Europe, China Set to See Stark Increase in Natural Gas Production

Natural gas production is set to increase significantly in Europe, China and Nigeria over the next decade, according to industry experts at a London conference that was held Tuesday afternoon.

Frank van Doorn, the director and head of continental power trading and LNG at Vatendall Energy Trading, said that Europe would be shifting its focus to natural gas in the future, although no dramatic demand increases would be seen in the very short term.

Speaking at the Natural Resources Forum, Rigzone heard van Doorn state:

“European power generation is very likely to move from lignite to coal to natural gas in the coming years and decades. It will certainly create some extra demand for natural gas but certainly no dramatic increase in the short run.”

China is also looking to increase its natural gas production, according to Green Dragon Gas Chairman and CEO Randeep Grewal, who dismissed reports of a market slowdown in the country:

“[In China] gas consumption today is about less than 4 percent…call it 6 trillion cubic feet a year, that’s nothing for a country of China’s size. But the expectation by 2020 is that number will be 20 Tcf. Twenty Tcf is about $200 billion of a market. That’s a real market.

“There’s all this thing about China slowdown. China slowdown of what? The country is growing at six plus percent…the growth continues. The growth will have, and does have, an energy demand and it is driven and focused on natural gas.”

In spite of this natural gas focus, Grewal suggested that the Chinese shale industry is unlikely to play a part in the production increase:

“I think that shale in China is probably a decade away from ever getting there, if it does get there. That’s my personal view, that’s not the country’s view. The country expects shale to be online and producing rather quickly.

“Asia as a whole is a long-term bet. You’ve got to be patient, it takes a long time. This is not a place you’re going to come and get a drilling rig, poke a hole and expect to make hydrocarbons and make all kinds of capital….These are all 10-15 year bets.”

Another region that will see increased natural gas production is Africa, according to Seplat Petroleum Chief Financial Officer Roger Brown, who believes the continent offers a “big future” for the resource.

Brown confirmed that the Nigerian Government plans to quintuple its power target to 20,000 megawatts in the next four years, from current levels of around 4,000 megawatts, and revealed that forecasted investment in the project is said to be around $10 billion per annum. In an effort to meet this demand, Seplat is rapidly expanding its gas business and will increase its gas processing by 75 percent this year to 525 million cubic feet.

The boost in natural gas production is due, in part, to last year’s COP21 agreement in Paris, which saw leaders from all around the world pledge to decrease carbon-emissions. As a result, natural gas was hailed as a satisfactory transitional fuel source due to its cleaner and more efficient nature compared to emission-heavy energy sources.

Commenting on this transitional period, Energy Exemplar’s European Regional Director Christos Papadopoulos warned that its undefined timeframe could be a cause for concern for the industry:

“Everybody says today that, yes, gas is going to be the transition fuel for a cleaner energy technology, however nobody can define how long this transition is.”

Other speakers at the conference were more optimistic about this transitional span of time however, with BP Lead Gas and Power Originator Fabio Fiorini stating that “gas will stay in the energy mix for the foreseeable future”.

A graduate in journalism from Cardiff University, Andreas has eight years of experience as a business journalist. Email Andreas at andreas.exarheas@rigzone.com

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