Countries in the Middle East and North Africa (MENA) are leading global LNG demand growth in 2016, a trend that will continue as domestic gas output falls short of surging regional demand for power and industry, according to a report by the Arab Petroleum Investment Corp. (APICORP).
By the end of 2017, MENA countries will account for 6.5% of global LNG demand – a sharp rise from about 1% in 2013, according to APICORP.
Imports of the chilled fuel by consumer countries in the MENA region amounted to just 10.5bcm of LNG last year, of which 40% arrived from Qatar, the report said.
However, according to the report, these levels “will rise steeply, spurred by the present global supply overhang, which should allow regional buyers to lock in preferential prices and allow them to choose from a wider range of suppliers.”
“Despite this, some MENA countries will take a “wait and see” approach to building capital intensive permanent LNG-import terminals, wary of a looming tightening in LNG balances and the potential for price inflation in the second half of the next decade.”
According to APICORP, MENA countries will still invest around $10.3bn in LNG-importing facilities over the medium term to cater for growing demand, and will increasingly charter foating storage and regasifcation units (FSRUs) as a temporary and lower-cost solution.
In conclusion, APICORP said MENA countries will seek to reinforce gas security by prioritising gas for the domestic market and by creating import infrastructure and capacity. Low spot LNG prices combined with FSRUs offer a “welcome quick fix.”
“A swathe of import tenders from Egypt and Jordan in the past two years is a positive step towards energy security. Diversifed imports in Dubai and Kuwait show that under current market conditions MENA importers can meet seasonal demand increases. Favourable market conditions should incentivise new MENA importers to do more to ensure they do not miss the opportunity to install import infrastructure and sign cheap and fexible LNG deals.”