ENI CEO Warns of Future Gas Crisis

The EU must work harder to create “strong and stable” relationships with gas suppliers and providing nations if it wants to avoid a future ongoing gas crisis like that which began on new years day 2006, Eni CEO Paolo Scaroni says.

Speaking today at the World Energy Congress in Rome – the largest meeting on energy of its kind to look at the sustainability of energy supplies – Scaroni warned of looming threats surrounding energy security and supply.

“The truth of the matter is we are still going to be very reliant on a small number of gas suppliers [in the EU]. Algeria and Russia [in particular] will continue to be pillars of our energy securities for years to come,” Scaroni says.

The EU currently imports 60% of its gas from nations such as Russia.

Russia supplies 10% of the gas needed in Finland, Slovakia, Lithuania, Latvia, Roman, Hungary and Bulgaria and 80% of the supplies to Australia, Poland and Greece.

Germany receives 40% of its gas from Russia while Italy and France, with the completion of the North Stream gas pipeline, will receive more than their current 30% quota.

“This equation is not going to change and in short term our dependence may even increase,” according to Scaroni, the head of Italy’s leading oil and gas supplier.

On top of this, gas consumption in some provider countries, such as those in the Middle East, is predicted to skyrocket where gas will be used for both domestic and industrial growth, as well as production itself in oil fields where the use of gas is viewed to be the most profitable.

“Our growing demand and the [decreasing] reliance of imports and increasing competition for gas [means] we clearly run the risk of a gas shortage in the future,” Scaroni says.

“This would be a very serious issue in deed for in Europe gas means light, it means heat, it means industrial produce.

“Running out of gas is simply not a risk we can afford to take.”

Scaroni used current gas forecasts for nations such as Italy, which relies heavily on gas for most of its energy needs, to call for better ways to mitigate risk, including the diversification of resources and pipeline connections used to transport it, such s the North and South Stream pipelines which provide direct import lines into the EU.

“We need to improve interconnections in Europe to ensure gas [gets to] to where it is needed and invest in storage infrastructure to cope with temporary drops and increased demand,” Scaroni says.

“We also need to reduce the importance of gas in our energy mix.”

While Scaroni did endorse the growth of nuclear and renewable power sources, he did warn that these alone would not solve short-term problems, or be able to alone reach long-term demand.

“It seems clear alternative energy resources will not be able to cover even Europe’s incremental demand from here to 2020 – much of this growth will inevitably be satisfied by gas.”

Scaroni says that the decommissioning of coal and nuclear plants already in operation due to age will only exacerbate the situation.

He predicts up to 20% of nuclear plants could be turned off by 2020 and coal could be wound down, or obsolete, as the world puts focus on cleaner energy sources.

New markets such as China, which could well become a strong market partner for Russia, Europe’s key supplier, could add market pressure for the EU in regards to gas.

By Penny Jones