Natural Gas : Information and Updates
Alaya Legal introduces its Natural Gas: Information and Updates, with a view to present in a systematic, organized and comprehensive manner the developments in the natural gas segment across the globe and the Republic of India.
The publication is intended to serve as a canvas for understanding various legal and market developments in this segment.
Introduction
Natural gas is a natural reserve present throughout the world and is extracted in several countries. In today’s world, a country’s revenues and Gross Domestic Product (GDP) heavily depend upon natural gas reserves and production.
Countries across the globe have been grouped into categories depending upon the quantum of proven natural gas reserves present in such countries.
The endeavour is to cover developments in very high concentration areas and major developments in all other areas. Developments in the Republic of India are covered separately.
Zoning
The global scenario of proven natural gas reserves has been divided into the following four categories:
- Very High Concentration – above 100,000,000,000 cu-m
- High Concentration – above 10,000,000,000 cu-m
- Medium Concentration – above 1,000,000,000 cu-m
- Low Concentration – 0 to 1,000,000 cu-m
Very High Concentration Areas include Canada, Qatar, USA, Russia, Norway and Iran.
The picture will remain incomplete without reference to shale gas basin reserve holders across the world.
Global Scenario
Statistics
Canada
Canada is the world’s third-largest producer of dry natural gas and the source of most U.S. natural gas imports.
Despite holding a relatively small share of the world’s proven natural gas reserves, Canada ranks third in dry natural gas production and fourth in exports after Russia, Norway and Qatar.
Canada currently exports natural gas primarily to U.S. markets through pipelines.
The estimated production of natural gas was 160.1 billion cu-m while consumption stood at 103.3 billion cu-m.
Qatar
Qatar holds the world’s third largest natural gas reserves and is the single largest supplier of liquefied natural gas (LNG).
Qatar’s proven reserves stood at approximately 896 trillion cubic feet (Tcf) as of January 01, 2012.
Qatar possesses nearly 14 percent of total world natural gas reserves and ranks behind Russia and Iran.
USA
Proved reserves of U.S. oil and natural gas in 2010 rose by the highest amount ever recorded since reserve estimates began in 1977.
Growth in shale gas production driven by horizontal drilling and hydraulic fracturing significantly contributed to reserve expansion.
The estimated gas production in 2011 was 651.3 billion cu-m while consumption stood at 689.9 billion cu-m.
Russia
Russia holds the largest natural gas reserves in the world and is the largest producer and exporter of dry natural gas.
Russia exports significant quantities of natural gas to CIS nations, European Union countries, Turkey, Japan and other Asian nations.
Norway
Norway is the second-largest exporter of natural gas after Russia and ranks fourth in global production.
Norway possessed 71 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2012.
Norway exported approximately 96 percent of its natural gas production in 2011 through extensive pipeline networks and LNG shipments.
Iran
Iran, a member of OPEC, possesses the world’s second largest natural gas reserves after Russia.
Natural gas accounts for approximately 54 percent of Iran’s domestic energy consumption.
Iran’s estimated proven reserves stood at 1,046 trillion cubic feet (Tcf) as of January 2012.
Major gas fields include:
- South Pars
- North Pars
- Kish
- Kangan-Nar
Iran produced approximately 5.2 Tcf of dry natural gas in 2010 and consumed approximately 5.1 Tcf.
Market Update – Global
Canada Natural Gas Imports Increase, US Imports Decrease
Canadian natural gas has historically been the primary source of natural gas imports into the United States.
However, imports from Canada have steadily declined since 2001 due to rising shale gas production within the United States.
Net imports from Canada declined by approximately 7% during the first eight months of 2012.
U.S. exports to Canada have simultaneously increased significantly since 2000.
USA – Net Exporter of Natural Gas by 2020
The U.S. Energy Information Administration released the Annual Energy Outlook 2013 (AEO2013), projecting significant growth in shale gas production.
According to AEO2013:
- U.S. LNG exports are expected to commence in 2016
- The United States is projected to become a net exporter of natural gas by 2020
- Pipeline exports are expected to increase substantially
Russia’s Gazprom $4 Billion Refund to European Clients
Gazprom announced refunds amounting to approximately $4 billion to European clients, resulting in a substantial decline in profits.
The European Commission initiated investigations into alleged anti-competitive practices by Gazprom.
Norway Statoil and Germany Wintershall Supply Deal
Norway’s Statoil entered into a ten-year supply agreement with Germany’s Wintershall beginning January 01, 2013.
The agreement covers supply of 45 billion cubic metres (bcm) of natural gas.
Iran to Earn $400 Billion from Gas Fields
Iran announced that the South Pars and related gas fields could generate annual revenues of approximately $400 billion upon completion.
Iran’s Gas Production Reaches 120 bn Cubic Tons
Iran increased gas production significantly through investments in South Pars and other fields.
Qatar Exports Rise
Natural gas exports from Qatar increased substantially according to International Monetary Fund reports.
Bulgaria to Import Gas from Europe
Bulgaria planned gas interconnectors with Serbia and Hungary to diversify gas supply sources by 2014.
Ukraine Moves Closer to Shale Gas Deal with Shell
Ukraine moved closer to a production sharing agreement with Royal Dutch Shell relating to shale gas reserves.
Nord Stream to Increase Gazprom Export Costs
Gazprom’s plans to divert exports through Nord Stream significantly increased transportation costs.
Market Update – Republic of India
Statistics
India possessed approximately 38 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2011.
India produced approximately 46.1 billion cu-m of natural gas in 2011 while consumption stood at 61.1 billion cu-m.
Market Updates
Production Sharing Contracts Signed under NELP-IX
Under the Ninth Round of the New Exploration Licensing Policy (NELP-IX), the Government of India signed 13 Production Sharing Contracts on March 28, 2012.
The contracts covered:
- 2 shallow water blocks
- 11 onshore blocks
- Basins across Assam, Gujarat, Rajasthan and Madhya Pradesh
RIL Advocates Market-Driven Pricing for Natural Gas
Reliance Industries Limited stated that deep sea reserves require prices above $10 per million British thermal units for viable development.
RIL advocated market-linked pricing mechanisms for exploration and production.
India Shale Policy
The Ministry of Petroleum and Natural Gas announced that India’s shale gas exploration policy favouring market-determined pricing was under discussion.
The Government identified the following basins for shale gas exploration:
- Cambay
- Assam-Arakan
- Gondwana
- KG Onshore
- Cauvery Onshore
- Indo-Gangetic Basin
New Oil Findings
Malaysia
Petronas discovered two major gas reserves in Kuang North and Tukau Tamar gas fields estimated to contain over 4 trillion cubic feet (Tcf).
Saudi Arabia
Saudi Arabia announced discovery of a gas field in the Red Sea near Dhuba Port in Tabuk region.
Bangladesh
Bangladesh discovered approximately 1 trillion cubic feet (TCF) of additional reserves in the Titas Gas Field.
The discovery was expected to improve domestic gas supply and support economic growth.
Sources
- Norwegian Petroleum Directorate
- U.S. Energy Information Administration
- International Energy Agency
Legal Developments
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