Security of Energy Supply in Europe

Security of Energy Supply in Europe

Natural Gas, Nuclear and Hydrogen

Loyola de Palacio Series on European Energy Policy

Edited by François Lévêque, Jean-Michel Glachant, Julián Barquín, Christian von Hirschhausen, Franziska Holz and William J. Nuttall

In economic, technical and political terms, the security of energy supply is of the utmost importance for Europe. Alongside competition and sustainability, supply security represents a cornerstone of the EU’s energy policy, and in times of rising geopolitical conflict plays an increasingly important role in its external relations. Within this context, the contributors analyse and explore the natural gas, nuclear, and hydrogen energy sectors, which will be of critical significance for the future of energy supplies in Europe.

Chapter 4: Natural Gas and Geopolitics

David G. Victor

Subjects: economics and finance, energy economics


David G. Victor INTRODUCTION Natural gas is rapidly gaining in geopolitical importance. Gas has grown from a marginal fuel consumed in regionally disconnected markets to a fuel that is transported across great distances for consumption in many different economic sectors. Increasingly, natural gas is the fuel of choice for consumers seeking its relatively low environmental impact, especially for electric power generation. As a result, world gas consumption is projected to more than double over the next three decades, possibly each surpassing coal as the world’s number two energy source and potentially overtaking oil’s share in many large industrialized economies – although recent projections made in light of high gas prices have been less bullish (EIA, 2002, 2003, 2004; IEA, 2006). Currently, most natural gas is transported by pipeline. Elaborate pipeline networks in North America and Europe connect consumers to production areas and provide an important source of energy. In Asia, liquefied natural gas (LNG) is the primary means of connecting endusers to supply, most of which originates in remote locations and must be compressed and refrigerated into liquid form, allowing easier transport by vessels across oceans. International trade in LNG, though limited in application, has been occurring for over 30 years and involves shipments from close to a dozen countries. Japan is by far the largest importer of LNG, consuming almost half of all LNG traded worldwide. South Korea is the second largest importer of LNG (EIA, 2006). In the 1990s, roughly 5 percent of world natural gas consumption moved as...

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