The Middle East may be the largest LNG exporting region, but it is increasingly becoming an LNG importing region as well. Several Middle Eastern countries lack domestic resources of natural gas and are either seeking to expand, or develop for the first time, LNG regasification capacity. Currently import volumes are very small, amounting to 3.3 million tpy in 2013, according to World Gas Intelligence.3 The bulk of these imports were received by Kuwait, with small amounts from the UAE and Israel. All of the LNG was received by floating storage and regasification units (FSRUs), which can handle smaller volumes of LNG when they are required (mainly during the hot summer months) and are cheaper to build and operate than fixed onshore structures.
Yet LNG imports will become a permanent fixture on the Middle East LNG landscape. Both Kuwait and the UAE have definite plans to build regasification terminals, with capacities of 11.2 and 9 million tpy, respectively. The Kuwaiti project will involve the construction of an onshore import terminal, while the UAE’s Fujairah project will involve a combination of an FSRU and an onshore terminal. Once completed, these projects will boost the Middle East’s LNG import capacity to a level greater than the amount of LNG imported by South and Central America last year. Meanwhile, resource poor states Jordan and Lebanon are also reported to be in the market for acquiring FSRUs, and could be importing small volumes of LNG by 2016.
As LNG increases its share of the global gas trade it will also have a greater impact on Middle Eastern economies. Qatar will remain a key supplier but will face competitive challenges, while neighbouring Iran has the potential to be a major gas exporter, including in the form of LNG, should political circumstances surrounding its relationship with the West durably change. Israel, through recent discoveries, is on the cusp of becoming an Eastern Mediterranean gas supplier, although via pipeline rather than LNG.
On the demand side, high growth in natural gas consumption, partly spurred by inefficient domestic energy policies, will facilitate several countries in the region to become sizeable importers of LNG. By the end of this decade the Middle East, like Asia, will feature as both an LNG exporting and importing region, with significant intra-regional trade developing to connect those who have the gas with those that do not.
3. World Gas Intelligence, ‘Middle East to Become a Top LNG Buyer’, 26 March 2014.
Written by Peter Kiernan, The Economist Intelligence Unit. Edited by Ted Monroe
Read the article online at: https://www.lngindustry.com/regasification/17102014/peter-kiernan-explains-why-lng-imports-and-exports-are-shaping-the-middle-east-lng-landscape-3/