DOHA • Growing nationalism in major gas producing countries, lack of progress on key pipeline projects in Asia and uncertainties surrounding gas-handling and internal transmission issues in China and India overall paint a disturbing picture for the global natural gas industry.
Increasing intervention of the Russian government in gas production and export is a cause of concern (especially as the country sits on the world's largest proven reserves), warned a UK-based energy expert addressing the concluding session of the 12th Middle East Gas Summit here yesterday.
Iran, with the second-largest reservoir, is struggling with issues of reform, constitutional obstacles in attracting foreign investment to optimize its production potential and the government's contradictory approach to handling overseas investors, said Robin Chatterjee.
Chatterjee is the chairman of Energy Management International, UK, and was presenting a paper on 'Middle East & Asia: Unlocking the deadlocks-a new paradigm for gas market development'.
An essential pre-requisite in the case of Iran, where domestic consumption of gas is increasing fast, is that it has to reform in order to be able to develop its gas industry for export, he stated.
Practically no progress has been made on the proposed Iran-Pakistan-India pipeline project, which has been discussed for the past 10 years. Geo-political differences (between India and Pakistan) remain a major stumbling block.
Indonesia, which is one of the key players in world liquefied natural gas (LNG) exports, has recently decided to withhold 25 per cent of its gas for local consumption.
Some LNG trains are being shut down and a pipeline is being built within the country to divert the gas meant for export for local use, the expert said. "This will destabilise the Asia-Pacific market."
In Russia, which hopes to cater to the vast and emerging Asian markets-China and India-there is an upsurge of nationalistic sentiment and the state-controlled Gazprom is becoming very powerful. "There is, therefore, the need to control the increasing intervention of the state (in the local gas industry)," remarked Chatterjee.
Things are equally uneasy on the demand side as China and India, the two major world markets where the demand for gas is tipped to grow at very high rates, are sending confusing signals about how they plan to handle the large gas imports and transmit locally.
The country had been planning 20 to 25 gas terminals but they have all been "rejected or axed", sending confusing signals to LNG providers.
As for India, there is a huge supply-demand gap and only one LNG terminal (Dahej) is functioning at full capacity, while the one at Hazira (Shell-owned) is yet to be fully operational, said Chatterjee.
"The relations between the NOCs (national oil companies) and IOCs (international oil companies) are getting confused and the former are becoming very powerful at the expense of the latter."
But, to make further and worthwhile progress in opening up global gas markets, the role of the IOCs needs to be defined, he said.