27-08-04
Gas prices could collapse as the end of the decade approaches, as heavy investment in a number of planned gas projects bear fruit. Energy giant Total said the gas supply shortage that British group Centrica said was behind its latest inflation-busting price hikes would likely be short-term and brief.
Yves-Louis Darricarrere, Total's executive vice-president in charge of gas and
power, predicted a potential excess of gas supply, or a "bubble", that
would depress prices around 2010. And he said he believed that a fear of
shortages was being overplayed and less serious than many people may think.
"If you have a bubble in 2010 you might have a new period of very low prices," he said, but added that beyond then it was difficult to predict the supply and demand situation.
"Around 2015, everything is still open with plenty of room for new
quantities of gas. There are plenty of reserves in the neighbourhood of Europe
but with a need for longer and longer transportation," he said.
Mr Darricarrere's comments, at an oil conference in Norway, echo comments made by Norway's leading energy company, Statoil, earlier, which themselves followed in the wake of Centrica's price rise announcement. Statoil predicted a gas glut in the UK from 2007-2012 if six new gas import projects all go ahead. It said that there was still "great potential" in so-called tail production at maturing fields in the North Sea.
Mr Darricarrere said: "The market anticipates shortage in the next two to
three years. In northern Europe there might be a shortage, but there might be a
surplus in the south." This, he added, raised the possibility of a more
balanced situation than the forward market indicates.
The views contrast with British firm Centrica -- the UK's biggest residential gas supplier -- which warned that the era of cheap UK energy was over as it announced an unprecedented 12.4 % hike in its prices. As supplies from existing fields dwindle, Britain is expected to become a net importer in the next couple of years as demand outstrips supply.
"In 2010, probably half of UK gas will be imported," Mr Darricarrere
said, projecting a period of lower gas prices in the UK as many companies are
planning huge investments in infrastructure to feed the market. "In 2007-08
there might be pressure on prices," he added. "But they might also be
very high from time to time," he added, pointing to high demand situations
such as cold British winters.
Asked about possible further consolidation in the fuel sector, Mr
Darricarrere said: "Generally, consolidation does not happen when prices
are high." He said Total, the product of a merger between oil majors Total,
Fina and Elf, had the necessary financial strength to carry the risks involved
in new high-risk developments.
"The size of the new Total allows us to be very competitive," he said.
Source: scotsman.com