The Gas Revolution: Energy GPS

Moty Kuperberg's picture
Moty Kuperberg, Director Oil and Gas, Dynamic Shipping Services Ltd
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The last 3 years, since energy prices collapsed from the $ 100 a barrel ‘consensus’ level to below $30, created the opportunity to announce and introduce a different price regime era.

An era that provides the world nations and economies with the required Security of Supply that will assist in leading the world out of the carbon energy era, into a cleaner sustained energy era where renewables and alternative energy will be available and affordable. Gas will take us there and will bridge the gap between the carbon era to better environmental sustainability within the coming decades.

Energy Security

Energy security is defined by the IEA (International Energy Agency) as ‘uninterrupted availability of energy at an affordable price’. This security is crucial for both national and international economic stability which also influences geopolitical stability. It is also important for the long-term planning of different energy-related infrastructures; for example, Exploration and Production (E&P) and power plants - Gas to Power and Gas to Water.

However, in light of the recent decades-long energy price crises, I will introduce a different solid model for energy security I coined as the Energy GPS. The main 3 pillars of this model are:

  1. Geopolitics
  2. Price
  3. Supply

Set in a unique formula to ink a better global energy security regime.

We need to go through the history of oil and gas - the major geopolitical events, the changing supply and evolving energy prices - in order to end up in a new energy era, where supply is secured, and prices are relatively stable for the long-term. The focus must be on the oil and gas market and the influence of the ‘Gas Revolution – the Golden Age of Gas’, as well as what to expect ‘Beyond Fossils’.

The changing geopolitics of the 21st century, spreading from the Persian Gulf and the Middle East to Russia, Central America can affect so many other producers and consumers.

The price of energy is reviewed from a birds-eye perspective, including the oil crises and other major disruptions that have affected the trading terms and supply of oil and gas. The falling price of LNG and piped gas has increased the demand for more gas. It seems that US LNG has come with a completely new price formula and real open market which has managed to ‘break the ice’ and bring more gas demand and LNG to end-users.

A new price formula of HH + Liquefaction + Shipping, with no destination or further trading restrictions, brings the real revolution. An important pressure on the price introducing Floor and Cap price range appears to enter as OPEC with Russia cut production dramatically to prevent oil from crashing below $50; while President Trump together with the IEA Chairman Mr. Fatih Berol stood firm to stop oil prices from climbing to over $80 a barrel.

The changing supply owes much to the gas revolution, creating ‘the Golden Age of Gas’ based on conventional and non-conventional gas sources. The big picture is made up of the many gas sources spreading all over the globe with new positive explorations results – South America, West Africa, East Africa, East Mediterranean (Cyprus, Egypt, Israel), and Asia. If one will look at the proposed 2025 LNG supply route map, you cannot compare it to a decade ago map.

This big picture is also influenced by the implementation of alternative and renewable energy sources; as well as energy conservation.

If we view the three main pillars in the correct perspective and link them, we can then create and establish the secured energy environment that the world needs for economic and political stability.

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Image courtesy of Dynamic Shipping Services