by Jerome a Paris
Thu Aug 30th, 2007 at 08:33:06 AM EST
I went to read the article quoted below because of its funny lead about Sarkozy ("There is one big problem with the proposed French mega-merger of Suez, the power, gas and water utility, and Gaz de France (GdF) (...) - that it was not Nicolas Sarkozy's idea") but had to react to that bit of propaganda:
Gas is becoming cheaper and could become even more so in Britain over the next few years, thanks to new infrastructure. Huge volumes of Norwegian gas are being pumped into the UK and a convoy of ships will be delivering frozen gas to terminals on the Thames and in West Wales from 2009. Britain is creating an expanding gas balloon with an exit valve at the Interconnector pipeline to Zeebrugge.
Oh yeah, and let's not mention the fact that Norwegian and LNG imports are meant to replace collapsing domestic production, and that this winter was incredibly mild and thus helped cut demand for heating...
Promoted by whataboutbob
It's a huge opportunity for aggressive energy companies to compete, buying cheap gas in Britain for export to the Continent. It will not only cause a commercial headache for incumbents, such as GdF, which are tied to expensive, long-term contracts to buy Russian gas, but also a political problem, as the French Government will come under intense pressure to deliver cheaper energy to consumers.
Cheaper is surely a challenge, but cheaper than ther UK?
Unprivatised, monopolistic, sluggish GdF is a political accident waiting to happen. Without a merger, it can only become a whipping boy for angry regulators and consumers.
It is privatised, it is not monopolistic (just dominant because, precisely, it is competitive thanks to its long term supply contracts - the same long term contracts that made the Norwegian pipeline possible - and its focus on infrastructure - a competence it is now bringing to the UK market, by the way).
This report by Poyry (pdf), a well known market consultant, suggests that the future is quite hard to predict - they have several radically different scenarios for the future
Excess capacity (and note that import capacity is not quite the same thing as supply as the winter last year showed with little supply coming via the interconnector from the continent despite the record prices in the UK, and as the future is likely to show when the US and Spain will offer to pay more for LNG to ensure supply).
So, with a nice underlying hypothesis of steady oil prices at 50$/bl, you get massively variable price scenarios for the next 5 years.
But the UK market is just so superior to what's done on the continent.