GRM 2010 GRM 2011

Abstract Details

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Potential Impact of Methane Hydrate Development on GCC and NEA Energy Trade Dynamics: The Gulf Perspective
Paper Proposal Text :
The Northeast Asian (NEA) region has been one of the biggest fossil fuel customers of the Gulf Cooperation Council (GCC). The emergence of unconventional hydrocarbons, such as shale, coalbed methane, and methane hydrates, will naturally have an effect on the ongoing bilateral trade relations between the two regions. The development of such energy sources to be used by NEA countries will have a direct impact on the GCC, compromising the social welfare of the region. In this chapter, we highlight the historical energy trade relationship between the two regions, the evolution and scientific basics of an alternative fuel source, primarily methane hydrate, a literature review on the methods of methane hydrate extraction, the challenges faced, and the pricing of such an alternative. Methane hydrates are present in substantial quantities in NEA and have the potential to disrupt global energy markets once economical extraction methods are identified and developed. Any NEA country that is able to exploit its methane hydrate resources will potentially alter its need for hydrocarbon imports. This would greatly impact future energy trade relations between NEA and GCC countries and could result in a shift from a broader bilateral energy trade relationship into a narrow one. However, one must account for the time period required for the development of methane hydrates as well as the ensuing political and technical challenges that could hinder it. A key question is: to what extent would GCC economies be affected by NEA unconventional gas development? GCC hydrocarbon exports would have to be modified to accommodate a change in customer demand. Demand would decrease and hydrocarbon price fluctuations would affect revenue streams as well as international trade partnerships. We attempt in this chapter to present the state of the art in terms of methane hydrates as an alternative hydrocarbon source as well as the current barriers and cost variations to full exploitation of this alternative energy source. Finally, we propose policy recommendation based on our analysis.