Europe's Gas Crisis is 'Crazy' Given Emission Concerns - Eni's Descalzi
“Gas in Europe is in crisis, which is crazy because it’s the best partner of renewables,” said Eni CEO Claudio Descalzi at an event in Paris on April 15.
Europe should make full use of its spare gas infrastructure in order to reduce emissions, he told an event hosted by the IEA, and that Russian gas will be needed for that task but that Europe also needs to diversify its gas supplies.
In 2008, the industry expected European gas consumption by now to have reached 750bn m3/yr but instead it is 420bn m3, said Descalzi, adding that despite a year-on-year increase in 2015, Europe is still consuming about 100bn m3/yr less than in 2008.
“Europe has 670bn m3/yr of infrastructure capacity and we are using 200bn m3/yr less than that, so we have room to improve,” he said: “We have 200bn m3/yr LNG import capacity and are using 20%.”
Competition for market share is getting livelier, said Descalzi: “The long-term contract [suppliers] that we had in the past...are fighting with the hubs.”
He praised the UK for shutting coal-fired plants, thereby promoting gas, which he said in one year had reduced its emissions by 25%: “It took the right decisions. I hope Europe is going to follow.”
“We have a serious problem with the energy mix in Europe. But I am sure that gas is going to grow and can fill this capacity gap of 200bn m3/yr. But we must also note that Europe is a net importer, we import 82% of our gas needs – and domestic gas production is going down, down, down. So we have to fill a gap of about 200bn m3/yr in about 4 to 5 years.”
Descalzi cited Russia’s importance as a gas supplier to Europe: “We cannot live without Russia, that is clear, but we have to diversify. For that reason, when I talk about a South-North corridor that is beneficial for Africa and for Europe, it is to complement this growth.”
“Commercially, we have to diversify because Europe has no energy. It’s important for security of supply too. But we cannot live without Russia, as it has the possibility to supply 240bn m3/yr to Europe – it is exporting now 140bn m3/yr. So we in Europe and Turkey are big customers.
“Russia, with Norway, Libya, Algeria practically supply all Europe’s needs. But we will need more gas in the future,” said Descalzi. He noted Eni’s own Zohr giant gasfield development in Egypt, due to start up in late 2017 (initially at 1bn ft3/d, rising later to 2.8bn ft3) is primarily for the domestic market, but also pointed to the Eni-led 3.4mn ton/yr Coral floating LNG project offshore Mozambique.
“It is practically certain that we will take Final Investment Decision this year on Coral,” said Descalzi.
Mark Smedley