Deloitte: Gas to remain the dominant fuel choice for the power sector in the Middle East over the next two decades
A new report from Deloitte Touche Tohmatsu Limited (DTTL), Empowering Ideas 2011: A Look at Ten of the Emerging Issues in the Power and Utilities Sector, suggests the recent natural disasters that led to a nuclear meltdown at the Fukushima nuclear plant in Japan will have far-reaching impacts on the global nuclear power industry. The report, now in its second year, offers insights into issues and trends in the coming year and identifies opportunities (e.g., the high growth of unconventional gas) and challenges (e.g., the security of energy supplies). “The impact of the events in Japan on the nuclear industry will be both profound and long-lasting,” said Peter Bommel, DTTL Global Industry Leader for Energy & Resources. “As the demand for energy continues to increase, energy companies will face formidable challenges in balancing safety concerns with energy demands.” he added. The report includes the prediction that governments, utilities, and consumers will increasingly tap into energy efficiency and demand side management programs in order to address these challenges globally and in the Middle East. Another trend, according to the report, is the growing importance of data analytics, which help companies analyze enormous data sets to create scenarios and take informed decisions. According to Kenneth McKellar, Partner and Middle East Energy & Resources Leader at Deloitte Middle East, “Although the region has weathered the recent economic crisis better than most, due to its growing population, the Middle East will require significant investment in generating capacity and networks to produce the required energy for business and domestic users.” The report outlines 10 forces impacting the global power and utilities sector:
The combined total of energy efficiency program budgets for ratepayer-funded electric and gas programs reached nearly $6.1bn in 2009, up from $4.5bn in 2008.
Cosmo, Solitz start Qatar’s new oilfield
Cosmo Oil, Japan’s fourth-biggest oil refiner, and Sojitz Corp said on Thursday they have begun commercial output from a new oil field in A-structure South of offshore Block 1 in southeastern Qatar. The two firms said production began on April 27 and came to around 3,000 barrels per day, pushing up the venture’s total crude output in Qatar to around 9,000 bpd. Cosmo Oil’s 75 per cent-owned joint venture with Japanese trading house Sojitz had been developing the field under a production-sharing pact with Qatar.
Egypt to raise diesel fuel, gas subsidies
Egypt says it plans to increase diesel fuel and natural gas subsidies by 50 per cent in the financial year that begins on July 1, according to a report in our sister newspaper Gulf Daily News. In recent days, drivers have been forced to form long queues in front of the country’s petrol stations as fuel supplies fall short of demand.
Source: TradeArabia News Service
UAE's Dana Gas announces fifth gas discovery in Egypt
Dana Gas said on Tuesday it has made a new gas discovery in the Nile Delta, Egypt, its fifth gas find in the Arab state. “A preliminary estimate of the discovered reserves in the new pool (El Wastani formation) is in excess of 60 Bcf of gas, with a possible upside still under evaluation,” the company said in a statement. The Gulf’s only listed natural gas company will prepare a separate development plan for the new poll, including several appraisal and development wells. On test, the South Abu El Naga-2 well produced 14.1 million standard cubic feet per day of gas with 718 barrels of condensate from the Abu Madi Formation, the company said. “The discovery… represents a new era of shallow wells that can be drilled at low cost with fast production to meet Egypt’s gas production demands,” Hany Elsharkawi, Dana Gas Egypt president said in the statement. “We still have a sizeable portfolio of drillable prospects and our exploration activity will continue throughout the year, as will our development activities.” Dana Gas, which plans to list its shares in London to expand its investor base, is Egypt’s sixth largest gas producer. Its operations last year had average production rates of 42,300 barrels of oil equivalent per day (boepd), a 20 percent increase over the previous year.
Qatargas adds Greece to its portfolio
Qatargas has added Greece to its customer portfolio, opening up another new market for Qatari liquefied natural gas (LNG), from the State of Qatar. The cargo was sold to the QG customer Vitol, the Netherlands-based energy firm dealing in oil and gas products, for DEPA, the public gas supply corporation of Greece. The Golar Maria, a conventional LNG vessel, carried 141,014 cubic meters of Qatari LNG and safely delivered to the Revithoussa LNG Terminal, situated on the Revithoussa Island in the Gulf of Megara, west of Athens. Commenting on the first LNG shipment by Qatargas to Greece, Khalid bin Khalifa Al Thani, Chief Executive Officer of Qatargas, said: “We are pleased to supply LNG where it is needed most. Greece is the latest addition to our growing customer portfolio in Europe and we are happy that our LNG will keep the lights on in Athens. The company is focused on meeting its commitments to all its customers across the globe.” Europe is currently one of Qatargas’s largest customer markets accounting for approximately 45 per cent and Qatargas continues to demonstrate its long-term commitment to the European market through making safe and reliable deliveries of LNG through European terminals.
Source: The Peninsula
Bahrain halts gas deal with Iran
Bahrain Minister of Foreign Affairs Shaikh Khalid bin Ahmed bin Mohammed Al Khalifa said on Saturday that his country has frozen the gas import agreement with Iran until further notice. According to a statement in the Bahrain News Agency, Shaikh Khalid attributed the decision to troubled political relations between the two countries. Shaikh Khalid said the gas import project was stopped because of Iran’s blatant interference in the kingdom’s domestic affairs. He said Iran’s successive provocative statements will affect agreements between the two countries, stressing that such projects require more suitable political atmosphere. However, the foreign minister denied reports that the agreement was cancelled altogether, asserting that the kingdom is looking forward to setting up better relations with Iran and other neighborly countries. The agreement was signed between the two countries in 2008 to import one billion cubic feet of natural gas per day, but the project, according to the minister, was delayed because of Iran’s interference in Bahrain’s internal affairs.
Source: Khaleej Times
Iraq vows to go ahead with gas development
Iraq, struggling with power shortages, is installing compressor facilities to use huge volumes of gas being flared in southern oilfields, the director general of state-run South Gas Co said. Ali Al-Khudhier also said in an interview with Reuters on Sunday that Iraq hoped to seal a $12 billion gas deal with London-listed Royal Dutch Shell as soon as possible. It has been working to finalize a joint venture between South Gas Co, Shell and Japanese group Mitsubishi since an initial agreement was signed in 2008. As natural gas builds up in association with rising oil output from Iraq’s southern fields, pressure has been mounting to find a solution. For now, gas has to be burnt off because there is no infrastructure to capture it. The Shell deal could give access to more than 700 million cubic feet per day for much-needed power. Ali Al-Khudhier said new compressor facilities being installed in West Qurna Phase One field could be up and running by mid-2012. New facilities will be installed in Zubair oilfield by the second half of this year, while additional gas facilities will be also brought for Rumaila oilfield, he said. ‘Whether the agreement (with Shell) goes ahead or not, we will not stand with our hands tied. Maybe the agreement will happen and maybe it will be halted at a certain stage, but this does not mean the SGC will stop working,’ he said. The southern oilfields of Basra produce 1.1 billion cubic feet of associated gas each day, but only 40 percent is being utilized, he said. The new facilities will treat some of the flared gas associated with crude output and would be paid toward Iraq’s share in the joint venture with Shell and Mitsubishi, when the deal is finalized. Iraq will own a 51 percent stake in the new joint venture. Iraq needs to revamp existing compression facilities, many of which are crumbling, and build treatment plants to use associated gas -- a centerpiece of its plan to boost electricity production to keep up with demand. West Qurna Phase One is being developed mainly by US major ExxonMobil, while Italian group ENI is the main operator for Zubair field, and British company BP along with Chinese firm CNPC are developing Rumaila. Al-Khudhier said new gas facilities for West Qurna will not be able to use all current gas production, ‘but at least it would provide us with liquefied gas and other products needed for power generation’ that are currently being imported. ‘Our plan at this stage is that all the facilities we have bought and have contracted to buy will cover the amount of flared gas now until Shell deal is finalized,’ he said. Iraq has signed a series of deals with foreign oil companies that aim to boost its production capacity to 12 million barrels per day by 2017, from about 2.7 million bpd now, making it a close rival to global oil giant Saudi Arabia. However, most analysts say 6-7 million bpd is a more realistic target. Associated gas production from oil deals Iraq awarded in two auctions in 2009 was expected to reach about 8 billion cubic feet per day. Iraq expects oil production to reach 3 million bpd by the end of this year, 3.3 million in 2012, and 6.5 million bpd in 2014.
Libya oil minister ‘no more with Gaddafi'
Shokri Ghanem Libya’s top oil official is in neighboring Tunisia and believed to be no longer working for Muammar Gaddafi, Tunisia said on Monday, following rebel assertions that he defected in the country’s civil war. Tunisia’s foreign minister stopped short of confirming that Shokri Ghanem, chairman of Libya’s NOC state energy firm and a central figure in Gaddafi’s government, had swapped sides. But the possibility that Ghanem has deserted the Libyan leader would bolster the rebels, already buoyed by a visit from the EU’s foreign policy chief to their Benghazi base. Ghanem’s whereabouts have been a mystery since the rebels and a Tunisian security source said that he had defected. The Libyan government denied this and said he was merely on an official trip to Tunisia, Europe and Egypt. However, on Monday Tunisian Foreign Minister Mouldi Kefi cast doubt on Tripoli’s assertions over Ghanem, Libya’s delegate to OPEC who is widely respected in the energy industry. “I believe and I suspect Mr Ghanem just left Libya and that he is not any more working with the Gaddafi regime. Probably that’s why he came to Tunisia,” Kefi said on a visit to Tokyo. Ghanem was staying in an hotel on a small southern Tunisian island, he told a news conference. But when asked whether Ghanem planned to travel to other countries, Kefi said: “Only God knows what is in Mr Ghanem’s mind.” Western nations, including Britain, France and the US which are conducting air strikes on Libya, hope that stalemate in the civil war will be broken by a collapse of Gaddafi’s government. The most prominent Libyan defector so far is Moussa Koussa, the former foreign minister who fled to Britain in March. A Tunisian security source also said that Gaddafi’s wife Safia and daughter Aisha were on the Tunisian island of Djerba. Rebels and Arab media previously reported that the U.S.-educated Ghanem, a technocrat credited with liberalizing Libya’s economy and energy sector, had stepped down. However, he appeared later and said he was in his office and working as usual. European Union foreign policy chief Catherine Ashton promised support for the rebels in eastern Libya on Sunday, becoming the most senior foreign official to visit the area since the revolt against Gaddafi began. “We are here for the long term and what we can offer is support to Libyan institutions and the economy. We will be here to support you all the way,” Ashton said in the rebel stronghold of Benghazi, where she opened an EU representative office. France, Britain and other European states have backed Libya’s poorly trained and equipped rebels against a government that has held onto power for more than four decades. French planes were the first to bomb Gaddafi’s forces in March after the United Nations voted to allow intervention to protect civilians. The air strikes, now led by Nato, were launched as Gaddafi’s troops advanced on Benghazi after the Libyan leader vowed “no mercy, no pity”. “I’m very clear that protecting civilians and the people of Libya is fundamental,” said Ashton. “Too many people have died already it is important to realize that Gaddafi should leave.” “The Libyan people appreciate this visit and appreciate the European Union for supporting the revolution,” said Mustafa Abdel Jalil, who heads of the Benghazi-based rebel National Transitional Council. Several Libyans surrounded Ashton in the city where the revolt against Gaddafi began in mid-February, flashing victory signs. One man said: “Every Libyan is very happy.”
Libya denounced the visit. “The visit itself gives the impression of recognition of an illegal entity,” the Foreign Ministry said in a statement on the state news agency Jana. “It aims to divide Libya.” It said the EU should instead be looking for a peaceful solution to the conflict “to save the blood of Libyans and strengthen the unity of Libya and its territorial integrity in accordance with the U.N. Security Council resolutions”.
GCC oil and gas contracts ‘averaging $40bn’ per year
MEED Insight Research Director Angus Hindley told the MEED Insight Middle East Projects Market Seminar 2011 that about $40 billion worth of hydrocarbons projects have been awarded in the GCC on average in each of the past five years. “In 2009, the value of hydrocarbons projects reached a record high of more than $50 billion,” Hindley said. “So the flow of projects varies considerably year-to-year.” Hindley said that Saudi Arabia had been the largest market for major oil and gas awards in the last five years with the exception of 2009, when Abu Dhabi was the biggest GCC market. “Looking ahead, we expect to see $15 billion-$20 billion worth of work awarded in the kingdom’s major oil and gas projects market every year,” Hindley said. Figures for the past five years show that the UAE, mainly Abu Dhabi, has been the second largest market. “In 2006, Qatar delivered close to $15,000 million worth of oil and gas projects,” Hindley said. “Since then, the flow of project work has been comparatively low. The North Field non-associated gas field moratorium has also had an impact on the flow of oil and gas projects in Qatar.” Korean companies have become the dominant force in GCC energy projects markets since 2009 due to aggressive bidding. “Lump-sum turnkey contracts are the favored procurement model in the region with the risk weighing heavily on the contractors,” Hindley said. He said Korean companies have been prepared to accept these risks. “The size and number of large-scale projects have surged in recent years,” Hindley added.
Gap grows between Middle East oil importers, exporters
MEED Editorial Director Richard Thompson told the MEED Insight briefing in Dubai this morning that the gap between the economic performance of oil-exporting and non-oil exporting Middle East countries will grow in 2011. “GCC states are forecast to enjoy higher real growth in 2011 despite political events in the region,” Thompson said. “Growth in oil-importing Middle East countries, in contrast, will decline.” The GCC is forecast to be the world’s fastest growing region in 2011 and is expected to double in size by 2020 to $2 trillion, Thompson said. Thompson said additional public spending announced in 2011 amounts to 16.7% of the kingdom’s GDP. All GCC governments have announced government expenditure increases following uprisings in Arab countries since the start of 2011.