Mashreq could play key role in Gulf-Europe gas transit, says Shell
Posted:23 June 2008
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The Mashreq region could play a key role in the increased transit of gas from Gulf countries to the major markets of Europe, a senior Shell executive said in a European Union–Mashreq conference in Damascus , Syria.
Gas prices are rising globally, reflecting the increasing cost and difficulty of finding and producing supplies to keep up with growing demand.
According to John Mills, Executive Vice President for Shell’s Gas & Power business in North Africa, the Middle East and South Asia, this situation is not likely to change in the near future.
In the case of Europe, which already imports almost half of its gas, demand is expected to grow to 80 billion cubic feet per day by 2030 from 60 billion cubic feet today. Domestic production is expected to fall by 40% so imports will play an ever more prominent role.
"The Middle East, which holds 40% of the world’s gas resources, is likely to play a role in filling the European gas supply gap,” said Mills.
According to Mills, the possible addition of Iraqi supplies to global trade flows could be a game changer – gas from Iraq could find its way to Europe through a number of routes.
"Countries like Turkey, Egypt, Jordan and Syria could play a key role in facilitating the transit of that gas and stand to benefit from doing so,” he added. He noted that Shell is working with Syrian and Iraqi governments to develop gas master plans for their respective countries.
In addition, Mills identified three key requirements for being a successful energy transit hub.
First, allowing direct contractual links between the energy supplier and the customer rather than seeking too active a broker role.
Second, ensuring security of supply for customers combined with security of demand for suppliers.
Finally, offering competitive transit tariffs. This will provide transit countries with transit revenues and also ensure that countries in the region have supplies to meet their own domestic demand.
"Companies like Shell can play a role in realising this potential,” Mills said. “With our knowledge of global and regional dynamics and extensive experience in the industry we are ideally placed to help find and develop the gas and structure the deals to make this all happen.”
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