Total, Statoil predict European gas oversupply by 2010
French Total’s executive vice president for gas and power, Yves-Louis Darricarrère, has predicted a European gas supply excess that will depress prices by 2010, according to media reports.
He is reported as saying that gas imports will outstrip demand as heavy investments in supply infrastructure will make any potential gas shortage brief. The claim follows comments this week by Norwegian Statoil predicting an oversupply situation in the UK by 2007-2012 on the back of high import project activity.
Meanwhile, traders told The Heren Report that, although many companies are planning huge investments, especially in liquefied natural gas (LNG) import capacity, there is a danger that far fewer projects go ahead than is anticipated.
They said that, with so many projects planned, some companies may adopt a mindset that they would rather let others invest and then buy capacity in new projects, which could quickly deteriorate into a domino effect and eventual under-investment.
Britain’s largest residential gas supplier Centrica this week raised its gas tariffs by 12.4%, signalling its belief that the era of cheap UK gas was over.
Darricarrère is reported to have said that, with the UK becoming a net importer of gas in the near future, international gas producers will view the UK as an increasingly attractive market.
Meanwhile Norwegian daily Aftenbladet also reports Darricarrère as saying that the European gas market will become more attractive from 2010 onwards for non- European producers.
The paper reports that Norwegian supply is expected to rise from 73 billion cubic metres (Gm3) in 2003 to 120 Gm3 in the next 7-12 years, as the Ormen Lange and Snøhvit fields come onstream. But Aftenbladet reports Darricarrère as saying that, by 2015, European demand will be in excess of 430 Gm3 annually.This means more gas will have to come from further afield.
The paper reports that Darricarrère sees 55% of European demand coming from gas-fired power generation, as the UK and Germany switch from nuclear to gas, while Spain, Poland and Italy switch from coal to gas. GD
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