Turkey to benefit from diversified gas suppliers

ANKARA

Turkey should benefit as much as possible from a more diversified global natural gas market, as the United States, Canada and Australia have become major players in liquefied natural gas (LNG), according to Fatih Birol, the executive director of the International Energy Agency (IEA). Birol indicated that the LNG market would become more competitive if more players were involved, while speaking at the Turkish National Committee of the World Energy Council’s DEK Speeches event in the Turkish capital Ankara.

He explained the market has moved on from the era of the early 2000s, when there were only five LNG-importing countries, to a market in which figures of around 50 will emerge by the end of the next three years.

“Most of these countries are developing. Japan, Korea, India and China will become important natural gas importers, replacing Europe’s leading position. The market will start to thrive in Asia, not in Europe,” Birol said.

He explained that two of the biggest competitors in the market, the U.S. and Russia, have become a hot topic in the global energy sector.

“The U.S. will try to sell its gas, Russia will try to maintain its current share of the market and dominance,” said Birol.

Consequently, he advised that countries like Turkey take stock of any developments, analyze their situation and play their cards to extract the best deals possible in a more secure market environment.

“Source diversity is extremely important. I suggest countries increase their diversity, thus reducing risks,” he said, adding that four or five years ago, it was inconceivable that the U.S. would export gas to the Middle East and Gulf countries, Birol said.

“We do not expect a huge increase in gas prices unless there is a huge geopolitical situation in the next four to five years. Even if they will not import gas from the U.S. or Canada, it is a good option for countries like Turkey to have them. It may bring better conditions in existing contracts. It should be eyed very well,” he explained.

China to shake up sector

The IEA head argued that China is taking very important steps on new energy technologies.

“China will shake up the energy world, but this time it will do so especially with new energy technologies. The figures point to it. By doing so, China may cause costs to fall,” Birol said.

He argued that in the last 15 years, there was a huge demand for coal from China, but that this would decrease in the future.

“We see coal demand will decrease in the coming years because the Chinese government has made restrictions to reduce air pollution in cities. China’s LNG imports grew 40 percent this year, an enormous figure. China has made its mark on the energy world,” he said.

Birol advised that the decisions made by China and India for new technology investments in the energy sector will have a knock-on effect on all countries.

“...Decisions made in China and India are extremely important for all countries. If these countries go for and invest in ‘x’ technology, their costs will fall and everyone will be affected. We have to pay attention to the decisions made there,” he said.

300 million electric cars

Birol noted that despite the increase in the numbers of electric vehicles, oil would still be featured in the global energy mix.

There are a total of one billion cars in the world, out of which two million are electric, he said.

“There are different estimates in this regard, but we think based on a mid-way estimate, it could reach up to 300 million by 2040. Some governments, such as the Netherlands, Sweden, Norway and China have already come up with legislation and laws in this regard,” said Birol, adding that one million electric cars on the market are in China. 

Thanks to big incentives in this area, he said the number of electric cars could reach up to 300 million, but warned this could only be achieved if the corresponding infrastructure is in place.

“The increase in energy efficiency in conventional cars and increase in the number of electric cars will lead to a decline in petroleum demand for cars, plus many countries now use oil to generate electricity, especially in the Middle East, which will also fall. But there are a number of issues where oil demand will increase rapidly: Trucks, planes and petrochemical facilities. There are no serious alternatives to replace oil in these three main areas. Therefore, oil and gas investments are still needed,” said the IEA head.