Argus has three reporters at the World Gas Conference in Paris this week. We could do with 30 to cover all the sessions and speak to all the interesting people.
Yesterday, before the first coffee break on the first conference day, executives from French firms Total and Engie, Qatargas, ExxonMobil, Shell, BP, South Korea’s state-controlled Kogas and Algeria’s state-owned Sonatrach had all spoken on the future of gas and LNG. Later in the day, came Gazprom, Eni, Petronas, Eon, Osaka Gas, Statoil, Iran’s NIGC… the list continues.
Stories have been flying in thick and fast, and there are still another two and a half days to go.
For those stuck in an office — like me — here are three main themes coming out of the conference.
1. Gas attack on coal
The industry is moving against its biggest competitor — coal for power generation. The chief executives of Shell, Total and Engie called for global emissions pricing mechanisms to increase power sector natural gas consumption at the expense of coal burn.
Total expects gas to eat into coal’s share of the power mix, with coal’s share to fall to one-third in 2030 from 40pc today. Gas will pick up the slack, especially in North America because of the abundance of cheap shale gas. Gerard Mestrallet, chief executive of Engie, formerly GDF Suez, called for the inception of a climate dialogue that would give gas “pride of place” in electricity generation.
Shell said Asian countries should enact policies to encourage gas in the power sector. “Without good policies, a coal-plus-renewables system could also emerge in northeast Asia,” Shell chief executive Ben van Beurden said. Which leads me to…
2. Failure of climate change policy in Europe
Most of the delegates at the conference believe that the EU emissions trading scheme (ETS) is not working. Not working for gas anyway. Mestrallet argued that the carbon price should stimulate economic growth, particularly in the gas industry. It is important to promote gas for power generation and a global mechanism would allow gas to displace coal, Total chief executive Patrick Pouyanne said. Engie also called for a stable agreement at this year’s UN climate talks in Paris rather than no agreement, which would lead to uncertainty and possibly chaos.
However, reforms have been put in place for the EU ETS, and analysts expect higher carbon prices to start displacing coal for gas in EU power generation after 2020.
3. We need more LNG!
Despite two huge LNG export plant start-ups in the last year — Papua New Guinea and Australia’s Queensland Curtis — and at least five starting or restarting in the next 12 months — Australia’s Gorgon, Gladstone and Australia Pacific LNG projects, US Sabine Pass, and Angola LNG — there were calls for more LNG. Chevron said there would be a 70mn t/yr shortfall by 2025 and liquefaction projects outside the US must be developed. Total said that LNG demand is expected to double by 2030. But more than half of the LNG projects needed to meet anticipated LNG demand growth have not yet been sanctioned.
Did I miss anything? Undoubtedly there will be more to come before the end of the week. Watch this space for more coverage…
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