Changing Landscape of Global Energy

A Report by Brookings Doha

“Major changes in geopolitics, political economy, and energy markets are altering the global energy landscape. A potential nuclear deal with Iran has raised the possibility of new supplies coming online, and ongoing political gridlock in Iraq has hampered the country’s ability to expand supply. The U.S. energy boom is increasingly viewed as a long-term phenomenon, while a prolonged crisis in Ukraine threatens to impact Russian gas supplies to Europe.”

- From Brookings Doha Energy Report 2014. To read the report, please click here.


File photo: Liquid natural gas production in Qatar (qatarchronicle.com)

U.S. Oil and Gas Production Reaches Historic High

The Energy Information Administration (EIA) reported on Tuesday that the boom in natural gas production in the U.S. reached a record high last year, increasingly substituting for imported foreign oil.

Meanwhile, the U.S. oil production grew more in 2012 than in any year in the history of the domestic oil industry, which began in 1859, and is set to surge even more in 2013. The U.S. produced an average of 6.4 million barrels a day last year.

As a result, for the first time in recent memory, an energy-sufficient U.S., independent of foreign oil, could become a reality, unthinkable only a few years ago. The development will have huge geopolitical implications, especially in the Middle East.

The breakthroughs in the drilling technique known as hydraulic fracturing, or fracking, are driving the increase in U.S. oil and gas production.

Meanwhile, in an interesting and probably related news, the Dow Jones Industrial Average reached a historic high on Tuesday, eclipsing the previous closing highs set in October of 2007, before the financial crisis.

File photo: Natural gas production using ‘fracking’ method (Getty Images/money.CNN.com)

Construction Of The Gas Pipeline To Pakistan Commences

By: Jabbar Fazeli, MD

Fars News reports that the Gas pipeline, dubbed the "peace pipeline" has commenced and is expected to be completed in thirteen months (1)

In related news, the BBC reports (per Fars News) that Iraq has agreed to the allow the building of an Iran-Syria pipeline. The pipeline would be 1500 KMs and would be operational in 18 months, according to Fars (2).

It is reported that Pakistan and Turkey have asked Iran to reduce the price of Gas available for export to these countries (2).

Iran consumes the bulk of its 600 million cubic meters daily production and any increase in exports would require improvement in energy infrastructure to allow for increased production.

References:

(1) http://www.farsnews.com/newstext.php?nn=13911202000732

(2) http://www.bbc.co.uk/persian/business/2013/02/130220_l45_iran_iraq_pakistan_gas.shtml

Photo credit: energytribune.com

Total ends fuel sale to Iran

The French energy company Total has stopped supplying fuel supplies to Iran, Total only makes up for a small amount of fuel deliveries to the Islamic Republic.

This has come as a result of the unilateral sanctions imposed on Iran by the United States, these sanctions aim to stop international companies such as Total from supplying Iran with petroleum products or investing in her oil and gas industries by preventing them from then trading in the US.

However these measures are not part of the all round sanctions approved by the UN to which China and Russia have objected.

Spain's Repsol has also pulled out of a contract to develop the South Pars gas field.

Even with its huge petroleum reserves Iran still relies on petroleum imports for 30-40% of its petrol requirements.

IRGC Receives South Pars Gas Contract

Iran’s IRGC has been awarded the rights to develop the latest phases of the giant South Pars natural gas fields in the Persian Gulf. South Pars is Iran’s largest gas field. Together with the adjoining Qatar’s North Field, they are the world’s largest.

The Revolutionary Guards' business arm, Khatam al-Anbiya Base, received the lucrative contract after Royal Dutch Shell and Respol YPF decided not to move forward on South Pars development.

Khatam al-Anbiya is under UN sanctions related to Iran’s nuclear program. Shell and Respol withdrawal from South Pars represent the hesitancy of global energy majors to doing business with Iran.

Iran to Increase Gas Import

The National Iranian Gas Company announced today that the import of gas from Turkmenistan would reach 40 million cubic meters a day, a 5-fold increase from the current 8 MMcm/day [Shaha News Agecny, 26 April 2010]. Turkmenistan will commission a second gas pipeline by November to accommodate Iran’s growing imports.

Iran has the world’s second largest gas reserves (after Russia), and shares the world’s largest natural gas field (with Qatar) in the Persian Gulf waters, but the country does not produce sufficient natural gas for domestic use.

Aside from its need to increase natural gas production, Iran needs to raise its oil production and exports as well as expand its refining capacity to meet domestic demands for gasoline. NIOC, the country’s giant state-owned oil company, has estimated that Iran would need some $150 billion in new investments over the next decade to build up its energy sector. But the growing sanctions have resulted in an exodus of foreign oil and gas giants from Iran, bringing the level of foreign investments in oil and gas sector to near zero.

On Saturday, the IRGC, the country’s powerful branch of armed forces, announced that it could fill the gap in the country’s energy sector left by Western oil firms pulling out in the face of the new sanctions. As good a fighting force that IRGC might have become, it is clear that it would fail miserably if it wanted to transform itself into a giant oil and gas company, dependant on high technology and global capital markets to meet the investment needs of the Iranian energy sector.