HighBeam Research:
Title: Why natural gas is the future of energy
http://www.furl.net/item.jsp?id=2475789
Date: 3/28/2005
Publication: The Economic Times (New Delhi, India) (via Knight Ridder/Tribune Business News)
Byline: Pradeep Kurup
Mar. 28--Till recently natural gas was a poor cousin of oil. Natural gas was often stranded and that left it undeveloped. But today natural gas is very much in favour as a clean fossil fuel, especially for electricity generation in industrialised countries.
Global proven gas reserves are 5501 TcM with around 60 years of production at current utilisation rates compared to 40 years for oil.
The world could be consuming more gas than oil by 2030 and that would mean an even greater incremental growth in both gas supply and transportation than the industry has seen up to date, with nearly 25 percent of all natural gas produced now crossing an international border. <...>
The EIA, in conjunction with the Oil and Gas Journal and World Oil publications, estimates world proved natural gas reserves to be around 5,210.8 Tcf.
Most of these reserves are located in the Middle East with 1,836.2 Tcf, or 34 per cent of the world total, and Europe and the former Central Asia with 2158.7, or 42 per cent of total world reserves.
The United States, by this calculation, possesses 3 per cent of the world total natural gas reserves.
What are the challenges in the global natural gas sector? High-risk elements remain in pursuing successful strategies in the global gas industry. Oil companies today are dealing with high gas prices in the USA and rising prices in Europe.
Countries are now less reliant on long term gas contracts and are relying on spot and supply sales, whether via pipeline or LNG.
As demand for gas is increasing, there is concern over the security of supply. In the case of countries like the USA and European countries and India, where indigenous supply cannot keep up with demand, gas being sourced from greater and greater distances, bringing together a mix of political, economic and technical risk.
Markets like Japan and China are already very LNG-dependent and are driving the demand-supply imbalances. China is trying to raise the share of gas in the energy market from 2 percent to around 8 percent by 2010.
Gas markets are fast changing, and though oil companies have structural advantages, assets and capabilities to enter and profit from the changing gas market, they have to invest heavily in building a vertically integrated gas business. This requires a huge capital expenditure and we may again witness some monopoly building up in gas business among a few huge corporations in the world.
Apart from this transportation is the single biggest challenge faced by natural gas business. <...>
Why Indo-Iran pipeline is in news? India and Iran have proposed a 2,700-km gas pipeline between the two countries, via Pakistan at a cost of $4.5 billion.
India would build strategic storages in Rajasthan or Gujarat as an insurance against possible disruption in supplies of natural gas through the 2775-km-long pipeline, one-fourth of which will pass through Pakistan.
The current situation in Iraq and the implications this holds for the price and stability of supply of oil from West Asia only add greater relevance to cementing contractual and infrastructural arrangements for supply of natural gas from Iran to India. <...>
Another proposed pipeline is the Turkmenistan-Afghanistan-Pakistan-India gas project. The project estimated at $3.3 billion will have a total length of 1,600-km.
India has shown its readiness for the proposal though worried about security of the pipeline in Afghanistan and Pakistan.
To see more of The Economic Times, or to subscribe to the newspaper, go to http://economictimes.indiatimes.com Copyright (c) 2005, The Economic Times, India Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints at krtinfo.com.
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