f Gas Supply in Europe, Gas Demand, Resources and Deliveries to European Consumers in the Upcoming Decades

At the beginning of the first decade of this century natural gas primary demand in the European Union with about 470 bcm accounted for more than 20 % of its total primary energy demand (World Energy Outlook 2004, IEA). According to the last “Reference Scenario” of the IEA the European Union is projected to have a natural gas average growth of 1.8 % per year during the period 2000 - 2030. This projected development leads to the total gas demand of more than 780 bcm in the European Union in 2030. The steady increase in gas demand requires an expansion of exploration and production. There is a positive phenomenon in this respect: proven reserves of natural gas have outpaced production by a wide margin since 1970. The world proven reserves account for 180 tcm as of 1 January 2004 (Cedigaz statistics). Russia and the former Soviet republics hold almost a third of global reserves, but its share has decreased steadily over the past decade. The Middle East holds 40% of all reserves and its share is growing. In 2030 the Middle East will be the world’s largest exporting region. Natural gas reserves in Europe come not even to 4% of world total and its share is decreasing. However, natural gas resources which could be imported to the European Union can easily meet the projected increase in gas demand of that region provided we take into account that higher oil prices will stimulate exploration and production of new more remote and challenging reserves. Another precondition is that long term contracts are allowed which will continue to play a decisive role in investment into production and infrastructure. The excellent track record of the European gas industry in the course of last few decades has helped to create a picture of secure natural gas supply to Europe. However, security of supply means not only the physical existence of sufficient and reliable resources, but also the existence of an adequate and reliable infrastructure to bring those resources to the market. At present there are three main corridors for supplying Europe with piped natural gas: from Russia to Central and Western Europe, from North Africa to Italy and Spain and from Norway to UK and Western Europe. To open up a forth corridor to connect the European markets with the world’s second biggest resources in the Caspian region and the Middle East is one of the big challenges of the future to further guarantee security of supply. In addition LNG will also play an increasing role regarding future gas imports to the European Union. All this shows that the European gas industry is facing big challenges to meet future gas demands of European gas consumers.