Global gas

Oct. 12, 2001
Europe is about to start work on its first LNG export project, in northern Norway. The North Sea's best-known oil field, Brent, is now predominantly a producer of gas. And the trend-setting gas-to-power project in the burgeoning Asian market has just come on stream at Malampaya in the Philippines.

Europe is about to start work on its first LNG export project, in northern Norway. The North Sea's best-known oil field, Brent, is now predominantly a producer of gas. And the trend-setting gas-to-power project in the burgeoning Asian market has just come on stream at Malampaya in the Philippines.

Oil companies are exploring for gas throughout the world and searching for gas assets and reserves to acquire.

Fadhil Chalabi, deputy secretary general of the Organization of Petroleum Exporting Countries at a time when oil was an economic weapon and gas assets were left undeveloped and now an executive director of the Centre for Global Energy Studies, takes the view that natural gas will be "the fuel of the 21st Century, just as oil was the fuel of the 20th and coal was the fuel of the 19th."

New infrastructure

In most markets, gas is now the fuel of choice, and this fact is changing the exploration and production industry. This leads one to consider whether markets can support the development of gas infrastructure in emerging economies: Can these economies make the jump to the necessary scale and sophistication to support the huge investments involved?

For this reason, many companies will be analyzing the progress of the Malampaya project. Of course, it has been thoroughly costed, and the $4.5 billion investment would never have gone ahead without all the figures showing that it will be economically viable. Its success will lie as a role model for other projects, converting gas into usable energy close to market.

Diverse markets

The many virtues of gas don't, of course, include ease of supply, and meeting expanding needs in diverse markets will challenge this industry, as well as those who set the regulatory frameworks within which it works.

The difference in markets, even those of potentially similar size is illustrated by the fact that the range of development is very wide. In the US, gas supplies a quarter of primary energy, 2,200 cu m/year per capita. In China, it supplies only 3% of energy, just 17 cu m/year per capita. Gas supplies a significant proportion of energy in the Netherlands and Britain, but less in Germany, France, and Spain-whereas Japan still uses less gas than other industrialized countries.

So are we really looking at a fundamental change in the industry?

Marie-Francoise Chabrelie, secretary general of Cedigaz in Paris, said that although a world gas market does not yet exist, barriers separating and isolating the regional gas markets will be removed more quickly than anticipated. Natural gas trade, incorporating pipeline grids and LNG tankers, will combine to improve flexibility of flows.

"Indeed, natural gas trade is the key to a global market," she said. "The gas industry is at a turning point, en route for a new growth phase, bound for the creation of a global market."