• NOV Downhole

 

A tale of two natural gas giants

The stark contrast in the fortunes of the Middle East’s two largest natural gas players will likely dominate the regional industry landscape for 2010.

Iran and Qatar, which together control nearly 30% of the world’s natural gas reserves, are at opposite ends of the geopolitical popularity pole, and even further apart in the development of their oil and gas industries.

Iran, weakened by over a decade of economic and trade sanctions, faces the growing prospects of war with the USA and Israel, while prosperous Qatar is expanding its global reach and preparing to celebrate a major milestone with the completion of its massive LNG building programme this year.

Weighed down by international trade sanctions and the threat of war, Iran has made little progress in developing its 29.6 trillion m3 of gas reserves, the world’s second largest. Qatar, on the other hand, has continued its smooth ascent as a global player, thanks to the skilful political skills of Deputy Premier and Energy Minister Abdullah Bin Hamad Al-Attiyah, who has been winning both customers and friends in the world’s main power centres. Qatar, with an estimated 25.5 trillion m3 of gas reserves, is on course to complete 77 million tpy of LNG capacity this year, consolidating its position as the world’s largest LNG exporter.

In the long term, the Middle East, which now holds approximately 41% of the world’s proven gas reserves, could face serious challenges from the development of unconventional gas reserves in North America and Australia. There’s also competition from Australia, where the world’s leading Western companies including ExxonMobil, Shell, Chevron and ConocoPhillips are developing the country’s huge offshore gas reserves as well as coalbed methane (CBM) resources. Just as crucial, Australia’s march into Asia has made it a global energy superpower capable of competing against the Middle East and Russia.

Iran: focus on gas as oil depletion accelerates

If Iran is worried about the lack of progress in developing its oil and gas sector, it certainly is trying not to let the world know. With oil prices down sharply from the record US$ 100 - US$ 147 range through most of 2008, Iran’s heavily oil dependent economy has been hit by the simultaneous threats of a recession, a massive balance of payment deficit, runaway inflation, fuel shortages and high unemployment rates.

An internal intelligence report has warned that Iran, now the world’s fourth largest oil exporter, could become a net importer by 2018, with dire consequences for the economy and political stability. The report based its conclusion on Iran’s oil output declining by 8% per year and domestic consumption rising by 5% per year. It said Iran would need to invest US$ 4.5 billion a year to maintain domestic crude production at 2.5 million bpd, but this is unlikely to happen given the country’s political uncertainties. As an alternative, Iran is touting its vast natural gas reserves, the world’s second largest after Russia.

Qatar: increased LNG exports to boost balance of payment surplus

Qatar will tighten its position as the world’s leading LNG exporter this year with the start-up of several new trains to boost its total production capacity to 77 million t. The new units will tap into natural gas reserves from its South Pars field straddling the border with Iran. The increased capacity is expected to boost the country’s gas revenues to at least US$ 140 billion from US$ 80 billion, based on a conservative price of US$ 4 per million British Thermal Unit (BTU), said QNB Capital.

Qatar’s LNG production and exports were boosted last year by state RasGas’s completion of three large trains, each capable of producing 7.8 million tpa. RasGas today operates six trains with a total capacity of 28.5 million t, while rival Qatargas has five trains with a total capacity of 25.6 million t, giving Qatar more than 54 million t of LNG capacity.

The government is targeting to make this a landmark year for the LNG industry, which did not even exist in Qatar until late last decade. The production and export of LNG today accounts for more than 30% of Qatar’s GDP. Using the country’s massive natural gas resources, Qatar Petroleum (QP), Qapco and their joint venture partners have invested billions of dollars in petrochemical ventures that will produce around 28 million t of petrochemical products by 2012. 

Author: Ng Weng Hoong. To read the full version of this report, subscribers can log in here. Non subscribers can purchase a subscription here.

Published on 28/04/2010


Oilfield Technology

Would you like a FREE issue of Oilfield Technology magazine?

With 12 issues per year containing strong technical editorial and exciting case studies, you’ll easily stay up-to-date on the technologies, solutions and services that see global upstream oil and gas operations flow smoothly and successfully.

Get your FREE magazine now »

No credit card required

 
 

Write your own comments

*
*
*

Recommend magazines

  Hydrocarbon Engineering  LNG Industry  Oilfield Technology  World Pipelines