September 6, 2018
Carlos Torres-Diaz, VP and Head of Gas Markets & Renewables, Rystad Energy, shares his view on the current and future global and Middle Eastern Gas market stating that the potential in the region is huge, yet political and socio-economical aspects can influence heavily the output over the next years.
Q: Mr. Torres, Pipeline Oil & Gas Magazine understands you have for several years been analyzing the global gas market, can you share some insight into the market, and how it has and will develop in the future? Which region shows the largest reserves and what to expect geographically?
A: The Middle East holds almost 30% of the discovered gas reserves, which is the largest ratio worldwide and above North America (20%) and Russia (19%). There is great potential in the region, however, thus far they have not been able to use the potential to its maximum. For example, Iran has one of the largest gas reserves but due to sanctions and political issues, the development and investments have been hampered. Iraq and Yemen would show a similar situation. Also, other countries such as Saudi Arabia and UAE have focused more on oil than gas, because oil is more profitable. With that, the actual potential has not been reached.
Within Rystad Energy, we continuously follow the gas and renewables industry and with that can offer advisory, research products and databases on medium- to long-term global gas market fundamentals to the market. We have a dedicated research and consulting team here in Oslo, Norway that does so, with a global support team assisting us locally.
Q: Carlos, does Rystad Energy think the potential of the Middle Eastern gas can be reached?
A: We do expect an increase in production in the region from the current level of 600 bcm to more than 800 bcm in 2030. This is specifically arising from Iran (2017: 211 bcm; 2030: 363 bcm), Qatar (2017: 154 bcm; 2030: 209 bcm) and Saudi Arabia (2017: 98 bcm; 2030: 140 bcm). For example, in Iran the government has prioritized for the gas industry to rely less on fuel imports, and with that have opened up for private investment in the exploration and production sector. This is obviously helping to increase production and we expect the trend to continue despite the recently reinstated sanctions from the US. Important here is the South Pars field which is the largest gas field in the world. The Chinese company CNPC has expressed interest in taking over the development of this field from Total, which had to pull out due to the sanctions. And in Qatar, the main increase will come as a result from the lifting of the moratorium of the North Field that will allow higher production; in Saudi Arabia it comes from the Hasbah and Haradh-Hawiyah fields.
Q: Will the increase in production allow for higher exports from the region?
A: So for most of the countries we see that demand will grow at the same rate as production, meaning that most of the higher volumes will be consumed domestically. Iran has heavily invested in the petrochemical sector and has widely promoted the use of compressed natural gas vehicles that will contribute to further growth in gas demand. The government is also trying to increase the use of gas in the power mix. Saudi Arabia will see a similar situation here as the country has also been prioritizing substituting oil production with gas in the power sector, which is cheaper and cleaner.
With Qatar however, given the small population and little domestic demand, the growth in production will lead to higher exports of LNG. Today, Qatar is one of the main exporters of LNG internationally, and increasing production could allow them to become the leading exporter globally by 2025, taking over Australia which will this year become number one in terms of exports.
Q: Where are the potential buyers form LNG in Qatar?
A: The potential buyers will continue to be predominantly in the Asian LNG market, led by China and other South-Eastern countries. China will take over Japan as the main LNG importer before 2025 due to their environmental ambitions to shift from coal to gas production. With that Qatar has great potential to increase its foot print in the region and strengthen its position as the leading LNG exporter.
Q: Do you see the potential of higher gas exports from other countries in the Middle East?
A: Not really. Currently, the other LNG exporters are Oman, Yemen and UAE and they all have a limited upside in exports. Oman does not have any plans to develop any new LNG infrastructure. The UAE has a gas deficit, meaning any increase will be consumed domestically to reduce its dependency from Qatari imports. Yemen has actually stopped LNG exports due to the ongoing political conflict in the area, which results in the termination of any further infrastructure developments.
Q: What about shale gas in the Middle East, Carlos?
A: Currently there is practically no production from shale plays in the Middle East. Going forward there will be a slight increase in production from unconventional sources but this is expected to represent only around 2.5% of total production by 2030, or around 21 bcm. The increase from shale plays will come mainly from Oman, and from Kuwait to a lesser extent.
Q: Last question Carlos. How do you study all this?
A: We have a dedicated team of gas analysts who are following developments asset-by-asset globally. This is based on publicly available data like government notes, press releases and annual reports of the industry. This allows us to have a bottom-up, detailed overview of field production up to country and regional level. We are also carefully studying governmental policies and infrastructure developments that allows us to forecast growth in demand. We speak in addition regularly to the main industrial players. Our uniqueness comes from the field by field coverage of production, and of data adds up throughout within our offers and throughout our product lines.
Carlos Torres Diaz
VP Gas & Renewables Markets
Phone: +47 24 00 42 00
SVP, Head of Marketing
Mobile: +47 48 29 87 61
About Rystad Energy
Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry.
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