Demand for Natural Gas is Projected to Remain Stable

4 october 2018 | Rossiyskaya Gazeta

Over the past six years exports of Russian natural gas via pipeline to European countries has gone up by 53 billion cubic meters, which is roughly the same as the capacity of the operating first line of Nord Stream Pipeline. Experts estimate that as domestic production of natural gas in Europe falls through 2030 the utilisation of Nord Stream 2 will be kept at least at 70%, however, Russian natural gas is going to be facing more and more competition and the root of this new competition is not at all political.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

"Geographically, Norway still is the closer option for getting natural gas from for Europe. the International Energy Agency forecasts that total annual natural gas production in the EU should fall by almost 50 billion cubic meters in 2017–2030 and by a further 20 billion cubic meters in Norway. Meanwhile, demand for natural gas will most likely stay largely the same," Alexander Kurdin, Head of Research at the Department for Fuel and Energy Sector of the Analytical Center told a Rossiyskaya Gazeta correspondent.

"First of all, natural gas gives consumers a good balance between cost and environmental friendliness, secondly, the fast growing renewable energy generation capacity needs backup capacity and the best option for that is natural gas," the expert reasons. "As a result, the total demand for net imports of natural gas from outside Europe may grow by 70 billion cubic meters per year by 2030. Russia currently controls about 70% in these imports, so in theory demand for Russian natural gas can grow by as much as 50 billion cubic meters per year."

At the same time, over the next few years Russia is probably going to run into tougher competition in the global markets, so Russia's going to work hard to secure these extra sales, Mr. Kurdin warns. For this reason it is highly unlikely that Nord Stream 2 will see 100% (or even 90%) utilisation through 2030, but it can very easily see 70–80% utilization, the analyst believes.

By the way when the original Nord Stream project was discussed in the early 2000s, the European Commission gave it the status of trans-European infrastructure, which means it was seen as being of vital importance for sustainable development and energy security in Europe. Things are more complicated with Nord Stream 2, seeing how the project is weighed down by political issues.

Mr. Kurdin is of the opinion that expansion of the Baltic pipeline would in any case not be completely in line with the European energy security ideology even if politically it was smooth sailing, because over the past decade the EU has been trying to diversify both sources of its energy resources and the routes by which it is getting them. "In actuality, Nord Stream 2 would of course improve the reliability of supplies as it significantly reduces transit risks, but in all probability its benefits are not seen as being sufficient to warrant serious backing from the majority of European politicians," the expert concluded.

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