MENA to invest $10.3bn for LNG import facilities
With an insatiable demand for LNG, the MENA region is due to become the world’s second-largest gas-importing area by 2040.
Qatar already supplies 40% of the consumer countries imports from the MENA region and as demand for LNG grows, the small Gulf State is earmarked to be the potential supplier to meet the ballooning demand.
A recent research report by Arab Petroleum Investments Corporation (APICORP) citing International Energy Agency data, noted that despite the region’s vast hydrocarbons reserves, the use of natural gas in the MENA region will rise from 480 billion cubic metres (bcm) in 2015 to 738bcm in 2040, The Peninsula reports.
As domestic gas output in most countries falls short of the growing regional demand for power and industry, the sharp rise in demand for LNG in the region is anticipated to last.
Over the medium term, MENA countries are forecast to invest around $10.3bn in LNG-importing facilities, increasingly chartering floating storage and regasifcation units (FSRUs) as a temporary and lower-cost solution to meet the growing demand.
In 2015 Egypt, formally a gas exporter, and Jordan, received their first consignments of LNG, while Kuwait, the Gulf’s first LNG importer and Bahrain, are considering permanent import terminals and Abu Dhabi has chosen to import LNG via an FSRU.
Regional LNG importers are taking advantage of structural oversupply to ensure secured pricing and flexibility, in an effort to tie up term supply deals.
The report commented that this will make MENA a growing demand-side force in the global LNG segment.
Historical demand growth has outpaced production, despite its strong gas reserves base, further exacerbated by an absence of a large build-out of regional gas pipeline import options.
LNG therefore, has the potential to make up some of the balance.
While imports in 2015 by consumer countries in the region came to just 10.5bcm of LNG, 40% of this arrived from Qatar alone.
These levels will rise sharply however, on the back of the present global supply, which should afford regional buyers the opportunity to lock in favourable prices and allow them to select from a wider range of providers.