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Regional Focus –
Europe Faces a ‘Perfect Storm’ in Securing Future Gas Supplies
a report by
E
Azfar Shaukat and Meredith McArthur
urasia
Oil and Gas Consulting, Mott MacDonald
The EU currently imports approximately 41% of its gas, with imports Although EU policy-makers are making progress in developing
expected to increase to 74% over the next 25 years, 30% of which new supply initiatives, progress has been slow. Consequently,
is expected to come from Russia (see Figure 1). During a summit in available gas quantities are dwindling as producers commit
Brussels in 2007, the EU discussed plans for security of energy supply. supplies to elsewhere.
It was outlined that the EU first needs to diversify its energy sources and
promote feasible transport routes with better operational and Development of New Gas Transport Routes from
management systems to respond to supply crises more effectively. It Central Asia to Europe
was also clear that new gas supplies needed to be secured. From Mott MacDonald’s experience in the region, many of the
Compounding this increase in demand, long-term contracts with transit pipelines are old and in poor condition due to lack of
current suppliers are reaching an end and for new supply contracts investment. Therefore, rehabilitation of the existing lines and
Europe is competing with the world market. Thus, the EU faces a modernisation of facilities will be required. However, many current
‘perfect storm’ of sharply rising domestic consumption, falling domestic pipeline capacities are already at a maximum and some
supply and increasing scarcity of available gas, as well as long timelines infrastructure obsolete; therefore, new facilities will be required.
to develop projects. How can Europe meet its future gas needs?
The system is further complicated in that a range of different design
Diversifying Gas Supply and construction standards are used in the transit countries.
The EU is dependent on imported gas. By 2020, gas demand will Therefore, initiatives on developing harmonised standards and best
exceed 700 billion cubic metres (bcm)/year, approximately 25% up on practices, improving operations and maintenance procedures,
2007, sustained by increasing gas-fired power generation. Over this maintenance rehabilitation of current infrastructure, reducing losses
and developing new infrastructure are being created.
There are several Over the last decade, gas transport routes for delivering gas from
interconnected factors
central Asian producers have been proposed including the Nabucco
project, a 56-inch pipeline capable of delivering up to 31bcm of gas
affecting future European
from potential sources in the Middle East and central Asia. Other
gas supplies and, taken
transit options to deliver Caspian gas to complement Nabucco are
also being considered (see Figure 2). These studies are at various
together, they provide an
stages of development; however, construction has yet to start.
indication of the challenge
Competition for Central Asian Gas Supply
facing the EU.
Worldwide demand for natural gas consumption is expected to grow
at a pace of 1.6% per annum from 2,944bcm in 2006 to 4,332bcm
by 2030; gas is expected to account for 23% of the world’s energy
period, domestic energy production will continue to fall to one-quarter consumption. Natural gas consumption in Organisation for Economic
of demand and Russia’s importance as Europe’s primary supplier will Cooperation and Development (OECD) Europe is expected to grow by
continue to increase. There are several interconnected factors affecting an average of 1% per annum from 543bcm in 2006 to 682bcm in
future supplies and, taken together, they provide an indication of the 2030; however, both China and India are expected to see more
challenge facing the EU:
Azfar Shaukat is Director of Oil and Gas Consulting at Mott MacDonald. A professional
First, in some producing countries, operation of existing gas fields
engineer, he has over 25 years of oil and gas experience with international consulting
is not optimal, meaning additional throughput capacities cannot firms and major operating companies. He specialises in strategy, project development,
be realised. Also, maintenance practices are not consistent or
performance improvement, financial appraisal, design and operation of upstream and
downstream petroleum facilities, including refineries, liquefied natural gas and other
implemented effectively, meaning many pipelines and facilities
fuels terminals.
are degrading. Finally, due to lack of investment, upgrading and
Meredith McArthur is a Senior Consultant in the Oil, Gas and Petrochemicals Unit of
developing existing fields has not been possible, resulting in
Mott MacDonald, specialising in market studies for oil and gas pipelines, liquefied
production being stifled rather than increased. natural gas and refineries. She has experience working with governments, contractors,
major upstream oil companies and academic institutes.
Most of the EU’s imports are highly concentrated, so that disruptions E: Karen.Gemmill@mottmac.com
for whatever reason can place Europe’s gas consumers at risk.
© TOUCH BRIEFINGS 2009
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