European Gas Execs Spell out Costs, Benefits

European gas industry's top brass took another stand for the cleanest fossil fuel at a conference panel session in St Petersburg October 3, explaining the benefits of using gas in the power generation sector in particular.

Gas was once considered too valuable for this use, but now its major producers and marketers are trading on its environmental credentials, in particular urging governments and generators to use it instead of coal.

Gazprom Export boss Elena Burmistrova, standing in for the dominant Russian gas company's CEO Alexei Miller, said that the concerns of the climate protest movement had to be considered, but "it is impossible to reduce carbon emissions to zero. It will cause an economic crisis and job losses. That is why we are calling for incremental reductions in emissions," she said. Gas is the solution that "does not cause risk to the economic and social balance."

Germany's Wintershall DEA and Austrian OMV echoed the claims. Wintershall DEA's CEO Mario Mehren said companies needed to recognise the power of the climate issue on the gas industry, saying that what industry does today is more important than what it promise to do in 30, 40 or more years. It had to more to make sure that gas is at "the top of the agenda" in terms of solutions proposed at climate summits, he said.

Addressing the practical concerns of the gas market today, the CEO of Austrian OMV, Rainer Seele, said that uncertainty about the construction of Nord Stream 2, and transit of Russian gas across Ukraine from January 1 were making the market jittery. He said some countries are seeking to block infrastructure that is needed for energy security. Unlike some LNG suppliers, he said, Gazprom was willing to invest in pipelines. "There needs to be a better regulatory framework," he said, to stop the obstruction of vital infrastructure that could bring more "highly competitive" Russian gas.

Also on the panel was the International Gas Union head, Joe Kang, who suggested the industry needed to find a better way to communicate the important message, in response to climate concerns. Saying gas was not just a bridge but a key environmental contributor, the industry needed to act more nimbly, to innovate more.

Seele was referring to Poland as a country "seeking to block infrastructure that is needed for energy security." Poland can claim credit for the reduction in flows through the Nord Stream 1 line. Last month it won its case against the European Commission (EC), in which it was joined by other European Union states and also Ukraine. Since mid-September, flows through the Opal line have been reduced, meaning less gas through Nord Stream 1. Poland also successfully blocked the creation of a joint venture that Gazprom had founded, to build Nord Stream 2. 

Poland is trying to end its contractual imports of Russian gas, replacing it with Qatari and other LNG; and with pipeline gas from elsewhere such as Norway. But those are both relatively expensive options which might explain its continuing dependence on coal. The country's chief energy adviser Piotr Naimski told UK daily Financial Times October 3 edition that coal would still generate up to half the country's electricity in two decades' time.

If the European Union wanted net zero carbon emissions by 2050, he said, at the cost of hudreds of billions of dollars, the responsibility for that should be shared among EU states, taking in consideraion every country's situation and possibilities. Poland's stance is likely to be thorn in the side of the new EC president, Ursula von der Leyen, who has pledged to renew the EC's battle against carbon.