Energy across the globe
The rise in world oil and gas reserves was impressive between the period 2005-2010, indicating rises of 12% for world oil and 7% for gas. These reserves are significantly controlled by the top 20 National and International Oil Companies (NOCs and IOCs), who dominate every segment of this industry.
By 2030, taking into account the emerging markets, it has been predicted that the world energy demand will rise by up to 30% with regards to major contributions from India and China.
Also by 2030 however, studies indicate and predict that the second largest source of fuel energy will be natural gas as it gains prominence along with renewable energy sources, giving rise to a decrease in the dominance of oil in satisfying energy needs across the world.
Furthermore, by 2035, further models predict that gas will be used in the increasing production of more electricity. Natural gas is further commended with regard to a ‘greener economy’ as awareness is raised and precautions are taken with regard to ‘Greenhouse Gas’ emissions (GHG) as is evident from the 2005 Kyoto Protocol agreement which was signed by participating countries in allegiance to reducing their GHG emissions by 2012 by an average of 5% below the levels recorded for 1990. The G8 further agreed to cut CHG by 2050 by 50%. Natural gas is therefore considered a solution that is a back up of sorts and is flexible with regard to renewable sources such as wind and solar energy. Furthermore, the diversification of energy supplies also puts natural gas on the worlds energy security map as it has the potential to improve this area of concern also.
With increasing world population in parallel to an increasing demand in quality of life standards, more energy is needed and whilst volatility has been a key feature in commodity markets, it is anticipated that prices will continue to increase.
Energy and the European Union
European energy sources are posed to change in the future significantly. For example, decisions to decommission Germany’s nuclear power stations will have an impact of magnitude on the mix of European energy sources. Furthermore, the European Commission has set strategic goals by 2020 to target a 20-20-20 result in reduction of GHG emissions, an increase of share of renewable energy sources and an increase in energy efficiencies. Whilst progress has been made, the overall results to date are below the anticipated expectations.
52% of EU energy needs are imported at present from Russia, Norway and Algeria. The EU’s own energy production of around 48% is primarily based on nuclear energy and less on oil, natural gas and renewable sources. Denmark was a net energy exporter, especially of oil and together with the Netherlands were the only gas exporting countries in 2009.
Studies in 2009 by the US Energy Information Administration indicated the following with regard to natural gas reserves and life ratios:
Country Reserves Life ratios
(Trillion cubic meters) (Years, reserves, production)
Europe 5 18
South America 9 53
North America 9 11
Africa 14 69
Asia & Oceania 12 29
Eurasia 57 78
Russia, an important EU Partner
Russia plays a significant role with regard to the provision of resources to Europe and this exclusive mutually beneficial association dates back to 1994. Russia and the EU signed an agreement with regard to EU-Russian Energy Cooperation in 2008, extending until 2050 and a new agreement is being negotiated as both parties acknowledge the significance of their association with regard to energy, as Russia is one of the world’s leading energy producing countries, producing 20% of the world’s natural gas, the Asian markets are fast growing too. The table below gives further details, as provided by the European Commission – Directorate - General for Energy, EU:
|36% of total gas imports for EU originate in Russia||80% of all Russian oil exports go to the EU|
|31% of total crude oil imports for EU originate in Russia||70% of all Russian gas exports go to the EU|
|30% of EU’s coal imports originate from Russia||50% of all Russian coal exports go to the EU|