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Gas undervalued as energy source - ex Shell CEO

MidEast must embrace natural gas, incorporate renewables in energy mix

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Former Shell CEO Jereon van der Veer believes natural gas should be utilised more.
Former Shell CEO Jereon van der Veer believes natural gas should be utilised more.

Natural gas has been undervalued as a source of energy, said former Royal Dutch Shell CEO Jeroen van der Veer at the keynote speech of this year’s SAOGE.

He also believes that the Middle East must incorporate renewables into its energy mix, in order to be well equipped for an uncertain future, and appealed to the oil and gas community to create a new generation of skilled manpower.

“Natural gas has been too modest about its strength and abilities to provide energy,” said van der Veer at the Damman International Exhibition Centre.

As a result of a “supply side discontinuity”, the known reserves of natural gas have gone up by several decades. But this has not been reflected in demand, said the former CEO.

“Looking at demand side of things, natural gas is not doing a good marketing job.”

This is in spite the fact that electricity from natural gas necessitates the lowest investment, and permits for the construction of power plants running fuelled by gas are generally easy to obtain.

In addition, natural gas would become even cheaper vis-a-vis coal and oil if carbon storage is mandated in future, as gas emits less CO2 than fossil fuels.

While conceding that wind and solar are even cleaner sources of energy, van der Veer points out that these alternative energies are not yet cost effective, and still require high levels of subsidies.

“I often say that wind mills are not so much turned by wind but by subsidies,” he remarked.

Yet an investment in renewables is essential from a long term energy security perspective, argues van der Veer. Not only will demand for energy have doubled by 2030, but there is a large degree of uncertainty about the availability and price of respective sources of power.

“Do we know the relative price of oil and gas compared to other sources of energy in 2050? Do we know about the cost and price of Co2 solutions? Do we know about the scarity constraining biofuels,” he asks.

To counter this uncertainty, governments in the region have to pursue an energy mix, and invest in the research and development of renewables.

“There are a lot of uncertainties, so we get concerned. And if you get concerned, you have to spread your bets.”

“Its an insurance premium against uncertainties of future energy supply, and I’m glad to see that most countries in the region have invested in that premium.Yes, the region is based in oil and gas, but it makes strategic sense to be involved in the alternatives,” concludes van der Veer.

The retired CEO also stressed the need to ensure that a new generation of experienced and technically adept personnel is employed by the industry.

“The skilled and experienced people in the industry have to realise that there is a bottleneck for talent and that we need to forge a new experienced generation of technical people in a world of zero tolerance towards accidents.”

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