Speech of HE Eng. Mohamed Hamel, Secretary General of the GECF, at 11th LNG Producer-Consumer Conference
Excellences, Ladies and gentlemen,
It is my great privilege and honour to address such a distinguished gathering. I would like to congratulate the Ministry of Economy, Trade and Industry of Japan for organising the 11th edition of the LNG Producer-Consumer Conference.
The Gas Exporting Countries Forum, the GECF, is an organisation of 19 Member Countries from four continents.
With a total natural gas liquefaction capacity of 237 million tonnes, they represent 51% of the world’s capacity.
In 2021, they exported nearly 190 million tonnes to 42 countries, or 50% of the global exports. In the first eight months of this year, their combined exports reached 131 million tonnes or half of the global exports.
The GECF Member Countries are also investing in new liquefaction plants, or in expanding the existing ones. It is expected that their total capacity will reach over 400 million tonnes by 2030, representing 62% of the global capacity.
Ladies and gentlemen,
Today, the world faces a multifaceted crisis, and the natural gas crisis is one of its dimensions.
Its origin could be traced back to 2015 when the decline in investment began, due to very low gas prices and the misguided narrative that natural gas use is not compatible with combating climate change, as well as the ensuing pressures to stop financing natural gas projects.
The COVID-19 pandemic exacerbated this decline in investment.
In 2021, a strong post-pandemic economic recovery – compounded with gas supply outages and extreme weather conditions – led to tightening market conditions, as epitomised by rapidly rising gas hub prices in the second half of last year.
This market tightness further intensified due to the geopolitical crisis in 2022. On the back of the reduced pipeline supply, the status of Europe shifted from being the “market of last resort for LNG deliveries” to becoming the “preferred destination”. To date, supply to the region has increased by 64% year-on-year, while that to Asia has declined by 8%.
The adverse effects of these developments are being felt worldwide. Hub-based gas prices have reached record levels. Demand shift from gas to oil and coal is underway in many regions and sectors. Various policy means, such as price caps and subsidies, are used to shield end-users from the effects of high prices. Developing countries, notably in South Asia, face immense difficulties in acquiring LNG cargos, a situation that is creating havoc on their economies and affecting people’s standard of living.
In the past, the issues of combating climate change and of the energy transition had progressively taken the front seat in the energy policy debate, especially in the run-up to COP 26 in Glasgow.
At the same time, three billion people continue to lack access to clean cooking and 800 million to reliable electricity.
Today, in the face of an acute natural gas supply deficit, energy security and affordability have moved to the top of the priority list for policymakers, to ensure that the economy is kept running, the homes warm and the lights on.
Yet, energy security, affordability, and sustainability shall remain equally important.
Security of supply and security of demand. These are the two sides of the same coin.
Affordability and a fair return on the high and risky investments in natural gas projects.
Sustainability, encompassing economic growth, social progress and the protection of the environment.
Seeking a balance between these three pillars is the key recipe for any energy policy that aims to succeed over the short- and long-term.
At the GECF, we believe that natural gas, the cleanest-burning hydrocarbon, plays a pivotal role to this end.
It is an energy that could contribute to realising the UN Sustainable Development Goals by 2030 and the Paris Agreement long-term objectives.
Available, clean, flexible, versatile, natural gas is an enabler of the energy transition; a transition that is smooth, just, inclusive, and leaves no one behind.
It improves air quality and provides much-needed backup and stability to power grids.
In developing countries, notably in Africa and South Asia, switching from coal to gas, along with renewables, constitutes the most realistic and cost-effective energy transition pathway.
And natural gas could be made even cleaner.
First, by improving energy efficiency and reducing gas flaring and methane emissions along the whole value chain.
Second, by the scaling up of existing technologies, such as carbon capture, utilisation and storage, low-carbon ammonia, and hydrogen.
In the GECF Reference Case scenario, it is expected that natural gas share in the global energy mix will rise from 23% today to 26% in 2050.
However, for natural gas to truly play its role as an enabler of the energy transition, it shall remain affordable. This is indeed possible, provided that sufficient investments are made in a timely manner, in all segments of the value chain.
Investment is crucial to market stability, along with contractual arrangements that not only take into account the capital-intensive nature, long lead time and payback period of gas investments, but also provide equitable risks sharing between producers and consumers.
To this end, policy and financial support are required, as the needs are huge, to the tune of 10 trillion US dollars by 2050.
Ladies and gentlemen,
Earlier this year, at the most recent GECF Summit of Heads of State and Government, held here in Qatar, the leaders of our Member States stressed the importance of dialogue between producers and consumers for the promotion of international cooperation.
In this context, the 11th LNG Producer-Consumer Conference is a great platform to advance the better understanding of the challenges and opportunities that lay ahead.
Thank you very much.
The Video Message is available on YouTube.