By OGJ editors
HOUSTON, May 1 -- In order to reform its natural gas market, Germany will have to make it possible for outside oil and gas companies "to secure fair and nondiscriminatory access" to the country's natural gas pipeline grid in accordance with the European gas directive, said BP PLC Chief Executive John Browne during a speech Apr. 29 at Humboldt University in Berlin. Browne added that while the liberalization of the European gas market is providing opportunities to build positions in Germany, there are still barriers preventing companies such as BP from entering the German gas market.
"First, we need to complete the strategic move of selling our stake in Ruhrgas [AG]," Browne said. "This is not an operating investment, but a financial one, and is centered around the gas pipeline business, which is not part of our core strategy." Sale of its Ruhrgas stake, Browne said, would then pave the way for the company to increase its operating activities in energy trading and marketing in the country.
And while BP's exact plans for energy trading would depend largely on "how the liberalization process continues to unfold," Browne said that the company has already established an energy trading operation in Hamburg and has set up a direct sales force for German industrial customers, "which would enable it to move quickly as opportunities arise.
"The gas industry here in Germany is on the threshold of major changes, and we believe those changes offer us the opportunity to enter this market as a significant new player," he said.
European gas directive
Browne said that BP welcomes the recent announcement of a task force to deliver full implementation of the European gas directive by next January.
Germany's evolving natural gas market will play a major role in helping the country meet the greenhouse gas emissions reduction targets set by the Kyoto Protocol on global climate change, Browne said, adding that there should also be a new international dialogue—that could include businesses and the emerging economies as well as the developed world—to address the challenge of climate change.
"The new dialogue should have a simple goal—to set incentives which encourage all possible efforts to decarbonize the world and stabilize total emissions below the level of risk," he said. "That dialogue should include business, because it is a delivery vehicle, and also the emerging economies, because they are part of the solution."
The increased use of gas will also be an important part of reducing Germany's emissions, Browne said. Natural gas has already helped BP to meet its own reduction target for greenhouse gas emissions, which have been reduced so far by 10% from a 1990 base line, he noted. In addition, BP plans to continue its development of lower-carbon content fuels, such as compressed natural gas (CNG) and liquefied petroleum gas. Also, BP would increase its production of clean fuels and continue development of solar energy projects.
For Germany, Browne said that would mean an increase in the number of CNG retail outlets over the next 4 years, all of BP's German refineries producing only clean fuels by the yearend, and construction of a solar module plant at Hamlin, Lower Saxony, which is due on stream in 2003.