IEA Chief Says Europe Must Rely on Russian Gas – WSJ

STAVANGER, NORWAY—Europe is set to rely on gas supplies from Russia in the short term, as diversification will take time, said the International Energy Agency’s chief executive Maria van der Hoeven Monday, amid tensions between Russia and the European Union over Ukraine.

“In the short term, Europe has very, very little means to diversify its gas imports,” Ms. van der Hoeven told The Wall Street Journal in an interview at the sidelines of the Offshore Northern Seas energy conference. “As far as we can see, Russian gas will be needed in Europe.”

About a third of Europe’s gas supply is coming from Russia and a fifth is supplied by Norway, while other key sources include imported liquefied natural gas and indigenous gas producers like the Netherlands and the U.K., said Ms. van der Hoeven.

“If you want to change that and diversify, it takes time. You can’t do it overnight,” she said.

The agency—which advises industrialized nations on oil and gas policies—forecast last year that the European Union’s annual gas imports would rise by some 140 billion cubic meters to 450 billion cubic meters by 2035, as indigenous production continues to drop.

Significant future U.S. gas exports to Europe “is an alternative that I think is not really very realistic because the gas is not yet there, and it will come at a price,” said Ms. van der Hoeven. The IEA has forecast that the U.S. will export 50 billion cubic meters of natural gas as LNG annually by 2035.

Norway’s gas exports to Europe are expected to fade in the early 2020s. Potential replacements include increased pipeline supply from Azerbaijan and Kurdistan, more LNG from the U.S., the Eastern Mediterranean and Africa, and potentially also shale gas production in Europe. However, Russia is expected to retain and even strengthen its position as a major gas supplier to Europe.

“Russian gas remains competitive against other alternatives and will continue to be the cornerstone of European gas supply,” said consultancy Wood Mackenzie in a June report. “Our long-term view is that the Europe-Russia gas relationship will continue out of necessity.”

Norway’s biggest oil and gas company Statoil AS STL.OS +0.58% A is a key gas supplier to Europe, and the company’s Chief Executive Helge Lund said Monday that he hoped for a diplomatic solution for the tensions with Russia, partly because Europe depends on Russian gas.

“Europe and Russia will be energy partners for many decades to come. That is fundamental,” he said.

via IEA Chief Says Europe Must Rely on Russian Gas – WSJ.