Responding to energy needs of every reality: Exploring opportunities with Cepsa

Juan Manuel García-Horillo's picture
Juan Manuel García-Horillo, Manager of Gas & Power, Cepsa
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As an integrated company operating across the entire oil and gas value chain, Cepsa is one of the leading energy companies in Spain; adapting to the new realities in the ever-changing gas, LNG and energy environment.

Ahead of Gastech 2018 in Barcelona, Gastech Insights spoke with Juan Manuel García-Horillo, Manager of Gas and Power at Cepsa to discover more about the organisation and natural gas’ role in the new energy landscape.

Gastech Insights: At the start of 2018 it was announced that Cepsa and Masdar were joining forces to explore renewable energy projects. Could you share any developments on this collaboration?

Juan Manuel García-Horillo: We signed a Memorandum of Understanding (MOU) to explore renewable energy project collaboration, especially wind and solar, and that is exactly what we are doing, exploring opportunities. We aim to grow internationally in the renewables market to continue to diversify our energy sources and respond to the energy needs of every reality and we are proud to do it alongside experts and leaders in the sector. We are sure that this agreement will lead to interesting projects for both companies.

Gastech Insights: What does the new US LNG into Europe mean for supply, demand and pricing?

Juan Manuel García-Horillo: US LNG sets a landmark change in the natural gas industry leading to important changes in technology, investment model and also in the overall gas market. As such, gas balance and trading flows have been affected and a new wave of LNG Supply and Purchase Agreements have emerged with higher flexibility in volume and FOB instead of former DES contracts with the aim of increasing flexibility in the face of high price volatility. These new settings have attracted new players with different risk profiles, such as traders, which has led even to an increase in price volatility. The weight of new US LNG contracts would likely grow in the European supply mix, at least until 2020, and potentially beyond that date, if we consider new LNG ventures coming online. For that reason, we see the potential for European Prices, namely TTF or NBP, increasing.   

Gastech Insights: With growing power demands, what does the future energy mix look like in the continent?

Juan Manuel García-Horillo: As we set out in our research study Cepsa Energy Outlook 2030 (CEO 2030), an ever-increasing population with growing and diverse economic aspirations will drive energy demand, and to sustain it, supply will have to be cleaner and consumption more efficient. Demand for energy will keep rising over the next few years, and while improvements in efficiency will slow this rise down, it will also pose multiple challenges: to supply more energy, to make it more sustainable, and to consume it smartly.

Primary demand will still grow but at a slower pace than the last decades, with South-East Asia still the main driver of energy demand, whereas more developed countries such as those in Europe might have reached their peak demand. Such economies are heavily geared toward services and their economic growth has been decoupled from substantial increases in energy demand. The forthcoming period will differ from the past because efficiency will play a leading role, while energy intensity will see its sharpest drop ever.

Gastech Insights: In your opinion, how fast will renewable energy grow in the next decade?

Juan Manuel García-Horillo: Regarding the power mix generation, and according to the CEO 2030, renewables will see a significant increase and will reach about the 34% of the generation mix. In Europe, this figure will be higher. Solar and wind power are already the two largest sources of newly installed capacity. Indeed, together they accounted for 45% of the new capacity installed in 2016. Renewables are thus set to become the top power generation source by 2030 and will account for one-third of total power output. Natural gas will see very solid growth, despite having fallen out of favour compared to renewables.

Gastech Insights: Cepsa is part of the Spanish Consortium Members for Gastech 2018. Why should industry players attend the upcoming event in Barcelona?

Juan Manuel García-Horillo: Gastech is one of the largest and most important gatherings of professionals in the Industry. It is a unique business platform to see new ideas, new technologies, listen to leading conferences and exhibitors, and keep up-to-date on the latest trends of an ever-changing industry adapting to the needs of society.

Would you like to hear more on the natural gas and LNG industry dynamics? Register to attend Gastech 2018 in Barcelona (17-20 September) to hear exclusive views of energy experts.