Ban on Shale Imports Could Hurt France: Lobby Group
As France’s energy and environment minister Segolene Royal seeks a ban on shale gas imports from the US, Jean-Louis Schilansky, director of the Non-Conventional Hydrocarbons Center (CHNC) questions the feasibility of the proposal and its potential consequences in an interview with NGE. Schilansky also stresses the benefits of US imports for the European gas market.
Mr Schilansky, Segolene Royal told lawmakers May 10 she is willing to find a “legal way” to prevent the import of non-conventional US LNG and asking French companies in contact wiith Cheniere Energy to look for other sources of supply producing only conventional gas. As an expert on issues related to shale gas developments, do you think her proposal is feasible giving the fact that half of the US LNG comes from shale gas resources?
First, let’s acknowledge that there is no difference between conventional and unconventional reserves. It’s the same product. In the US, they all go into the same pipes. There is no way to segregate shale gas from gas of other sorts of gas. It’s not a surprise. We knew that the US will export some of its gas resources. We have seen the construction of export terminals followed by the first exports.
EDF and Engie, which signed contracts with Cheniere, see US LNG as an opportunity to diversify the supply.
If we are serious about not importing non-conventional resources, we may have to ban all gas imports from the US but shale gas is not just an American phenomenon, it’s getting global. Others countries will develop their own non-conventional resources. Relying on countries which are exporting only conventional gas may be possible today but what are we going to do if Russia or Algeria start producing shale gas? Stop imports from these two countries? A ban on US imports into France would raise questions for the future. Moreover, we should look if such a decision would be in conformity with European and international free trades agreements.
Gas suppliers including Russia, Norway and Algeria may be exporting only conventional resource but we should also look at the environmental conditions in which the Russian gas is produced and transported through thousands of kilometres of pipelines. If we are raising environment concerns, we’d better look at the broad picture.
US LNG may raise some concerns in France, it may also provide new opportunities with lower prices.How might the arrival of US LNG reshape the gas market in Europe or “disrupt the old order” as Cheniere's Vice President for Strategy Andrew Walker recently argued during a conference organised by the Atlantic Council in Washington DC on 28 April?
The entry of a new competitor in the European gas market will undoubtedly have an impact on gas prices. First, it will be limited giving that US imports will represent a small part of all imports but if the volumes increase, and they certainly will, it’s going to reduce the energy bills for consumers.
Energy prices are regulated but they will include new transportation costs. US imports will likely create a new market balance with lower prices across the board: not just American imports but also from Russia and Norway. Don’t expect miracles either, as gas prices are already low in Europe. It going to be a problem for historic gas exporters to Europe. "A new order" may be a little bit exaggerated but still it’s a major development.
Europe is a priority for US exports with South America: Brazil has already received its first US LNG – then there will be imports to Asia, Japan in particular. The European market is very accessible."
Thank you very much, Mr Schilansky