Growth in Pakistan tempers change driven by Egypt
Whilst the overall number of cargoes delivered by Sunday midnight is looking to remain stable week-on-week as well as year-on-year, the actual volumes delivered will lag behind both those of the previous week (7.6%) and year-on-year (-14.3%), our LNG Market Tracker data for this week to Sunday indicates.
The key to that development is found in Egypt.
Egypt’s return as exporter is tipping the scale
Eni’s discovery of the Egyptian Zohr offshore gas field in 2015 and subsequent swift development has had a significant effect on overall Middle Eastern LNG demand. Eni’s figures show the field achieved production growth to 2.7 bcf/d in August, growth which helped free up gas produced from the West Delta Deep Marine Development for export.
This has allowed Egypt to re-enter the LNG market as a net LNG exporter via its Idku plant notwithstanding seasonally high domestic summer demand that has whittled exports down to one cargo in September.
Idku has seen the number of shipped cargoes rise from 21 cargoes in 2018 to 36 in the year to October, our LNG Market Tracker data shows. Notably, the plant sent out an additional cargo on 30 August via the Cadiz Knutsen, though this was a domestic shipment to Ain Sokhna.
Knock-on effects on regional demand
As a result, the region’s demand picture this year is missing 36 cargoes that were received by the Ain Sokhna terminal between January and early October last year.
Moreover, Egypt’s gas developments are also impacting Jordan, which has seen the number of cargoes delivered to the Aqaba LNG terminal fall by 83% year-on-year since January. The reason is not a sudden drop in Jordanian energy demand but the resumption of Egyptian gas exports to the country via the Arab Gas Pipeline. The pipeline suffered a series of sabotage attacks in 2011, which led to the commissioning of the Aqaba LNG facility.
Pakistan and Dubai demand slows overall decline, leaving a nuanced picture
The fall in demand could have been much more significant but for robust demand growth in Pakistan. Although the UAE and Israel have also increased offtakes significantly by 78% and 30% year-on-year since January, these took place from relatively low bases. In contrast, Pakistan’s increase of 32.5% represent more than 4mmt over the same period, thus compensating to a large extent for the decline in Egyptian LNG demand.
The Middle Eastern LNG demand picture is thus likely to continue a nuanced development, with importers such as Pakistan likely to continue on an LNG growth path whilst those with domestic resources and pipeline connectivity continuing to reduce offtakes.Previous:
PNG expansion talksNext:
Western Australia upstream spending to rise as Equinor joins Carnarvon Basin exploration