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Article Excerpt
The following are extracts from a presentation by APS Energy Group President Pierre Shammas made to the Iran-China Co-operation Conference held on Kish Island, Iran, on Feb. 18-19, 2006.
Introduction: "...The China-Iran connection covers a whole spectrum of economic activities - dam-building, steel mills, ship-building, transport and dozens of other projects, and energy. More than 100 Chinese firms are involved in Iran, also co-operating to develop ports, jetties, airports in six cities, mine-development projects and, of course, oil and gas. Trade between the two countries in 2005 hit a new record of US$9.5 billion, compared with $7.5 billion in 2004.
"...[One] example of the huge rewards of China becoming the world's largest importer of LNG: It will have already developed itself as the largest and most competitive ship-builder in the world. Another example: It will have already developed itself as the world's largest consumer of clean gas and liquids from its own coal reserves. China's coal reserves are the third largest in the world next to those of the US and Russia.
"Iran and China may note that in promoting its shift to natural gas and its two LNG ventures - Oman LNG and Qalhat LNG - the sultanate of Oman had a gas development strategy based on three models adopted in the 1990s:
"(1) the model of Trinidad and Tobago (T&T), whose main challenge was high unemployment and needed new jobs for its nationals out of an expanding gas sector and gas-based industries, as well as jobs for Omanis in LNG maritime shipping - a sector which is acutely short of manpower on both sides of Suez, and Omanis are being trained in this field, taking into account Oman's history as a maritime shipping empire, hence the importance of Oman Shipping Co. (OSC) having its own LNG tankers and developing all-purpose fleets;
"(2) the model of Indonesia, whose priority was to generate foreign exchange earnings first to support LNG exports, followed by converting gas into chemicals; and
"(3) the model of Pakistan, whose priority was to develop a domestic market for natural gas, rather than the Dutch model which led to the Dutch disease; and in this particular respect Oman deserves special praise.
"LNG is natural gas cooled down to -162C, at which temperature it contracts into a liquid, which can be carried in tankers and delivered around the world, anywhere there are LNG-receiving/regasification terminals. These turn the liquid back into gaseous form for industrial use, feeding it into pipelines for distribution.
"Liquefication allows a vast amount of the gas to be transported in a single cargo. Methane, for instance, is 600 times less voluminous as a liquid than as a gas, so one shipment by an ultra-large tanker is the equivalent of almost 5% of the gas consumed in the US on an average day.
"LNG and other gas-to-liquid (GTL) fuels, transported by sea, allow producers to bypass the pipeline constraints which have traditionally tied natural gas within regional markets and provide an immense boost to globalise some of the trade in world gas production.
"Gas is an attractive alternative to oil or coal for another reason: the environment. Gas is the cleanest burning of the fossil fuels and is finding increasing favour globally in the struggle against the harmful emissions of greenhouse gases.
"Over the last 20 years, natural gas consumption has grown by more than 50% and is now the primary choice for power generation. More than half of the power stations operating around the world are gas-fired.
"The constantly rising demand for electricity around the world has spurred the expansion of the LNG industry. Indonesia is the world's biggest LNG exporter, but its capacity has declined in the past two years from a peak of 30 million tons per annum in 2004. Qatar, which has more than 910 TCF, the world's third largest reserve after Russia and Iran, is planning to take the lead by 2014 or before by raising its LNG export capacity to about 83 million tons/year. That will be equivalent to 2 million b/d of crude oil.
"The natural gas industry will have a far-reaching impact on the world economy,...
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