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Export Availability of Pipeline Gas and LNG
from North Africa and the Middle East
Professor Jonathan Stern
Director of Gas Research
Oxford Institute for Energy Studies

Institute of Energy Economics
Tokyo, September 27, 2011

IEEJ: 2011 October All Rights Reserved

OIES Natural Gas Research Programme
WE ARE: a gas research programme at a Recognised Independent
Research Centre of Oxford University, specialising in fossil fuel research
WE ARE NOT:
• consultants• sellers of exclusive, high price business reports
WE PRODUCE: independent research on national and international gasissues
WE ARE FUNDED BY: sponsorship by companies and governments ingas producing and consuming countries

2Information about our Institute, our Programme andits publications can be found on our website:
http://www.oxfordenergy.org/gasprog.shtml

IEEJ: 2011 October All Rights Reserved

Oxford Institute for Energy Studies
Natural Gas Research Programme

PUBLISHED: MARCH
2011
15 CHAPTERS
16 AUTHORS
600 PAGESIEEJ: 2011 October All Rights Reserved

Oxford Institute for Energy Studies
Natural Gas Research ProgrammeTwin Tasks of the Book
1. To look at the problems and prospects of the gas
markets of the Middle East and North Africa
because of the growing importance of natural gas
in the energy balances of all countries in theregion
2. To examine the prevailing assumption in muchinternational energy literature that the region will
become an ever-larger source of internationallytraded gas

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

IEEJ: 2011 October All Rights Reserved

Algerian gas export availability to 2020

Exports plateau until 2013/14, increase to 2018, thendecline; split between LNG and pipeline is uncertain;
what rationale for going ahead with Galsi?

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

IEEJ: 2011 October All Rights Reserved

Egyptian gas exports: stalled prior to revolution

Export facilities were running well below capacity,pipeline exports to Israel/AGP may not recommence,
LNG export will depend on domestic demand

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

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Libyan gas: disappointing before 2011
• EPSA-IV first-round concessions expired in 2010, with nosignificant reserves found.
• Majors were pushing ahead with drilling plans, offshore andonshore, in the hope of tapping into Libya’s gas potential, but
the only commercial finds so far have been made byindependents (Hess and Verenex).
• Shell postponed Brega LNG revamp plans before unrest.
• Upstream investment terms are largely to blame for Libya’s
disappointing post-sanctions exploration campaign.
Gas development prospects were poor before political unrest.
Greenstream pipeline exports, cut off in February, may restartin a few months if facilities undamaged. Post-Ghadaffi future
will probably be one of very slow progress for gas

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

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GULF GAS TRADE: a bleak picture• Saudi Arabia – no imports/no exports; nolikely change but imports are possible• Kuwait – already importing and likely toincrease• Abu Dhabi – net importer• Dubai – LNG imports began end‐2010• Bahrain – likely to start LNG imports soon
• Oman – exports of LNG may decline
With the exception of Bahrain, all of thesecountries have major reserves of gas
OXFORD INSTITUTE FOR ENERGY STUDIES - Natural Gas Research ProgrammeOXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

IEEJ: 2011 October All Rights ReservedIraqi Gas Exports: unlikely any time soon
UNCERTAINTIES:• New hydrocarbon law: content and timing?
• Domestic politics: impact of new coalition government?
• Security situation especially after US withdrawal• Domestic gas demand: how much growth, how quickly?
CONSEQUENCES:• Very slow progress in contracting/developing gas for export• Likely opposition to exports until domestic demand issatisfied

Current focus is on pipeline gas exports toTurkey/Europe; but Syria, Jordan, Lebanon andKuwait are closer and need gas. LNG exports – notbefore 2020??
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Iranian gas exports: perpetual promise
unfulfilled
PIPELINE GAS:
• Exports to Turkey have been problematic but lower
domestic demand may allow increase to contracted
volumes of 10 Bcm/year• Pakistan exports problematic due to domestic
demand and pricing
LNG:• 28-36 Bcm/year are possible BUT..
• none will start before 2020 unless Chinese arewilling/able to develop a project independently offoreign technology and equipment
Import from Turkmenistan likely to exceed pipeline
exports to Turkey and Armenia until at least 2015
OXFORD INSTITUTE FOR ENERGY STUDIES - Natural Gas Research ProgrammeOXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

IEEJ: 2011 October All Rights ReservedQatari LNG Exports (mtpa): a huge
success story
ActualSource: Oxford Institute for Energy Studies - Natural Gas Markets in the Middle East and North Africa”. March 2011

Exports to rise to 104 Bcm by end 2012; debottlenecking canincrease this to 120 Bcm by 2018 (assuming moratorium relaxed)
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Israel (Cyprus) gas discoveries: a game-changer?

Up to 4.5 Tcm of gas reserves, but how will theybe brought to market and when?

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

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Main Gas Import/Export Changes: 2015‐2020
COUNTRY

MAIN CHANGES TO IMPORT/EXPORT STATUS

Algeria

Slow increase in exports levelling off post 2015

Egypt

Pipeline exports will be phased out, imports are possible

Libya

Very slow development of export potential

IsraelImports cease before 2015, exports possible thereafter

Iran

Remains net importer until at least 2015; future uncertain

Iraq

Small net exporter by 2020, probably to Mashreq

Saudi Arabia

Status quo (could become an importer before 2020)

KuwaitLNG imports likely to increase

BahrainWill need to import LNG

Oman

Net exports likely to fall unless more reserves developed

Mashreq: increasing imports; Yemen, Palestine, no significant change
Qatar

Substantial increase in exports

Aside from Qatar, Algeria and (maybe) Israel andIraq, the export picture is very bleak
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IEEJ: 2011 October All Rights ReservedConclusion: MENA gas exports to 2015/20
Poor prospects for rapid and large incrementalexports due to:• rapidly increasing demand (partly due to low
domestic prices) everywhere• moratoria on new projects (Qatar, Egypt)• many countries (including exporters) becoming
importers (UAE, Oman, Kuwait, Bahrain)• Incremental supply needed domestically/
regionally (S. Arabia and Iraq)• Politics to continue trumping “rational” decisions
Despite large reserves, no significant increase inexports beyond Qatar and Algerian projects

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

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What Can Be Done: Supply Side Actions
Promote/attract more investment in the upstream: Improvement of upstream investment terms
 Politics/“resource nationalism”
 Reduce bureaucracy and institutional inefficiency/instability
 NOCs “hostages” of government politics
Increased regional trade: Concerns of energy security (Qatar-Saudi Arabia, Iranand the rest of region)
 Commercial terms/expectations
Develop alternative sources of energy: solar + nuclear
 Timescale/know-how/safety/politics
 Costs/subsidies/pricing policies

OXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research ProgrammeIEEJ: 2011 October All Rights Reserved

What Can Be Done: Demand and Price Actions
Feedstock (and power) pricing policy:
 Policy of maintaining low gas prices at $0.5-1.5/MMBtu isunsustainable (prolonging distortions and inefficiency);
 Subsidies need to be gradually removed – Iran has madethe boldest efforts yet – politically very painful; Failure to do so will result in worsening supply crisis,
further curtailment of exports and increase in subsidies(Qatar excepted);
Reconsider petrochemical expansion plans: How much added value to the economy/employment?
 Looming global petrochemicals glut?

By 2015, prices need to be raised to cost-based levels,and by 2020 to international levels; if not rationinggas (and power) will be the only alternativeOXFORD INSTITUTE FOR ENERGY STUDIES Natural Gas Research Programme

IEEJ: 2011 October All Rights ReservedThank You
OIES GAS PROGRAMME RESEARCH IN PROGRESS:The Transit Dimension of EU Energy Security, Katja Yafimava
The Pricing Debate over Russian Export to China, James Henderson
Will there be an Unconventional Gas Revolution in China by 2020? FanGaoThe Pricing of Internationally Traded Gas, ed. Jonathan Stern
The Iraqi Gas Sector: prospects and development challenges, Hakim
Darbouche
US Natural Gas at “20” and Henry Hub at 2020: $3 or $10? Michelle Foss
Gas Price Volatility in the UK and North America, Sofya Alterman
Interaction of LNG and pipeline gas pricing: does greater connectivity
equal globalisation? Howard Rogers
Contact: report@tky.ieej.or.jp