Tensions between Greece and Turkey and the American sanctions against the completion of the Nordstream 2 pipe line in the North Sea are revealing with a full daylight the new importance and the geopolitical challenges linked to natural gas. 20th century had been the oil century with major political and economic consequences. During the Twenties, the breaking up of the Ottoman Empire and the sharing, between Western powers of the territories where were located oil fields had, through the “Red Line Agreements” allowed oil majors emergence and guaranteed the supplying of Western countries. It was the oil embargo against Japan decided by American authorities, which caused the Pearl Harbor attack and the coming of the U.S. into the war. If Germany oriented its offensive against the Soviet Union, stopped in Stalingrad, toward Caspian Sea, it was to have access to its oil fields, necessary for its war efforts. Once peace was back, oil didn’t lose its strategic role, this time on economic issues, the 1971 crisis showed it, followed by the OPEC creation, a temporary embargo and the two oil shocks which hurt Western economies. In a fortunately less violent context, natural gas has become a strategic raw material and would play an essential role in the future.
Natural gas has always been abundant and cheap. Ignoring the consequences on environment, companies which were exploiting oil fields were flaring it when it emerged from wells. Its utilization was limited by the difficulties related to its transportation and its distribution which, atop of that, needed costly storage capacities. Compared to oil and coal, which were easy to transport until their users location, its cost advantage was disappearing. But two major innovations occurred. Progresses made in liquefaction and in the transportation of LNG by sea have allowed to supplying markets too far to be served through pipe lines. The new production technologies through hydraulic fracking have considerably increased the available natural gas supply, in the United States, in China and tomorrow in Latin America which, combined with liquefaction technologies and the authorization given by American authorities to export it, have created a real world market.
These transformations have come at a time when the taking into conscience of the negative role of fossil fuels on environment and climate was becoming stronger, which lead to the Paris Agreement. But natural gas combustion, in thermal power plant or in industrial or domestic boilers, emits much less CO2 and particles than oil, coal and especially wood. In the U.S., the price fall caused by the supply increase has generated an unprecedented move in favor of natural gas to the detriment of coal in power plants. In China, the development of new fields, the connection of the country by pipelines to Central Asia and more recently to Siberia, as the building of many liquefaction plants has allowed consumption to be multiplied by four in ten years and to slow CO2 emission growth. At the world level, natural gas production and consumption has grown by more than 5% as a total during the last two years which has caused a growing interest for this raw material and generated new geopolitical tensions.
In Northern Europe, since Germany is starting to understand that its excessive use of coal cannot last and that it will have to reconvert its power plants to natural gas because the country has decided to renounce to nuclear power, investments to carry the resource are reviving old East-West rivalries. The completion of the Nordstream 2 pipe line which will transport the natural gas from the giant Yamal field in Russia is interrupted by threats of American sanctions against companies like Engie which are participating to its construction and tomorrow to its exploitation. To the opposite, the Poland project to build through Baltic Sea a pipeline carrying natural gas coming from Norwegian fields is going on, which will reduce the country dependence toward Moscow. That makes us reminding that the Ukrainian crisis was partly caused by a disagreement between the two countries about tariffs. The Beijing insistence on maritime sovereignty issues is not more unfamiliar to its worries about the security of its oil and natural gas supplies which go through the Southern part of the China Sea. To the opposite, there are less tensions in Africa, which allows Total to launch its huge project of 23 billion $ to exploit a natural gas field under the sea arm which separates Madagascar from Mozambique.
The situation is quite different in the Eastern part of the Mediterranean Sea where, to the civil war which affects Libya, must now be added a conflict between Turkey and Greece about the delimitation of sea territories in an area where it is considered that the probability to have located large natural gas resources is high. Very important fields have already been found near Israel and Egypt coasts. They reach Libya where a civil war opposes general Haftar, at the head of the National Liberation Army at the east of the country, supported by France, Egypt and Russia to the official government, recognized by ONU and supported by Turkey. What is at stake is a mystery for nobody: the purpose is to control the new rich oil and natural gas fields of the country. Tension between Turkey and Greece, for the same reason, is much more serious because it again opposes France and Turkey with an escalation which has resulted in the order by Greece to France of fighters.
So, natural gas has become a strategic raw material which will be used to compensate the slow oil and coal declines. The growing demand of power, generated notably by new mobility will not be, before a very long time, supplied by renewable due to their intermittent character. As no country can renounce to the security of its power supply and as these which master nuclear power are very few, natural gas appears, more and more, as the transition solution which allows to combine the objectives of a reduction of greenhouse gas emissions and the aspiration of development of countries like China and India, which are potentially the biggest emitters. To that must be added the reconversion of developed countries like the U.S., Germany or Poland, which are still too much dependant of coal. So, production and consumption of natural gas will increase in the coming decades.
Tensions, even conflicts, to control production and transport of this strategic raw material would so be multiplied in several regions of the globe. Instead of imagining a “de-carboned world”, quite unrealistic, it is important to build a “de-coaled world”. So it is necessary to be prepared to it in order to avoid heavy crisis which remind us what happened with oil, come again with natural gas. It is quite more important for France because its enterprises have the human expertise and the technologies which allow to extract, to transport and to distribute natural gas.