Europe needs to import more natural gas because of the decline of local production, OMV Chairman and CEO Rainer Seele said.
Speaking at CERAWeek 2018 by IHS Markit energy conference, Seele spoke on Wednesday about the European natural gas market, renewable energy use and policies to combat climate change.
'After a long period of stagnation, we are going to see growth in the European gas market. My outlook is triggered by two arguments,' Seele said.
He argued that firstly Europe is transitioning from coal to gas, and secondly, gas-fired power generation is capable of competing with nuclear and coal sources.
'Europe needs to import more gas because indigenous production is declining much faster than we all anticipated,' he said.
He affirmed that Europe would stay in the first instance as a pipe market given that more additional quantities are being invested in and imported from Russia, as this gas is 'extremely cheap.'
Seele explained that gas flow from the Nord Stream II, the gas pipeline project that runs directly from Russia to Germany, rids Europe of additional fees from transit countries making gas even cheaper.
'We support the Nord Stream II pipeline because it is the only pipeline that imports gas from Russia into the European market with a direct connection without any transit countries involved, so we have the highest security for supply,' he said.
He said additional LNG cargos are also welcome in Europe, but higher gas demand and prices in Asia are forcing the U.S. to choose that region over Europe for its LNG exports.
Seele emphasized that natural gas would also benefit the fight against climate change and lower carbon emissions.
'I don't think we have to convince any politician that gas is the cleaner fuel with all the ecological benefits,' he said.
'But, when it comes to politicians, they think that renewables are the only solution for the climate. Therefore, they are striving for climate strategies that are 100 percent based on renewables. I don't know which economy can consume at such a high-cost level,' he added.
Seele stressed that as CO2 emissions are becoming a major priority for Europe, natural gas would be the best short-term option and solution to meet these CO2 targets.
'That's the reason why I like to import gas, and it doesn't matter where it comes from. We need to have cheap energy, and we shouldn't only have an ecological discussion while ignoring the economic effects,' he concluded.
By Ovunc Kutlu in Houston
Anadolu Agency
ovunc.kutlu@aa.com.tr