05.07.2009

The EU’s main source of natural gas is Russia. Relationships between the two will worsen following the latest Gazprom-Ukraine fight in January 2009. Another issue with Russia is it is doubtful that Moscow will be able to finance the necessary investments in Eastern Siberian fields to maintain sufficient gas production levels and it is equally doubtful that Russia will be able to transport that gas to the faraway EU market, as the entire Siberian grid system is in great need of upgrading. The second largest supplier to the EU is from Norway’s offshore fields but these are likely to plateau around 2015. The third largest source of gas to Europe is Algeria. Because of the increasing fear of dependence on Russia, the idea for European governments to back a trans-Saharan pipeline to carry Nigerian gas to the Continent via Algeria is growing. The feasibility of such a project still needs to be assessed (2009), but if it were built it would turn Algeria into an important intercontinental gas hub for Europe. The European Commission projects that between 2005 and 2030 natural gas demand among the EU’s 27 current member states will rise 24% to 666 bcm from 537 bcm in 2009, with imports forecasted to stand at between 470-600 bcm. Imports in 2007 were 370 bcm. Another issue with Europe is that the liberalization of the EU gas markets has created a great uncertainty about the projections of the amount of gas needed in the future. If gas producers are to be in a position to mobilize the financial and technical means to explore for new gas and bring it to European customers they must be able to rely on guarantees regarding quantities.

Gina Cohen
Natural Gas Expert
Phone:
972-54-4203480
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