Gas, second fiddle no more

Global LNG demand set to triple to 400 million tons per year by 2020

SINGAPORE (4 May 2011) – According to Coffey, demand for liquefied natural gas (LNG) is on the meteoric rise and such growth is expected to persist over the next ten years, with industry commentators predicting global demand to triple to 400 million tons per year by 2020. The recent Japanese disaster that involved the Fukushima nuclear plant is set to accelerate LNG demand and further cement Japan’s status as the world’s largest liquefied natural gas consumer. Societe Generale estimates Japan’s loss in nuclear capacity from the earthquake could result in replacements with gas (47 per cent), coal (39 per cent) and oil (14 per cent). Undoubtedly, this will cause gas prices to escalate.

Price volatility, which affects sales forecast and estimations on profit, is just one of the tremendous challenges faced by the O&G industry. Another major concern, highlighted by US-based Metastorm, is the “big crew change” whereby almost half of the workforce in O&G is expected to retire in the next ten years which could potentially cause a knowledge chasm. Anton Mubarak, chief executive of U.K. consultancy Energy Projects Development reportedly said that, “There is a big gap with the younger staff. If [companies] don’t act quickly, they will miss the boat.”

Whilst having to cater to unprecedented energy demand from emerging markets, O&G also has to grapple with tightening environmental regulation(s). Already, the EU’s taxation related to CO2 emissions will impose a minimum rate of €20 (RM 87) per metric ton of CO2 emitted by gasoline, diesel, natural gas and coal, effective as of 2013. The European Commission also proposed a gradual increase in the minimum levy on diesel for it to be on par with rates for gasoline by 2018. And soon, the rest of the world will follow suit in implementing carbon taxes. These and EU’s other measures in reaching 2020 climate change targets only compound O&G’s challenges.

Furthermore, O&G has considerable physical assets such as rigs, refineries, systems and pipelines that require continual maintenance and upgrading, representing huge sunk costs. These socio-economic pressures pose seemingly insurmountable challenges to O&G companies. It is important for them to relook the business case and tackle challenges straight on for organisational sustainability.

In the aftermath of the disaster and with nuclear dropped from the energy basket for now, Japan requires up to 5.4 million tonnes per year of additional LNG. The trend of increasing LNG demand is here to stay and is most advantageous to companies with the capacity to divert LNG cargoes. Especially since LNG is now commonly regarded as a clean fuel and appreciated for its versatility in substitution of oil products and utility as feed stock in petrochemical plants and refineries.

LNG’s rising demand also puts the spotlight on holders/producers of natural gas. As a matter of fact, Iran is the second holder and fourth biggest producer of natural gas. According to the National Iranian Gas Company (NIGC), its country alone possesses 27.5 trillion cubic meters (TCM) of natural gas which exceeds the combined volume of natural gas reserves in the United States, Canada, Europe and Asia Pacific. Investment opportunities abound as much of Iran’s potential is untapped, representing avenues of partnership and investment for hydrocarbon-starved countries like China, Korea and Japan.

Malaysia too, being a net exporter, is set to benefit from the trend of increasing LNG demand. According to AmResearch, the country’s new discoveries totalling 2.8 trillion standard cubic feet (tscf) of natural gas prolongs the lifespan of the country’s reserves for another 38 years. Moreover, national oil corporation, Petronas, has this year a RM40 billion budget for capital expenditure for upgrading infrastructure and exploration.

Rapid urbanization of cities pushes world energy consumption to a frenetic pace. Added to that, global endeavors to curtail greenhouse gas emissions as well as favourable natural gas perceptions are likely to give rise to seismic changes in O&G, calling for a redefining of business strategies which focus on LNG where previously oil, owing to higher prices comprised the foremost strategic business unit.

Here are some pertinent questions Malaysia’s O&G industry could address amidst change:
• Are we leveraging on the increased LNG demand for higher GDP?
• Are we engaging buyers of LNG and fulfilling their energy needs?
• What are our mid to long-term strategic plans in tackling O&G challenges?
• In what ways are we optimising production for sustainability, safety and profitability?

Production Optimisation Week Asia Welcomes Dr. Ing. Evita Legowo, Director-General, Oil & Gas, Ministry of Energy and Mineral Resources, Indonesia and Mr. Aftab Ahmad Khan, Executive Director, Oil and Natural Gas Corporation, India

With the recent affirmation of the Indonesian government on its aim to increase oil production to one (1) million bpd over the coming years by offering new exploration rights and encouraging enhanced production from existing wells with its fresh incentives to oil and gas investors and ONGC Rajahmundry Asset’s over-achievement of its onshore oil & gas production targets year after year since 2006, we would like to welcome Dr. Ing. Evita Legowo and Mr Aftab Khan to Production Optimisation Week Asia!
Dr. Ing. Evita Legowo leads Indonesia’s oil and gas industry to new heights with favourable tax treatment and improved production splits, as the country considers offering more incentives to foreign investors to encourage oil and gas projects.
As Executive Director - Asset Manager, Rajahmundry Asset of ONGC, Mr. Khan is responsible for steering the most valuable region of ONGC where onshore activities are spread over three districts in the State of Andhra Pradesh viz., East Godavari, West Godavari and Krishna. Also looks after the drilling operations of ONGC in offshore in the East Coast.
The Center for Energy Sustainability and Economics is convening Production Optimisation Week Asia (POWA) 2011 from 25th to 29th July 2011 in Kuala Lumpur Malaysia to help oil and gas companies such as state-owned oil companies from as far as the Africa, South America and the Middle East to generate alignment to boost recovery and revenue and come together for informed and integrated approaches to a diverse variety of conditions. The meeting will involve senior company executives as well as functional heads in charge of reservoir engineering, production engineering, drilling and completions engineering, particularly those involved with each company’s mature, marginal, deepwater and other technically and commercially challenging fields.

POWA 2011 is specifically designed based on the feedback of experts and specialists from major oil and gas operators concerning their current challenges and needs associated with maximising production and with world-leading optimisation strategies and solutions. Ergo, we ascertained that POWA 2011, with its well-rounded and solution-focused structure, will successfully respond to the need for ground breaking solutions and technology as well as policy and strategy and cost-efficient advanced techniques to maximise and optimise production, increase recovery and improve HSE.

Thus, for the very first time – combining the reservoir, production and completions engineering, POWA 2011 will provide you a real comprehensive, multidisciplinary platform highlighting the breadth and depth of information you need to provide the best solutions and services to your clients in oil and gas industry as they share their current challenges and needs. The event website can be accessed on http://www.arcmediaglobal.com/powa

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If you’d like more information about this topic, or to schedule an interview with the speakers at
POWA 2011, please call Eunice Wee at (+65) 6844 2080 or email Eunice at powa@arcmediaglobal.com

Keywords: Coffey, liquefied natural gas, LNG, Japan, Fukushima, nuclear plant, earthquake, price, volatility, Societe Generale, SG, Metastorm, Anton Mubarak, Energy Projects Development, EU, European Union, CO2, carbon, emissions, taxation, levy, diesel, gasoline, climate change, European Commission, energy basket, LNG demand, Iran, National Iranian Gas Company, NIGC, China, Korea, Japan, Evita Legowo, Indonesia, Aftab Khan, India, ONGC, TCM, AmResearch, Malaysia, Petronas , Rajahmundry, onshore, offshore, Asia, Africa, South America, Middle East

The Center for Energy Sustainability and Economics (Center for Energy) is an industry research centre (IRC) that works to bring top executives together in communities of learning and practice to act as a catalyst for generating high-value energy business insight and channel top expertise to where the world needs it most. Meetings by the Center for Energy are managed by Arc Media Global, the world’s first B2B/G2B integrated marketing specialist headquartered in Singapore.

Robinson Road. PO Box 176. Singapore 900326

Contact: Eunice Wee
Arc Media Global
(+65) 6844 2080
powa@arcmediaglobal.com
www.arcmediaglobal.com/powa

This release was published on openPR.