Addleshaw Goddard's Energy & Utilities team has launched a special report entitled "The Future of Gas", focusing on global gas market trends and the changing role of natural gas in future energy supply.

Led by AG Energy partners Guy Winter and Anna Nerush and produced in collaboration with NewsBase, the leading independent supplier of global energy intelligence, the report was launched at an event on the 16th May at AG's London office, where panellists debated current and future market trends and themes.

The report takes a critical look at the role of gas, drawing out what lies on the horizon for this key source of heat and energy, as governments, energy companies and consumers focus on the "Energy Trilemma" of affordable, sustainable and secure supplies. In the face of cheap but polluting coal and burgeoning but intermittent renewables, the future of gas in the UK and beyond has never been so fundamental. The report surmises that the opportunities are plentiful, stemming from new demand and climate change objectives, and driven by exploration successes as well as a changing attitude among investors.

Key themes that have emerged out of the analysis of the market and conversations with industry leaders, include:

• Security of supply is a question governments are concerned with, while companies are more focused with a working market. Gas is central to the idea of energy security, but the market, particularly the supply side, is dominated by private investment.
• Reconciling these potentially differing goals is a real challenge in ensuring that the lights stay on.
• Substantial existing gas resources exist around the world and demand is growing. Project costs, price volatility and access to market are some of the key obstacles standing in the way of gas' commercial future.
• Given growing concerns about carbon emissions, how gas finds a place in the world's energy mix is crucial - the answer lies in its role between cheap coal and intermittent renewables. Until industry-scale Carbon Capital & Storage (CCS) is successfully deployed, gas will continue to generate significant carbon emissions- albeit at about 50% the volume that coal does. The industry is ready to commit resources to CCS technology, but in the UK needs clearer guidance and encouragement from Government to facilitate that.
• LNG demand and prices have had a boom-and-bust few years, destroying much new appetite for additional projects. This may lead to a price war in Europe between US LNG and Russian pipe gas.
• The impact of Brexit – there are significant risks to the UK/Belgium interconnector and the wider gas trading relationship between Britain and Europe as a result of Brexit.
• The Power of Zohr – Eni's 850 bcm off shore gas field find is a game changer for the East Mediterranean, making the big players re-think the region's gas potential.

The report focuses on exploring the following issues from across the natural gas value chain, including:

• Upstream exploration and production: a focus on the downward trend in gas production in Europe, rise in imports, with the exceptions of a peak in UK production and continued strength of Norway as well as bright prospects for the South East of Europe; the challenges affecting Azerbaijan and the opportunities that continue to arise in Africa.
• Transmission and distribution: including a look at, in Europe, the gas transmission and distribution sectors, and the need for greater Government guidance as to how climate change targets should be met; Brexit risks; the opportunities represented by hydrogen as a domestic heating and transport fuel; the importance of the interaction between gas and electricity; storage pressures; the difficulty of export markets for central Asia; and the potential for gas-to-power in Africa in the right financing conditions.
• Consumption: includes a focus on Europe's gas demand growth, Russia's monopoly; the bounty in Africa versus the challenges around execution and investment and a look at the LNG boom.

Commenting on the Report's findings, Guy Winter, Head of Corporate Energy, said: "One crucial conclusion from the report is that Britain has the potential to provide genuine global leadership as a sustainable gas innovator, but that will require more effective leadership from the Government – particularly in Carbon Capture & Storage (CCS). Gas can answer a lot of the most pressing questions around security and affordability of domestic heating and transport fuel, as well as large-scale energy storage- and CCS is the missing piece of that jigsaw. The good news is that, from speaking a wide spectrum of stakeholders across the gas value chain, there is a high level of commitment in the industry to innovation and decarbonisation, to help ensure that our gas infrastructure is a key contributor towards hitting the UK's carbon reduction targets."

Anna Nerush, partner in the Energy Group, said: "Gas has an important role to play in our future energy mix especially as diversity and security of supply continue to be top of government agenda. As demand grows so will the sources of demand and the way we use gas as a cleaner and potentially more cost effective fuel for power and transportation."

– ENDS –

Notes to Editors

• Our Energy and Utilities Sector Team, of over 50 lawyers globally, has a high quality client base, which includes both Big 6 (and equivalent) energy companies and corporates that have increasing energy requirements.
• We are unique in that we advise on service lines but we also provide market leading regulatory expertise, drawn from recent secondments to DECC/BEIS where secondees have played a role in shaping legislation, as well as providing advice for OFGEM and the regulator in Northern Ireland (all regulators in the UK).
• Our expertise and resource spans a wide range of energy practices, specifically Oil and Gas, Renewables, and Power.
• Our Oil and Gas practice has over 20 lawyers, and continues to grow in strength and expertise. The past 12 months has seen the team acting on significant instructions for the likes of BP, National Grid, Nobel Upstream, PA Resources, SGN, SSE and Seven Energy - a clear demonstration that our team has a strong foothold in this highly competitive market.