On 4 October, a plenary meeting of the 8th St. Petersburg International Gas Forum took place, The role and significance of natural gas in the energy balance of the world economy.
Leading world experts of the gas sector shared their opinions on the top trends of the gas market and discussed the current status of the gas industry development and its long-term prospects.
Alexey Miller, Chairman of the Management Committee of Gazprom, welcomed the delegates of SPIGF-2018. He noticed that St. Petersburg became the headquarters of Gazprom, the leading energy company across the globe, and that the venue of St. Petersburg International Gas Forum keeps expanding. This year, SPIGF was participated by over 5,000 delegates from 51 countries.
“Today, the most large-scale expositions are exhibited at the 8th St. Petersburg International Gas Forum. The key exhibition is dedicated to import substitution in Russia’s gas industry. Every thing presented in the exhibition is rather impressive. Indeed, it is the forefront of global technological innovation. The technologies and equipment showcased at the exhibition do not just comply with the most advanced global standards, but outperform them by one or even two generations. Here, you can see what Russia is doing, how it is being done, and how far ahead we are. We have something to be proud of!” said Alexey Miller.
Alexander Beglov, Acting Governor of St. Petersburg, greeted the delegates, too.
“Gas industry actually started in our city – in 1818, the first ever gas lamps were lit at Aptekarsky Isle. You bring people warmth and light. Thanks to you, our city is illuminated,” said he.
Alexey Miller, Chairman of the Management Committee of Gazprom, told about gas market prospects up to 2025. According to forecasts, global demand for gas will steadily grow, and there are no threats from other energy resources in this regard. According to Miller, Gasprom predicts an increase in demand of 17% by 2025, and the major share of this global demand (about 30%) will be China’s.
“The key market for Gazprom is Europe. This year, we celebrate the 50th anniversary of the first contract for Russian gas supply to Europe. In 2017, Gazprom supplied 194.4 bln m3 to this market, which is 8.4% more than in 2016. Today, we see an increase of 6%, which is already much higher than in the previous record year,” said he.
In 2018, Gazprom is expected to set a record in its gas supplies to Europe – volume of gas supply is going to exceed 200 bln m3, or can even reach 205 bln m3. According to the speaker, this is the maximal annual contractual amount provided for in all the company’s agreements for European supplies. This suggests a new system of axes, which implies that the seller’s market has been shaped in the Europe’s gas market. Demand for Russian gas keeps growing. Nord Stream gas main is 100+ % demanded as the gas export corridor from Russia. After January 2020, the company will be able to start gas supplies through Nord Stream-2. In 2 months, the company is going to complete the marine section of TurkStream pipeline.
Alexey Miller told that with its resource base of 35 bln m3 Gazprom will be able to satisfy any demand in the Russian, European and Asian markets.
Speaking of the Asian market, demand growth here is to a large extent covered on the account of LNG supplies. In China, record increase in gas demand is expected: in 2017, it grew by 15.3%, and since the turn of 2018, it has already increased by 17.5% more. Alexey Miller emphasized that pipeline gas supplies, unlike LNG, can balance peak demand during winter. This is why for objective reasons import of pipeline gas is going to increase in the Chinese market. On 20 December, 2019, Gazprom is going to start first supplies of pipeline gas to China through Power of Siberia line. Moreover, the company is engaged in negotiations about the new gas transportation routes.
Maarten Wetselaar, Integrated Gas & New Energies Director, Member of the Executive Committee, Royal Dutch Shell, expressed his appreciation of high organization standards at the St. Petersburg International Gas Forum, a great venue for industry-specific dialogue.
The expert told about the joint project Breaking Free to Breathe? (In all the lungs) of Shell Russia, Skolkovo Business School and Russian bloggers. The project included air purity assessment in three Russian cities – Omsk with its coal power station, Yuzhno-Sakhalinsk going through a coal-to-gas transformation, and Samara, where natural gas is used as a fuel.
“We want our message to go beyond the industry-related audience. New markets for natural gas should be discovered. We need to create a bright future!” said M. Wetselaar. According to him, global gas volume increased by 50% since 2000, and LNG volume increased thrice. In the next 20 years, he expects increase in both natural and liquefied natural gas.
The expert believes that the gas sector should be included in the political policy – natural gas should replace coal globally, and it is necessary to cut industry costs to make gas available to consumers, as well as to check the ecological footprint. Moreover, it is necessary to consider minor gas markets and help island countries like Bahamas switch to LNG and thus, make their environment more sustainable.
Speaking of China, Wetselaar remarked that LNG is highly demanded in the motor transport sphere, and Shell is building its infrastructure there.
“Heavy vehicles are a major energy consumer, and we need an infrastructure at hand. Another serious consumer is vessels. Natural gas has a bright future, but we’ll have to make certain efforts for it to arrive. We see Gazprom as the main gas supplier. If coal replaces gas, even snow will be cleaner in Russia. We are ready to cooperate, to discover new markets together and to offer the best products to our consumers!” he declared.
Rainer Seele, Chairman of the Executive Board, CEO, OMV, shared a review of the European gas market. For instance, gas production in Europe is being reduced, so the import will increase, and the gas demand will retain.
“Gas helped us to cope with cold winters, and we see great potential in gas share growth within the European energy mix,” remarked the speaker. According to him, increase of the gas share can be associated with logistic challenges, and that’s why it is important to optimize energy distribution systems in seasons featuring peak demand. Distinct contracts, agreements and logistic arrangements will enhance development of the system in general, the system that should be as flexible as possible. Moreover, the matter of supply security is rather relevant.
Weizhong Qin, Vice President of China National Petroleum Corporation (CNPC) mentioned that Chinese economy needs to rely on high quality energy. In recent years, the share of natural gas in the Celestial Empire increased from 3 to 7%.
“Natural gas is a great choice if we want to adhere the climate change reaction policy,” the expert said. According to him, since 2000 the natural gas market has been actively developed and high increase in consumption is obvious.
Today, China has several channels of gas import, including from the Central Asia and by sea, and moreover, Power of Siberia gas main is under construction. LNG import is also increasing – today, China is the second largest LNG importer in the world.
“Gas chain of China has major transformations ahead. The challenges we see are season-based uneven consumption, price increase in imported gas, as well as competition with new energy sources,” said PRC’s representative. As for using gas in the transport sector, it is not too popular in China yet.
Ulf Heitmueller, Chairman of the Executive Board, Verbundnetz Gas spoke about the prospects of natural gas use. Thus, Russian gas has been supplied to Germany for 45 years, and in Europe gas demand increase is expected. The expert believes that the problem of sustainability remains, as Germany is still using much coal for heating purposes.
“The next 10 years will bring us many things. We need to answer if we are ready for total decarbonization, for decarbonization of the production. Obviously, natural gas has lots of interesting prospects, and it will win this way or another. Natural gas is the key to our ecologically safe future, and gas has great potential in many other sectors, too,” he emphasized.
Keith Martin, Chief Commercial Officer of Uniper SE, remarked that prices for fossil fuels increased twice or even thrice, but gas has a special place there. Thanks to the new technologies, today gas can be supplied to new countries, and we see an incredible increase in its consumption. The speaker believes that LNG is considered to be a premium-class product today, though.
“Gas is steadily replacing oil products, conquering the new markets. We need to make its supplies secure and stable, to ensure competitive prices. The infrastructure is an integral element of this system. Besides, we need to develop partner relations and serve the consumers in a right way,” the expert said.
Joe M. Kang, President of International Gas Union, assented to his colleagues’ opinion on the bright future predicted to natural gas. Thus, in 2017 the world saw the highest natural gas demand increase by 3.7%, which is more than double of the prior five-year average. The speaker said that the share of natural gas in Asia keeps growing, especially in the marine LNG bunkering space. At the same time, he believes that there are three main things are cost of gas, security and stability of its supplies.
“Natural gas is flexible, clean, and high efficiency fuel, valuable both for economy and ecology. We need to preserve our planet and environment, support the goals of the Paris agreement and change the scopes of environmental pollution,” said J. Kang.
Summing up, moderator Kevin Owen, Russia Today, mentioned that the role of gas in the global energy mix is going to increase. We need to take into account China as a major gas importer, and proceed with development of Russian gas export to Europe, to tell consumers about the value and sustainability of gas, to keep prices down, as well as to ensure stable and secure supplies. Russia has the key part in these processes.