GRM 2010 GRM 2011

Abstract Details

Family Name:
First Name:
Title of Paper:
MENA LNG: From supplier to consumer
Paper Proposal Text :
Beyond Qatar, with its dominant position as a regional and world LNG producer, MENA LNG output fell significantly in 2012 and will continue under pressure in 2013 due to a combination of declining gas availability, physical security problems and delayed maintenance and upgrade investments. MENA region LNG production at 109 MTPA in 2012 represents an overall utilization rate of 81%; but once Qatar is excluded, this falls to 58% according to PPI estimates. New liquefaction capacity due on-stream in Algeria in 2013 should mitigate further declines regionally, although further hold-ups to these already heavily-delayed projects will see another fall in regional LNG output, excluding Qatar.

In broad terms, dwindling gas availability in Egypt and security-related disruption in Yemen have contributed most to the 2012 decline, with Algerian production also slightly lower in line with a multi-year trend. Both Abu Dhabi and Oman face gas shortages, but are expected to continue to meet term LNG commitments in the coming years and source additional gas for domestic needs elsewhere, keeping their LNG production outlook stable.

The region’s squeezed LNG production comes as the list of MENA countries importing or planning to import LNG grows. According to PPI estimates, there are firm plans to import LNG in five MENA countries over the next five years, beyond existing importers Dubai and Kuwait. That number could increase substantially if, as we expect, additional countries seek LNG as a short-term solution to rising power demand.

Yet far from being the short-term bridge fuel that many importing countries suppose, the arrival of sea-borne natural gas in heavy domestic user countries like Egypt is likely to unlock pent-up demand, driving up gas demand after LNG deliveries start. As a result, the requirement for additional volumes will rise, increasing the regional pull on LNG and contributing to higher gas prices, which will gradually rise closer to oil equivalent levels.

This paper will seek to explore these trends, examining the drivers of MENA region gas and power demand, analysing the prospects for gas intensive downstream industries that have so far thrived on an abundance of cheap gas, while looking at the alternative energy sources that will in turn mitigate gas demand in the longer term.

The paper will examine the specific opportunities and challenges faced by the region and world’s largest LNG producer Qatar, as well as the declining opportunities for the LNG industry elsewhere in the Gulf. It will look at the security implications for Algeria’s LNG business and the tightening natural gas balances across North Africa.