Interview: Abdul Rahim Hashim, President of the International Gas Union
Natural Gas Asia recently spoke with Dr. Abdul Rahim Hashim, President of the International Gas Union (IGU) regarding the future of natural gas. The IGU is a global association aimed at promoting the technical and economic progress of the gas industry.
1) Natural gas is often portrayed as a fuel that is a 'bridge to the future", i.e. until replaced by renewables. What is the role of natural gas as a permanent part of a the global energy mix?
A: Natural gas is definitely not a fuel that is “a bridge to the future.” It has been around for a long time, about 250 years. The presence of natural gas has not pushed renewable energy to the backseat. Instead, gas plays a complementary role to renewable energy. Inexpensive and efficient, the use of gas helps to achieve a better utilization of energy.
2) Often portrayed as the "greener fuel", is natural gas really the “responsible choice”?
A: Yes. The use of gas produces carbon, but we can use biogas. The way to use gas in a “greener” way is to take the carbon out – to sequester carbon so that it does not pollute the environment. For instance in Holland, they use the Carbon Capture and Sequestration (CCS) technology to reduce the amount of carbon dioxide released into the atmosphere. Holland also uses the carbon dioxide produced for other purposes.
3) In the World LNG series last year, you spoke of the changing dynamics and opportunities and challenges. How has this dynamic changed in Asia? In terms of infrastructure, volume of imports, price, etc?
A: It has been a decade of significant progress since the year 2000. Unconventional gas now is flourishing. Global LNG supply was at 107 MTA in 2000, and in 2010, the global LNG supply was at 221 MTA, and set to increase from this year onwards. In 2000, there were only 38 LNG regasification terminals, in 2010, there were 84 LNG regasification terminals. Today, we have a more transparent fuel market.
4) What do you mean by a more “transparent” fuel market?
A: When I say a more “transparent” fuel market, I am referring to the global changes in gas prices. In Europe, for instance, there is a mix when it comes to price determination. Though there is still a linkage to Brent or oil product, gas prices in Europe are moving towards Henry Hub prices. Even though Asia pays a premium for LNG – we are paying $12-15/mmBtu – it hasn’t stopped the surge in demand for gas. It goes to show that Asian economies can afford these high prices. The question of affordability doesn’t seem to come into the picture. Even so, we are beginning to see some changes in the gas market in Asia. There are maybe spot cargoes, and some sort of bidding being done in the open market. This is a change from 1969 where such bidding was not observed. I still firmly believe that it should be the market deciding what gas prices should be because the inherent goodness of gas can be discovered that way.
5) The shale gas revolution in the United States is set to turn that nation into an exporter of gas. How will this change the supply and demand dynamics of natural gas?
A: I think the shale gas revolution has given the US some benefit in exporting gas. The US has become a potential global exporter of LNG. But I don’t think that will affect the Asian market as much. The volume of gas exports is not that big to have an impact on the dynamics of demand and supply of gas, and thus a fairly small effect on price.
6) One of the major challenges is the absence of a unified market for natural gas. How long do you think it’ll take for Asia (and the rest of the world) to trade gas at Henry Hub prices?
A: I think it will take a long time before that will happen, if it happens. There are a lot of buyers and sellers in the market but they are in long-term contracts. The high prices Asian countries pay do not come as huge costs to them. So the move towards Henry Hub prices will not happen in the near future.
7) Who do you think will be the major suppliers of natural gas to Asia? Is it the U.S.? or Australia?
A: The U.S. will not be a major exporter of gas to Asia because of the many infrastructure problems that still exist. Australia is set to overtake Qatar in gas exports by 2020 as it enjoys huge advantages in terms of distance. In addition, there are already existing relationships between buyers in Asia and sellers in Australia. There is a certain level of comfort there and the buyers tend to go back to their suppliers. So, Australia holds the key to supply in Asia-Pacific.