Nord Stream: Proof in the Pudding
Pipelines are long term investments, according to Paul Corcoran, Financial Director, Nord Stream AG, whose proof was in the proverbial pudding: a pipeline project which came together and was working.
Prior to Mr. Corcoran revealing the secrets of Nord Stream's success at the European Gas Conference in Vienna, Austria, the session chair noted that Corcoran had raised money in the debt markets in November 2008 - an "interesting time."
He began by mentioning and thanking Nord Stream's numerous partners in the project, many representatives of whom were in attendance at the conference. Then Mr. Corcoran showed a chart.
He commented: "This chart has stayed, more or less, the same - we've had major recessions, great expectations about the development of gas and have lots of pessimism about the development of gas, but the basis on the chart has remained the same: a gap of 200 bcm between the current imported domestic production capacity, which has more or less stayed the same; and the basic message is Europe is using its own domestic reserves rather quickly and has an increasing import requirement.
"There are lots of possibilities with LNG," he continued, mentioning Australia and the Black Sea. "One thing is clear - we have huge reserves at our doorstep."
He noted the numerous scenarios, mentioning the enthusiasm over shale gas development a couple of years ago.
"In the meantime, there's a degree more realism around shale gas possibilities in Europe; there have also been numerous expectations in the past regarding renewables," said Mr. Corcoran. "In reality, the economic crisis has put a heavy burden on the renewables industry; nuclear, we all know about.
"We should be optimistic about gas because it has a key role. Gas capacity has to be put online to balance the northern and southern German network, even in good times when renewables are producing they need gas as well," he said.
He stated that Europe sat in the midst of tremendous natural gas reserves, mentioning North Africa potential, the Caspian basin, Norway, Russia, and the Middle East.
"Pipelines are a great thing for security of supply, but also for security of demand. They're a huge investment and have to be a cooperative enterprise and there has to be clarity on both sides, otherwise one or the other party is left- either with assets that are empty, or with market demand which is not fulfilled," he explained and spoke of the possibility of the extension of third and fourth lines for Nord Stream and a feasibility study.