The Uphill Quest for Natural Gas

The Uphill Quest for Natural Gas

Although the hydrogen sector is generating a lot of hype and millions of dollars, not even all hydrogen is made equal. Although hydrogen is by far the most plentiful resource in the world, it must be separated from its source, which requires energy. At the present, it’s largely made from grey hydrogen, which comes from fossil resources like natural gas as well as oil.

Furthermore, it should be noted that Egypt is Africa’s biggest hydrocarbon user. As a result, the necessity to increase the nation’s productivity to fulfill this need has become more obvious, particularly as energy consumption grew in the years prior to the coronavirus. Natural gas consumption increased from 40.9 billion cubic meters in 2009 to 58.9 billion cubic meters (bcm) in 2019, culminating at 59.6 bcm in 2018. Rising population, industrial growth, and hydrocarbon-extraction operations, as well as a spike in the proportion of automobiles on the road, all contributed to increased demand.

General Review of Natural Gas

First of all, Egypt was ready to cease importing LNG in October 2018 and resume exporting it in January 2019 as a result of natural gas breakthroughs and large increases in productivity over the preceding years. Egyptian exports accounted for 1% of the global economy in 2019, despite the country’s larger objective of positioning itself as the regional hub for natural gas liquefaction and LNG exports. Egypt now has two LNG facilities at Idku and Damietta. Between 2013 and 2019, the former was operating at roughly 15% capacity, while the latter had been shut down from November 2012. Idku, on the other hand, was said to be working at 90% capacity in September 2019. The Idku factory reopened in February 2021, following a temporary halt in processes to the pandemic. At the same time, the Damietta plant reopened.

Over the medium to long term, the government has promised to boost LNG exports from either of the two projects to 12.5 million tonnes. In addition to local natural gas, the nation’s long-term goal to become a significant LNG exporter calls for it to obtain natural gas from reserves being developed by neighbouring Mediterranean nations such as Cyprus, and Greece. Egypt also intends to use its existing gas infrastructure and local relations to develop itself as a major hub for the refining and export of Mediterranean LNG to International markets. Egypt exported 1.3 million tonnes of LNG to the EU in 2019, with 0.6 million and 0.3 million tonnes going to Pakistan and Singapore, accordingly. As projected by a Petroleum Scientist in the Egyptian Oil and Gas industry, “I believe that the industry will be projected to be driven by a lot of variables like strong regulatory programs and strategies to increase natural gas and oil [output] with future initiatives.”

Nevertheless, the economy’s growth is projected to be limited in the future years by the significant capital expenditure necessary, as well as a shortage of funding owing to a global financial recession in the case of the COVID-19 pandemic.

Thus far, North America has topped LNG export growth, with US LNG production increasing by over a third year on year (y-o-y) in the first half of 2021. Africa’s LNG exports increased by 9% (y-o-y), owing to a strong resurgence in Egyptian LNG exports, which has been strengthened even more by the inauguration of the Damietta facility in February 2021. During the first half of 2021, LNG supply in the Middle East increased by 2% y-o-y as Qatar generated above nominal capacity.

Future Potential of Natural Gas

As a result of a significant rebound in demand, harsh weather occurrences, and unforeseen supply interruptions, the Q4 2021 begins with record-level seasonal gasoline prices. These concerns can be seen as are a warning that stability of supply continues to remain a big issue for gas markets, just a year after a record decline in sales and oversaturated markets.

The series of changes in market conditions so far this year has highlighted the need for adaptability in guaranteeing resource security and consistency. Liquefied natural gas trade elasticity, along with other key aspects of the gas adaptability toolkit like interconnectors and storage space, has been and continues to be critical in reacting to unforeseen market fluctuations. As networks in transition shift to low-carbon gas to achieve net zero emission goals, providing secure and convenient supply is going to become increasingly difficult. To maintain grid stability in a transitional gas system, regulators should take a cautious and defined approach to market design.

To conclude, gas networks in the future will be more complicated and decentralized, with unidirectional networks. Due to the wide range of low-carbon gas sources of supply and the existing lack of hydrogen mixing criterion standardization during the transition period, maintaining consistent performance standards is projected to be more challenging. The process parameters of low-carbon gas production may limit the ability to offer flexibility. To assure security and sustainability in transitional gas lines, authorities should use a wise and extensible market design strategy.

To achieve the goal of net zero pollutants by 2050, a large-scale distribution of low-carbon emissions is required to decarbonize the present gas infrastructure. To plan for this major change in gas networks and industry, policies established in the following few years must facilitate this implementation. Authorities should examine the latest safety of supply problems that are expected to develop throughout this shift in this respect.


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