It Gets Worse!!
Everybody knows about the regional energy/geopolitical enigmas – subsidized energy, power, and water driving wasteful consumption. Add the forced addition of subsidized oil-fired power as cheaply valued associated gas production tops out. Mix in the usual conflicting politics where each country has its own reason not to ‘play well with others,” and it’s surprising that there’s any agreement at all on energy, political, or economic fronts.
In recent years, the shift to imported LNG (Kuwait, UAE) through floating terminals has expanded, and permanent regas capacity is under construction in the UAE. Robust nuclear power timelines continue to move to the right. All of which, absent economic reform (yeah, right), signals the need for yet more imported oil linked gas to offset the wasteful use of heavily discounted domestic hydrocarbons. Most recently:
A) Qatari interests now seek investments in US shale projects. Qatar (70%) and partner ExxonMobil (30%) have a already agreed to work to converts their regas terminal at Golden Pass to export LNG. The Qataris have also bought into one of Shell’s Brazilian offshore commercial fields.
B) Last week Kuwaiti interests bought into Shell’s Wheatstone LNG project.
C) The UAE is determining how to best invest in US LNG exports, not confident of receiving additional supplies from Qatar’s Dolphin pipe,
D) Both SABIC and Saudi Aramco have expressed interest in US petrochemical/gas opportunities.
Yes, Henry Hub based LNG may be advantaged versus oil-linked supply, but there is SO much regional supply – now and soon, from Qatar, East Africa, (don’t laugh) Israel/Cyprus, and, someday, Iran. Is US LNG the next cheapest energy opportunity for a wasteful economy??
More pragmatic energy buyers throughout the world seem to find a way for economics to trump ego/politics (US-Venezuela, Russia-Ukraine and Europe. Even Venezuelan leadership is hinting at raising gasoline prices from 6 cents a gallon to as much as 15-20 cents (!). But not the Middle East! Can’t even some of these entities just get along?
Some day, perhaps within the decade, Chinese , Argentine, and other shale oil projects may further narrow the market for OPEC exports. Plenty of time to plan, but what are the odds?