WGC 2012: Gazprom CEO Sees Growth in Gas Use (Malaysia)

Gazprom CEO Sees Growth in Gas Use

The global gas business has entered a stage of comprehensive diversification and structural diversity, stated in his speech Chairman of Gazprom Management Committee Alexey Miller at the 25th World Gas Conference in Kuala Lumpur. On the part of A. Miller, Deputy Chairman of Gazprom Management Committee, Director General of Gazprom Export Alexander Medvedev pronounced the speech.

«It is quite possible that there is future for renewable energy sources and technologies, which are still in the experimental stages. Nevertheless, fossil fuels account for the main power generation at present. Moreover, the need for available energy at affordable prices is now so great that we have seen – with great concern – the rapid increase in the use of coal, the most intense source of hazardous emissions. The rate of growth in world energy demand is clearly outpacing development of energy technologies based on solar, wind, tides, or carbon capture and storage. This means that for a sustainable development, the global economy immediately needs an energy alternative. Here, natural gas offers such alternative».

According to A. Miller, world gas trade increased by 4.2% in 2011 alone. This growth was due to increase in exports from Russia, Qatar and Turkmenistan. Moreover, despite the high growth of LNG supplies, pipeline transport still holds the leading position. Regional pipeline systems continue to develop rapidly, while interregional transportation facilities for network and liquefied natural gas complement them, responding to the dynamics of global growth.

«With the development of international trade, export gas pipelines, which previously connected two countries – the exporter and importer – began a transformation into transcontinental systems, head of Gazpom specified. – Today, there is a transborder gas market in the North American continent. The EU is working to create a single European gas market. Integration processes in the growing Unified Gas Supply System of the former Soviet Union are continuing».

A. Miller accentuated in his report that despite the powerful factors of globalization, in reality there are three macro-regional markets today – North America, Europe and East Asia. Each of these markets retains its regional identity.

Concerning the pricing problem, Alexey Miller explained, that it is a primitive, almost Orwellian scheme: “Hub is good, while indexation is bad” is not relevant. We believe that in the search for optimal solutions, we must first think about ensuring the investment attractiveness of gas production and transportation. One should not forget that despite all the innovations in business organization in the era of LNG, long-term contracts have retained their importance as a means of sharing risk and ensuring long-term investments.

According to A. Miller, «expanded use of natural gas is quite a clearly visible perspective. More investments in technologies for natural gas use, including in transportation, will be the result of the gas boom that we see today in North America. Eventually, this will lead to expansion of the market for natural gas as motor fuel».

«The word “gasification” has a second meaning in Russian language. It means expansion of gas supply in the utilities and consumer sectors in the regions of Russia. It seems to me that at the global level, we should move from forecasts of a likely coming of the “golden age of natural gas” to a practical and quick action on the gasification of the world economy», A. Miller emphasized.

LNG World News Staff, June 06, 2012; Image: Gazprom