Middle East imports of liquefied natural gas are set to decrease as Egypt becomes more self sufficient, but the Arabian Gulf region will need more of the fuel amid a gas deficiency in several states.
Egypt could become a net exporter of energy again as it ramps up production from the Zohr gasfield which started production last year.
The Middle East imported around 16.2 million tonnes (mmt) of LNG last year, roughly 2.1 mmt lower than 2016 levels, mainly due to domestic production offsetting the need for imports in Egypt, according to Facts Global Energy based in London.
“Ramping up gas production from Zohr and West Nile Delta gas projects will eliminate Egypt’s LNG requirements by latest in 2019,” said FGE senior consultant Siamak Adibi.
“[As a consequence] LNG imports into Middle East will decline to possibly 15.5 mmt in 2018 and 14 mmt in 2019,” he said.
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US eyes opportunities to sell LNG to Saudi Arabia
UAE looks to increase US LNG imports
Saudi Arabia's gas hunt
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Already Kuwait and the UAE are the only two Gulf states currently importing LNG, but demand from other states will climb as LNG receiving terminals in Bahrain and Sharjah will open in 2019. Gas also forms part of a critical mix in the drive towards cleaner energy in the GCC. "Abu Dhabi and Dubai are diversifying their power mix," says Lucas Schmitt, senior gas and LNG analyst at Wood Mackenzie.
“With nuclear and coal-fired capacity under construction, we expect some displacement of gas in power from the 2020s. Renewables have also started to get greater momentum across the region.”
The UAE unveiled a five-year spending plan of US$109 billion, that will look to prioritise development of gas from its sour reservoirs, which contain high level of sulfur. Saudi Arabia, the world's biggest oil exporter, also plans to double its gas production capacity over the next decade and awarded $4.5bn worth of contracts in November to boost production, particularly offshore. However, there still remains a deficit of 2 to 3 billion cubic feet a day of gas in the region, says Mr Adibi. And the only option to overcome any near-term shortfalls will remain through imports.
LNG imports into the Gulf states will recover from 6 mmt in 2017 to over 7 mmt in 2018, nearly 9 mmt by 2019, and over 10.5 mmt by 2020, according to FGE estimates.
“Post 2020, LNG imports into the Gulf countries will continue to increase, in line with more gas consumption for power generation,” said Mr Adibi.
However, with the ongoing crisis with Qatar, the world's largest LNG exporter and a major supplier of gas via pipeline to the UAE and Oman, the region's big consumers of the fuel are looking for other source markets for their gas needs. The demand is likely to be met from increasing imports from the United States and Russia, who have both lined up offers to supply to the Middle East, following a visit by the US energy secretary to the region and the Saudi energy minister's presence at the opening of Russia's arctic LNG facility in December.
The UAE has tapped US supplies since 2016, when it received cargoes from Houston-based Cheniere Energy, while Kuwait, which also faces a gas deficit, signed a 15-year contract with Anglo-Dutch major Shell last month to import the fuel.
While long-term contracts were the norm for the LNG industry, regional buyers now are more keen to buy from the spot market.
"Generally buyers are showing much less appetite for the sort of long-term contracts that used to dominate the LNG market, although multi-year supply deals are still common," says Richard Mallinson, analyst at consultancy Energy Aspects. "Supply tenders in the Middle East and elsewhere will often be won by trading houses or producers that have a portfolio of LNG from multiples sources, meaning the supply could come from various sources over the life of the contract."
With an estimated 350 million cft a day of gas set to come online from 2018 from Egypt’s offshore Zohr gasfield, the North African state, which enjoys warmer political ties with the UAE and Saudi Arabia, could look to supply to its regional neighbours.
Qatar, which is estimated to hold 13 per cent of the world's gas reserves according to the 2017 BP Statistical Review of World Energy, may face a challenging time in 2018 as it looks to secure new markets and contracts amid new supply from Australia hitting the market.
Australia could possibly overtake Qatar as the top LNG exporter this year as it aims to increase LNG exports by 16 per cent from mid-2018 to mid-2019 from new projects
The big East Asian consumers, Japan, South Korea and China are likely to absorb the extra volumes with market share remaining a challenge for Qatar, which last June outlined its plans to ramp up its gas production by 30 per cent over an unspecified timeline.
However, this additional supply is unlikely to enter the market anytime soon.
"Qatar’s plans are more long-term and will only see it significantly increase gas production and LNG exports in four to six years’ time," said Mr Mallinson.
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
UAE currency: the story behind the money in your pockets
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
MATCH INFO
Fulham 0
Aston Villa 3 (Grealish 4', Hourihane 15', Mings 48')
Man of the match: Jack Grealish (Aston Villa)
RESULTS
6pm: Mazrat Al Ruwayah – Group 2 (PA) $40,000 (Dirt) 1,600m
Winner: AF Alajaj, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
6.35pm: Race of Future – Handicap (TB) $80,000 (Turf) 2,410m
Winner: Global Storm, William Buick, Charlie Appleby
7.10pm: UAE 2000 Guineas – Group 3 (TB) $150,000 (D) 1,600m
Winner: Azure Coast, Antonio Fresu, Pavel Vashchenko
7.45pm: Business Bay Challenge – Listed (TB) $100,000 (T) 1,400m
Winner: Storm Damage, Patrick Cosgrave, Saeed bin Suroor
20.20pm: Curlin Stakes – Listed (TB) $100,000 (D) 2,000m
Winner: Appreciated, Fernando Jara, Doug O’Neill
8.55pm: Singspiel Stakes – Group 2 (TB) $180,000 (T) 1,800m
Winner: Lord Glitters, Daniel Tudhope, David O'Meara
9.30pm: Al Shindagha Sprint – Group 3 (TB) $150,000 (D) 1,200m
Winner: Meraas, Antonio Fresu, Musabah Al Muhairi
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Honeymoonish
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Sheikh Zayed's poem
When it is unveiled at Abu Dhabi Art, the Standing Tall exhibition will appear as an interplay of poetry and art. The 100 scarves are 100 fragments surrounding five, figurative, female sculptures, and both sculptures and scarves are hand-embroidered by a group of refugee women artisans, who used the Palestinian cross-stitch embroidery art of tatreez. Fragments of Sheikh Zayed’s poem Your Love is Ruling My Heart, written in Arabic as a love poem to his nation, are embroidered onto both the sculptures and the scarves. Here is the English translation.
Your love is ruling over my heart
Your love is ruling over my heart, even a mountain can’t bear all of it
Woe for my heart of such a love, if it befell it and made it its home
You came on me like a gleaming sun, you are the cure for my soul of its sickness
Be lenient on me, oh tender one, and have mercy on who because of you is in ruins
You are like the Ajeed Al-reem [leader of the gazelle herd] for my country, the source of all of its knowledge
You waddle even when you stand still, with feet white like the blooming of the dates of the palm
Oh, who wishes to deprive me of sleep, the night has ended and I still have not seen you
You are the cure for my sickness and my support, you dried my throat up let me go and damp it
Help me, oh children of mine, for in his love my life will pass me by.
UAE currency: the story behind the money in your pockets
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
More on Quran memorisation:
Abu Dhabi GP schedule
Friday: First practice - 1pm; Second practice - 5pm
Saturday: Final practice - 2pm; Qualifying - 5pm
Sunday: Etihad Airways Abu Dhabi Grand Prix (55 laps) - 5.10pm
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
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