thermal technologies that enable cost-effective and
TRANSCRIPT
THERMAL TECHNOLOGIESTHAT ENABLE COST-EFFECTIVE
AND EFFICIENT OIL AND GASPROCESSING FACILITIES
October 2019
ISSN 1747-1826
CONTENTS
Copyright © Palladian Publications Ltd 2019. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK.
ON THIS MONTH’S COVER
12
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OCTOBER OCTOBER 20192019
Global demand for energy and fuel is at an imbalance with regional supply. As a result, there is an increased need to transport large amounts of energy. LNG is the solution. Chromalox has the unique ability to solve the thermal challenges of LNG and gas processing facilities, leveraging its vast engineering knowledge and expertise in the oil and gas sector to create advanced, cost-effective and efficient processing facilities.
03 Comment
04 LNG news
31 Optimising valve performanceKevin Niebergall, CGIS, Canada, presents an innovative valve technology and approach to increase check valve performance.
35 A new approach to LNG bunkeringSilvia Saggiori and Filippo Visentini, MIB Italiana S.p.A., Italy, outline how to achieve no compromise between safety and performance in bunker vessel LNG transfers.
39 The new market realityMarco Ferrara, Italy, and Rick Liberson, USA, Emerson, discuss the importance of superior fit-for-purpose valve technology for the LNG value chain.
43 Better safe than sorryChristian Sommerhoff, IWB, Germany, discusses safety and efficiency in LNG distribution.
47 Deriving data differentlyDanny Constantinis, EM&I Group, Malta, discusses a new data gathering methodology for the floating gas industry, which uses robotics and digitised methods of data gathering and analysis to derive reliable data trends.
52 No more nuisance noiseJochen Schaal, SoundPLAN GmbH, Germany, examines issues surrounding the monitoring and mitigation of noise from LNG operations and how these can be resolved.
56 15 facts on... The Middle East17 Smooth sailing with LNG as fuelJose Navarro, Lloyd’s Register, South Korea, outlines the key considerations and challenges that individuals need to be aware of, in order to safely design and operate LNG-fuelled ships.
21 Behind the scenesNicolas Thenard, GTT, France, provides a detailed look inside the company’s cryogenic materials laboratory.
27 From beginning to endEric Sallee, Honeywell UOP, USA, looks at the current state of the liquefaction and regasification sectors, and discusses the company’s work in these fields.
12 The rise of the Middle EastAditya Saraswat and Carlos Torres-Diaz, Rystad Energy, Norway, explain how the Middle East’s gas production could overtake Russia this year.
Copyright © Palladian Publications Ltd 2019. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmittedin any form or by any means, electronic, mechanical phoor otherwise, without the i
ON THIS MONTH’S C
ulations (ABC). sales department.
Global demand for energyat at an imbalance with regiAAs a result, there is an incneed to transport large amenergy. LNG is the solutionhas the unique ability to sothermal challenges of LNGprocessing facilities, leveraengineering knowledge andin the oil and gas sector to advanced, cost-effective andprocessing facilities.
enesovides a detailed look inside the aboratory.
ng to endlooks at the current state of n sectors, and discusses the
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COMMENTDAVID ROWLANDS
EDITOR
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With the Rugby World Cup now underway, the sport’s superpowers are running, tackling and kicking to be crowned as world champions.
Like LNG, rugby is undoubtedly growing in popularity. Not long ago, for instance, Japan was hardly in the conversation as a serious contender. Although not likely to win the World Cup anytime soon, the nation has risen quickly through the ranks, and is now hosting the tournament itself. Just as significantly, it has just defeated Northern Hemisphere heavyweight, Ireland, in a scintillating group game. Just four years ago, Japan caused another upset by defeating South Africa in the ‘Brighton miracle’ – often cited as the greatest upset in World Cup history.
Despite the sport’s growing stature, there have only ever been four winners since the first World Cup was held in 1987: New Zealand, Australia, South Africa and England. New Zealand in particular, despite the fact some of its core players are being touted as ‘past their prime’, is almost certain to present a serious challenge to any opposition. With over 100 years of being at the top of the game, it can be difficult to ever see this changing.
After all, a recent BBC article presenting the results of a ‘readers’ choice’ starting XV included seven New Zealanders and, as I write this comment, New Zealand has just beaten Canada 63 – 0.1 Past their prime indeed.
Similarly, the world’s LNG superpowers are also battling it out for top spot.
This month’s issue of LNG Industry includes a regional report on the Middle East by Aditya Saraswat and Carlos Torres-Diaz of Rystad Energy, who claim the region
will overtake Russian gas production levels this year, and will become the second largest gas producer in the world after North America.
Of course, an increase in gas production will not necessarily translate directly into an increase in LNG production. For instance, Saraswat and Torres-Diaz discuss how gas demand – and not just gas production – is also set to increase significantly.
Unlike many of its Middle Eastern neighbours, however, Qatar still has the ability to increase gas production and become the world’s largest LNG exporter once again. As Saraswat and Torres-Diaz write: “Qatar benefits from the third-largest discovered gas reserves globally, production levels of approximately 168 billion m³, and a population of about 2.6 million people. Consequently, even with gas demand forecast to increase, the country has sufficient gas resources and development projects in sight to meet demand and become the largest LNG exporter.”
Regardless of whether it is Qatar or Australia that ends up being crowned the world’s largest LNG exporter, it will certainly be interesting to watch the competition unfold. As my own team Wales has already proven in the World Cup, it is not impossible to slay a Wallaby.
We hope you enjoy this latest issue of LNG Industry magazine. Please feel free to pick up a copy at the North American Gas Forum, ADIPEC, the European Annual Gas Conference and the European LNG Infrastructure Development Summit.
1. ‘Rugby World Cup: Jonah Lomu tops vote - who made your all-time XV?’, BBC, (1 October 2019), https://www.bbc.co.uk/sport/rugby-union/49877206
4 October 2019
LNGNEWSRussiaRussia
GTT signs contract with Arctic LNG 2
GTT has signed a contract with SAREN B.V. (Russian joint venture of Renaissance
Heavy Industries Russia and Saipem) related to the detailed design and construction of three gravity-based structures (GBSs) dedicated to the Arctic LNG 2 project, for the Russian LNG producer Pao Novatek.
The contract concerns the design, construction studies and technical assistance for the membrane containment system of the LNG and ethane tanks to be installed inside the three GBSs.
The first two GBSs will each consist of two LNG storage tanks with a capacity of 114 500 m³, and one ethane storage tank with a capacity of 980 m³. The third GBS will consist of two LNG storage tanks with a capacity of 114 500 m³ only.
The GBS terminals, which will sit on the seabed, are made up of concrete caissons with membrane containment tanks using GTT’s GST® technology. The units would be built in a dry dock of the Novatek-Murmansk LNG Construction Center. They will be towed and installed in their final location in the Gydan Peninsular in the Russian Arctic.
Philippe Berterottière, Chairman and CEO of GTT, declared: “This is GTT’s first project development in the GBS market. We are very confident in the perspectives of this solution and are looking forward to working on this project with our highly experienced partners in order to accompany them from an early stage and throughout all phases in this project for Novatek and its partners.”
USAUSA
ABS grants AIP to SpaceTech4Sea composite LNG tanks
The American Bureau of Shipping (ABS) has announced that it has granted approval in principle (AIP) to SpaceTech4Sea
for the conceptual design of carbon fibre LNG fuel tanks.It is a key milestone for the SpaceTech4Sea project, which
sees ABS, OceanFinance and Cimarron Composites joining forces to adapt composite technologies developed for the space industry to the LNG shipping industry. It is backed by €1 million from the EU, and explores whether composite technology, which is lighter and more cost-effective, can provide a competitive alternative in LNG as a marine fuel designs (largely for short sea shipping).
The joint team’s goal is to create tanks that will attract newbuilds and LNG as a marine fuel retrofits by cutting costs, reducing weight and increasing vessels’ cargo capacity. Although the technology can have a wide range of applications, the SpaceTech4Sea project focuses initially on high speed vessels with small to medium tank capacities. It offers weight savings of up to 80% over existing equivalent LNG tank designs, is not affected by corrosion, and also introduces space technology safety standards to marine operations.
According to the statement, Attica Group (the owner of Superfast Ferries, Blue Star Ferries, Hellenic Seaways and AML) is following SpaceTech4Sea closely, and evaluating the feasibility of the technology for future projects.
Currently, the tanks are built by hand. However, the project is planning to adopt a highly automated production line to ensure a competitive pricing level. The AIP provides guidance on the analysis and testing required by the rules and standards under which the composite tank technology can be approved for marine applications.
USAUSA
Eagle LNG receives FERC authorisation for Jacksonville LNG
Eagle LNG Partners LLC has announced that it has received an order from the US Federal Energy
Regulatory Commission (FERC) granting authorisation for siting and constructing its proposed on-water Jacksonville LNG export facility.
The LNG export facility and terminal in Jacksonville, Florida, will have a production capacity of approximately
1.65 million gal./d of LNG, with 12 million gal. of storage, plus marine and truck loading capabilities located on-site.
Eagle LNG claims that the construction of its Jacksonville LNG export facility will be approximately US$500 million, with a continuing positive economic and employment impact for the Southeast US, State of Florida and the North Florida region.
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News Highlights
Visit our website for more news: www.lngindustry.com
Total to take FID on Nigeria LNG project
WoodMac comments on recent LNG deals
Pavilion eyes Europe as LNG expansion opportunity
LNGNEWSAustraliaAustralia
EnerMech awarded five-year LNG contract in Australia
EnerMech Australia has announced that it has won a five-year contract to provide specialist nitrogen
and flange management services to an LNG facility in Central Queensland.
According to the statement, the work will be carried out on-site, located off the coast of Gladstone, Queensland, with project engineering and management conducted from the company’s Gladstone facility and Brisbane office.
EnerMech will deploy liquid nitrogen converters, nitrogen membrane generation units and flange management torque/tensioning equipment, as well as the use of its bespoke System Integrity Management software, SIMPro, in the provision of the specialist services.
EnerMech’s Australia Manager for Process, Pipelines & Umbilicals, Jamie McIntyre, said: “Our experience in delivering similar integrated specialist services in Australia, our extensive fleet of equipment, the high calibre of our Queensland-based staff, and our drive for innovation and continuous improvement placed us in a good position to secure this contract.”
ChinaChina
LNG carrier for Yamal LNG project named LNG DUBHE
M itsui O.S.K. Lines, Ltd (MOL) has announced that a naming ceremony for a conventional LNG carrier,
jointly ordered by MOL and China COSCO Shipping Corp. Ltd, has been held at Hudong-Zhonghua Shipbuilding (Group) Co., Ltd.
The ceremony was held at the Hudong shipyard, with the vessel named LNG DUBHE after a star in the constellation Ursa Major. It is the first of four newbuild conventional LNG carriers for the Yamal LNG project announced at the end of June 2017. The LNG DUBHE is scheduled to go into LNG transportation service for the Yamal LNG project following its delivery at the shipyard in Hudong at the end of October.
MOL delivered three ice-breaking LNG carriers to the project between 2018 and 2019, which are currently engaged in LNG transportation in the Northern Sea Route. For the time being, LNG DUBHE will be engaged in the transport of the project’s LNG from transshipment terminals in Europe or a location where ship-to-ship transfer operations are carried out.
MOL has been operating 10 LNG carriers built in China for other projects, and LNG DUBHE will be the 11th LNG carrier built in China among its fleet.
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8 October 2019
LNGNEWS
21 - 22 October 2019
European LNGInfrastructure Development SummitBarcelona, Spainhttps://www.lngevent.com/
21 - 23 October 2019
North American Gas ForumWashington, D.C.https://energy-dialogues.com/nagf/
09 - 10 December 2019
2nd Gas & LNG Middle East SummitOmanhttps://www.gasoman.com/
04 - 05 February 2020
American LNG ForumHouston, Texashttps://americanlngforum.com/
JapanJapan
NYK orders world’s largest LNG-fuelled PCTC
NYK has announced that it has ordered the world’s largest pure car and truck carrier (PCTC) capable of
navigating oceans with only LNG as the main fuel.According to the statement, a keel laying ceremony
was held on 20 September at Shin Kurushima Toyohashi Shipbuilding Co. Ltd. The ship is scheduled for delivery next year, and will be the first large LNG-fuelled PCTC to be constructed in Japan.
In order to minimise a reduction in vehicle loading capacity caused by the installation of LNG fuel tanks, in addition to optimising major items such as ship width, a number of designs for maximising the cargo loading space will be implemented. Once complete, the new vessel will be able to transport approximately 7000 units (standard vehicle equivalent) per voyage.
With the support of Japan’s Ministry of Environment and Ministry of Land, Infrastructure, Transport and Tourism for its model project to reduce CO2 emissions by using alternative fuel, NYK claims that the vessel will be installed with the technology to reduce further CO2 emissions and the experimental verification in its actual voyage will be scheduled. According to the statement, the vessel will be approximately 40% more energy efficient (reducing CO2 emissions per unit of transport), far exceeding the International Maritime Organization (IMO) EEDI phase 3 requirements that will become effective in 2025. The vessel is additionally expected to reduce sulfur oxide (SOx) emissions by approximately 99% and nitrogen oxides (NOx) by approximately 86%, compared to conventional heavy oil-fired engines.
USAUSA
Tellurian and Petronet sign Driftwood LNG MOU
Tellurian Inc. and Petronet LNG Ltd India (PLL) have signed a memorandum of understanding (MOU)
wherein Petronet and its affiliates intend to negotiate the purchase of up to 5 million tpy of LNG from Driftwood, concurrent with its equity investment, which remains subject to further due diligence and approval of its board of directors.
Tellurian and Petronet will endeavour to finalise the transaction agreements by 31 March 2020.
President and CEO, Meg Gentle, said: “Petronet, India’s largest LNG importer, will be able to deliver clean, low-cost, and reliable natural gas to India from Driftwood. Increasing natural gas use will enable India to fuel its impressive economic growth to achieve Prime Minister Modi’s goal of a US$5 trillion economy while contributing to a cleaner environment. It is an honour to sign the MOU with Petronet in the presence of H.E. Prime Minister Narendra Modi. At Tellurian, we look forward to a long and prosperous partnership with Petronet in the Driftwood project.”
The Driftwood project includes natural gas production, gathering, processing and transportation facilities, along with Driftwood LNG, a proposed approximately 27.6 million tpy liquefaction export facility that will be located near Lake Charles, Louisiana on the US Gulf Coast. In April, the US Federal Energy Regulatory Commission (FERC) issued the order granting authorisation for Driftwood LNG and the 96-mile Driftwood Pipeline, which will inter-connect the LNG terminal to the US natural gas market.
05 - 07 November 2019
European Annual Gas ConferenceParis, Francehttps://www.theeagc.com/
03 - 06 December 2019
20th CWC World LNG Summit & Awards EveningRome, Italyhttps://world.cwclng.com/
10 October 2019
LNGNEWSUSAUSA
NextDecade and Enbridge sign Rio Grande LNG MOU
NextDecade Corp. and Enbridge Inc. have signed a memorandum of understanding (MOU) to jointly pursue
the development of the Rio Bravo Pipeline and other natural gas pipelines in South Texas to transport natural gas to NextDecade’s Rio Grande LNG project located in Brownsville, Texas.
Rio Bravo is designed to transport 4.5 billion ft³/d of natural gas from the Agua Dulce area to Rio Grande LNG.
Matt Schatzman, NextDecade’s Chairman and Chief Executive Officer, said: “Enbridge is one of North America’s leading energy infrastructure companies and we look forward to exploring a strong partnership in South Texas. With its Texas Eastern Pipeline and recently completed Valley Crossing Pipeline, Enbridge has extensive permitting, construction, and operating experience in the State of Texas, especially in South Texas.”
Bill Yardley, Enbridge’s President of Gas Transmission and Midstream, added: “We are excited to be working with NextDecade for pipeline solutions to the Rio Grande LNG facility. Our existing infrastructure fits very well with the Brownsville location. This is a continuation of our strategy to bring our major projects execution and permitting capability to the expanding LNG export efforts in North America.”
VietnamVietnam
LNGL and DeltaOE agree Vietnam supply deal
Delta Offshore Energy (DeltaOE) and LNG Limited (LNGL) have jointly announced an alliance with the
Bac Lieu Provincial Government in Vietnam to deliver an LNG-to-power project for the province.
The DeltaOE led power project includes the construction and operation of an LNG import terminal, 3200 MW combined-cycle power plant and delivery of power generation to the Bac Lieu Province. The integrated project is expected to commence operations in 2023 pending finalisation of anticipated government approvals.
LNGL’s wholly-owned subsidiary, Magnolia LNG LLC, shall deliver 2 million tpy of LNG to DeltaOE, pursuant to a supply and purchase agreement (SPA), on a
free-on-board (FOB) basis, for a 20-year term with options to extend the term. In turn, DeltaOE will deliver gas to the power plant, generate electricity, and sell its output to the province pursuant to a power purchase agreement (PPA). The SPA and PPA are linked on a back-to-back basis providing an integrated LNG-to-power solution for the province.
Specific terms and conditions of both the SPA and PPA, respectively, have been negotiated in term sheet form and the various contracting parties are currently completing the SPA and PPA contracts for execution. Routine conditions precedent apply in both the SPA and PPA documents, and the parties shall make reasonable efforts to complete these contracts expeditiously.
QatarQatar
Qatargas delivers first Q-Flex LNG cargo to Petrobangla
Qatargas Operating Co. Ltd has delivered the first cargo of LNG on a Q-Flex vessel to the floating storage and
regasification unit (FSRU) named Excellence and known as Moheshkali LNG Terminal (MLNG), located offshore Bangladesh.
The cargo, on board the Qatargas-chartered Al Thumama, was loaded at Ras Laffan on 4 September 2019 and delivered to MLNG on 20 September 2019.
This is the first commercial open water ship-to-ship transfer involving a Q-Flex vessel. MLNG is a project jointly developed by Excelerate Energy and Bangladesh Oil, Gas and Mineral Corp. (Petrobangla) on a build, own and operate basis. The FSRU Excellence is under a 15-year charter deal to Petrobangla and carried the inaugural LNG cargo from Qatar in April 2018.
Al Thumama is a Q-Flex class LNG vessel with an overall cargo carrying capacity of 216 000 m³.
The deliveries to Petrobangla are being made under a long-term sale and purchase agreement (SPA) signed in September 2017 between Qatargas and Petrobangla for the supply of up to 2.5 million tpy of LNG for 15 years.
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Gas production in the Middle East is on a spectacular rise, and Rystad Energy forecasts that the region will take over Russian production levels in 2019 to become
the second-largest gas producer globally after North America. Rystad Energy forecasts the region will produce over 730 billion m³ by 2020 and further increase to approximately 920 billion m³ by 2030. The region already surpassed Asia in 2018, when Middle East gas production rose to 665 billion m³,
up from approximately 465 billion m³ in 2010. About two-thirds of the meteoric rise is fuelled by Iran and Qatar.
ProductionThe region’s gas production levels have maintained growth trajectory despite geopolitical turbulence, conflicts, sanctions and now, plummeting LNG prices, to become the second-largest gas producer globally. These factors, however, have slowed down
the growth outlook primarily due to delays in future Iranian gas developments amid US sanctions. Rystad Energy estimates the sanctions shaved off 70 billion m³ in production potential by 2030, thus slowing down the growth in the next decade.
Since 2010, Iran’s hydrocarbon industry has been subject to two waves of US-led sanctions.
During the first phase, which lasted through 2016, domestic players responded by developing domestic gas projects, adding approximately 86.5 billion m³ of gas production by 2018 up from 145 billion m³ in 2010, the highest addition among the neighbours. In the second phase, which came in November 2018, Rystad Energy sees the sanctions having a limited effect on already-producing fields as these are owned and operated by national companies and the gas is mostly consumed domestically. Moreover, gas exports to neighbouring countries – Iraq and Turkey – see an uptick. However, future development
Aditya Saraswat and Carlos Torres-Diaz, Rystad Energy,
Norway, explain how the Middle East’s gas production could overtake Russia this year.
13
14 October 2019
plans took a hit, notably South Pars (Phase 11), as Total failed to get an exemption. Rystad Energy estimates the country’s gas production will reach approximately 250 billion m³ in 2019 and further increase to 290 billion m³ by 2030.
In addition to Iran, Qatar remains a consistent driver of the region’s gas production. Rystad Energy estimates Middle East production will increase from approximately 465 billion m³ in 2010 to approximately 920 billion m³ in 2030, and Qatar to contribute about a quarter of that growth. The country’s promising outlook is a positive outcome of removing the moratorium on North Field in 2017, now allowing for expansions of both the Barzan and North Field expansion projects, among others. The country’s gas production increased from 125 billion m³ in 2010 to 168 billion m³ in 2018, and is further forecast to reach 230 billion m³ by 2030.
Saudi Arabia and the United Arab Emirates (UAE) are expected to grow their collective gas production from 115 billion m³ in 2010 to 225 billion m³ in 2030, with 70% of this coming from Saudi Arabia, though overall production is still dominated by Qatar.
Saudi Arabia is set to double gas production in the long-term, from approximately 75 billion m³ in 2010 to 150 billion m³ in 2030. The country has pushed to develop all types of gas – non-associated, associated and unconventional – in order to feed domestic demand. Associated gas is being targeted at the Marjan, Zuluf, Berri and Khurais fields and compression projects at the Haradh and Hawiyah are underway. On the unconventional front, the country is making strides towards developing tight gas at the Jafurah field, where Saudi Aramco plans to start constructing a 6 billion m³ gas processing plant.
The UAE, led by Abu Dhabi National Oil Co. (ADNOC) is also tapping into sour gas fields, developing gas caps, and exploring unconventional reserves in order to realise its goal of becoming a net exporter of gas by 2030.
ADNOC recently awarded Eni (25%), Wintershall (10%) and OMV (5%) stakes in the concession for the development of ultra-sour gas reserves at the offshore Hail, Ghasha and Dalma concessions. The three fields are expected to produce a combined 16.5 billion m³ gas at peak, but given the high hydrogen sulfide content, actual gas sales will be considerably lower. Moreover, to develop gas caps, in March 2019, Total agreed to develop the offshore Umm Shaif field’s gas cap, which is expected to produce 5.2 billion m³ at peak rates. Rystad Energy estimates first gas by 2023. ADNOC is targeting 10.3 billion m³/yr in unconventional gas production by 2030, which will include production from the 6000 km² Ruwais Diyab unconventional gas concession, which Total has signed onto.
As the country’s oil production struggles to thrive, Oman has shifted focus to accelerate gas development: the country’s gas production is forecast to rise just above 50 billion m³ in the next decade up from approximately 42 billion m³ in 2018 and 2019. The Omani government has improved the commerciality of upstream gas projects by doubling domestic gas prices, as well as promising to deliver gas in the industrial and power sectors.
In Israel, production is set to grow exponentially as the Leviathan field and the Tamar Phase 2 volumes come online. Production is forecast to grow from the current level of 10 billion m³ up to 40 billion m³ by 2030.
DemandNatural gas demand in the Middle East has shown very strong growth in the last decade as regional production increased. Total demand went from close to 420 billion m³ in 2010 to more than 600 billion m³ in 2018, or an increase of 42%. In the coming years, demand growth is expected to continue being fuelled by a further expansion in production; Rystad Energy expects demand to total 870 billion m³ by 2030 (see Table 1).
Iran has been the main driver in regional demand growth since 2013, but consumption could slow down during the next
Table 1. Middle East natural gas demand by country (billion m3). Source: Rystad Energy GasMarketCube (Beta)
Iran Saudi Arabia UAE Turkey Qatar Oman Other Total
2010 146 83 61 37 25 19 49 4192018 215 118 71 52 47 28 71 6032025 277 161 85 63 51 39 116 7932030 305 170 86 82 56 35 137 870Change in demand between 2018 and 2030
90 52 14 30 9 7 65 267
Figure 1. Global natural gas production split by continent (billion m3).
Figure 2. Middle East gas production split by country (billion m3).
decade as economic sanctions hamper production. Iranian demand grew from 145 billion m³ in 2010 to 215 billion m³ in 2018, cementing the country’s position as the fourth largest gas consumer in the world. Much of the growth came from the power sector, but industrial and residential demand also showed steady development as the economy expanded at a rate of more than 4% during this period (on average) and there was a rapid expansion of the domestic natural gas distribution system.
Iranian gas demand growth is expected to slow down over the next decade as economic sanctions start taking an economic toll. According to the World Bank, the economy is projected to contract by more than 2% during the next two years and Rystad Energy believes this will cause a stagnation in demand growth. By 2022, natural gas consumption will reach 284 billion m³ as production fields currently under development come online, but after this, consumption could remain at a relatively flat level of approximately 280 billion m³ before growth resumes closer to 2030, as shown in Figure 3.
In Saudi Arabia, natural gas demand is projected to continue growing at a fast pace as the government has made gas a priority. The greater use of gas within the country will free up more profitable oil for export and also help the country slash CO2 emissions from the power sector. Currently, approximately 60% of the country’s electricity is generated from petroleum liquids. As the country weans itself from oil, the total natural gas demand is forecast to more than double in 20 years, growing from 83 billion m³ in 2010 to 170 billion m³ in 2030, with practically all of the growth coming from the power sector. Most of the demand will be met through increased domestic production, but the kingdom is also considering building a LNG import plant.
Turkey has similarly strong demand growth which reached 52 billion m³ in 2018, compared to 37 billion m³ in 2010. Higher domestic production and an expansion in import infrastructure combined with healthy economic growth have resulted in a compound average growth rate of 4% in consumption in the past 10 years. Going forward, demand is forecast to reach 82 billion m³ by 2030 with the power sector accounting for most of the growth. However, the country already relies heavily on imports to meet gas demand and its dependency could reach close to 80% if consumption grows at the forecasted rate. Turkey already has 104 billion m³ in import capacity and this is expected to reach 150 billion m³ by 2021 with the commissioning of Gazprom’s TurkStream pipeline and three new regasification plants.
Growth in renewable energy in the Middle East poses a risk for natural gas as countries like Saudi Arabia and the UAE are defining policies to diversify their energy mix. However, given the region’s continued use of liquid fuels in the power sector, any additions in solar, wind or even nuclear power capacity should be directed towards reducing liquid fuel rather than gas consumption.
Qatar to continue leading gas exportsQatar leads Middle Eastern gas exports with 158 billion m³ in 2018, and Rystad Energy forecasts the export levels to remain at approximately 170 billion m³ until 2025 before increasing to 200 billion m³ by 2030. In addition to Qatar, which alone accounts for 75% of gas exports in the region, Oman, Yemen, UAE and Iran account for rest.
Contrary to its neighbours, Qatar has the potential to increase gas production and reclaim the title as the largest LNG exporter
16 October 2019
from Australia. Qatar benefits from the third-largest discovered gas reserves globally, production levels of approximately 168 billion m³, and a population of about 2.6 million people. Consequently, even with gas demand forecast to increase, the country has sufficient gas resources and development projects in sight to meet demand and become the largest LNG exporter.
To fuel the ambitious plan, Qatar aims to further develop the North Field, first with a sustainability project, and then expansion project. The sustainability project aims to maintain output from the North Field. The North Field Expansion (NFE) project, which will add four new LNG trains, will boost Qatar’s liquefaction capacity to 110 million tpy from the current 77 million tpy.
The country envisages launching the sustainability project in two development phases. The first phase was greenlighted in March 2019 and it is expected to bring additional gas online in early 2021. Furthermore, the second phase has entered the front-end engineering and design (FEED) stage and
Rystad Energy estimates a final investment decision (FID) by early 2020. These developments will sustain production levels from the North Field, followed by the NFE project. The NFE project initially aimed to increase the country’s liquefaction capacity to 100 million tpy. However, in September 2018, Qatar Petroleum decided to add a fourth liquefaction train and raised the project’s target to 110 million tpy. Rystad Energy estimates the expansion will be worth approximately US$35 billion in greenfield investments and the breakeven price would be approximately US$5.8/million Btu (including transport to Asia), making these volumes very competitive in the international market.
Exports from Oman, Yemen and the UAE, which all have existing liquefaction facilities, are expected to remain flat. Oman had healthy LNG exports totaling 13.6 billion m³ in 2018, but currently there are only plans to build LNG bunkering infrastructure, with no new LNG export facilities in the cards. In Yemen, the LNG plant has been offline for more than three years due to ongoing political conflicts, and the country plans to reinstate LNG in the near-term. Lastly, any increase in production in the UAE will be directed at reducing the country’s large gas deficit and its dependence on Qatari imports.
Saudi Arabia, meanwhile, has not prioritised any export projects in its development plans. Given that the country can profit more from exporting crude oil while burning gas domestically, it is unlikely to see any LNG or export pipeline developments before the country manages to reduce its use of crude oil to generate power.
Exports from Iran will likely remain minimal going forward due to volumes being consumed at home, complicated relations with neighbouring countries, and foreign firms hesitating to participate due to US sanctions. There are currently two export pipelines delivering Iranian gas to Turkey and Iraq, and total exports last year were just above 13 billion m³ (compared to the 22.8 billion m³ contracted). Additionally, there were three LNG export projects being considered: Pars LNG, Persian LNG and Iran LNG. However, the main investors – Shell and Total – had to pull out after the sanctions were re-imposed.
As previously mentioned, Israeli production is expected to increase exponentially, but with a limited upside in domestic demand, the country needs to look for export alternatives. Some of the gas has already been committed to companies in Egypt and Jordan. In 2018, Noble Energy and Delek Drilling, the owners of the Tamar and Leviathan fields, signed a deal to sell 64 billion m³ of gas to Egypt over the next 10 years, but this will not be enough to absorb all future volumes. Last year, a memorandum of understanding was also signed between Israel, Cyprus, Greece and Italy for the construction of the EastMed pipeline, which could provide another exit route for the new volumes. The pipeline is expected to have a capacity of 10 billion m³ and to take six to seven years to complete. The construction is supported by the European Union as it would help the continent diversify its sources of supply.
Rystad Energy’s analysis shows a rise in production, yet this will not necessarily translate into increased exports from the Middle East. The only two countries with substantial export potential are the traditional gas powerhouse Qatar, which will continue to increase the number of LNG cargoes leaving its shore, and Israel, which, if all goes to plan and the EastMed pipeline comes to life, will also become a net exporter. Additional volumes from the other countries will likely be absorbed by a continued indigenous hunger for gas.
Figure 3. Iran natural gas demand by sector (billion m3).
Figure 4. Middle East gas exports split by country (billion m3).
Figure 5. Gas production for North Field and future development project (million tpy).
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