With David Knott
from London
A London conference on survival prospects of the Organization of Petroleum Exporting Countries focused gloomily on non-OPEC production and expected return of Iraqi exports (see p. 25).
The conference program also suggested gas was another potential threat to OPEC oil production, yet the speakers said gas prospects are a rare cause for optimism within OPEC.
As with oil, OPEC members hold a big slice of the world's gas reserves. The BP Statistical Review of World Energy reports that OPEC members account for 40.8% of the world's 4.98 quadrillion cu ft of gas reserves.
Abdullah Bin Hamad Al-Attiyah, Qatar's minister of energy and industry, said although the Middle East is known for its massive oil industry, gas accounts for 38% of hydrocarbons use in that region.
Qatar's gas
"As far as Qatar is concerned," said Al-Attiyah, "the equation is quite simple. Oil reserves, in spite of recent discoveries, are rather limited. Their lifetime is about 20 years. Proved gas reserves are about 25 times more than oil reserves, and for 20 years these reserves have been frozen."
Al-Attiyah outlined Qatar's campaign to cash in on its gas riches with a liquefied natural gas export program expected to deliver its first cargo to Japan in 1997.
"Qatar is preparing to become one of the world's largest gas exporters early next century," Al-Attiyah said. "Gas cannot be seen just as a competitor for oil. It is, in fact, a natural complement to oil."
Henk Dijkgraaf, chief executive of Shell International Gas Ltd., said transportation will remain the main weak market for gas. Yet, apart from use as a transportation fuel, he sees gas winning over oil.
"Gas's geographic presence is now truly global," Dijkgraaf said.
Power generation is the biggest growth area for gas, Dijkgraaf said, and demand for electricity appears almost insatiable.
He said, "Under low energy prices 'cost of distance' will slow but not stop development of far-away gas. With the exception of the transport sector, I suggest there is no natural limit to gas's market share."
Costs tradeoff
James Jensen, president of Jensen Associates Inc., Boston, said the cost of transporting LNG does not rise as rapidly, as a function of distance, as the cost of moving natural gas by pipeline.
He said, "Nowhere is the tradeoff of supply costs for transportation costs more in evidence than in the Asian LNG markets. It has brought Middle East supplies back into competition after a long period when nearer sources such as Indonesia and Malaysia dominated the trade."
Nordine Ait-Laoussine, former minister for energy in Algeria and now president of consultant Nalcosa in Geneva, predicted world gas demand will rise by 2.5%/year until 2010.
He also said gas will fuel 75% of future power generation projects. Gas is burned in 51% of Asia-Pacific region power stations today and is expected to fuel 65% in 2010.
"Natural gas is the fastest growing fuel worldwide," Ait-Laoussine said. "Gas should be seen as OPEC's ally because most members are either exporting or about to export substantial volumes."
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
