Last year, Russia supplied Europe and Turkey with a record 179.3 billion cubic metres (bcm) of gas as consumers capitalised on low gas prices, which follow the prices of oil with a lag of six to nine months. Its share of the EU gas market rose to an all-time high of 34 percent from 31 percent in 2015.
Russia plans to boost supplies further and remain the dominant player on the European gas market.
“In order to cater for the growth (in Europe’s gas demand) tomorrow, large-scale investment decisions are required already today. This is a stimulus for us to invest in new fields and gas pipelines,” Medvedev told a European Gas conference in Vienna.
“According to a consensus forecast of the world’s leading energy agencies, thanks to new spheres of growth, Europe will need some additional 90 bcm of gas by 2025 fr
om the current level of supply and more than 120 bcm by 2035,” he said. Full interview is below.
Mr. Drebentsov’s core responsibilities at BP plc comprise of economic, energy research and policy advice in the countries of the former Soviet Union. Mr. Drebentsov also covers European gas markets, global gas reserves and gas pipeline trade for BP Statistical Review of World Energy and BP Energy Outlook 2035. Since 2010, Mr. Drebentsov has assumed the Vice-President role at BP Russia. He is a member of the Expert Council of the Government of Russia.
1. What role is gas going to play in the future European energy mix?
That’s an open question and opinions on this vary greatly depending on who you ask. For example the European Commission believes that there will be transition away from gas by 2030. But others believe that we will not completely transition away from gas as an energy source and it’s more likely that gas will provide a backup for renewables in the future. I personally believe that there will be a future for gas in the European Energy mix.
2. What do you think the impact of COP21 will be on the European Gas Industry?
If you look at BP Energy Outlook from February this year, we have something called factor transition which is method of looking at the impact of COP21 on a global level and a European level. Our predictions are that the implementation of COP 21 targets will not bring the desired result, Europe may have strict targets that it has committed to but it has not done enough to ensure they come to fruition.
3. Are long-term gas/LNG contracts becoming a thing of the past? What does long-term mean today?
I think that the average duration of the contracts has certainly reduced, but I also believe that duration is not the most important part of the contract. What we understand a long-term contract to be in ten years’ time will be quite different to what we are used to at the moment. Long-term contracts in their current shape are built for a different climate than the one that is currently evolving; these contracts are built for markets that are a lot less liquid and much less competitive. In the emergence of the global gas market, regions that we consider key gas markets are changing and becoming much more competitive.
4. Considering Russia’s overcapacity in gas export pipelines, do you think it’s newly established gas trade connections with European partners will be successful?
This depends on what pipeline you are referring to as Russia has plans to build multiple pipelines. For example, I believe that the Nord Stream 2, has a good chance of being successful, but the Turkish stream I don’t think will come into fruition. Most pipeline problems seem to be related to issues with the European partners and not the pipeline itself.
5. What do you think the main benefits are of events such as EGC for the industry?
For me it is opportunity to listen to people from different corners of the world and expand my circle beyond people I interact with.