Already the world's oil powerhouse, the Middle East is building a gas supply base.
Oil - easy to find, easy to transport and easy to sell - has dominated Middle East economics, and it will continue to hold that dominant position, but the area is proving it can count on natural gas economics, as well.
Tiny Qatar, with 393.8 Tcf of gas reserves - third highest in the world after Russia (1,700 Tcf) and Iran (812.3 Tcf) - has taken the regional lead in gas distribution with its Dolphin project and in international sales with its Ras Laffan liquefied natural gas (LNG) complex.
The nucleus of this accelerating gas distribution is the combined North-South Pars fields. Qatar owns North with its 377.6 Tcf in gas reserves, while Iran owns the South Pars field with another 321 Tcf of gas.
To take advantage of all that gas, Qatar built the Ras Laffan complex in 1997. The Ras Laffan Liquefied Natural Gas Co. (RasGas) has started work on the third LNG train at the complex to raise production to 11.3 million tons of LNG per year from 6.6 million tons. That entire train is dedicated to supply India with 7.5 million tons of LNG annually for 25 years with first deliveries by the end of 2003.
Korea Gas Corp. takes the entire output, and RasGas is planning still another train on its way to a goal of as much as 30 million tons a year by 2010.
Meanwhile, Qatar Petroleum and South Africa's Sasol plan a US $900 million gas-to-liquids plant at Ras Laffan.
At the same time, a Middle East gas pipeline network is forming from the same source. That's the Dolphin project. Dolphin contemplates bringing gas south from North field to Ras Laffan to strip out condensate, sulfur, ethane and liquefied petroleum gas before injecting it into a 217-mile (350-km) undersea pipeline that will carry as much as 2 Bcf/d of gas to Al Taweelah, Abu Dhabi. From there, it would go to Jebel Ali, Dubai, and then to Oman. If everything works out, first gas deliveries in the $10 billion project ($3.5 billion for the pipeline) should arrive in 2004.
There has been some talk about a gas pipeline to Pakistan, but that's an underwater trip at a cost of at least $3 billion, and many people doubt the economics of demand will allow that plan to work.
At the same time, Qatar has signed memorandums of agreement to take gas north to Kuwait with a spur to Bahrain under an agreement with ExxonMobil Middle East Marketing. Bahrain will get up to 700 MMcf/d of gas while Kuwait will receive up to 1.75 Bcf/d.
All this takes deep pockets. Qatar estimates energy investments have totaled $28 billion in the past 5 years, and will take another $27.4 billion in the next decade.
On the other side of the mammoth field, Iran has been slower in developing South Pars and its gas industry. It planned a 12-phase development program for the field and would like to get agreements under its buy-back program for the final four phases by the beginning of the Iranian new year March 21. Those four phases will require about $4 billion in investments.
Statoil is the only bidder for phases 9 and 10, but TotalFinaElf, ENI, BP and a consortium of Asian companies are in the running for phases 11 and 12, which could produce 80,000 b/d of condensate and 2 Bcf/d of gas.
Iran's program has been held back by the Iran-Libya Sanctions Act, which has barred larger US-based oil companies from investing in that country.
Iran would like to send its gas to India, but a land route through Pakistan is a little risky, and a sea route is expensive.
Iran also has completed a 1,598-mile (2,577-km) pipeline that will carry 106 Bcf/year of gas into Turkey. That volume could reach 353 Bcf/year by 2007. Even considering Turkey's on-the-edge economic situation, that could happen if Turkey realizes its plans to act as a way station to move Russian, Caspian and Middle East gas to Europe.
The biggest new step in Middle East gas is the year-old plan by Saudi Arabia to allow major oil companies to develop some of its 213.8 Tcf of gas. Those talks with major oil companies to develop $25 billion in gas projects have been extended into March.
ExxonMobil has been chosen to lead two consortia, one to develop gas in South Ghawar with BP, Shell and Phillips Petroleum, and one to develop Red Sea with Occidental Petroleum and Marathon. Shell leads a group that will develop Shaybah and part of South Ghawar with Conoco.
Shaybah is "a superb project on the scale of Brittania, Heidrun (both huge North Sea fields) and Petrozuata (Venezuelan heavy oil). In fact, it's potentially bigger than any of them," said Jim McColgin, Conoco's president of exploration and production for Africa, Asia and the Middle East, in an interview in Conoco World magazine. The project spans the value chain, from production to gas processing through a pipeline to electrical generation, petrochemicals.

Comments