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‘Free gas to Ukraine? Sounds a bit strange’ - Eurogas ex-chief ― RT SophieCo

Sophie Shevardnadze: Jean-Marie Devos, former head of Eurogas, thanks for being with us on a program today. The question of the day is: can Europe survive without Russian gas?

SS: Obviously another huge player in this whole game is America. US officials are calling for export of American natural gas to Europe. Is that a realistic plan as of today?

JD: That's a very interesting question of course. Shale gas...it's very clear that today shale gas gives the United States a major competitive advantage. Shale gas, being produced locally in the United States is an outset not only for economy but also for citizens. If, you know, considering possibility of export to Europe, and I did discuss that by the way with some industrialists, I would say it is definitely possible from a technical point of view.

However the cost structure of shale gas exported to Europe may lead to prices which are maybe above the same as the existing prices in Europe. So there is no demonstration so far that American shale gas would flow to Europe at very cheap price with which it should be beating any other kinds of gas sources in terms of competition. This is not the information I have, especially for technical reasons.

You need of course liquefication installations, you need to transport, you need re-gasification. You know, all that add to the cost. And though, you will have, because I believe, there will be a development, you will have increased competition on the European market… We know also that natural gas is a global market and you have markets in the world: look at Asia, look at Japan where the price structure might be much more attractive for exporters. So we will see movements but I don't think we will see quick, immediate flow of American shale gas to Europe.

SS: Just to summarize, you are saying that except the fact the shale gas transportation from America will be too expensive, Europe also right now does not have terminals to ensure smooth transportation? Do I understand everything correctly?

JD: No, we do have of course in Europe capacities...by the way a lot of capacities are unused or insufficiently used for liquid gas. But in the United States you probably don't have yet all the necessary capacities to liquefy all the natural gas and to export them. So it will take time if it happens. And then of course we have also to consider by the way the needs in the United States itself for cheap gas which may create indeed a de-incentive actually to export natural gas to Europe.

It is clear that industry today benefits from this low price in the United States. But again, I believe all this is a dynamic process and you may see with creative industrialist developments where you will see more exports of natural gas, shale natural gas from the US to Europe. But today there are questions including on prices.

SS: Apart from the prices, do I correctly understand that is also a question of time. How long would it take until it materializes itself? And also will the quantity that America is promising to Europe enough for Europe?

JD: Quantity, you know, is very relative because markets are already served I don't need to tell you, I mean by Russia, Norway, the internal EU production. So it is definitely not unlimited needs, but again the battle, if there is a battle of this kind, will be a price battle and competitiveness battle. Now, from a technical point of view on this very day I don't see, I repeat, the possibility for massive exports of US shale gas. However, this things may develop in some time and maybe very quickly and you could think that in 2016 for example, that you’ll see already more substantial moves.

SS: Shale gas reserves also have been found in Europe. You have France and Bulgaria that are protesting against it, saying that it's really bad for their environment. Poland tapped into it but said they are not going to go ahead with it. Romania were seeing huge protests against Chevron’s plans for shale gas exploration. Is it really that harmful? If it's that harmful, than why is shale gas being trumpeted as the next best thing?

JD: This is a question which is very debated. Having some experience and having talked to industrialist you probably have the possibility to exploit shale gas in an environmentally-friendly manner. At the very same time it is true that there are objective problems and there are also questions of perceptions by public opinion. So it's not an obvious answer. We don't know – that is an honest truth today in Europe. If there is a future for shale gas in Europe.

As you know, some countries are going on, other countries are very restrictive to the point that even prevent the R&D and limiting experiences. But again, these things might change considering for example the economic situation. A real problem for Europe as you know is the competitiveness of its industry. And it is very important for European industry to look that the chemical, cement, others, but also the electricity industry needs to have access to very competitive gas, natural gas. If they want to be indeed successful in their operations. That will dictate I think in a wide way the future of shale gas in Europe – keeping in mind that other gas sources are there and may take this future shale energies for their own advantage.