Europe shouldn’t swap energy dependency on Russian gas with a dependency on U.S. gas, but instead needs a diversified supply source, ENGIE executive vice president Didier Holleaux said during CERAWeek by S&P Global.
Amid uncertainties around future gas supply and demand scenarios, Holleaux told reporters March 8 during a press conference that diversification is the preferred strategy for Europe.
“It's a difficult issue, but we are working on that and expect there will be more contracts signed for gas dedicated to Europe with U.S. LNG producers... It could be Qatar. It could be piped gas from the Caspian Sea, it could be more gas coming from Algeria [or] Libya,” Holleaux told reporters. “We have to diversify. So, we do not want to replace overdependency to Russia by overdependency to the U.S. We want to have a balanced portfolio.”
However, the executive with Paris-based ENGIE was pleased with the lower emissions aspect of U.S. gas supply and LNG.
“I'm very happy to see that our colleagues in the U.S. gas industry are taking commitments and making great efforts to reduce their environmental footprint, be that in the production or the liquefaction stage,” Holleaux said.
In Europe, he said discussions are ongoing on two key matters, among others, about future gas supply. The first relates to Europe creating some type of central scenario about the makeup of its energy mix between now and 2045. The second, to decisions that could encourage companies to secure long-term gas contracts.
Those decisions will assist Europe to overcome its current energy crisis sometime in 2026 to 2027 at the latest, Holleaux said. “By then, we will have secured new sources of gas, which will put Europe back on track to be independent of Russian gas,” he said.
Moscow’s decision in February 2022 to invade Ukraine wreaked havoc on Europe as the continent was forced to scramble to find new gas supplies after drastic reductions in Russian shipments, allowing U.S. LNG to become an even more important supply source.
As a result, Europe boosted its LNG imports by 60% in 2022 to 121 million tonnes, offsetting lower Russian pipeline imports, energy giant Shell Plc said in a recent LNG study.
Shell LNG Outlook Highlights Risks to US Gas Market
Uncertainties around European LNG needs
Exactly how much LNG Europe will need this year is unknown, but will depend on prices in Europe and Asia and what China will do after reopening its economy, Holleaux said.
More difficult to predict is what affect China would have on supplies this year and next after slowing its conversion in 2022 from coal to gas to send LNG to Europe.
“In the short term, we very much depend on the price level and therefore… on the demand of all the regions of the world,” Holleaux said in response to a question from Hart Energy. “In the long term, then, we should be our own masters… [that] means that it's up to us, European players, to sign the long-term contracts, we need to secure supply of either pipe-gas or LNG to Europe in the long-run.”
Holleaux said Europe still faces uncertainties over the next three-to-five winters, but said Japan’s decision to restart some nuclear power plants would free up LNG and put downward pressure on the global energy market.
Diamondback Closes $1.55 Billion Lario Acquisition, Boosting Midland Basin Inventory
2023-02-01 - With the Lario Permian deal closed, Diamondback wraps up a pair of fourth-quarter 2022 deals in which it purchased private Midland Basin operators for a total of about $3.3 billion.
Arena Energy Acquires Cox Operating's GOM Shelf Properties
2023-01-25 - Arena Energy's acquired interests add to the company's ownership interest in the Eugene Island 330 and South Marsh 128 fields in the U.S. Gulf of Mexico.
Afentra Aims to Get More Black Gold Out of Brownfields
2023-01-24 - Former Tullow Oil CEO Paul McDade is leading a new company, Afentra, aimed at rejuvenating mature West Africa oil fields.
E&P Highlights: March 20, 2023
2023-03-20 - Here’s a roundup of the latest E&P headlines, including a Black Sea discovery and new contract awards in the upstream oil and gas industry.
Commentary: 2023 Global Conventional Brownfield Investment to Near $200 Billion
2023-02-27 - South America and North Africa to see brownfield investment growth.