IEA Urges More Gas and Solar in Mideast Power
Major oil and gas producer countries have weathered many upheavals in recent decades but will need a renewed commitment to reform and economic diversification in the years to come, according to an International Energy Agency (IEA) report released October 25 that urges them to capture more value from oil and especially gas.
‘Outlook for Producer Economies 2018,’ released as a special report in advance of the IEA’s annual World Energy Outlook due out November 13, focuses on six major producers – Iraq, Nigeria, Russia, Saudi Arabia, the United Arab Emirates and Venezuela – for which gas is of varying importance to their production mix – but also looks at Qatar and others where LNG is crucial.
All producer nations face three new structural pressures, IEA executive director Fatih Birol told reporters in London. The first is the shale revolution where more than half of global oil growth to 2040 will be shale, chiefly US. The second is on the demand side, where increasing efficiency means that less road fuel will be required for each car or truck to move it the same distance. And the third is the climate change agenda and how it will affect policy in consumer markets.
Birol said in the key six producer nations featured in the report, governments are all very reliant on oil and gas revenues – 40% in Russia and as much as 90% in Iraq – so higher oil prices are welcome but risk entrenching inertia at a policy and investment level.
Many nations see the need to capture more value from oil and gas by moving into petrochemicals and refining, but the head of the IEA supply division, Tim Gould, stressed that gas in particular can support such strategic investments – often better than oil.
Today in the Middle East still about 1.8mn b/d oil is burned for power generation, Ali al-Saffar, IEA programme director for the Middle East/North Africa (Mena), told NGW – citing the report.
Exporting that oil and replacing its use in Mideast power generation with gas, and increasingly renewables – particularly photovoltaic solar – could deliver major economic and environmental benefit to the region, said Gould.
Moreover, the issue of integrating renewables into the power grid is not as major a challenge in the Mena region as for instance in Europe, he noted, as peaks for power demand in cooling are in the afternoon when solar is available. And flexibility can be provided by fast-response combined-cycle gas (CCGT) plants; in fact 90% of the UAE's power already comes from CCGTs.
The report says gas demand in Gulf Cooperation Council states has increased by a factor of 2.5 times since 2000, with around half that growth coming from power generation.
The report forecasts continuing strong growth in gas production in the region, nowhere more so than in Iraq where the IEA report forecasts gas production rising from 8bn m3 today to 115bn m3 by 2040. Of the Iraqi government taking office this week, al-Saffar told NGW he was confident that the new ministers for electricity and oil understood the need for a reformist agenda.