Page 40 - bne magazine November 2021_20211104 uzbekistan risding

40 I Special focus bne November 2021
supply, production could fall by a further 75% within the next decade, leaving the country dangerously reliant on energy imports.
“We will need gas to power us through this green transition,” OGUK CEO Deir- dre Michie said in a statement. “It would be far better to get as much of that gas as possible from sources we can control rather than rely on other countries.”
Denmark ends exploration
Gas supply in Denmark has also been falling for years, as a result of natural decline and, more recently, the closure of its largest field for redevelopment work. From 8.5 bcm in 2010, the coun- try’s output was only 1.4 bcm last year.
The offshore Tyra gas field operated
by France’s TotalEnergies was by far Denmark’s biggest source of production until its closure in September 2019, so that a redevelopment programme could take place. This programme involved the replacement of the topsides at Tyra’s platforms, which over many years of production had subsided, as well as the installation of new jacket extensions.
The work had been due to wrap up in July 2020, although there were delays
as a result of coronavirus restrictions imposed at fabrication yards in Asia.
The field still has not resumed gas supply.
As a result, Danish authorities now pre- dict that national gas output will never again reach the level of 4 bcm per year that it was prior to Tyra’s closure, and will instead re-peak at only 3 bcm in 2027.
Further dimming prospects for Danish gas supply, the country became the lat- est to end all oil and gas exploration in December last year under an agreement between the government and Parlia- ment. Denmark is the largest oil and gas producer to have taken such a step.
Romanian Black Sea delays
Contributing to the current tightness
of the European gas market, Romania’s ambitious plan to develop a series of gas fields in the Black Sea has largely not materialised. Rather than an environ- mental policy, the industry has blamed the lack of investment in offshore discov- eries to radical changes to the country’s offshore law that were introduced by the government in late 2018. Among other things, the revised law imposed restric- tions on where operators could sell their gas as well as introducing caps on prices.
OMV Petrom and ExxonMobil have repeatedly delayed taking a final invest- ment decision (FID) on the largest of Romania’s offshore discoveries, Neptun Deep, citing the regulatory changes. The centre-right minority government of Prime Minister Florin Citu wants to
reverse the changes to the offshore law, but opposition parties have tried to prevent this. The country is now in the midst of a political crisis, with Roma- nian lawmakers voting overwhelm- ingly to topple Citu’s government in a no-confidence vote on October 5. As such, it seems unlikely there will be any improvements to the law any time soon.
The Norwegian bright spot
The notable exception to declining gas supply rates in Europe is Norway, which has kept its output stable in recent years. It produced 111.5 bcm of gas last year, much of which went to Europe, making it the continent’s second-biggest sup- plier after Russia.
And indeed, Norway shows no sign of following other European countries
in imposing restrictions on oil and gas development. The former centre-right government announced in June a new energy strategy that would see the coun- try continue to hold regular licensing rounds for oil and gas exploration for decades to come, although a 65% natu- ral decline in production is envisaged
by 2050. Norway’s Labour and Centre parties are due to form a new minor- ity government following elections in September, although both are eager to protect the Norwegian economy and jobs, making a tougher stance against gas development unlikely.
It isn’t the ‘Usual Suspect' who is really
'weaponising gas'
Mark Galeotti
That naughty Vladimir Putin
is up to his tricks again. Not weaponising football hooligans or COVID vaccines this time, but apparently gas. From US National Security Advisor Jake Sullivan to British Defence Secretary Ben Wallace, politicians are queuing up to blame Russia for the current global gas crisis. The trouble is that not only is this bad analysis, it is also bad politics.
www.bne.eu
The economics
As has been documented on this site and elsewhere, the current gas crisis has numerous causes, which have combined in a singularly problematic way. A year of coronavirus (COVID-19) which saw reserves scaled down in a “gas glut”; a hard winter and a hot summer, both of which meant greater consumption; acci- dents interrupting supply lines. All this is exacerbated by a heightened demand
from Asia, which is essentially monopo- lising the liquid natural gas (LNG) which otherwise represents the fungible supply often relied on to make up for shortfalls in piped gas. And, of course, European buyers who had not wanted to commit themselves to long-term contracts as
a result ended up paying spot prices.
But where does Russia fit? Moscow has been fulfilling its contract commitments