Review of Environment, Energy and Economics - Re3 Rethinking Global Natural Gas Markets: New Challenges and Opportunities Ahead


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Rethinking Global Natural Gas Markets: New Challenges and Opportunities Ahead
by Manfred Hafner and Simone Tagliapietra
Energy - Book Reviews

As stated by Jonathan Stern in his foreword to the volume "The Globalization of Natural Gas Markets: New Challenges and Opportunities for Europe" by Manfred Hafner and Simone Tagliapietra, the terms "globalisation and "gas markets" could only have been placed in the same title of a book on this subject over the past five years. In their latest volume on the challenging topic of natural gas markets, the authors shed light on a number of issues, including the rapid expansion of the LNG market, the US shale gas revolution, the EU gas security of supply architecture, the EU gas market outlook and the new gas supply potential for Europe.

The Globalization of Natural Gas Markets: New Challenges and Opportunities for Europe (European Energy Studies) by Manfred Hafner and Simone Tagliapietra, Claeys & Casteels, 2013

What this book covers

The global gas industry has experienced over the last decade an extraordinary success. The shale gas revolution in the United States has reshaped the world energy outlook and the rapid expansion of LNG trade has redesigned the global natural gas dynamics. These two pressures are rapidly converging, paving the way for the globalization of the world’s natural gas markets. These historical changes also have a strong impact on the European gas industry, unveiling a number of new challenges and opportunities related to both its demand and supply sides. 

On the demand side, the ambitious EU decarbonisation targets have led to an unprecedented uncertainty of EU future gas demand. In fact, the implementation of a climate-based energy policy in Europe challenges the role of natural gas in the long-term EU energy mix, although in the short- to mid-term natural gas could play an important and cost effective role in the transition towards a low carbon economy.

On the supply side, new natural gas supplies are emerging around the world, mainly because of the increase in global LNG supply and the shale gas revolution. This unprecedented shift in the supply/demand balance is creating new dynamics also in the European gas industry, related to both the EU security of gas supply architecture and the EU gas pricing mechanism. This book provides a comprehensive analysis of all the challenges and opportunities affecting the European gas industry, in order to provide a clear overview of a market characterized by growing uncertainty and volatility.

Structure of the Book

Chapter 1 provides a brief snapshot on the evolution of the world's natural gas markets, illustrating the world's three key gas hotspots - North America, Europe, Asia Pacific - and discussing their two structural differences: supply-demand balance and pricing. The chapter also provides a comprehensive discussion of the key drivers of the world's gas markets' globalization, the recent LNG boom and the US shale gas revolution, analyzing their impact on the European gas markets.

Chapter 2 illustrates the historical evolution of the European gas markets from the discovery of the Groningen field in 1959 to the prospect of the Internal EU Gas Market in 2014, an excursus that allows a better understanding of the transition of the European gas markets from state capitalism to liberalization. A nouvelle vague certainly incentivized by the European Union through a number of Directives aimed at liberalizing the European gas markets, which are also analyzed in the text. The chapter also presents the historical evolution and future outlook of the European gas demand and production, outlining the "EU security of gas supply equation": Uncertainty of demand + Declining production = Increase of import needs.

Chapter 3 analyses the EU gas security of supply architecture, presenting a wide overview on the EU key gas suppliers: Russia, Norway, Algeria, Libya, Egypt, Qatar and Nigeria. For each of these players, the Chapter examines the crucial features related to their gas resources, gas infrastructure and gas strategy.

Chapter 4 investigates the future gas supply potential for Europe, focusing on the Southern Gas Corridor and on the Eastern Mediterranean. The Southern Gas Corridor - an EU initiative for the gas supply from Caspian and Middle Eastern regions to Europe - could well represent a new "Silk Road", able to promote the common prosperity, stability and security of all the countries involved. The Arab Spring and the recent gas findings in the offshore of Egypt, Israel, and Cyprus are reshaping the equilibrium of the Eastern Mediterranean region, both in terms of energy and geopolitics. The Chapter provides a deep insight into these recent developments, which disclose a number of challenges and opportunities for each player in the region, including the EU.

Whom This Book is For

This volume is intended to provide an extensive discussion of the global gas markets and, within this wider framework, to offer an in-depth analysis of the various aspects related to the European gas markets. It also includes useful insights for energy industry operators, policymakers, the academia and anybody wishing to understand the major emerging changes in European and international gas markets.









Manfred Hafner is Associate Researcher at Fondazione Eni Enrico Mattei

Simone Tagliapietra is Junior Researcher at Fondazione Eni Enrico Mattei