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BUSINESS GUARDIAN guardian.co.tt JULY 20 • 2017
IEA: US supply, demand changing gas market
Rising natural gas supplies from the US
along with expanding industrial demand will
dramatically shift the global market through
2022, according to the International Energy
Agency's latest market analysis and five-year
Global gas demand is expected to increase 1.6
per cent/year for the next five years, with con-
sumption by 2022 reaching almost four trillion
cu m (tcm), up from 3.63 tcm in 2016. China
will account for 40 per cent of the growth.
The industrial sector will emerge as the main
engine of consumption growth, replacing
power generation, where gas is being squeezed
by growing renewables and competition from
coal, IEA said.
The US, the world's largest gas consumer
and producer, will account for 40 per cent of
the world's extra gas production to 2022 as its
shale industry continues to expand. By 2022,
US production will be 890 billion cu m, or more
than a fifth of global gas output. Production
from the Marcellus shale is expected to increase
45 per cent between 2016-22 even at current
low price levels as producers increase efficiency
and produce more gas with fewer rigs.
US becomes LNG export powerhouse
While US demand for gas is rising because
of higher industrial consumption, more than
half of the production increase will be used for
LNG for export. By 2022, IEA estimates that
the US will be on course to challenge Australia
and Qatar for global leadership among LNG
"The US shale revolution shows no sign of
running out of steam and its effects are now
amplified by a second revolution of rising LNG
supplies," said Fatih Birol, IEA executive di-
"Also, the rising number of LNG consuming
countries---from 15 in 2005 to 39 this year---
shows that LNG attracts many new customers,
especially in the emerging world. However,
whether these countries remain long-term
consumers or opportunistic buyers will de-
pend on price competition."
IEA believes US LNG will be a catalyst for
change in the international gas market, diver-
sifying supply, challenging traditional business
models and suppliers, and transforming global
A new wave of liquefaction capacity is com-
ing online at a time when the LNG market is
already well supplied, and the LNG glut is al-
ready affecting price formation and traditional
business models and attracting new LNG-con-
suming countries such as Pakistan, Thailand,
Meanwhile, the ample availability of LNG is
also creating new competition with pipeline
gas supplies, which could benefit consumers.
Intense competition is loosening pricing and
contractual rigidities that have traditionally
characterised long-distance gas trade.
The change will be accelerated by the expan-
sion of US exports, which are not tied to any
particular destination and will play a major
role in increasing the liquidity and flexibility
of LNG trade, IEA said.
Total, BP Unit,
Argentina's state-run oil firm YPF SA,
France's Total SA, Wintershall Energía SA and
BP unit Pan American Energy LLC announced
a US$1.15 billion joint investment on Tuesday
to increase shale gas production.
The investment is the largest specific project
announcement since March in Vaca Muerta,
one of the world's largest shale formations, as
Argentine president Mauricio Macri's govern-
ment tries to reduce reliance on gas imports
that have strained Argentina's finances.
The provincial government in Neuquen,
where Vaca Muerta is located, has agreed to
split the Aguada Pichana area into two parts
and is also combining it with the Aguada de
Castro area, according to a statement.
Total will operate the eastern part of Agua-
da Pichana with a 41 per cent stake, where 48
horizontal wells will be drilled through 2021,
up from 12 currently. Pan American Energy will
operate the western part as well as Aguada de
Castro with a 45 per cent stake and plans to
drill 24 horizontal wells.
The investments will double natural gas pro-
duction in the area to 4.5 million cubic meters
per day, up from 2.2 million cubic meters per
day currently, Neuquen Governor Omar Gut-
ierrez said at a news conference.
oil deals with
Suriname's state oil company Staat-
solie said on Thursday it signed pro-
duction sharing contracts involving
Exxon Mobil Corp, Hess Corp and
Statoil ASA for two blocks off the coast
of the South American nation.
The 30-year exploration and pro-
duction agreements involve the areas
known as Block 59, to be developed by
a consortium consisting of Exxon and
Hess, and Block 60, to be developed
The area off the shoulder of South
America has generated interest from
oil companies after Hess and Exxon
discovered crude off the coast of near-
Hess and Statoil already own stakes
in Suriname oil projects.
Staatsolie will be able to take up to a
10 percent stake during the develop-
ment and production phases.
Staatsolie has said that 2016 was one
of the most difficult years in its 36-year
history due to low oil prices, though
the company managed to reach a gross
profit of US$13 million.
Next Mexico deepwater tender may draw from three Gulf basins
Mexico will announce later this week the
bid terms and blocks up for grabs in its next
deepwater oil tender, which may include the
first areas from the Cordilleras Mexicanas ba-
sin, a senior official said on Monday.
The Cordilleras Mexicanas deepwater ba-
sin is home to national oil company Pemex's
Lakach natural gas project and located east of
the Gulf Coast port of Veracruz.
Mexico's first deepwater oil auction last De-
cember included blocks from the Perdido Fold
Belt straddling the US-Mexico maritime bor-
der, and the Salina basin further to the south.
For the next deepwater round, the energy
ministry is also looking at areas in the Cor-
dilleras Mexicanas basin, said Juan Carlos
Zepeda, head of the National Hydrocarbons
Commission (CNH), the oil regulator that runs
"The auction might include blocks from (all)
three basins," he said.
The auction will likely take place in January,
although no fixed date has yet been set, and
will differ from the last deepwater tender by
including a maximum additional royalty that
interested bidders can offer to win develop-
Last month, the finance ministry said future
oil auctions would include both minimum and
maximum additional royalties, and in the case
of a tie, a cash bond would be used to break it.
Such cash bonds alone raised US$88 million
last week as several of the 21 onshore blocks
awarded ended up tied.
After the next deepwater round, the follow-
ing auction will include so-called non-con-
ventional or shale blocks, which would mark
another first, Zepeda said.
The calendar and bid terms of the non-con-
ventional auction will likely be announced later
this summer, he added.
Last week, Italy's Eni said it had raised the
estimate for what is in its Amoca block, won in
2015, to up to 1 billion barrels of oil equivalent
and planned to speed up development so that
production could come online as soon as 2019.
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