Uchenna Izundu
International Editor
LAKE COMO, ITALY, Nov. 25 -- Eni Gas & Power SPA Chief Operating Officer Domenico Dispenza warned in a keynote address at the European Autumn Gas Conference (EAGC) at Lake Como, Italy, that the credit crisis could seriously affect the supply and diversity of gas supply projects in Europe.
Dispenza said extreme volatility in stock and commodity prices were complicating the planning of major developments, and the drying up of financing has led to unprecedented government intervention in the market.
"The forecasting of the medium and long-term European gas demand will become a difficult exercise as the common wisdom of its unstoppable growth is being challenged by two full years of decrease—the combined effects of mild winters, marginal fuel competition, and efficiency measures," Dispenza said.
European gas companies have proposed a number of pipelines and LNG import terminals to bring in natural gas from Russia, Algeria, and Qatar to meet the growing deficit in gas supplies. But Dispenza stressed that infrastructure developments would be difficult without major finance and that strong upstream resources and a good project framework would be crucial going forward.
"The effect of the credit crunch on new capital-intensive export projects will be material for supply and diversity," he added.
He was critical of the "dangerous inward attitude" regarding development of the European single gas market and called for all actors to display similar attitudes to action investment. Otherwise, he warned, it would be difficult to encourage suppliers to establish multibillion-dollar export infrastructure.
"The priority of any new regulator and the third European liberalization package should therefore be on the promotion of a favorable investment climate and a finally stable regulatory framework," Dispenza said.
Of the EAGC delegates voting in a poll to identify the greatest concern for European Union (EU) marketers over the next year, 26.5% said it would be the threat of underinvestment as access to finance diminishes. Another 24% said legislative and regulatory uncertainty was the key challenge as the EU finalizes and implements its energy and climate change package.
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