Gas leaders discussed the future of the industry at the Budapest LNG Summit
Starting the conference, Hungary’s Minister of Foreign Affairs and Trade Péter Szijjártó underlined that the issue of energy supply must be a question of physical reality instead of ideology. For Hungary, diversification doesn’t mean giving up already existing sources, it means looking for additional sources, complementary to those that the country already has.He underlined the importance of the development of infrastructure, he mentioned some success stories, such as the construction of the Turkish Stream pipeline, the Interconnector between Slovakia and Hungary and the commercial LNG agreement with Shell, which Hungary wants to extend beyond 2027.
Providing a global perspective, Gergely Molnár, Gas Analyst at the International Energy Agency (IEA), said that gas demand is expected to return to growth in 2024, with global gas consumption expected to increase by 2.5 per cent, mainly driven by Asia. “We expect gas demand to slow down in the medium-term,” he said.
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Jefferson Edwards, Vice President of Shell Energy Integration & Fundamentals presented Shell’s LNG Outlook for 2024, a benchmark annual forecast that analyses the trends of the global LNG market. “Gas and LNG have an important role both in energy security and in the energy transition. Global demand for LNG is estimated to rise by more than 50 per cent by 2040, as industrial coal-to-gas switching gathers pace in China and South Asia and South-East Asian countries use more LNG to support their economic growth. As well, LNG continues to play a critical role in providing security of supply to Europe through diversification,” he highlighted.
Gergely Szabó, Regional Chairman of MET Central Europe underlined that to prepare for the next energy crisis, the energy industry needs to change the way it approaches products and pricing of risks. Additionally, the industry needs to diversify – “any means of diversification is welcome,” he said.
The conference also focused on the role of LNG in energy security, flexibility of supply and competitiveness. “In order to access LNG from the US and globally, you need long-term contracts, which can provide certainty” said Franck Neel, Member of OMV Petrom’s Executive Board. He underlined that Romania became a net gas exporter for the first time in 2023. Regarding diversification of supply and OMV Petrom’s projects in the Black Sea, he said that they were confident for a lot more to come from the Black Sea, not just in Romania, noting his company’s projects in Bulgaria. The two main challenges he sees in the LNG market are the lack of volume and financing.
The next panel was focused on LNG traders and their needs, with a focus on flexible planning. Zoltán Rahóty, Director of Structured Gas Trading and LNG at MVM CEEnergy noted that “cargos are being redirected to Asia which may leave Europe volatile.” When asked about MVM CEEnergy’s plans in the 2030 perspective, Mr Rahóty noted that his company will be looking to negotiate with OMV Petrom on shares for the Neptun Deep gas production project.
Eszter Szekeres, Executive Director of Wholesale & Portfolio Optimisation at MET Central Europe underlined thatglobal events have a much higher impact on European gas prices since approximately 20 per cent of Europe’s natural gas supply has changed from pipeline gas to LNG in the last couple of years. “Therefore, even if price levels have decreased to almost pre-crises levels, volatility has not,” she pointed out.
On the topic of diversification, Vitaliy Baylarbayov, Deputy Vice-President of SOCAR urged countries to look at Azerbaijan for new energy cooperation opportunities. “What we value most is the stability in the relationships,” he underlined. Trying to use your oil and gas not as a weapon but as a bridge in strategic relations.
Regarding the US LNG pause and its implications for Europe, László Fritsch, CEO of MVM CEEnergy said: “It was very surprising because it was not as big of a shock to the market, however, if this pause continues, it may have a significant impact on the global markets.” Regarding the future of gas, he highlighted that the market signals are there and gas will stay as a transitional fuel for the next 20 years in Europe.
Leaders of the gas transmission system operators from Central and Eastern Europe gave an update on the status of the integration of the regional gas market and the flagship project of the Vertical Corridor. “The Vertical Corridor is a good initiative based on the effective cooperation of TSOs and LNG infrastructure operators,” said Szabolcs I. Ferencz, CEO of FGSZ Hungarian Gas TSO. “With minor adjustments to the existing pipeline system new alternative gas and LNG supplies would be available and benefit the Balkans, Ukraine and the wider CEE region as well while creating more liquidity, better market integration and competition respectively. It is a realistic option and a prime example of getting rid of existing bottlenecks and realising effective bidirectional transmission infrastructure that can transmit more supplies from the Southern direction,” he noted.
The panellists reiterated Mr Ferencz’s point about the project’s significance for regional energy security and development and presented their country’s perspectives and their strategic investments within the Vertical Corridor initiative, for example, the start of the operations of the Alexandroupolis FSRU to facilitate the needed capacity and investments in Bulgaria’s transmission system.
György Berze, CEO of HEXUM Földgáz presented his insights into the future of gas storage in Hungary pointing out that gas infrastructure operators must decide on how they convert their technology to serve the changing energy supply.
The conference also saw a presentation from Ukraine’s Deputy Energy Minister Mykola Kolisnyk who highlighted the important role that natural gas will play in Ukraine in the next 10 to 15 years, noting the country’s ambition to develop the needed infrastructure and develop more entry and exit points.
The upcoming European methane regulation was also on the table at the Budapest LNG Summit. Knowledge-sharing on methane measuring between companies as well as the need to tackle methane emissions from imports was mentioned among the areas that need greater attention going forward.