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SPECIAL REPORT

energy source)”, says Thomas Barros-Tastets, a consultant in European public affairs for Gazprom. The European Commission predicts that both sources of energy will be complementary, at least, until 2030. After that, the role of natural gas in the EU energy mix is still unknown.

LNG opens new markets for Europe The price paid for Russian gas increased considerably in recent years, approaching the Liquefied Natural Gas (LNG), which helped the tariffs for the latter to become more competitive. LNG offers advantages over pipe gas for transportation over long distances, which makes diversification of sources easier. The expansion of LNG terminals became, therefore, a major threat to the safeguarding of the Russian market share, which may lead to a significant loss of revenue.

LNG currently represents 24 % of natural gas imports in Europe, with Qatar being its bigger supplier (Eurostat, 2010). Spain, UK and France are, on the other hand, the main consuming markets. Spain could already reduce its dependence on Russian gas, since 65% of its gas imports are LNG (BP). In Eastern Europe, where almost all the gas still comes from Russia, one LNG terminal is being built (Poland), and some others are already announced (Estonia, Latvia and Lithuania), which might reduce the overdependence that those countries have with Russia. The transport between the production site and reception is done by ships specially built for this purpose. The production, transportation and regasification of LNG are operations that require high investments and losses of 10 to 15% of gas during the process, much more than an equivalent transport by pipeline (loss between 1 and 2%). This makes the choice of LNG restricted to cases where pipelines are not technically attainable

(deep seas crossings) or where the transportation distance in pipelines is too long.

Shale gas convinces US, but not Europe The new technique of natural gas extraction from shale rocks is shaking the global energy market. Unconventional gas production was nearly 60% of total gas production in the United States in 2010, where shale gas is expected to remain the main source of growth in overall gas supply in the coming decades (World Energy Outlook, 2012). In Europe, some exploration projects have been initiated by countries such as Poland or the United Kingdom, but the results are not visible yet. “There is nobody with an interest in making it happen, except the oil companies”, justifies Simon Blakey, special envoy for Eurogas, While Western Europe has a considerable environmental and political opposition to the exploration of shale gas, some eastern states strongly support the exploration and production of this gas, for geopolitical reasons. Last year, France was the first country to ban the use of this technology due to the danger of water contamination by the chemicals used in the extraction process. On the other hand, Poland is eager to explore its reserves of shale gas, the biggest in Europe, as an opportunity to reduce its dependence on gas supplies from Russia

Nord Stream to link Russia to Great-Britain

The president of the big Russian gas company, Gazprom, has announced that the Nord Stream pipeline might link Russia to Great-Britain thanks to an additional pipe under consideration. He added that the British oil company, BP, showed some interest in the project. The Nord Stream, inaugurated in September 2011, links Russia to Germany under the Baltic Sea. This 1.220km long pipeline was built to avoid the frequent gas disruptions due to arguments between Russia and Ukraine. The pipeline is owned by a consortium composed of Gazprom (51%), the German companies BASF and EON (15,5% each), the Dutch Gasunie (9%) and the French GDF Suez (9%). If the new section was built, the funds could come from a different set of shareholders. But no agreement has been reach at this point.

EUROPEANBUSINESSREVIEW

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Profile for European Business Review (EBR)

European Business Review (EBR) 03/2013  

Issue 3/2013 of EUROPEAN BUSINESS REVIEW (EBR) magazine

European Business Review (EBR) 03/2013  

Issue 3/2013 of EUROPEAN BUSINESS REVIEW (EBR) magazine

Profile for ebreview
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