Natural gas exports from Mena to fall by 50 billion cubic metres per annum (bcma) in 2025 from 2013 levels as domestic demand outpaces supply growth, said Apicorp's latest Energy Research, citing an IEA report.
Natural gas exports from Mena to fall by 50 billion cubic metres per annum (bcma) in 2025 from 2013 levels as domestic demand outpaces supply growth, said the latest Energy Research report from Arab Petroleum Investments Corporation (Apicorp), citing an IEA report.
Mena gas output is set to rise by over 10 per cent to reach 756 billion cubic metres per annum (bcma) in 2021. The region holds 47 per cent of the world's natural gas reserves, mainly concentrated in two countries: Iran and Qatar.
LNG export volumes in countries such as Oman, the UAE, Egypt and Yemen have been declining or have stopped altogether and the region's LNG imports have correspondingly risen to meet domestic demand.
Mena exporters are also facing growing competition from new suppliers, as LNG becomes a buyers' market in the 2017 to early 2020s period. There is currently 150bcma of global liquefaction capacity under construction. When it comes on stream, importers will seek the best possible purchase terms, which will weigh down on LNG prices over the medium term.
The shift in these dynamics potentially signals the end of the dominance enjoyed by some of Mena's key LNG exporters such as Qatar and Algeria and will affect export revenues. However, Mena exporters should be able to adapt. Production costs in countries such as Qatar are amongst the lowest in the world, and close proximity to key demand hubs will still ensure a competitive advantage over their rivals.
Algeria has a long history of exporting LNG to Europe, having faced pipeline competition from Russia; and Qatar will continue to enjoy a strong presence in Asia, where it exports nearly half of its LNG. Nor should they ignore the market closer to home, with domestic demand growth in Mena amongst the highest in the world.
At the moment, the regional pipeline gas trade remains limited, with the Dolphin pipeline, which transports Qatari gas to Abu Dhabi, Dubai and Oman, accounting for the bulk of intra-Arab gas trade.