LONDON (ICIS)--Borealis CEO Mark Garrett said on Monday Europe would have to get used to high energy prices if shale gas extraction does not take off on the continent as it has in other parts of the world.
Other regions of the world, predominantly the US, are experiencing a revolution with cheap feedstock which will benefit their manufacturing sectors, added the CEO of the Austria-based chemicals and fertilizer producer.
“The first [shale gas] drillings in Poland have been disappointing. We should have [a] clear [idea] what the economic potential can be. We also need to take into account environmental considerations. It’d be worth following studies carried out in Germany pointing at ways to extract the gas without inflicting a big impact on the environment,” Garrett added.
Not extracting any gas at all would carry risks and high energy prices for Europe for decades to come, he said.
“[If we don’t have shale gas] Europe’s in trouble and will always face high energy prices and will be stuck with deindustrialisation. And once jobs in manufacturing are gone, it’s very difficult for them to come back. Last year, Europe’s manufacturing sector destroyed 470,000 jobs; the US’ created 1.2m new employments,” Garrett said.
The CEO believes in the future consumption of petrochemical feedstocks in Europe will come from imports, mainly liquefied natural gas (LNG) from the US or Qatar, while the new world energy scenario will also see Australian exports shipped to Japan.
However, he said, such imports would present additional challenges in Europe, given the national-focused infrastructure network to transport energy.
“We need to have an import and distribution infrastructure to move the gas. But Europe comes from a bunch of national policies and doesn’t have a regional infrastructure like the US national grid, for instance,” he said.
A good outcome of the increasing competition of gas producers would be that Russian state-owned producer Gazprom producer has to lower its prices to compete with other exporters, added Garrett.