Speaking during the Fourth International Gas Forum in St Petersburg, Alexey Miller, the CEO of Gazprom argued that the shale revolution does not pose a threat to his company and that Europe will lose its importance in the energy markets of the future.
According to Mr Miller, by 2050, natural gas will constitute one third of the world energy market, and the volume of production will exceed 7 trillion cubic meters per year. The share of LNG in the global market will remain unchanged at the level of 30 per cent.
In his speech, Mr Miller questioned the importance of shale energy, predicting that the North American gas market will be solving its own problems during the next 10-20 years and that shale gas will remain a regional market development – not a global one.
Mr Miller also argued that the fastest growing and the most promising gas market globally will be the Asia-Pacific region, and predicted that the share of gas transported through the pipelines within the Asian-Pacific and the Chinese market will grow steadily. Gazprom is planning to capitalise on this growth, with future deals following the already signed contract worth $400 billion over 30 years. The company expects its shipments to this region to grow in the short term up to 60 and even up to 100 billion cubic meters of gas per year.
When it comes to the European market, Mr Miller pointed to the increase in energy consumption in the production sector and the subsequent decrease in the competitiveness of European companies. He also noted that European LNG terminals are currently operating only at 20 per cent of their capacity, as Europe loses the pricing battle over LNG with Asian-Pacific markets.
As far as the future is concerned, Gazprom – Mr Miller said – is re-evaluating whether it is worth being everywhere on the value chain in Europe e.g. from production to retail. In Gazprom’s view, the European market isn’t currently a buyer’s market and Gazprom may be more selective in pursuing planned projects because reaching end users in Europe doesn’t necessarily work. This does not mean that Gazprom will abandon some projects, but it does mean that there will be changes.
The said changes may be necessary because gas markets have developed very quickly in all the regions of the world and strategies that guided the companies in those markets have very quickly became obsolete. All the players in the gas markets in North America, the Asia-Pacific and the EU face the challenge to design new strategies and have new approaches.
“The 20th century was the century of oil,” said Mr Miller, “the 21st century is the century of gas.”
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