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Oil & gas exploration and production, strong markets key to Energy Union success

Brussels, Feb. 24, 2015: Europe should back exploration and production of oil and gas both domestically and across neighbouring regions, if it wants a successful Energy Union, the International Association of Oil & Gas Producers (IOGP) said today.

In a new position paper on the Energy Union – released just ahead of the publication of the European Commission strategy on the issue – IOGP underlines how exploration and production of oil and gas, together with strategic policies improving market competition, can help the EU face its energy challenges.

“There is an abundance of natural gas in and around Europe: the North Sea, the Black Sea, the Caspian, the Mediterranean, the Arctic and shale gas. The EU should take the full benefit of this potential, which can bring royalties, cleaner fuel, jobs, and innovation,” said Roland Festor, IOGP’s EU affairs director.

Gas plays a vital role in securing energy supply. It can also help build an Energy Union in line with the EU climate ambitions. Switching from coal to gas could cut CO2 emissions in electricity production by roughly half. Gas power plants are also needed to balance variable renewable energy sources like wind and solar.

To live up to its ambitions, the Energy Union will need a fully-functioning internal energy market. Robust wholesale energy markets will help deliver a secure supply and trigger the necessary investment in infrastructure and innovation. Experience in Europe shows that domestic oil and gas production fosters the development of competitive, active wholesale gas markets.

“The Energy Union should focus on measures that boost competition, rather than undermine it. We would warn against common gas purchasing mechanisms, but we encourage the EU to instead consider gas release programmes[1] and promote price liberalization across member countries and well-functioning gas and power wholesale markets,” Mr. Festor said.

[1] In a gas release programme, the dominant player in a given market is required to auction part of its wholesale gas to other companies that will then have the right to sell it directly to consumers. The aim is to boost competition.

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