‘We are no longer the risky region – the rest of the world has become riskier!’
At the AIEN International Energy Summit in Istanbul, one of the panels took a look at Global Energy Demand and Supply. Looking at hydrocarbons, where is the oil and gas supply coming from, and what are the effects of the global geopolitical uncertainty?
Laurent Ruseckas, Executive Director, Gas Industry, EMEA, S&P Global, expects to see the supply of LNG increase in the coming years. ‘In the US, we are seeing lots of LNG capacity coming online this year until 2027 which will bring the prices down globally. Some might say there will be an oversupply by then. But if you want gas to grow and be competitive with other fuels, the price needs to come down.’
Moderator Asma Muttawa, Counsel, White & Case then turned to supply concentration and energy security in Latin America. Could this region become a strategic player in oil and gas?
Jimena Blanco, Chief Analyst – Global Risk Insight, Verisk Maplecroft, said: ‘Latin America is very interesting – it fell off the geopolitical map and now there is a resurgence in interest due to the rivalry in the Middle East and Russia’s repositioning. But while we fell off the map for the West, we didn’t for China. From China, there has been a big expansion in investment and mining infrastructure. Now the West is looking for reliable supplies and is willing to pay premiums for reliable suppliers and partnerships. We are no longer the risky region – the rest of the world has become riskier!’
Moving on to demand, Asma asked what the panel’s predictions were for peak oil. ‘As the saying goes, the stone age didn’t end because we ran out of stone, and similarly the oil age won’t end because we run out of oil.’
Laurent said: ‘There has been a shift in tone in Europe, focusing more on affordability and competitiveness. The political far right is against the energy transition in many countries. The centre right, which is seen as more reasonable, is getting more sceptical although they aren’t quite backing away from their goals. There is just so much regulation telling us how to do the transition. The goal has stayed the same but maybe they are trying to scale back the regulations and targets.
‘For demand, we are upgrading our gas demand outlook. We will have peak gas in Europe later this decade, but it will be there for a long time.’
Jimena added to this: ‘We have a different transition in different regions. Europe went maximalist and reality has forced a rethink. In the US, we are seeing demand grow due to technology – for example, data centres and AI – and gas provides a stable source of energy. This will continue to drive demand domestically. In Latin America, it is also a fiscal solution. Countries are developing gas due to their debt position and are stabilizing their economies.’
Turning to geopolitical issues, Asma’s last question was very direct – why hasn’t President Trump stopped the war between Russia and Ukraine?
Chris Weafer, CEO, Macro-Advisory gave his thoughts on this. ‘President Trump has talked about the US staying out of it – let them fight it out and see who wins, which is what we are currently seeing. The US wants to stay engaged with Russia. It does not want Russia in a place where it has nowhere to go other than increase its servitude with China. This would mean that China would essentially have a border with EU and all its resources.
‘It is a mistake to assume we have three years to sit this out and wait for someone else to come in and sort it out – that’s not what we are hearing from institutions in Washington. The long-term plan is to contain China and therefore Ukraine might have to be collateral damage.
Looking forward to what could happen to Russian supply in the future, Chris said: ‘Energy policy in Russia is run entirely from the Kremlin. When war is over, they will use aggressive pricing to try to get markets back. I would expect big, big discounts for several years. Europe says it doesn’t want Russian gas, but what happens when they start offering it at a 30% discount…?’
Laurent finished off by saying ‘some people in Europe, given Trump and Vance’s actions and rhetoric, are getting nervous about dependence on US energy but I don’t think this is something to worry about. The current ‘plan’ is that there is a lot of LNG in the markets and gas prices are coming down. It is implausible that demand will keep up with the supply that is coming in 2026, 2027 and 2028.’
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