At the 2023 seminar, there were a lot of concerns regarding the capacity of European gas companies to sign new long-term contracts to secure additional supplies in the wake of the energy crisis. Such concerns seem to have eased this year. Has this changed?
After the crisis, some companies have taken different strategies. Some of them secured a very large share of new long-term deals and still want to rely on long-term contracts. Others in Europe, particularly the ones that burnt their fingers in this crisis, are far more reluctant to sign new long-term contracts because they have been under pressure from their shareholders to avoid being dependent on new long-term deals which made their life difficult in the wake of the war. Therefore, they will tend to rely far more on spot markets, even if they know that in times of severe crisis, they may face difficulties.
We do see more diverging strategies amongst companies, and that’s perhaps one of the lessons drawn from the past year. This very much depends on the kind of risk that companies’ shareholders are prepared to accept.
Another key factor depends on the location of your customers and where you are based as a supplier. Clearly, if you are close to a node of the network, you can import from very different places and diversify your supply under your long-term contract. In other places, you may have difficulties in finding a diversity of sellers willing to propose long-term contracts.
What does the content of this year’s seminar tell us about the state of the market and the industry now?
We have had very good debates at the seminar. They show that we have not yet drawn all the lessons from the crisis. There is still a lot to be done to ensure that gas is part of a just transition which is not too costly. We need to keep exchanging ideas particularly because we must prepare for the new [European] Commission and a new set of policies for the coming years.
Regulation and intervention from policymakers remain a big theme at the seminar. What would you like to see for gas in concrete terms now that the EU is shifting to a new political cycle?
Today, the most immediate thing we could ask for is to have a credible reference scenario about the European energy mix through 2050. The only one we have which covers the 27 EU countries and that takes into account the Russian crisis is REPowerEU, which has no credibility whatsoever. 
The figures are just coming out of nowhere. They are not fact-based. If we have a good discussion on a reasonable scenario saying how much we can get from biomethane, from different sources of supply, what CCUS capacity we can develop, etc, we will be at least able to see how to adapt different policies to achieve this scenario.
Today there is no scenario. We are not able to say if we’re doing too much or too little for such and such policy, because there is no path to achieve decarbonization in 2050 which has been established and that takes into account the Russian crisis.
Is now the right time for this? Does the industry have enough leverage currently, considering the convergence of high economic, political and geopolitical uncertainties and the need to act fast on climate change?
I think so. That’s why Eurogas will be coming out with a scenario very soon. We think that it will be of interest to the new Commission because it will help understand whether the current set of policies is adapted to what we want to achieve or not, especially because the study will consider that we need to do all that at a reasonable cost.
The economic situation is so difficult that everyone will realise that if there is a path which is less costly to achieve the 2050 targets, then this is the path we should take.
Why is it important to re-focus on demand in this context?
That’s one of the things that differentiate us from the International Energy Agency, when they say that measures should be taken to reduce fossil fuel supplies. The Russian crisis did illustrate in very real and practical terms what happens if you suddenly r
educe the amount of fossil fuel available.
Yes, we did manage to accelerate a bit the development of renewable energy in Europe. But in the meanwhile, we have also been paying tens of billions of euros more to [other gas] producers – billions of euros that are no longer available to finance the energy transition in Europe.
We hear some NGOs say we should cut fossil fuel production, stop exploration and production and so on. To me, this argument is surprising because reducing production is exactly what OPEC has been doing to prop up prices. Does it look right that the policy proposed by these NGOs for fossil fuels is broadly aligned with the policy of OPEC when they want prices to go up?
These NGOs should think twice. Reducing the demand for fossil fuels is the appropriate way to make the energy transition work.
For instance, if we increase the production of biomethane, this can be a good substitute for fossil fuel and therefore reduce the demand for th
ese products. That’s one way of doing it. With electric vehicles, we can move away from oil. But if you start by reducing oil availability, the immediate impact is that people will pay more for their petrol and gasoline, and they will be unhappy.
We need to act on demand first, and in the meanwhile, we need to be careful with new investment into supplies because one doesn’t want to overinvest. That’s the only way to have a just transition.
What are your expectations from the next Commission in terms of energy policy?
I expect that the next Commission will probably follow broadly the same path as the previous one, maybe with a slight inflection. However, as far as energy is concerned, it very much depends on who will oversee energy matters at the commission.
It also depends on what we, as an industry, will propose as a perspective and that’s why the upcoming Eurogas study will be very important. If we come up with a credible scenario which is not too costly which will ensure transition to net zero in an orderly way, the next commissioner can only be interested.
Interview by Fatima Sadouki – Independent Energy Specialist – for CEDIGAZ