Natural Gas Executives Put Faith In Industry's Long-Term Outlook
October 06 2009 - 10:06PM
Dow Jones News
The global financial and economic crisis has taken its toll on
the natural gas industry, with sharp declines in prices and
consumption, but industry executives on Tuesday expressed their
faith in the long-term outlook.
"Primary gas consumption's share in the energy matrix is
expected to be stable or rising in the next 25 years, at around
22%; historically that share in the matrix has never stopped
increasing," said Antonio Brufau, chairman and chief executive of
Spain's Repsol YPF (REP), in a speech to the World Gas
Conference.
Emerging countries are going to be the main drivers of future
natural gas demand, especially as incomes start to rise in places
such as China or India, he said.
"If we believe in the economic health of these countries, then
we must believe in the health of natural gas demand," Brufau
said.
Brufau said he has doubts about the consensus forecast that
points to an excess of natural gas supplies through 2013.
"In my opinion this view is subject to a high degree of
uncertainty," Brufau said. "Although I admit it is the most likely
outcome, we must bear in mind that the market is now more
complex."
In Europe, a major center for demand, consumption will likely
fall 7% in 2009 compared with 2008, according to Bernhard
Reutersberg, chief executive of German gas company Ruhrgas, a
subsidiary of E.ON AG (EOAN.XE).
Demand should start to pick up again from next year, although
its still too early to know the full impact of the crisis, he
said.
"There will be a slight recovery in 2010, and present decreases
will likely be overcome in two or three years," Reutersberg
said.
Whether the slide represents a change in the long-term trend for
growth in natural gas use is still unclear, the executive said.
Alexei Miller, chief executive of Russian gas giant Gazprom
(GAZP.RS), also pointed to countries such as China and India which
are undergoing an "impetuous process of industrialization,
urbanization and other mobilization."
Energy demand will be growing but there will be limited
contributions from oil and nuclear power, while alternative
energies will be "insignificant," he said in a speech.
The case of Gazprom highlights the fact that, just as with the
oil industry, geopolitics also play a significant role in natural
gas markets. A dispute between Russia and Ukraine has seen gas
deliveries to a swath of European countries cut off intermittently
over recent years.
Seeking to allay some of those fears, Miller said that Gazprom
is committed to "fulfill its long term obligations," and that it's
necessary to "dispel ideological and political prejudices."
For now, the world won't be able to live without fossil fuels,
and natural gas is the most environmentally-friendly, he said,
echoing calls by a number of the executives to brand natural gas as
the cleanest of fossil fuels, and one which can help bridge the gap
to a world of alternative fuels.
A study by the International Gas Union projects that global
demand for natural gas will likely rise a third, to 4 trillion
cubic meters by 2030, up from around 3 trillion cubic meters
currently, as global economic growth and the desire for cleaner
fuels pushes sales of natural gas to new limits.
The study claimed that greater use of natural gas will
necessarily underpin any push for stricter environmental standards
and lower carbon dioxide emissions.
The study finds that the share of natural gas in the global fuel
mix could rise to 28% from 21% by 2030 if governments continue
pushing for cleaner fuels.
Colin Lyle, the study's coordinator, said that increasing the
world's dependence on natural gas isn't as risky as it may
seem.
"There is no 'peak oil' problem for gas," he said.
In an interview on the sidelines of the conference, Lyle said
new technologies are constantly providing gas producers with more
efficient ways to extract gas.
As a result, the world now has two to three times more natural
gas than it did decades ago, when experts said the world was on the
verge of running out of gas, he said.
-By Matthew Cowley, Dow Jones Newswires; +54 11 4103 6740;
matthew.cowley@dowjones.com
(Taos Turner and Jeff Fick contributed to this report)