Gas Association (AFG) – Jerome Ferrier, President
The president of the AFG discusses the future of gas in Europe and the future of natural gas in France.
France has held the presidency of the International Gas Union (IGU) since 2012. What have been some of the key achievements in those two years?
For the IGU, it’s a fantastic and very exciting period. Natural gas is at the top of the global agenda, particularly in Asia and the Americas, both North and South. On the Asian side, there are new LNG projects, seven of which are in Australia, with a total value of AUD 200 billion (USD 161.72 billion), which will be delivered between now and 2019, and will position Australia as the world’s largest LNG producer, above Qatar. China is also a driver for future gas development, both conventional and unconventional, as the country’s demand for gas is only set to increase, along with Japan and South Korea. In the Americas, gas is also booming because it is the only fossil fuel with good prospects for the future.
During the French IGU presidential term, the organization has expanded to include 91 members, with many new members of our family coming from Africa and Latin America, two key regions of focus for us. We have also worked to strengthen our ties to non-governmental and governmental organizations, as our mandate is evolving from a technical organization to a more political one. As a result, we have worked to build our ties with the UNFCCC, the World Bank, and UNESCO, among other organizations. We recently signed a memorandum of understanding with the World Bank, for example, to work together to boost gas development in east Africa, and we are working on the Sustainable Energy For All project, which aims to provide the world with sustainable energy by 2030. We believe such activities are vital for placing gas in the conversation when it comes to sustainable and clean energy. For the same reasons, we have also engaged a dialogue with non-governmental organizations like Greenpeace that see gas as a necessary step along the path to clean energy or the WWF.
Gas is increasingly becoming a geopolitical issue and IGU needs to add its voice to those discussing its future. We are in the process of systematic communication with the public about the importance of natural gas. The IGU is however not the OPEC of gas for the simple reason that we represent both suppliers and consumers. Our job is to promote the use of natural gas wherever possible.
Has Europe sufficiently embraced this idea of natural gas?
There is a lack of European policy, despite the ambitious perspectives and the new European package. It is a pity to have such a lack of clear directives when it comes to CO2 emissions, for example, and recently, we have even seen the coal consumption of some countries rising as a result of turning away from nuclear power. However, in the longer term we expect gas to continue to be important in Europe, particularly as countries start to develop shale gas resources.
In December 2014, Vladimir Putin announced the cancellation of the South stream pipeline project. What do you expect the consequences of this decision to be?
The announcement followed lengthy negotiations between the EU and Gazprom, which seem to have come unstuck over the issue of gas ownership in Bulgaria, and with neither side willing to back down, the project was cancelled. A situation that was very similar to what happened with the proposed Nabucco pipeline a number of years earlier.
It is important to mention that business arrangements such as gas infrastructure between companies can be very good for international relations. Russia is a reliable gas partner to Europe, and business relations can often help when political situations are tough.
France has one of the broadest ranges of suppliers in Europe with Norway (34 percent), the Netherlands (16 percent), Russia (15 percent) and Algeria (14 percent) as the top four import sources of gas. How is this expected to evolve in the future?
IGU was created in 1931 by the UK, Germany, France, and Italy, the top natural gas producers in Europe. Thanks to our long history of gas, we today have a natural gas culture, with a well-implemented network and strategic underground storage across the continent. In France, natural gas in power generation is limited due to the country’s heavy reliance on nuclear power – but in residential, commercial and industrial uses, natural gas is heavily used in France. As a result, it was wise to diversify supply as early as possible, which has left the country in a comfortable situation. We have good relations with our suppliers, which have been made easier by the fact that we are less dependent on one particular party.
France already boasts excellent energy infrastructure. What type of investments will be needed in the future?
France’s gas network is well developed and well connected, but at a European level, more investments will be required. The work must start now because although demand seems fairly stable at the moment, it will increase on the longer term. Four countries today represent 60 percent of the world’s conventional gas reserves: Russia, Iran, Qatar and Turkmenistan. A trunk pipeline connecting the central Asian region with Europe will help promote security of supply, and now is the time to send a signal to investors that there is interest in such a project, and that it could be a very profitable venture.
One of the targets of the government’s ‘Energy Transition for Green Growth’ is to reduce fossil energy consumption by 30 percent by 2030. What is the AFG’s response and stance on this ambition?
It is a key issue for us, and we have been working hard on this front. We were ultimately unsuccessful during the first vote in the lower house of parliament to get the bill amended, but we will try again as it goes through the senate for a vote. Our view is that not all fossil fuels are equal, and that it is wrong to treat natural gas in the same way as coal, just because it is a fossil fuel. Gas is much better for the environment than coal and so should be treated differently. We would like to see gas better represented in the Bill.
You have been president of the AFG for more than one year now. What is the importance and contribution of the gas industry in France to the GDP and employment, and what expertise have French companies developed that could be offered to the world?
France’s expertise is very much acknowledged around the world. We have champions, even though the current industry slowdown has created some very difficult circumstances for us. People do think of France when you mention certain companies like Technip, Schlumberger and CGG; these companies, and others, are very well known worldwide.