Threats on the European gas market
- Written by Lavinia Iancu
The recent European natural gas conference, held in Vienna at the end of January, has underscored the main challenges to the industry in the current steep decline in price of the barrel of oil. The development potential of the market for liquefied natural gas (LNG) - the new attraction on the EU’s energy agenda, under flexible trading (investments, strategies, medium-term outlook) and its integration in the global market, the shift to competitive economy based on low carbon dioxide emissions by 2050, reducing the share of coal in the energy mix, the security of supply and the diversification of routes and sources of gas supply to Europe, as well as the cooperation between the EU and Russia were the main topics of discussion.
The first warning came from OMV, from the company’s CEO, Reiner Seele, who believes that in the current market conditions only the companies which manage to remain profitable, to keep costs under control and act flexibly will survive. Despite the commitments from big players in the oil and gas industry after the Paris International Conference on Climate Change (COP 21), Rainer Seele believes that for the time being the fossil resources will continue to play an important role in the energy industry.
The low prices for raw materials are also reason of concern for Russia, Austria’s sustainable partner, as the representatives of Gazprom warned that a possible future crisis on the gas market is likely, as prices continue the downward trend.
According to Russian energy giant Gazprom Chairman Viktor Zubkov, the gas prices could fall by a third in Europe in the first quarter of this year, to USD 180/1,000 cubic meters, while exports will remain unchanged against 2015. He also believes that only a few countries will be able to continue investments in the coming period due to low crude oil quotations, which will create major problems on the gas market. Zubkov called for a balanced cooperation between partners, stressing that Russia will remain a reliable gas supplier to Europe.
In terms of security of supply and diversification of sources and routes for natural gas transportation in the region, Alex Barnes, Head Regulatory Affairs with Gazprom Marketing & Trading, continued the Gazprom representatives’ pleading to extend the Nord Stream, a project supported by the Netherlands, Germany, France and by Austria, saying that the project is in full accordance with all five pillars of the European energy union.