The liquefied natural gas (LNG) has massive potential but is too expensive, fuel bosses have told an industry event.
There is great interest in gas chilled to liquid form as an alternative to environmentally ruinous coal as LNG terminals are built across Europe.
Claudio Descalzi, chief executive of Italian fossil fuel giant Eni, told an oil summit in Abu Dhabi: “LNG has huge potential. But one of the problems with it, one of its fragile points, is the price. It is very expensive.”
The demand for LNG is anticipated to nearly double to 550 million tonnes annually by 2030.
BP chief executive Bob Dudley said the “abundance” of gas supplies was a result of US production.
Dudley also said LNG was too expensive.
“It has really become famous for how expensive it is,” Dudley said, adding that many costly LNG investments had seen limited returns.
“One of the issues shaping the industry is some countries are going to have to choose between low price coal and low carbon LNG. That problem has not been solved,” Dudley told the event.
The Polish Oil and Gas Company (PGNiG) and US-based Cheinere Marketing International have signed a long-term LNG deal.
Warsaw said the agreement could signal a shift from European reliance on Russian gas supplies to a more diversified model that could cut Russian Gazprom’s grip on Poland and wider Europe.
Polish Prime Minister Mateusz Morawiecki of the nationalist Law and Justice party (PiS) said: “The continued development of various LNG terminals across the EU ensures that we are more than capable of handling LNG supplies from other places, with a capacity similar to what we are currently buying from Russia.”
He told the media: “At present ,the LNG terminals are under-utilised because of a lack of interconnectors, as well as the decisiveness of the European Commission to put Nord Stream 2 on the third energy package as part of the gas directive.”
During the 24-year agreement, it is expected imports of LNG will approach 30 million tonnes.
Piotr Woźniak, board president of PGNiG, said: “The agreed conditions, including the competitive price, are fully satisfactory for PGNiG. Thanks to this agreement we will have regular supplies of LNG from the USA starting as early as 2019. The share of LNG in our import portfolio is constantly increasing. The world’s liquefied natural gas market is rapidly growing and allows us to select the best offers in this area.”
Poland is looking to develop its LNG market to reduce coal use and dependence on Gazprom imports. Picture credit: YouTube