More sources of supply are needed to replace the decline in the domestic production of natural gas in the European market, said Giles Farrer, research director of global LNG at Wood Mackenzie on late Monday.
Farrer told Anadolu Agency during the European Gas Conference in Austria's capital Vienna that Europe has to secure new sources of supply with one possibility being U.S. LNG as an additional source.
'I don’t know if it’s the question of LNG replacing piped gas, but Europe needs to replace declining indigenous production, and in order to mitigate its reliance on existing pipe supplies, we see the need for more LNG in the European market,' he said.
He asserted that the development of new supply is dependent on how buyers in Europe will incentivize more output. To this end, he stressed that floating storage regasification unit (FSRU) investments are important.
'Such investments broaden supply security and they create opportunities for alternative sources of supply and strengthen the negotiating position with other suppliers,' he explained.
The European Union meets only around 30 percent of its gas needs through domestic production at a time when the EU's gas demand is on the rise, he said.
Russia has the biggest share with more than 30 percent of the European gas market.
According to Eurogas, gas demand in the EU increased by around 7 percent year-on-year in 2017 to 490 billion cubic meters.
Last year, Europe's imports from Russia increased by 8 percent, reaching an all-time high. Also in 2017, the Norwegian pipeline's exports reached a record high, up by 7 percent.
Higher imports came largely because of higher demand.
According to the Center for Strategic and International Studies (CSIS), since 2015, Europe's production has fallen, while demand has recovered.
The CSIS noted on Jan. 18 that through September 2017, demand in European member countries of the Organization for Economic Co-operation and Development was up 7.5 percent. This was driven by increases across Europe and Turkey, which, after two years of decline, showed substantial growth that is now driving imports.
By Murat Temizer in Vienna
Anadolu Agency
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