The end of the euro zone is not a likely scenario, and while the economic situation in the region is difficult, it remains manageable for energy companies, consumers and stakeholders, the head of the International Energy Agency, Maria van der Hoeven, said Tuesday.
The end of the euro zone is not a likely scenario, and while the
economic situation in the region is difficult, it remains manageable for energy
companies, consumers and stakeholders, the head of the International Energy
Agency, Maria van der Hoeven, said Tuesday.
The ongoing sovereign-debt crisis in the euro zone and the resulting economic
slowdown and market jitters are a serious concern for the energy industry,
which is bracing for a substantial drop in consumption and demand in the region
at a time when gas prices remain low and oil prices are falling.
A breakup of the union could result in an even more depressed economy,
dramatically altering the landscape for the European energy industry.
"Of course we are concerned with the euro-zone situation and the economic
slowdown there, which is an issue for energy demand," Mrs. van der Hoeven
said.
But IEA doesn't envision the euro zone ceasing to exist even in its most
pessimistic scenario.
Speaking on the sidelines of the World Gas Conference, Mrs. van der Hoeven said
the agency "doesn't have predictions, only assumptions."
Since the IEA issued its last forecast, demand for power has dropped in
Greece
and
Spain
but
also in the
U.K.
,
which has been hurt by the monetary union's woes. Yet the situation "is
difficult but manageable," Mrs. van der Hoeven said.
Earlier Tuesday, the IEA forecast that global natural gas demand will likely
surge over the next five years, largely due to a more than doubling of
consumption in
China
even
as a boom in unconventional production continues unabated in the
U.S.
,
turning the country into an exporter of liquefied natural gas by 2017.
By 2017, global gas demand could grow by around 580 billion cubic
meters--nearly equal to the entire current annual production of
Russia
, the
world's biggest gas producer, the IEA said in its latest forecast.
U.S.
production of natural gas has surged in recent years due to hydraulic
fracturing, or fracking, which has enabled companies to extract natural gas
trapped in shale rock formations. Despite record-low prices, the revolution
will "continue in full swing" and may even end coal's hundred-year
dominance in
U.S.
power
generation, the IEA also said.
Mrs. van der Hoeven said the shale-gas boom called into question the
assumptions of the world's largest natural producers--
Russia
,
Qatar
,
Algeria
--because
the
U.S.
was
no longer a guaranteed importer of LNG. That could explain why some huge LNG
projects, such as Shtokman in Arctic Russia, have run into difficulties, she
said.
In the short and medium terms, the complex project--supported by Russian gas
giant Gazprom OAO (GAZP.RS), along with
France
's
Total SA (TOT) and
Norway
's
Statoil ASA (STO)--doesn't really make sense due to the increased supply from
shale gas and other LNG projects. But in the longer term, as gas demand remains
sustained, Shtokman could indeed be a valid plan, she said.
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