Technology from Europe:
Comments from IFP’s Panorama 2003
On February 6, 2003, more than 200 people attended Panorama 2003, the 8th international colloquium devoted to the current state of world energy, organized by IFP in connection with the Great National Debate on Energy. During this colloquium, Jean-Francois Giannesini, adviser to the Chairman and CEO of IFP, and various other experts, analyzed the geopolitical energy context in 2002, as well as the issues surrounding world reserves and the supply of oil and gas. Several points, discussed at the conference by Mr. Giannesini are summarized here.
In 2002, the geopolitical energy context was characterized by significant instability and, according to Mr. Giannesini, there were five major events which stood out during the year. First, there was great pressure on the oil market while a resolution of the Iraqi crisis was sought. Despite only a slight increase in demand compared to the previous year, price rises were toward the top end of the range hoped for by OPEC, i.e., 22 and 28 $/bbl. Of known reserves, Iraq is ranked second in the world and if, in addition to this, it is true that its production costs are among the lowest in the world, it is clear that, where oil is concerned, the stakes relating to this country are high.
As reserves are nothing more than promises, adds Mr. Giannesini, they can only be fulfilled by providing the production capacity and, above all, promoting export infrastructure, pipelines and shipping terminals. To improve market access, Iraq depends largely on the goodwill of its neighbors, except for the sea routes. Further, finding a legal and fiscal framework which both respects national sentiment and opens the door to international investments will be a difficult task. It is clear that Iraq offers tremendous potential where oil is concerned, but there remain many obstacles on the road which could lead this country to vie in importance with its neighbor, Saudi Arabia.
As far as price fluctuations are concerned, most analysts agree that a war premium is added to the basic price, depending on the intensity of the crisis. In September, when war seemed inevitable and the US was threatening to act outside the UN, this war premium reached 8 $/bbl, pushing prices to the 30 $/bbl mark. However, when tension began to subside and, in particular following action by France, the UN once again became the main regulatory body and the war premium decreased to the 4 $/bbl level at the beginning of November, even falling as low as 2 $/bbl in mid-November, when the UN inspectors arrived in Baghdad. But as soon as the Iraqi dossiers on its disarmament were studied by the UN Security Council and the judgement of the US on the contents became known, prices once again went up to the 30 $/bbl level. Never before had the economic-geopolitical relationship been so evident as it was throughout 2002, Mr. Giannesini said.
In comments on the environment and use of alternate energy, Mr. Giannesini said another event which took place during the year was the Johannesburg conference on climate change which saw Japan and Canada agree to ratify the Kyoto protocol. 2002 also saw notable progress in the hydrogen field. Ford unveiled its Focus vehicle fitted with a fuel cell using compressed hydrogen, and General Motors announced the imminent launch of a similar vehicle.
Fossil fuels – coal or hydrocarbons – represent good sources of hydrogen, but the problem then is the emission of CO2. If we had the ability to capture and trap this concentrated CO2, we would produce hydrogen even cleaner than that produced using nuclear fuel. It is for this reason that IFP has chosen to devote part of its research to this winning sector, Mr. Giannesini added. And regarding the so-called renewable energies for hydrogen production – hydroelectric, wood and biomass, wind and finally solar – the latter are set to develop because it is these that, while not the mostprofitable, are the most in keeping with the desires of people wishing to use clean energy.
The fourth feature which stood out in Europe in 2002 was the considerable progress toward the opening of gas and electricity markets, as well as the market for emission rights in London, which could be the beginnings of a large global energy market on the old continent, explains Giannesini.
Finally, and tragically, on November 13, the oil tanker Prestige foundered off the Spanish coast. This accident at sea could trigger a major ecological catastrophe, worse than that seen following the Erika incident. This illustrates the urgent requirement, on a European scale, to take measures with immediate effect. What can be done? Mr. Giannesini said the production of these heavy fuels, and therefore their transportation, could be reduced by developing existing deep conversion processes. It is possible to generalize the production of electricity from these fuels at refinery level, which would also obviate the need to transport them. Making double-skinned hulls commonplace would improve the quality of tankers and therefore their safety.