The global gas industry has experienced an extraordinary evolution over the last decade. The shale gas revolution in the United States has reshaped the world gas outlook, and the rapid expansion of LNG trade has redesigned global natural gas dynamics. These two pressures are rapidly converging, possibly paving the way towards the progressive globalization of the world’s natural gas markets, and creating new dynamics also in the European gas industry, as far as the EU security of gas supply architecture and the EU gas pricing mechanism are concerned. In this context, the European gas industry is presently facing a number of new challenges, but also some opportunities, in terms of both demand and supply.
On the demand side, gas is being squeezed not only by the economic crisis and EU climate policies, but more concretely by the increasingly widespread availability of renewable energy sources with extremely low marginal generation costs on the one side, and by the availability of low priced coal, partly imported from the US, where it has been displaced by cheaper gas, on the other. Under these circumstances, oil price indexed natural gas cannot compete against the large scale availability of subsidized renewables and imported coal from the US.
On the supply side, new natural gas supplies are emerging around the world. By the end of the present decade, the increase in global LNG supply - developed particularly for the far eastern Asian markets - is expected to be stronger than the LNG demand evolution in these markets. LNG supply could thus spill over to the European markets, recreating a gas glut with potentially important consequences on global and European gas market equilibria and pricing mechanisms.
The interviews to the experts attending the second edition of the "FEEM Gas Talks", held in Milan on 5-6 November 2013, provide a snapshot of the various challenges and opportunities facing the European gas industry, in the attempt to shed light on a market characterized by growing uncertainty and volatility. In particular, they address the question of future European gas demand and pricing mechanisms, the future development of the global LNG markets and consequences on global LNG pricing, the issue of future gas governance and regulation in Europe, including the tasks left over for the new European commission, as well as the new challenges/opportunities of the EU-Russia gas partnership and of the potential availability of new gas sources from the Caspian and the Eastern Mediterranean.
European gas demand outlook: how to boost it
What are the main challenges of the European power and gas industry in the coming years? How to boost gas demand in the power sector in Europe? What are the main challenges to integrate the rapidly growing renewable share in the European power sector and how to address them?
Jacqueline Bucher, GDF Suez
Future of gas pricing
Are the world gas markets converging towards a single price benchmark? How will the LNG developments in North America and the Pacific influence European gas markets? What regulatory steps should be addressed to create an efficient and functioning European wholesale gas market?
Anne-Sophie Corbeau, International Energy Agency
Michele Polo, Bocconi University and IEFE
Future governance of European gas
What are the main challenges for the European gas industry in the coming years? What are the tasks left over for the next European Commission concerning energy and gas issues? What is the meaning of the new concept of “Schengenization of European energy policies”?
Jacques de Jong, Clingendael International Energy Programme
Gas supply for Europe: new developments, challenges and opportunities
How is the EU-Russia gas partnership evolving? What will be the role of the Caspian region in future European gas supply? What are the gas export challenges and opportunities of the Eastern Mediterranean?
Arild Moe, Fridtjof Nansen Institute
John Roberts, Methinks Ltd and Former Energy Security Specialist at PLATTS
"FEEM Gas Talks", Second edition, Milan, 5-6 November 2013
"FEEM Gas Talks", First edition, Milan, 13-14 December 2012