Abu Dhabi: International Gas Union (IGU) has said that they are advising European Union to diversify its sources of gas supply to secure its energy demand as tensions with Russia, which is one of the main suppliers of gas to Europe, escalate over Ukraine crisis.
Jerome Ferrier, president of the IGU said Europe needs Russian gas but they also need to look for other sources as part of their diversification.
“If Europe wants to diversify and secure its supplies it is important to build new agreements with other countries like Qatar, Turkmenistan and Iran. They need to send good signs to the financing community for new investments in terms of gas lines.”
Europe imports about 30 per cent of gas from Russia, 20 per cent from Norway and about 20 per cent from Algeria.
According to Reuters, Europe received around 147 billion cubic metres of Russian gas last year — or around a third of its total needs — with roughly 40 per cent shipped via Ukraine.
In recent times, Russia has been warning Europe that there could be disruptions to gas supply if the payment row with Ukraine does not end.
On Iran gas entering the market if sanctions are lifted, Ferrier said the world needs gas from Iran and they are waiting for the opening of the market.
“It is of mutual interest for Iran and for the world to diversify. Iran will come back and they are already developing new lines to supply gas to Asia mainly China and India.”
He said at $60 (Dh220) per barrel oil price, the gas projects could be maintained in a right way.
On falling oil prices and whether shale projects are getting affected in the US, David Carroll, vice-president of IGU said that shale gas and shale oil are very important sources of energy in the US with around 40 per cent of natural gas production and one third of onshore oil production coming from shale.
“We have seen capital spending reductions on the part of individual companies for drilling in the range of 20 to 40 per cent based on the current prices on oil and gas. So, here has been a trimming of capital expenditure on new drilling activity. That said, we still expect production for shale gas and oil will increase, based on wells that have been already been drilled and process has been completed.”
He said significant shale reserves are found in China, Argentina, Canada, Algeria, Russia and some countries in Eastern Europe.
International Gas Union is a non-profit organisation supporting continued worldwide development, marketing and use of gas.
It has 91 countries as its members with Kuwait, Bahrain and Yemen being its new members. It held its executive meeting in Abu Dhabi on Tuesday.