LNG will continue to replace coal and oil: GECF official

 21 Jan 2014 - 10:35


DOHA: As a result of growing environmental concerns, the share of liquefied natural gas (LNG) in the global energy mix is set to increase from the current 23.5 percent to 26 percent over the next several years, said Dr Hossein Adeli (pictured), the Secretary-General of the Gas Exporting Countries Forum (GECF). 
“The 21st century is the era of LNG, and the share of coal and oil will continue to decline in favour of gas and renewables” said Adeli at the GECF headquarters here yesterday. 
Adeli, during his maiden interaction with the media after assuming office in January, said: “The growing awareness campaign and louder voices about greenhouse gas emissions and global warming at different forums, including Intergovernmental Panel on Climate Change (IPCC), have made the world more conscious about the environment forcing economies to substitute coal and oil with cleaner fuels such as gas.”  
Asked about shale gas revolution in different countries, especially in US, and its implications on investments in conventional energy, he said: “Shale gas accounts only two percent of the total gas production, which is estimated to reach up to 10 percent over the next decade.  However, it suffers from many shortcomings such as technology, know-how, water contamination and others. So the investments in the conventional gas will continue to be robust.”
In the current global energy mix, coal has the largest share between 33 and 34 percent, followed by oil and gas. But the share of coal is expected to come down to 29 percent over the next decade which will be replaced by gas and other renewable forms of energy, that accounts nearly 10 percent in the global energy mix.  
Commenting on the determinants of gas prices in the international market, he said gas does not have global market; rather it has regional and local market due to the nature of the product.
Adeli said gas is traded through different ways such as pipeline trade, where you have single buyer and single seller, with not many market forces working to influence the price. And the other forms of gas trade are long-term LNG contracts and LNG on spot.
“Barring the spot market, in the other two forms of LNG trade, prices are relatively less competitive, especially compared to oil market,” Adeli said. 
He also said that the oil-linked or alternative fuel-liked LNG prices will continue to remain in place as long as buyers want to feel secure about supplies. Even from the investor’s point of view such price mechanism will be preferred as it is more predictable and help in decision making process.
Established in 2008, GECF is a gathering of the world’s leading gas producers and was set up as international governmental organisation with the objective to increase the level of coordination and to strengthen the collaboration among member countries.
The GECF’s 17 member countries, including four observer members, together control over 70 percent of the world’s natural gas reserves, 38 percent of the pipeline trade and 85 percent of the LNG production.
The Peninsula