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By Satish Kanady
DOHA: The US entry into the Shale energy is set to alter the existing price structure of global energy market. There are dynamics in place to change the price structure, particularly in Europe, a top energy analyst told The Peninsula yesterday.
The pace of shale energy development in US is not as swift as expected. But with the production picking up, the US will become somewhat independent from the Middle East sourcing, Michiel Soeting, Partner, Global Chairman, Energy and Natural Resources Sector, KPMG said in an interview.
Michiel said the Shale resources will certainly create pressure on the energy prices. There will be more potential pressures on re negotiation of the prices, particularly in Europe. Long-term gas supply contracts linked to oil have already been successfully renegotiated by certain entities.
For instance, E.ON has now successfully renegotiated the pricing conditions of all of its currently oil-indexed volumes under its long-term gas supply contracts. This marks a major milestone in restoring the competitiveness of E.ON’s long-term gas contracts.
However, Michiel would not buy the theory that the Middle East’s dominance in the global energy market is under threat following the ‘ US shale revolution’. The emerging economies’ demand is set to go up substantially. The region’s domestic demand is also projected high. “Asia will continue to rely on gas from the Middle East. The region’s domestic demand is also projected to grow in medium-term to long term. The domestic demand in the Middle East is enormous. The governments in the Middle East are aware of this growing domestic energy demand “.
On Australia grabbing market share from Qatar and the Middle East exporters in Asia, Michiel said Australia has an extra edge on the supply side. But Qatar will continue to hold its position as the world top gas exporter. Qatar’s energy position is really solid. We cannot say Qatar is losing its grip as the world’s top LNG exporter, he said.
Michiel said the renewable energy industry has to create itself self-sufficient and has to be independent from government subsidies. The renewable energy sector cannot sustain simply on government funding. The best pathway to a stable renewable energy industry is to create self-sufficiency and independent from government financial assistance.
There is a need for an increased investment in the innovation and technology in the energy sector. An enhanced, technology-powered infrastructure is key for meeting the growing energy demand, Michiel noted. The Peninsula