Rhein on Energy and Climate

On June 3rd 2013 EON, one of Europe`s big utilities, and the Canadian company Pieridae Energy have signed a 20-year contract for the supply of 6.5 billion cubic meter per year (5mtpa) liquid gas starting 2020.

This deal deserves attention for several reasons.

It is the first time that a major European energy company turns to a North American supplier of shale gas for meeting some of its long-term gas requirements.

By doing so it sends a message to Gazprom, its traditional supplier, to be more flexible in its price policy and stop indexing gas to oil prices .

It also signals Russia and Central Asia that North America might become a serious competitor, thanks to its huge reserves of shale gas.

Finally, it should be a warning to the advocates of shale gas development in Europe to beware the risk of LNG imports from the other side of the Atlantic that might be as safe as production in Europe and even cheaper because of relatively low costs of liquefaction, shipping and re-gasification.

In the future, Europe will increasingly replace coal and oil by gas,wind and solar for electricity and heat generation. LNG imports will help enhance energy safety; and enable gas-fired power plants, plus continental grids, to make variable wind and solar power plants even more reliable and climate friendly.

Eberhard Rhein, Brussels

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