Oil and gas industry dynamics changing as LNG growth
accelerates
http://www.engineeringnews.co.za/article/oil-and-gas-industry-dynamics-changing-as-lng-growth-accelerates-2012-03-14[23.11.12
11:32:29]
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By: Jean McKenzie14th March 2012
TEXT SIZE
OIL & GAS
Oil and gas industry dynamicschanging as LNG
growthaccelerates
The global oil and gas industry had undergone a number of major
developments in therecent past, which would affect the industry
significantly going forward, Deloitte & ToucheSouth Africa oil
and gas leader Anton Botes said on Wednesday.
These developments include the growth of the liquefied natural
gas (LNG) market, theglobal development of unconventional gas, the
increase in riskier exploration andproduction investments and
rising operating costs in the industry.
It used to be sufficient to view global oil and gas trends in
the typical cyclical rhythms thatthe industry moves in. But in the
last five to ten years, significant macro changes causedspikes in
the matrix we usually evaluated of production, consumption and
prices, Botessaid.
For example, the rise of China to eclipse Japan as the worlds
second-largest economyhad a long-lasting impacting on global energy
production, consumption and prices, hesaid. These changes are not
fleeting but structural and they are shifting the cyclicalrhythm
that we are used to in the oil and gas market.
Botes said that the changes were resulting in a new balancing of
the geographical flow ofpetroleum supply and demand, a balancing of
fuel types and a change in the types ofplayers involved in the
industry.
In the early 2000s, about ten countries exported LNG and trade
was based on long-termsales agreements and flowed from the
producers in South East Asia and the North East,to consumers in
East Asia and Europe. However, LNG has in the last ten years become
aglobally traded commodity with new exporters from Latin America
and West Africaemerging and new importers such as China and India
appearing. In the next five years,there would be additional
exporters from North America, the Eastern Mediterranean andEast
Africa.
By 2035, LNG could account for 50% of the international gas
trade where it is currentlyaround 26%, predicted Botes.
The emergence of new LNG exporters and importers had resulted in
a change in thedynamics of energy geopolitics. The growth of LNG
also signals a shift in fuel mix ascountries such as the US, China,
Australia and Japan see a future more reliant on naturalgas than on
coal . . . and nuclear.
Botes proceeded to explain that the search for LNG had not meant
that producers weremoving away from oil. High crude prices are
incentivising producers to invest inexploration and production
projects. The new shift now is that it has become economicalfor
companies to go deeper and to go riskier. Botes qualified this by
saying that there
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Oil and gas industry dynamics changing as LNG growth
accelerates
http://www.engineeringnews.co.za/article/oil-and-gas-industry-dynamics-changing-as-lng-growth-accelerates-2012-03-14[23.11.12
11:32:29]
City Company Continent Country
Cape Town Deloitte & ToucheSouth Africa
Africa
Europe
Latin America
North America
Australia
China
India
Japan
United States
Industry Term Person Region
Energy ProductionConsumption
Liquefied NaturalGas
Oil And Gas Industry
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Oil And Gas Trends
Unconventional Gas
Anton Botes East Africa
West Africa
were other factors also pushing the deeper exploration such as
new technology available.
However, the rising cost of doing business in the oil and gas
industry was also impactingplayers globally. Although capital
expenditure of petroleum discoverers is on the rise, sotoo are
operating costs. One of the main drivers of increased [operating
costs] is highwages and this could be a long-term problem for the
perceived shortage of skilled labour.In a recent survey of
petroleum executives conducted by the Economist a shortage
ofskilled labour was listed as the second major barrier to growth.
Unconventionalexploration was also more labour intensive and
locations typically more remote, whichresulted in increased
costs.
The oil and gas industry in sub-Saharan Africa with its long
petroleum history and brightfuture in offshore and unconventional
resources stands squarely in these balancingdynamics, he
concluded.
Botes was speaking at the Oil & Gas Africa 2012 conference
in Cape Town.
Edited by: Creamer Media Reporter
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Oil and gas industry dynamics changing as LNG growth
accelerates
http://www.engineeringnews.co.za/article/oil-and-gas-industry-dynamics-changing-as-lng-growth-accelerates-2012-03-14[23.11.12
11:32:29]
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