Stretching from Ankara to the Algarve is a zone of crucial importance for the natural gas producers of the Gulf and North Africa. The states of southern Europe already include some of the world's largest consumers of gas. Over the next 20 years, demand from this region could increase by as much as 200 per cent as established users Italy and France turn more and more to gas for power generation, and new users - Spain, Portugal, Greece and Turkey - enter the equation.
According to studies prepared by Cambridge Energy Research Associates (CERA), gas demand in the six countries of southern Europe rose by over 50 per cent between 1995-2000 to reach some 146 billion cubic metres a year (bcm/y). That figure could reach 285 bcm/y in 2015 if liberalisation of the European gas market proceeds quickly, allowing the creation of a market that is highly liquid and responsive to spot gas price signals, says CERA. Even in the event of a managed transition, in which the pace of change is uneven and the link between gas and oil prices persists, CERA forecasts that demand will reach some 230 bcm/y in 2015.
At present Italy is by some margin the largest gas consumer in southern Europe, at close to 70 bcm in 2000. This is fairly evenly distributed between residential/commercial, industry and power generation. Most of the extra demand over the next 15 years will come from the power sector, CERA estimates. In France, the second-largest user at 43.6 bcm in 2000, power accounts for less than 3 per cent of consumption at present, as the French electricity system is dominated by nuclear power stations. However, gas will play an increasingly important role in the power sector over the next 10-15 years. CERA estimates that power generation will account for as much as 23 per cent of total gas consumption by 2015, assuming a liquid liberalised market, and 19 per cent in the managed transition scenario.
Power generation is also set to be the main force in the development of the two fastest-growing markets in the region: Spain and Turkey. In both cases, residential/commercial use is limited and is expected to remain so, but the use of gas for power generation is set to rise threefold by 2015.
Greece and Portugal barely consumed any gas at all in 2000, but from this low base, consumption is set to rise rapidly to reach a combined 15 bcm by 2015, assuming a liquid liberalised market, says CERA.
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