WEC: Eni's Scaroni says Europe runs risk of gas shortage

Paolo Scaroni, chief executive of ENI, called for a reduction of natural gas in Europe's energy mix to ensure that Europe does not suffer a shortage.

Uchenna Izundu
International Editor

ROME, Nov. 13 -- Paolo Scaroni, chief executive of ENI, called for a reduction of natural gas in Europe's energy mix to ensure that Europe does not suffer a shortage.

Scaroni's recommendation, made during a formal address at the World Energy Congress, would mean building nuclear capacity of about 115 Gw by 2020 and a push for renewable energy sources, especially solar power.

Gas accounts for a quarter of all the energy used in Europe, and 60% of that is imported. Scaroni said cutting Europe's reliance on gas combined with energy efficiency and gas supply diversity would position Europe to compete with other countries for energy supplies. "These are not alternative options. We need to do all three to avoid a gas shortage."

Scaroni said use of Europe's plentiful coal resources requires technologies to avoid increasing carbon emissions.

Gas imports in Europe are expected to double by 2030, but European gas production is expected to halve by 2020. With power generation set to be the key driver behind the growth of gas, "Europe's total gas demand in 2020 could be 40% higher than it is today," Scaroni said.

As international competition for gas supplies intensifies, pipeline gas and LNG supplies are crucial for diversity in Europe. Scaroni said a variety of transit routes would reduce transit risks. "Here, new pipeline projects such as South Stream and Nord Stream can help by making it possible to deliver Russian gas directly into the European Union."

Scaroni proposed investment in interconnections across Europe to bring gas to where it is needed as well as more gas storage infrastructure to cope with variability of demand and temporary drops in throughput.

According to Scaroni, Europe is vulnerable to a shortage because it has a small number of gas suppliers, namely Algeria and Russia, a point he also made in a press conference (OGJ Online, Nov. 13, 2007). It is important to develop "good and cooperative relationships" with suppliers, he said, calling for European Union member states to give Andris Pielbags, the EU energy commissioner, and Javier Solana, Europe's representative for Common Foreign and Security Policy, "the right tools" to carry out a European foreign energy policy.

Europe could save as much as 100 billion cu m/year of gas in the housing consumption sector alone though energy efficiency, he said.

Scaroni admitted that the outlook for renewable sources is "bleak" because Europe would have to install up to 15,000 wind turbines and solar panels covering the space of 50,000 football fields every year if it is to meet incremental electricity demand. "It seems clear that alternative energy sources will not really be able to cover even just Europe's incremental electricity demand from here to 2020. Much of this growth will inevitably be satisfied by gas."

Scaroni said Europe had been "sleepwalking" on its previous approach to gas policy because it had focused on "fine-tuning the internal gas market" without realizing that it had limited suppliers and faced transit route risks. Europe was shocked into a "rude awakening" when it suffered a shortfall in deliveries in 2006 when Russia cut off gas supplies to Ukraine, Scaroni said.

Contact Uchenna Izundu at uchennai@pennwell.com.

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