Three gas sources for Europe

By Vestnik Kavkaza

“Liquefied natural gas from the USA won’t save Europe from Gazprom in the near future. In the USA the energy power industry and production of LNG are controlled by private companies which will react to market factors rather than political orders. Today LNG prices are much higher in Asia than in Europe; and if the US becomes a serious LNG exporter, the majority of LNG carriers will be sent from the US to Asia,” the Center of Energy Expertise cites Jeffrey Mancoff, the deputy director of the office in Russia and Eurasia of the Center of Strategic and International Studies. According to him, Europe will probably seek alternative gas sources, especially through the South Corridor: “Today it is Azerbaijan, in the future it could be Iraq or Iran, Turkmenistan, or some combination of all of these countries, so that the EU has several gas exporters.”

According to the chairman of the State Duma Committee on Energy, Pavel Zavalny, total gas consumption in Europe last year was 480 billion cubic meters of gas. Admission during the best years of consumption reached 520 billion cubic meters and more. Europe itself produces approximately half of its gas, about 240 billion cubic meters. And half of its gas is exported, 50% are exports. Gazprom and Gazprom expo supplies in different years 150-160 billion cubic meters of gas, essentially providing 30% of the total gas consumption in Europe. And the trend is such that, according to the forecasts of almost all analysts, the demand for gas in Europe will grow. The growth rate will be small – up to 1%. At the same time, by 2035 gas demand in Europe will exceed 600 billion cubic meters. And while private production falls, the rate of decline is 2% per year.”

An increase of gas imports is necessary. The import volume may amount to 440-450 billion cubic meters. Even if Gazprom set itself the objective of maintaining the share of 30% at this level, it means that Gazprom has to secure supplies at the level of 200 billion or more against today's 160 billion.

“The EU is thinking how to provide this increase in demand for gas, because gas will replace coal in power generation as more eco-friendly. And this is a trend. This demand will be met by three sources. There is the supply of gas from Russia. Secondly, LNG is planned to meet the demand for liquefied natural gas by 20-30%. Terminals have been constructed for this. Thirdly, supplies of gas from the Middle East, Central Asia and in the framework of the so-called "Southern Corridor", one of the goals is ensuring delivery at the level of 60-120 billion cubic meters of gas. So now there are intensive negotiations, including with Turkmenistan and Iran.”

According to Zavalny, “if you take the gas demand in Europe as a whole, the development of infrastructure, Central Europe, including countries such as Hungary and Austria, almost all the Baltic States and Finland, as well as the countries of South-Eastern Europe – the Czech Republic, Bulgaria, Slovakia – they are very dependent on Russian gas, Gazprom is virtually the only supplier of natural gas. And in order to reduce transit risks, which we have all been facing during the subsequent 20 years after the collapse of the Soviet Union, the transit risks are associated with transit through Ukraine, and the idea of the "South Stream" appeared. And when the ideas appeared, there were two options considered for laying the track – through Turkey and through Bulgaria. Then it was selected to do that through Bulgaria. The project was developing that way to a certain point. But when it was time to begin to build in accordance with the construction schedule and arrangements with potential investors, to enter the maritime part of the pipeline, a building permit was not received. That is why the old idea of construction of the Turkish Stream appeared on the agenda.”