With leading global LNG demand growth in 2016, the Mena region is forecast to become the world’s second-largest gas-importing area by 2040. And Qatar,which alone supplies 40 percent of the consumer countries imports from the region, is being seen as the potential supplier to meeting the fast growing appetite for natural gas.
Despite the region’s dominant role in terms of hydrocarbons reserves, the consumption of natural gas in the Middle East will rise from 480 billion cubic metres (bcm) in 2015 to 738bcm in 2040, noted a latest research report by Arab Petroleum Investments Corporation (APICORP) citing International Energy Agency data.
The trend of sharp rise in demand for LNG in the region is expected to continue as domestic gas output in most countries falls short of surging regional demand for power and industry. And countries are to invest around $10.3bn in LNG-importing facilities over the medium term to cater for growing demand, and will increasingly charter floating storage and regasifcation units (FSRUs) as a temporary and lower-cost solution.
For instance Egypt (once the gas exporter) and Jordan received their first shipments of liquefied natural gas (LNG) in 2015; Kuwait, the Gulf’s first LNG importer, and Bahrain are looking to construct permanent import terminals; and Abu Dhabi has opted to import LNG via a floating storage and regasification unit (FSRU).
Regional LNG importers are seeking to tie up term supply deals, making the most of structural oversupply to lock in favourable pricing and flexibility. It will all make Mena a growing demand-side force in the global LNG sector, noted the report.Despite its strong gas reserves base, production has largely failed to keep pace with historical demand growth and nor will it do so in the coming years. Absent also is a large build-out of regional gas pipeline import options.
The potential for LNG to make up some of the balance is therefore strong. Imports by consumer countries in the region in 2015 amounted to just 10.5bcm of LNG, of which 40 percent arrived from Qatar. But these levels will rise steeply, spurred by the present global supply overhang, which should allow regional buyers to lock in preferential prices and allow them to choose from a wider range of suppliers.
No.of Reads (21)