Norwegian energy giant Statoil ASA is keen to deepen its investment in new gas production, but wants policy makers to first embrace the fuel, a top executive said.
"In order for us to invest, we must receive firm signals that gas will play an important role in future energy politics," Eldar Saetre, executive vice president for Statoil's marketing, processing and renewable energy business unit, said in an interview with Dow Jones Newswires.
"It's important for us as a company that invests in very long projects to know that the world wants gas, that politicians want gas -- we can't just gamble," added Saetre, Statoil's former chief financial officer.
Statoil calls for favorable gas policies in both gas-producing countries, where it is important to ensure access to gas resources, and consuming countries, where it argues the need for clear support from policy makers for gas as a vital part of the energy mix for 2020 and beyond. Statoil's pro-natural gas policy agenda comes amid calls from others for greater investment in renewable energy and nuclear energy.
The firm argues gas is cost efficient, competitive and available and says it can reduce carbon dioxide emissions by 70% from the power sector by replacing existing coal-fired power plants. "It's the cleanest of the fossil fuels," Saetre said and added that the fossil fuel tag makes politicians nervous about expressing support for an industry not considered green in the public's eye.
Much of Norway's wealth is generated from the oil industry, and Norway's declining oil production may become a big headache in the future unless the country finds other sources of income.
Saetre forecasts rising demand for gas in Europe, the U.S. and especially in Asia. In the U.S. the development of shale gas has transformed the market.
Within 10 to 20 years, he expects a doubling in demand in Asia and a 20% to 30% increase in demand in both the U.S. and Europe. "Probably more in the U.S. than in Europe," he said.
Saetre said that he believes Asia will continue to be the highest paying market for gas and that the U.S. will have the lowest prices, with Europe somewhere in between.
Statoil markets gas belonging to the Norwegian state together with its own, and is responsible for marketing about 75% of total Norwegian gas exports. The firm sells natural gas to customers in almost 20 countries, with the largest volumes sold in Germany, the U.K. and France.
The firm also trades gas in the spot market, is active in the emerging liquid trade markets for gas in Europe and has marketing activities in connection with its positions in the U.S. and Azerbaijan.
The majority, 80-90%, of the gas marketed by Statoil in Europe is sold under long-term contracts. Saetre said he expects long-term contracts to continue to have an important role on the gas market, but said they are likely to "represent a smaller part" in 10 to 15 years time. The Marketing Processing and Renewable unit, launched in January this year, had a first quarter net operating income of NOK2.2 billion ($368 million).