7:00 - 9:00 PM
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Paolo Scaroni
Chief Executive Officer
Eni
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<>At Tuesday's dinner IHS CERA Chairman Daniel Yergin,thanked the CERAWeek Strategic Sponsors Eni and Chevron Corporation and welcomed keynote speaker Paolo Scaroni, Chief Executive Officer, Eni. Mr. Scaroni began his address by stating that "the big issue today is no longer volatility in oil, but volatility in the natural gas market". He noted that natural gas is an increasingly important part of the world's energy future and is central to Eni's business strategy. Mr. Scaroni said that "the gas market has undergone something of a revolution," indicating on one hand the emergence of shale gas and on the other the global demand collapse caused by the economic recession. These two factors have provided the gas market with plentiful supply and also sparked a collapse in gas prices to about one third of their peak level. Mr. Scaroni stated, however, that concerns about security of supply remain extremely important, explaining that low gas prices coupled with the global economic recovery are expected to stimulate a bounce back in gas demand. He also believes that greater use of natural gas is the best way to combine economic development and environmental preservation, saying that "gas is by far the cleanest fossil fuel, emitting 50 percent less carbon dioxide than coal and 30 percent less than oil when used to generate one kilowatt-hour" of electricity. Mr. Scaroni also said that gas can also complement renewable energy by providing "swing capacity."
Mr. Scaroni warned that the world needs to prepare for a tight gas market, higher prices, and concerns about security. He said that this will particularly affect the European and Asian markets, but not the North American market, thanks to shale gas.
Regarding the European market Mr. Scaroni said that "establishing interconnections, developing complementary supply sources, and strengthening existing and new supply corridors are all necessary measures to ensure that Europe has ample, affordable, and secure gas supplies." He noted that diversification will remain an important objective for EU security of supply strategy and can be achieved by developing complementary supply sources and diversifying gas transit routes. He advocated liquefied natural gas as a third pillar of Europe's diversification strategy and an important channel for Asia but underscored the need for substantial investment, noting that "the average liquefaction plant costs somewhere in the region of $1 billion per billion cubic meters."
In response to questions from Dr. Yergin, Mr. Scaroni said that until renewable energy sources gain greater market share, greater energy efficiency--particularly in the United States--is paramount. Regarding the transportation sector Mr. Scaroni expressed optimism about market penetration of hybrid vehicles but doubt about plug-in electric vehicles, citing lingering issues with energy storage. On the evolution of resource nationalism, he pointed out Eni's distinctive approach of working with host governments to invest in countries where Eni operates. He particularly highlighted Eni's leadership in electricity production in oil-producing countries. Regarding Iran Mr. Scaroni said that Eni will not be signing any contracts with Iran going forward; the last contract was in 2001. He is optimistic regarding Iraq's prospects of effectively rejoining the energy market and mentioned Eni's recent engagement in two Iraqi fields: Nassriya and Zubair.
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