Dreams of a seamless global gas market are fading into the background as regional disparities in supply take centre stage.
Instead of freely traversing the globe as foreseen just a few years ago, the growing fleet of supertankers that carry liquefied natural gas (LNG) between continents is being diverted from North American shores.
Unable to unload their cargoes at attractive prices in a regional market glutted with gas, the few still arriving there are increasingly dispatched onwards to seek buyers in Asia or Europe.
Because of the recent surge in its unconventional gas output from shale deposits, the US has become a "virtual gas exporter", the International Energy Agency (IEA) said last month in its medium-term oil and gas market report. Last year, the US became the world's biggest gas producer, overtaking Russia.
Meanwhile, the Middle East, with 41 per cent of the world's proved conventional gas reserves, is struggling to meet domestic demand.
"Despite the large scale of proven gas reserves in the MENA area, only one country, Qatar, can be confident of meeting both its domestic needs and its export ambitions in the medium term," the IEA said.
The region's predicament is perhaps the most glaring example of an emerging global trend for gas producers to keep more of their output at home.
"Across the world, domestic market obligations are becoming more apparent to producers, which are now giving increasing priority to their domestic markets," said the Paris-based agency, which advises 28 industrialised countries on energy.
Take Peru, which has renegotiated its agreement with the international companies operating its giant Camisea gasfield to ensure the country's rising domestic demand will be met.
Last September, the government ordered the main operating consortium, led by the private US company Hunt Oil, to hold an auction to sell gas to the local market instead of exporting it.
A month earlier, the Peruvian minister of energy and mines Pedro Sanchez said Peru had reached an agreement with the group that gas from Camisea's block 88 would be reserved for domestic use until 2015, while the consortium would be allowed to export gas from its block 56.
"I think that with this accord we have the absolute security that the domestic market will remain supplied," Mr Sanchez said.
In August, the Spanish firm Repsol agreed to sell gas production from the neighbouring block 57, which it controls, exclusively to the Peruvian domestic market.
In Indonesia, fears of a gas deficit have prompted regulators to decree that the nation's Aran LNG plant would stop exports in 2014 while the Bontang plant would supply the domestic market by 2020.
The oil and gas regulator BPMigas also hopes to free up as much as 3 million tonnes a year of LNG to supply planned domestic import terminals when some contracts with Japanese customers expire next year.
In Africa, the OPEC member Nigeria has outlined a master plan for gas, setting the domestic market as a priority. That could delay the development of proposed LNG plants, the IEA said.
Qatar, which holds the world's third-biggest gas reserves, has extended a moratorium it had placed on further development of its reserves for export until 2015.
Imposed in 2005 to give the government time to develop a better understanding of how rapidly increasing gas production was affecting the reservoir dynamics of Qatar's North Field, which contains more than half the reserves of the world's biggest gasfield, the moratorium was initially supposed to be lifted this year. Instead, it has been extended several times.
Doha's concern over the lifetime performance of its biggest natural resource is understandable, but the IEA notes that a moratorium on exports is one tactic through which governments seek to meet their domestic market obligations.
While the North Field moratorium remains in place, Qatar is proceeding with the development of the sizeable Barzan offshore gasfield for domestic sales.
Another MENA gas exporter, Egypt, put new gas export contracts on hold in 2008. Its government had already decided in 2000 to allocate one third of the country's then proved reserves for domestic use and another third for "strategic purposes".
In November 2008, gas exports to Israel were interrupted over Egyptian concerns that the gas was being sold at less than the market price.
They were reinstated only recently, after the Egyptian supreme administrative court decided in February that the contract with Israel was legal.
Cairo agreed in 2008 to phase out some gas subsidies in order to allow producers to sell gas profitably on the domestic market. This year, the petroleum ministry struck a pricing deal with BP and Germany's RWE that is allowing the development of big, deepwater gasfields to move forward.
"This might not be sufficient as Egypt had been trying to renegotiate export volumes downwards," the IEA noted.
Given the current glut in international gas markets, international buyers might be happy to co-operate, it suggested. But Egypt's export revenues would be considerably reduced.
The UAE also faces tough choices, as it is already a net gas importer and has little hope of contracting for further imports at less than the subsidised prices at which gas is sold domestically.
Further gas development within the Emirates is also likely to be expensive. The production costs for gas from Abu Dhabi's Shah gasfield, for example, has been estimated at US$5 (Dh18.35) per million British thermal units, which is more than triple the domestic price of gas throughout most of the Emirates.
Some analysts have suggested Abu Dhabi would try to renegotiate or cancel long-term export contracts with Asia-Pacific customers for the 5.4 million tonnes a year of LNG it exports.
Oman, which also developed LNG capacity, faces a similar dilemma, since its remaining gas reserves are in "tight" reservoirs and will be costly to produce. It has already restricted LNG exports to 80 per cent of capacity and imports gas from Qatar.
Kuwait has turned to LNG imports to cover summer gas shortages as it seeks to exploit technically challenging sour gas deposits similar to Abu Dhabi's Shah field.
By contrast, Europe, a major gas importing region, is oversupplied because of its economic slump.
"In the Atlantic basin, and in Europe in particular, it is hard to see tight supplies before 2015, despite the rapid decline of European domestic production," the IEA said.
That all adds up to more gas staying closer to where it is produced for the next few years, and to the delay of many previously proposed export schemes.
tcarlisle@thenational.ae
Company%C2%A0profile
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SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The UAE's journey to space
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.”
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E6.5-litre%20V12%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E725hp%20at%207%2C750rpm%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E716Nm%20at%206%2C250rpm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E8-speed%20dual-clutch%20auto%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3EQ4%202023%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh1%2C650%2C000%3C%2Fp%3E%0A
The specs: 2019 Cadillac XT4
Price, base: Dh145,000
Engine: 2.0-litre turbocharged in-line four-cylinder engine
Transmission: Nine-speed automatic
Power: 237hp @ 5,000rpm
Torque: 350Nm @ 1,500rpm
Fuel economy, combined: 8.7L / 100km
Turning%20waste%20into%20fuel
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More from Neighbourhood Watch:
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
The specs: 2018 Ford F-150
Price, base / as tested: Dh173,250 / Dh178,500
Engine: 5.0-litre V8
Power: 395hp @ 5,000rpm
Torque: 555Nm @ 2,750rpm
Transmission: 10-speed automatic
Fuel consumption, combined: 12.4L / 100km
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Results
1. New Zealand Daniel Meech – Fine (name of horse), Richard Gardner – Calisto, Bruce Goodin - Backatorps Danny V, Samantha McIntosh – Check In. Team total First round: 200.22; Second round: 201.75 – Penalties 12 (jump-off 40.16 seconds) Prize €64,000
2. Ireland Cameron Hanley – Aiyetoro, David Simpson – Keoki, Paul Kennedy – Cartown Danger Mouse, Shane Breen – Laith. Team total 200.25/202.84 – P 12 (jump-off 51.79 – P17) Prize €40,000
3. Italy Luca Maria Moneta – Connery, Luca Coata – Crandessa, Simone Coata – Dardonge, Natale Chiaudani – Almero. Team total 130.82/198.-4 – P20. Prize €32,000
Pad Man
Dir: R Balki
Starring: Akshay Kumar, Sonam Kapoor, Radhika Apte
Three-and-a-half stars
How to help
Donate towards food and a flight by transferring money to this registered charity's account.
Account name: Dar Al Ber Society
Account Number: 11 530 734
IBAN: AE 9805 000 000 000 11 530 734
Bank Name: Abu Dhabi Islamic Bank
To ensure that your contribution reaches these people, please send the copy of deposit/transfer receipt to: juhi.khan@daralber.ae
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
The story of Edge
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, established Edge in 2019.
It brought together 25 state-owned and independent companies specialising in weapons systems, cyber protection and electronic warfare.
Edge has an annual revenue of $5 billion and employs more than 12,000 people.
Some of the companies include Nimr, a maker of armoured vehicles, Caracal, which manufactures guns and ammunitions company, Lahab
The%20specs%20
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3EDual%20permanently%20excited%20synchronous%20motors%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E516hp%20or%20400Kw%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E858Nm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3ESingle%20speed%20auto%3Cbr%3E%3Cstrong%3ERange%3A%20%3C%2Fstrong%3E485km%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh699%2C000%3C%2Fp%3E%0A
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
THREE POSSIBLE REPLACEMENTS
Khalfan Mubarak
The Al Jazira playmaker has for some time been tipped for stardom within UAE football, with Quique Sanchez Flores, his former manager at Al Ahli, once labelling him a “genius”. He was only 17. Now 23, Mubarak has developed into a crafty supplier of chances, evidenced by his seven assists in six league matches this season. Still to display his class at international level, though.
Rayan Yaslam
The Al Ain attacking midfielder has become a regular starter for his club in the past 15 months. Yaslam, 23, is a tidy and intelligent player, technically proficient with an eye for opening up defences. Developed while alongside Abdulrahman in the Al Ain first-team and has progressed well since manager Zoran Mamic’s arrival. However, made his UAE debut only last December.
Ismail Matar
The Al Wahda forward is revered by teammates and a key contributor to the squad. At 35, his best days are behind him, but Matar is incredibly experienced and an example to his colleagues. His ability to cope with tournament football is a concern, though, despite Matar beginning the season well. Not a like-for-like replacement, although the system could be adjusted to suit.
Sheer grandeur
The Owo building is 14 storeys high, seven of which are below ground, with the 30,000 square feet of amenities located subterranean, including a 16-seat private cinema, seven lounges, a gym, games room, treatment suites and bicycle storage.
A clear distinction between the residences and the Raffles hotel with the amenities operated separately.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5