Living in Dilemma: LNG in the Middle East
The Middle East still sits on the throne of oil. In 2013, oil production in the region was of 27,671.2 thousand barrels per day1, constituting 30.33% of global oil production, and the proven reserves of crude oil were still spiking high at 802.157 billion barrels2, 52.4% of the world’s reserves.
As the world seeks less dependence on oil and looks for attractive alternatives, the Middle East is well-positioned, with 40% of the world’s proven natural gas reserves — 2,823.230 trillion cubic feet in 20133.
Yet despite all its richness, the region has several challenges to overcome that threaten its exports capability.
Qatar is the world’s leading exporter of Liquefied Natural Gas. Qatar’s proved natural gas reserves are of 900 trillion cubic feet, which entitled this country to be the third-largest gas reserves. In 2005, Qatar exported 20.1 million metric tons of LNG to the global market. In 2009, the exports reached 36.7 million tons, and in 2012, the number became 77.4 million tons4. During one decade, Qatar has increased its LNG exports by 6 times5.
Considering its small population; 2.051 million in 20126, Qatar doesn’t face any issue in meeting its energy needs internally while keeping its exports high. Qatar’s real challenge is to keep itself atop the throne as the largest LNG exporter, with several emerging exporters coming on strong such as Australia and North America.
Another important contributor to the LNG global market is Abu Dhabi. This Arabic Emirate has the fifth rank globally in terms of gas reserves with 198.5 trillion cubic feet. Yet Abu Dhabi exports 93% of its LNG production to Japan7 through a long-term contract established between the two. Thus a barrier is created against local access of Abu Dhabi’s natural gas. With a growing population — increasing by one person every two minutes and 48 seconds8 — and an increasing demand caused by the rising energy intensive industries, this inability to use the natural gas domestically will require Abu Dhabi to dramatically increase its gas imports.
For Oman, exports of LNG in 2012 were of 8.1 MT (395 billion cubic feet). As for Yemen, LNG exports only started in 2009, and as of 2013, Yemen held 16.9 trillion cubic feet of proved natural gas reserves. In 2011, Yemen exported 6.4 MT (309 bcf) of LNG, consisting of over 90% of its total dry natural gas production that year. In 2013, Yemen LNG provided around 3% of global LNG volumes9.
Aside from these four exporters, most of the countries in the Middle East either use natural gas internally to meet their energy demand, or import LNG.
Although Iran holds the world's second-largest natural gas reserves with 1,187 trillion cubic feet, sanctions placed on the country by the United States of America and the European Union have deeply affected the investments and technology advancements in this field, resulting in its inability to implement LNG projects, despite aspirations to do so.
The remaining countries are currently struggling with increasing demand. Middle Eastern gas consumption is expected to grow about 5% annually10 due to several factors: the shift from oil to gas in the power sector, the growth of the industrial sector, the injection into oil reservoirs to enhance oil recovery, and the growth in population. This has led the International Energy Agency (IEA) to warn that an increase in gas exports from the region is unlikely to happen over the next few years.
In 2002, the natural gas consumption in the Middle East was of 7,662 bcf, rising to 14,826 bcf in 201211; the consumption has doubled in one decade. Besides that in 2002, the Middle Eastern natural gas consumption represented 8.4% of the world’s, while it climbed to 12.3% of the world’s consumption in 2012.
Several countries in Middle East have already realized the high benefits and cost-effectiveness of LNG, which provides the world with the lowest technical and non-technical transaction costs when compared to other hydrocarbon conventional energy resources12. As the ability to export decreases in the face of increasing demand, and as increasing imports become a necessity for the future energy of most of the Middle Eastern countries, it would seem cost-efficient to invest in a proper LNG infrastructure within the region. But that remains highly dependent on the stability and political reality of a region currently living in such turmoil.
- 1. US- Energy Information Administration (EIA)- Oil Productions (2013)
- 2. EIA- Crude Oil Proved Reserves (2012-2013)
- 3. EIA- Natural Gas Proved Reserves (2013)
- 4. International Gas Union, “World LNG Report 2013 Edition”
- 5. Joel Kukemelk, “Qatar – the biggest exporter of liquid gas in the world”, Persian Gulf Fund
- 6. World Bank- Qatar Population
- 7. Hamda Al Kindi, “Abu Dhabi’s gas Dilemma”, Abu Dhabi Council for Economic Development
- 8. Abu Dhabi Statistics Center (Scad)
- 9. IHS Global Insight
- 10. BP, “BP Statistical Review of World Energy 2012”
- 11. EIA- Natural Gas Consumption (2012)
- 12. Shell, “Sustainability Report: Royal Dutch Shell PLC Sustainability Report 2010”
Jessica is an Energy Engineer at CEDRO project- United Nations Development Program in Lebanon, Middle East, and is currently pursuing a masters' degree in Diplomacy and Strategic Negotiations.
She has participated in exchange programs on energy and technology in Asia, Europe and America, and has launched projects in her home country in renewable energy and women empowerment.
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