Gas Diplomat Says Gas is ‘Where It’s At’
Speaking in a session entitled Where will Europe get its gas? The Market’s View of the ‘Drivers of Supply’ at the European Autumn Gas Conference in Paris, France, Secretary General of The Energy Charter Secretariat, Ambassador Andre Mernier offered his organization’s views on how it saw the natural gas market developing and evolving in Europe, where the fuel’s prospects look good.
“Gas is abundant, and geographically diverse. We have diverse sources, being the Mediterranean Sea, Caspian Sea, Russia of course. It’s affordable and it’s politically acceptable - and I think that is very important – certainly more acceptable than nuclear, but also more politically acceptable than shale gas, at least in Europe, and even to LNG,” he said.
“We also consider gas as being the future in electricity, because it’s materialized relatively quickly and it’s also quite flexible,” explained Mernier, who added his conviction was that natural gas would remain the main source of energy for Western Europe.
“It will be piped gas. Although LNG does exist, it’s more a source of energy for Asia. Shale gas – maybe yes – but we have to solve the problems of political acceptance and of water. Many countries in Europe cannot have shale gas because of the demographics.”
Long-term contracts for natural gas, according to him, were also here to stay.
Ambassador Mernier stated that the Energy Charter, whose signatories number 51 European states, had a long history, but entered into force only 10 years ago. He explained, “We must go through parliament in every country before finalizing the participation of that country.” The Charter’s main goals, he said, were investment protection, securing transit and offering dispute settlement.
“Investment protection is more and more important,” he said. “A lot of new investments are needed in the energy world for the years to come. Be it LNG, be it pipelines – new routes – you need investment, even for renewables.”
Transit, he said, was a nagging problem for the natural gas industry as Europe had experienced in 2006 and 2009, referring to pipeline transit disputes between Russia and her neighbors in those years, resulting in the shut off of natural gas supplies.
For the moment, said Mernier, gas suppliers in Europe were trying to avoid transit problems. He commented: “The construction of Nord Stream is certainly going in that direction: directly from the suppliers to the consumers without transit countries. That is the case of Nord Stream and could be the case of South Stream.”
However, he said arbitration did work nicely through the Treaty, to avoid such instances.
The session’s moderator pointed out that Ambassador Mernier’s speech reflected a firm commitment pipeline gas in Europe - but what of shale gas and LNGs prospects?
“LNG has a bright future as well, the main reason being the need going to Asia,” said Mernier. “Japan and Korea have no natural gas resources and are close to the sea. It will be the same for China. Nobody can tell what the price will be in five years’ time.
“The industry is confident that pipe gas will stay as an answer, considering the realization of Nord Stream,” he said of Europe. “However, we still think that diversification is the magic bullet in energy, whether it be in routes, supply, or a good energy mix.
“For the moment, 80% of the gas will be provided by pipeline,” he reiterated.