies be able to have hydrogen networks?
•  Companies owning and managing hydrogen and natural gas networks should create
a new legal entity to deal with the hydrogen networks (e.g. as subsidiaries of a parent
company).
•  This means that companies owning hydrogen and gas networks can therefore be
owned by the same parent company. However, the two group entities should run
separate accounts and, as a general rule, the development of hydrogen networks
cannot be financed from revenues generated with natural gas network activities.

ACER FINAL REPORT: What are the main lines?
•  ACER published its full assessment of the benefits and drawbacks of the current
wholesale electricity market design.
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•  The market design  must deliver the signals necessary to incentivize
investments in renewables and to reach the objectives of the European Green
Deal on one hand, and mitigate price volatility to shield consumers  on  the
other hand
•  In particular, ACER report:
o  Explains why and how the current market design brings benefits, and detail
which challenges need to be addressed;
o  Proposes ways to improve the wholesale market design, in particular with
competitive and liquid long term markets enabling better “insurance” against
high prices
o  Addresses the retail markets with better consumer protection against price
volatility and bankruptcy of suppliers.
−  As tasked by the European Council, the Commission wil  follow up from this report
and make proposals to address the excessive electricity prices, by end of May 2022.

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BACKGROUND

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Document Outline