NATURAL GAS: CHANGING THE MIDDLE EAST ENERGY LANDSCAPE. Malcolm Brinded EXECUTIVE DIRECTOR, UPSTREAM INTERNATIONAL

Transcription

1 NATURAL GAS: CHANGING THE MIDDLE EAST ENERGY LANDSCAPE Malcolm Brinded EXECUTIVE DIRECTOR, UPSTREAM INTERNATIONAL 1

2 KUWAIT: UNLOCKING JURASSIC GAS FIELDS 2

3 THE MIDDLE EAST GAS PUZZLE Middle East has 40% of global Gas Reserves.. history of low gas pricing (mid 2000 s) 1,25 1,00 Europe & Eurasia 34% GCC 23% Other Middle East 18% Africa 8% Feedstock Prices ($/MMBtu) 0,75 0,50 0,25 0,00 Qatar Bahrain Saudi Oman Kuwait UAE Arabia.. and local Power Generation is still partly oil based Gas Oil S. and Centr. America 4% Asia Pacific 8% North America 5% Qatar Bahrain Saudi Arabia Oman Kuwait UAE Fuel Mix in Power Generation (%) 2007 Statistics Sources: Natural Gas Market Review, 2007, IEA; Facts Global Energy; World Energy Outlook,

4 NATURAL GAS OUTLOOK Natural gas demand growth Growing LNG capabilities BCM E SOURCE: IEA Natural gas advantage: example cost Abundant global gas resources ~250 years reserves at current production (IEA) GALLINA LNG SHIP Attractive economics for electricity producers $/MW hour CCGT: gas-fired power compared to coal: 40% more energy efficient 50-70% less CO2 CCS retrofit at similar cost per MWh Better complements wind power CCGT: Combined Cycle Gas Turbine CAPITAL COST Source: Shell analysis based on EU data LONG-RUN MARGINAL COST 4

5 CHINA: 3 rd LARGEST GAS MARKET BY 2020 China s gas pipeline network China s Gas Supply ~ bcmpa Imports Indigenous 2010 ~100 bcmpa More integrated gas system Further diversification of supply sources Introducing market pricing ~ mtpa of LNG Source: Shell Analysis Existing regas terminals Under construction/ development 5

6 GLOBAL LNG MARKET DEVELOPMENTS LNG importers LNG exporters LNG importers LNG exporters # Countries est. % increase LNG importers 19 ~ % LNG exporters 15 ~20 25% Source: Wood Mackenzie LNG tool (April 2010) 6

7 FLOATING LNG Length Width Weight (fully loaded) 480m 75m 600,000 metric tonnes Prelude Largest floating structure 7

8 THE GAS EXPORT OPPORTUNITY Algeria Oman Camel LNG Qatar OLNG plant Shipping Qatargas 4 World s largest LNG tanker (courtesy Nakilat) 8

9 PEARL GTL 2010 TOWARDS COMPLETION 9

10 MIDDLE EAST / NORTH AFRICA GROWING GAS DEMAND bcf / d Europe Middle East & North Africa Copyright of Royal Dutch Shell plc Sources: IEA, US EIA, Shell, Arthur D. Little, BMI, ARPC, Global Insights, Wood MacKenzie 04 /

11 MENA GAS SUPPLY Proven Reserves Tcf 112 UAE Iraq Iran Egypt Saudi Arabia 253 Kuwait Qatar Others 905 but they are highly concentrated in Iran, Qatar and Saudi Arabia Sources: Oil & Gas Journal, IEA, USGS 11

12 IRAQ: SOUTH GAS UTILISATION PROJECT Building Iraq s future gas industry Enhanced industrial & economic development of Iraq through utilisation of natural gas Net exporter of LPG NOW FUTURE An LNG producer & exporter 12

13 HARWEEL MISCIBLE GAS INJECTION Oil Export: 50,000 bbl/d Gas contaminants in streams: H 2 S: up to 13%; CO 2 : up to 27 % Injection at 555 bar compression 13

14 SULPHUR PRODUCTS Sulphur enhanced Fertilisers Increased crop yields in sulphur-responsive soils Potential for increased CO 2 sequestration Sulphur enhanced Roads Strong, durable roads. Potential to pave thinner Energy savings through lower temperature asphalt mixing Recognised as low carbon technology in Alberta, Canada Sulphur enhanced Concrete High strength, resistance to water and acid Potential to reduce lifecycle CO 2 by 30-50% 14

15 LNG: OPTION FOR MIDDLE EAST IMPORTERS LNG vs. Pipeline Cost Pipeline 36 Gas 56 Gas LNG Distance (km) Sakhalin II, Russia Generically, LNG is competitive over distances greater than 2,500 km LNG is also more flexible and scalable than pipeline Other important factors can influence the choice between LNG and Pipeline (Geo)politics, domestic needs (e.g. employment), risk appetite 15

16 LOW REGIONAL GAS PRICES 16,00 14,00 Energy equivalent of oil, assuming WTI price of $80 Feedstock prices $/MMBtu 12,00 10,00 8,00 6,00 Typical oil-linked contract at $80 WTI Henry Hub=Avg. of ,00 2,00 0,00 Qatar Bahrain Saudi Arabia Oman Kuwait UAE Henry Hub Japan LNG WTI oil 16

17 FUTURE: WILL NATURAL GAS CHANGE THE MIDDLE EAST S ENERGY GAME? The Middle East gas puzzle Gas-rich exporters have choices Gas-poor importers need supplies Pipelines vs LNG vs GTL Solving the puzzle Domestic gas development LNG import infrastructure Pricing: fair market value NOC-IOC partnerships 17

18 Thank you 18

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