BAKU, Azerbaijan, Affordable gas prices are possible with timely investments, Mohamed Hamel, Secretary General of the Gas Exporting Countries Forum (GECF), at the 11th LNG Producer-Consumer Conference, Trend reports.
“Today, in the face of an acute natural gas supply deficit, energy security and affordability have moved to the top of the priority list for policymakers, to ensure that the economy is kept running, the homes warm and the lights on. Yet, energy security, affordability, and sustainability shall remain equally important. Security of supply and security of demand. These are the two sides of the same coin. Affordability and a fair return on the high and risky investments in natural gas projects. Sustainability, encompassing economic growth, social progress and the protection of the environment. Seeking a balance between these three pillars is the key recipe for any energy policy that aims to succeed over the short- and long-term,” he said.
Hamel pointed out that today, the world faces a multifaceted crisis, and the natural gas crisis is one of its dimensions.
“Its origin could be traced back to 2015 when the decline in investment began, due to very low gas prices and the misguided narrative that natural gas use is not compatible with combating climate change, as well as the ensuing pressures to stop financing natural gas projects. The COVID-19 pandemic exacerbated this decline in investment,” noted the GECF secretary general.
Hamel recalled that in 2021, a strong post-pandemic economic recovery – compounded with gas supply outages and extreme weather conditions – led to tightening market conditions, as epitomized by rapidly rising gas hub prices in the second half of last year.
“This market tightness further intensified due to the geopolitical crisis in 2022. On the back of the reduced pipeline supply, the status of Europe shifted from being the “market of last resort for LNG deliveries” to becoming the “preferred destination”. To date, supply to the region has increased by 64 percent year-on-year, while that to Asia has declined by 8 percent.
The adverse effects of these developments are being felt worldwide. Hub-based gas prices have reached record levels. Demand shift from gas to oil and coal is underway in many regions and sectors. Various policy means, such as price caps and subsidies, are used to shield end-users from the effects of high prices. Developing countries, notably in South Asia, face immense difficulties in acquiring LNG cargos, a situation that is creating havoc on their economies and affecting people’s standard of living,” said GECF secretary general.
Source: TREND News Agency