Page 27 - European Energy Innovation - Spring 2017 publication
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Spring 2017 European Energy Innovation     27


Winston Churchill, as First Lord of the        its importance is about to increase        previously untapped reserves. From
Admiralty was the first to press for such      considerably around the globe.             the improvements in liquefaction and
a change, and after the British had                                                       regasification, to the vast new shale gas
switched to oil, other nations followed        The supremacy of oil started when it       production, the natural gas market has
suit. With major developments in its           gained a truly global market. I would      seen many fundamental changes, both
exploitation and refining, oil could offer     call a market truly global, when one       incremental and transformational ones.
enhanced manoeuvrability and smaller           can buy a standard amount in a fairly      These changes have revived industries
scale application, which provided a            standard quality for a somewhat            and altered geopolitics, and those
competitive edge in naval warfare. This        uniform price all over the globe. You      who adapted to them usually gained
marked the beginning of the age of             can buy a barrel of Brent quality crude    momentum.
oil, as its use became predominant in          in Singapore and in Rio de Janeiro
transport and heating. Eventually it has       for about the same price at a given        I believe that, due to the rapid
replaced coal as the primary global            moment. Natural gas markets cannot         developments, gas markets will change
energy source.                                 perform like that because of the costs     fundamentally in the coming five to
                                               of transport (both for pipeline and LNG)   ten years, and I do not see the pace
What we are experiencing nowadays              and the lack of liquidity. Inadequate      of the changes slowing down. Take
is very similar to that shift. Natural gas     demand, combined with high fixed           for example Floating LNG (FLNG).
is harder both to exploit and transport        costs halted the development of natural    The first operating floating facility,
than oil, but it has some features –           gas markets, when suppliers tended         stationed in Malaysia, received first
particularly its cleanness and efficiency      to be monopolistic and long term           gas in last November, and is about to
– which make it a superior source of           contracted. With increasing demand         launch its first cargo in early March
energy. Substitution is not possible in        and decreasing transport costs, the        2017, a historical moment. With such a
every application, for example it cannot       competition has intensified and the        novel technology, there are bound to
be used as a feedstock in all cases, but       markets have become more liquid.           arise new challenges and unexpected
the technological changes foretell a           We can already see the contract time       difficulties, but further innovation will
shift from coal and oil to natural gas. The    horizons shrinking, while the terms        surely tackle them, expanding natural
prediction of the International Energy         of the contract become increasingly        gas production to previously
Agency about the coming golden age             loose. With the LNG projects under         untapped reservoirs.
of gas could have been premature, but          way, which are to be realized in the next
it is clear that the role of natural gas will  2-3 years, we will see not just a boom     As we have seen, the evolution of
grow in the next decades.                      in LNG trade, but also a massive and       fossil fuels has accelerated, changing
                                               unprecedented integration of               the status quo on the energy market.
When contemplating the evolution               the markets.                               Technological and consumption
of fossil fuels, we cannot overlook                                                       changes have paved the way for
the common fate that will come to              This rapid development and integration     a radical shift in business models.
most species eventually: extinction.           of markets is essentially due to           Although oil and coal are to stay
Natural gas might be the cleanest, but         innovation. In the last decades we         with us for many years, they will not
it still creates harmful emissions. Mass       could see innovation reducing costs all    significantly question the primacy of the
scale electrification and the spread of        over the supply chain, while unlocking     new champion: natural gas. l
renewable energy challenge the rule of
fossil fuels, but in my opinion, the end       András Gyürk
is not yet close. Not every application        • Born in 1972, graduated in history in Budapest
can be electrified and the intermittence       • 1998 – 2004 member of the Hungarian Parliament
of renewable power sources requires a          • 2004 – member of the European Parliament (Committee on Industry, Research
flexible backup, which is most efficiently
provided by natural gas. In the coming            and Energy, EPP)
decades, both its overall demand               • 2010 – head of the Hungarian EPP delegation
and its share in the global primary            • Shadow rapporteur on the Energy Union Package – A Framework Strategy
energy consumption are expected to             • Rapporteur on the EU Strategy for LNG and Gas Storage
grow. It seems that natural gas will not
become extinct soon, on the contrary,
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