Since 1988 Paul has worked within the BASF Group. In UK with BASF PLC, in Germany as a divisional controller at BASF AG, Ludwigshafen, in Belgium as Finance Director with BASF Antwerpen NV, and as Finance Director at Wintershall AG, Germany. Wintershall is the Oil & Gas subsidiary of BASF AG.
He was the Finance Director of Nord Stream AG since the projects inception in 2006 and since January 2016 he is Chief Financial Officer with Nord Stream 2 AG.
1. What role will gas play in the future European energy mix?
There is no doubt that natural gas will have to play an increasingly important role in Europe’s future energy mix. The EU has three main energy objectives: supply security, affordability and sustainability. It is not possible to pursue all three objectives at the same time without relying on natural gas. Apart from its efficiency and the availability of substantial and easily-accessible reserves, gas will play a key role in helping Europe to meet its ambitious decarbonisation goals. As gas emits 50 % less CO2 when burned than coal, just replacing coal with gas in power generation will go a long way towards meeting the EU’s target of 40% below 1990 levels by 2030. Also the move towards greater use of renewables in electricity generation will require the sort of fast-start back-up that gas can provide for intermittent wind and solar power. Natural gas is therefore the ideal partner for renewables and a key pillar of Europe’s energy transition.
2. How will the Nord Stream 2 project impact supply security tracking?
The first basic condition of supply security is sufficient access to abundant resources. For this purpose, Nord Stream 2 will be a reliable state-of-the-art pipeline with the capacity to transport 55 bcm of gas to the EU internal energy market. It will be highly competitive and that the extra gas that it can bring would increase liquidity at the hubs. The increased inter-connectivity of the EU energy market will mean that this greater liquidity will eventually improve the energy security of all parts of the EU. Increased liquidity and interconnectivity will also stimulate a more competitive gas market.
3. How much do you think Nord Stream 2 will impact the EU’s gas supply landscape?
Nord Stream 2 will be a considerable benefit to the EU’s gas supply landscape: it will be another competitive and reliable link between the EU and the world’s largest gas reserves in Russia. With the EU’s indigenous gas production declining and demand for gas remaining stable or growing modestly, there will be an increased demand for gas imports. This “import gap” can best be filled by a combination of Nord Stream 2 and LNG. The long-term issue for Europe is that LNG can easily be diverted to where prices are higher, for example in some Asian markets where – unlike Europe – there are no or few pipeline alternatives.
4. How would you respond to critics of Nord Stream 2 who have argued the project could limit supply routes and the energy security of the EU?
Nord Stream 2 will not limit but broaden the EU’s supply options. It is patently absurd to think that adding a new 55-bcm state-of-the-art privately-funded supply route would make Europe’s energy future less secure! Some of our most vocal critics have other existing or planned commercial interests to protect such as transit fees, pipelines or LNG terminals.
At times we are also up against deliberate misinformation: for example although we regularly point out that Nord Stream 1 operated at app 80% of capacity in 2015 and is currently operating at 84%, we still come across the statement “Nord Stream is only operating at half capacity so Nord Stream 2 is not needed”! However there is no doubt in our minds that Nord Stream 2 has an important role to play. Nord Stream 2 will make a significant contribution toward meeting the EU’s energy objectives and will reinforce all dimensions of the Energy Union. Without adequate gas supplies, the EU cannot pursue its three main objectives simultaneously: security, sustainability and affordability. Furthermore, we are fully committed to thorough evaluation and scrutiny of our project in full compliance with the existing processes based on the rule of law.
5. How important is the Nord Stream 2 project in the current European climate of declining domestic gas production?
The biggest potential risk to supply security and affordability is a combination of declining domestic supply with a shortage of import infrastructure. Nord Stream 2 addresses this challenge. The steady decline in Europe’s domestic production, combined with a probable future stable or slightly increased demand for gas provides the rationale for Nord Stream 2: we aim to supply part of the resulting requirement for additional gas imports of approximately 120 bcm/year. We can only fill part of this import gap and we expect that most of the rest will come from LNG shipments. The market will decide how much will come from each source.
6. How do you feel about Chancellor Merkel’s position on the Nord Stream 2 project? And how do you see this position affecting the completion of the project?
Nord Stream 2 is a purely commercial venture, which makes commercial sense and offers business opportunities to German and European companies. The German government understands that. However, building a pipeline is not a political, but a business decision, as long as the project complies with all applicable regulations, which Nord Stream 2 does and will do.
7. Do you think the USA will ever be as big as Russia in its levels of supply of gas to Europe?
I doubt it. Any gas supplied by the USA to Europe would be in the form of LNG, which can easily be diverted to any other market offering the highest price. As Europe will continue to be well-supplied with price-competitive pipeline gas and in view of the relatively high costs of LNG, it is not likely – in strictly commercial terms - that supplies from the USA would be able to overtake Russian gas, even if the USA wanted to.
8. How important is it for Nord Stream 2 to participate in conferences such as the European Gas Conference?
We think that it is very important that all key players in our industry contribute to a greater understanding of the role of gas in a post-COP21 world. The more people understand, the greater the chance of more people appreciating the counter-intuitive truth that gas is the one fossil fuel that can make an important contribution to reducing CO2!
9. What do you think the main benefits are of events such as EGC for the industry?
The sharing of different perspectives on the issues, challenges and opportunities facing our industry and hopefully finding concrete solutions to the many challenges we are facing.
Paul Corcoran will be taking part in a Panel Discussion on Fixing the East-West Infrastructure Imbalance and Integrating New and Existing Infrastructure, taking place on 24th January (Day 2) of the European Gas Conference.