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    Natural Gas - Fuel of the Future

Summary

Serbian PM’s adviser for energy affairs, Dragutin Matanovic, and Leonid Grigoriev, Chair of World Economy said at Gas Dialogues event South Stream: The Evolution of a Pipeline that natural gas is “the future of humankind as far as energy is concerned.”

by: Igor Jovanovic

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Natural Gas - Fuel of the Future

The Serbian prime minister’s adviser for energy affairs, Dragutin Matanovic, and Leonid Grigoriev, Chair of World Economy, Research University – Higher School of Economics, Moscow, have said that natural gas is “the future of humankind as far as energy is concerned.”

Addressing participants of the conference titled South Stream: The Evolution of a Pipeline in Belgrade on July 11, Matanovic said that “energy, plentiful and cheap, created the high level of civilization at which humankind is today.” “Unfortunately, most of that energy that we are using comes from fossil fuels, which are finite and the end of which is in sight. The first to go will be oil. Regardless of the savings the West achieves by conserving energy, and thanks to modern technologies and low economic growth, consumption in India and China is so high that even Saudi Arabia will be an oil importer in 30 years or so,” the prime minister’s adviser said.

According to him, since 2005 oil production has been relatively the same; it peaked in 2008 and is now being maintained at a similar level thanks to the production of oil from biofuels, “which are extremely expensive and are competition to food production.” “The biggest oil sources are gradually dying out, with an annual decline rate of about five percent, and there are no new large oil fields, nor will any be found. The oil obtained from great sea depths is very expensive, complicated and environmentally hazardous. That does not mean the end of oil, but there will be no more cheap and available oil,” said Matanovic.

Professor Grigoriev, who is also the chief adviser of the head of the Analytical Center of the government of the Russian Federation, said that the world, if it wanted to accomplish a breakthrough in the field of energy by 2035, should switch from coal to natural gas. In his words, gas as fuel has a future, but that is not always merely an economic, but also a political question. 

On the other hand, Matanovic said the end of cheap coal exploitation would come in 2025. “Gas is something that is the future of humankind when it comes to energy, and it is assumed that around 30 percent of cars will be natural gas-fueled soon,” said the adviser to the prime minister.

According to him, this is why the geopolitical importance of the South Stream pipeline, which is to bring Russian gas to Italy via Southeast Europe, is growing. “On the other hand, the US diplomacy is inciting alternative projects and alternative routes of supplying Europe with energy, believing that to be a way of diminishing the Kremlin’s political role. However, North Stream, which was made predominantly thanks to Germany, and South Stream, where Germany will also play a very important part, prove that this battle has been lost,” Matanovic said. 

He further said that the supplies of shale gas were not excessive, but that thanks to shale gas production the US has become a global leader in gas production, with some 745 billion cubic meters per year, 40 percent of which is gas made from shale and methane. “However, the main issue the western media are not considering is the price of research – 21 billion dollars were spent in the US mid-2010, as well as the profitability of that fuel, and serious environmental problems primarily for potable water, caused by the production of shale gas,” said the adviser.  

“Western experts do not expect US shale gas deliveries to be any competition to Russian natural gas. The gas from Russia and Eurasia is far more profitable and environmentally cleaner, which is why South Stream is so important. It will certainly contribute to the tighter connecting of the states it runs through and their closer connection in Europe,” Matanovic concluded.

Grigoriev said the chief problem for the coming generations would be the economic crisis in Europe and the OECD countries, due to which there will be no significant GDP growth at the global level in the next 30 years or more. Moreover, the conspicuous rise of the Earth’s population will cease (the UN expects 8.9 billion people by 2040), and the world will need about 10 trillion dollars worth of investment in the energy sector alone.

The developing countries of Asia and Africa will see 90 percent of the absolute growth of world population, which will become a major driver of energy demand. It is expected that around 2040, 73 percent of the world’s population will live in the Asia-Pacific Region and Africa. Of all the OECD countries, only North America will experience a more noticeable increase in population of up to 24 percent.

The power sector, which is the main field of competition between all energy resources and numerous technologies, will also diversify its fuel mix: its gas consumption will increase by 2.5 times and gas will provide more of the expected increase in electric power generation than any other type of fuel. The use of non-carbon energy resources will also grow rapidly, increasing by more than 40 percent by 2040, Grigoriev added.

He went on to say that after the economic crisis Europe had to an extent gone back to coal consumption, but added he did not think that was a long-lasting trend. According to him, there will be oil in the future, but all who expect it to be cheap are wrong. Also, as Grigoriev put it, the gas produced from shale will not mean much to the European market. 

Igor Jovanovic