Zooming demand for energy in rapidly growing China eclipses other growth markets in the Eastern Hemisphere, speakers said May 12 at the Middle East Gas & LNG Forum in Bahrain.
"The China story is not the only LNG growth story in Asia," declared Charles Watson, Shell Gas & Power director, Middle East, South Asia, and Africa.
India is fast becoming a major market for natural gas, Watson pointed out. And the Middle East is becoming a world-scale gas market capable of growing by 50% by 2020-25.
Watson also said that the developing gas-to-liquids business is a key to the global gas market. Asked about marketability of the 500,000 b/d of distillate that soon will emerge from firm GTL projects in the Middle East, where other such projects are planned, the Shell executive insisted that the market is "deep" enough to absorb the supply.
In India, LNG trade began in January with commissioning by Petronet LNG Ltd. of a 5 million tonne/year (tpy) terminal at Dahej.
Suresh Mathur, Petronet CEO and managing director, told the conference that his company has buyers for all the regasified product and is considering expansion to 10 million tpy.
With that expansion and other planned projects, India could have capacity to import 25 million tpy in 7-10 years, Mathur said.
By yearend, Shell will have commissioned a 2.5 million tpy terminal at Hazira.
Locations and capacities of the other terminals cited by Mathur are Kochi, 2.5 million tpy; Mangalore, 5 million tpy; Dabhol, 2.5 million tpy, and Kakinada, 2.5 million tpy.
India, with economic growth exceeding 8%/year, "needs a lot of gas," Mathur noted, and is moving to deregulate its gas market.
Chandan Roy, a member of the board of India's National Thermal Power Corp. Ltd., agreed that the need for LNG imports is growing but said prices should be indexed to coal rather than crude oil in the power market. He also said power generators need gas to be available at no more than $3/MMbtu.
Iraq, Iran
Also at the conference, representatives of the Iraqi Ministry of Oil sketched plans for their country's gas industry, and a private businessman from Tehran described Iran's huge gas potential and what the country must do to achieve it.
A. Barifcani, advisor on downstream operations in the Iraqi oil ministry, said Iraq's gas processing plants are handling 420 MMscfd of inlet gas but have design capacity for 1.536 bscfd.
In the northern part of the country around giant Kirkuk field, the central gas plant has two trains with capacities of 268 MMscfd each.
Since 1990, when Iraq invaded Kuwait, only one train has operated because of low oil production and consequently limited supply of associated gas. The train recently has processed 200 MMscfd.
Four plants in the southern part of the country sustained heavy damage from looting and sabotage. The southern system, with capacity of 1 bscfd, is handling about 220 MMscfd of gas.
Hazim Sultan, director general of the ministry's Reservoirs and Fields Development Directorate, said the Iraqi oil industry has had to produce from gas caps in the north to meet domestic needs.
Rehabilitation of the industry and growth of production capacity to Iraq's long-term goal of 6 million b/d of oil would raise gas production to 5 bcfd, Sultan said. Likely use, he said, would be 3 bcfd for local consumption, 1 bcfd for injection into oil fields, and 1 bcfd for export.
He said Iraq has found seven nonassociated gas fields but partly developed only one of them. It produced 50 MMcfd during a pilot program that has ceased.
The Iranian businessman, Narsi Ghorban, vice-chairman of Azar Energy Co.,Tabriz, said Iran could develop a business using 10.1 trillion cu m of gas during 2010-30 for injection, domestic consumption, gas-based industries, and exports by pipeline and LNG and deplete only 37% of its huge reserves.
But the country would have to make fundamental changes. It would have to establish a legal framework based on something other than the current oil law, which relies on "buy-back contracts" that Ghorban said have "not proven conducive to investment."
Iran also, he said, would need to restructure its oil and gas industry. Three state-owned companies now handle gas affairs in an uncoordinated system. Ghorban said the government has acknowledged the problem and is studying potential changes.
Realization of Iran's gas potential also requires improvement of the political climate, including stabilization of the region and an end to US sanctions on Iran.
Ghorban said some observers cite contracts the Iranian government has signed with foreign companies as proof that the sanctions haven't worked.
But he said others believe many more contracts would be in effect now if the sanctions were not in place.
