BAKU, Azerbaijan, Nov.21. The combination of weak economic growth and high natural gas prices could have negative consequences on the gas industry, in the form of gas demand destruction as well as higher capital and operating costs, Trend reports with reference to the long-term strategy of the Gas Exporting Countries Forum (GECF).
“Having continuous access to reliable, affordable energy sources, as well as developing resilient energy systems is imperative for the global sustainable development. This can be achieved by reinforcing the security of gas supply and security of gas demand, which are the two sides of the same coin. On one side, security of gas supply is a key element for gas consuming countries to design and implement their energy policies in support of natural gas. The escalation of regional geopolitical tensions in Europe has resulted in record-high gas prices and unprecedented price volatility, as well as trade barriers and investment risks for involved countries. Underinvestment in the gas industry is another vital issue that has contributed to the undermining of security of gas supply,” reads the document.
On the other side, GECF notes that security of gas demand is critical to ensure sustained investment in the upstream and midstream in gas producing countries, given the capital intensive nature of gas projects with long lead times and payback periods.
“In this regard, the recent past has proven that policies of consuming countries aimed at reducing investments in natural gas are detrimental in the long term, as undermining of the security of gas demand can only lead to market tightness and diminished security of supply. Signing of long-term contracts is crucial to reinforce stability of gas deliveries in an increasingly uncertain environment, which may stimulate the exploitation of natural gas resources in producing countries.”
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