Shell urges long-term European gas plan
By Sylvia Pfeifer, Special Correspondent
Europe needs a long-term vision of how gas fits into its energy policy to ensure it can call on critical supplies such as imports of liquefied natural gas (LNG) in future, the chief financial officer of Royal Dutch Shell has warned.
Europe has become increasingly reliant on imports, including LNG from countries such as Qatar, as domestic production of oil and gas declines.
Last year, LNG imports made up nearly half of all gas imports into Britain, Europe’s largest gas consumer.
However, many cargoes have recently been lured elsewhere by higher prices, particularly in Asia, raising fears over supplies in the longer-term.
Imports to the UK, for example, are estimated to have dropped by around 40 per cent in the first half of 2012 compared with a year earlier.
According to Simon Henry, Shell chief financial officer, LNG exports from North America are vital for global supplies as they could feed energy-hungry Asian nations, consequently freeing up supplies from the Middle East for Europe.
“Europe needs to have a long term perspective or vision in terms of where gas fits into its energy policy . . . If you want the gas you have to be sure that suppliers long-term are committed to send it to you,” he told the Financial Times in an interview ahead of a speech on Tuesday to a Canadian energy summit in London.
Shell is a big investor in Canada, home to roughly 8 per cent of its global oil and gas production.
“By the end of the decade, Europe really needs LNG from North America, including western Canada, to open up global supplies,” Mr Henry said.
Shell expects European LNG demand could, with appropriate policy in place, rise to 100m tonnes by 2020. “The only way of meeting that 100m tonnes is out of North America, assuming some North American supply does come on stream,” he added.
Shell – Europe’s largest energy company by market capitalisation and one of the biggest investors in LNG globally – has been a vocal advocate for the role gas can play.
Europe stands to benefit, both in terms of energy security and price stability, if Canada broadens its export horizons and sends more of its production – traditionally consumed by the US – to Asia, Mr Henry will say on Tuesday.
Shell plans to build an LNG plant in Kitimat, British Columbia, which will export to Asia.
“The absence of a clear position for gas long-term [in Europe] does make it difficult for companies,” he told the FT.
“When we invest, we’re going 20, 30 years out. We can’t really invest on the basis of no security of demand . . . All of Europe is pushing for what we see as basically a non-financeable energy strategy, in which gas only plays a minimal part.”