Energy future of Europe: still no change

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On the European gas market we should not expect drastic changes: the share of natural gas from Russia will remain significant, and its price will be competitive. Not until after 2030 the price will slightly decrease, but Russia will compensate that itself by an increase in the supply of LNG to Europe.

These are the main conclusions from comprehensive report about European gas market drawn by the Washington Brookings Institution. Report predicts that even in the case of absence of gas transit through Ukraine, or if European Commission will prohibit the construction of South Stream pipeline from Russia to Italy, it wouldn’t have significant effects on the origin of natural gas in Europe. The conclusion is that regardless of the different hypothetical scenarios, Europe will still need Russian gas.

The authors assume that the demand for gas in Europe will start to grow from 2015, but will return to the pre-crisis level (2008) in 2040. They also estimate that domestic gas production in Europe will fall to 208 billion cubic meters in 2020, and then will decrease slightly to 199 billion cubic meters in 2040, even assuming that the production of shale gas in 2040 will be about 20 billion cubic meters. The authors based their calculations on the assumption that 80% of shale gas production will take place in the UK and Poland, which is “very optimistic assumption”.

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The report also refers to other alternative sources of supply, such as an increase in imports by the South Corridor or increase domestic production of shale gas. These options are important in themselves, but there is no evidence that these alternative supplies will lead to changes in the European gas supply system in the near future.

Sources: brookings.edu, rigzone.com
Photos from: euanmearns.com

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Radosław Budzowski

Logistics Manager in YoungPetro, third year student of Oil and Gas Engineering at the Faculty of Drilling, Oil and Gas at AGH. Interested in reservoir engineering and gas industry. Privately badminton and travels enthusiast.

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