I tend to like the folks at Wintershall but sometimes I really ask myself what goes on in their heads. Looks like they have not learned yet that the cost of pipeline gas goes up with distance and the conditions of the terrain you go through. Offshore is more expensive than onshore, mountains are more challenging than the desert, urban area is way harder to do than the steppes. When I learned Natural Gas (feels like eons ago) I was told that with a distance of more than 3500 km, LNG is more cost effective. This number is of course arbitrary as we don’t know what sort of terrain the pipe goes through. But it sets a principle. No matter what, there is a distance by which its easier and cheaper to do LNG. Whatever that turns out to be in each single case. Europe has a few choices when it comes to gas. Either it puts itself at the mercy of Russia, Algeria and Norway knowing that the potential for growth from the later two is limited. Or it goes for shale big time. Or it says good bye to gas and does something else. Or its LNG. Shale looks challenging, gas exit will be very hard with all those renewables, Russia is – well Russia which leaves only LNG on the table. Time will show.
Although LNG (liquid natural gas) provides a solid supplement to European gas supplies, the EU is and will remain a pipeline market – for good reasons. This is one of the theses of Wintershall’s new position paper. LNG is natural gas that is liquefied and then transported by tanker.