Large energy groups bet everything on gas

It took eight weeks to tow the world’s largest floating natural gas refinery from a South Korean shipyard to a point about 500 km northwest of the Australian coast, where it was anchored last month.

Over the next 25 years, this giant, which has a length of four football fields will collect gas from underwater wells and convert it to premium quality liquefied natural gas (LNG).

Oil tankers will visit the vessel once a week to discharge LNG for export. The Prelude project, headed by Royal Dutch Shell, is part of an increase in LNG capacity that promises to reshape the oil and gas industry and, with it, to the energy markets in which it is present.

From Australia, Chevron’s Wheatstone LNG platform will begin production this month after a $ 88 billion investment. ExxonMobil, BP, Total and Eni are also involved in large projects. It is estimated that the supply of LNG will increase by 50% between 2014 and 2021. This implies the opening of a new LNG “train” – the facility that condenses the gas into liquid to enable it to be transported on ships over long distances every two or three months. Spencer Dale, BP’s chief economist, believes that we are facing “an impressive growth rate.”


The investments are part of a clear commitment of the big energy companies for gas as an alternative to oil and coal.

The gas emits half as much carbon dioxide as coal when it is burned to generate electricity and 75% less nitrogen oxide and other harmful particles. This makes gas a possible ally in the fight against climate change and air pollution, and a haven for the industry in the face of the fall of oil with the boom of the electric car.

Of the 16 new BP projects planned between this year and 2021, 12 of them are related to gas rather than oil. This change is being noticed throughout the sector. Gas has doubled oil in proposals awaiting approval from the investment community, according to industry consultant Wood Mackenzie. “In the past, finding gas instead of oil was disappointing,” said Claudio Descalzi, CEO of Eni. The Italian group plans to start operating at the end of this year the Zohr pipeline located on the coast of Egypt. The focus on gas depends to a large extent on the sector’s ability to eliminate coal from the global energy system and compete with increased wind and solar energy. “Renewables will dominate the sector in the long term but during the transition there will have to be a stable source of electricity in the event that there is no wind and solar energy available.” I am convinced that gas will play that role, “explains Maarten Wetselaar, responsible for Shell’s gas division.

The evolution of gas is particularly important in Asia. China and India account for almost half of the 30% increase in global energy demand forecasts by 2035.

Coal still accounts for 60% of electricity generation in China and India, but increased awareness of the risks associated with pollution is creating more opportunities for gas. China intends to increase its gas consumption by 6 to 15 percent by 2030. In fact, there are already signs of growth: China’s LNG imports increased 38 percent in the first half of the year compared to the same period in 2016 .

“We will not eliminate coal overnight, but pollution is already a political problem in China,” says Wetselaar. “Until now, the priority was cheap electricity, but when you cannot go out for a month by pollution, environmental factors take centre stage,” he adds.


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Forex managed accountsLarge energy groups bet everything on gas

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