Oil finds fewer now, but energy shortfall growing
Jeremy Beckman
Editor, Europe
Energy needs across the northern Mediterranean are being driven by gas developments to the south. New gas discoveries and moving the gas to markets around Africa and the Mediterranean dominated keynote sessions at the Offshore Mediterranean Conference (OMC) in Ravenna, Italy. Discussions about oil development were few since there were few new prospects for major new plays, even in the underexplored deep waters of the Ionian Sea. Petroleum officials from nations along the eastern Adriatic played up their countries' new open licensing regimes. But the consensus was that future oil needs would more likely be met through the TransCaucasus pipelines carrying Caspian crude. Dr Rilwanu Lukman, OPEC Secretary General, substantiated this view through stating that the Mediterranean region produces 4.7MM b/d of oil, but consumes over 7MM bbl/d. There is an equivalent shortfall in natural gas, with the region demanding 2.4MM boe daily against production of just 1.7MM boe/d. This situation has arisen despite the multiplication of pipelines carrying Algerian gas subsea to Iberia and Italy. Lukman alluded to stringent environmental controls hampering development of the few worthwhile Mediterranean offshore prospects. Agip's Alto Adriatico is a prime victim. This should be one of Europe's largest new offshore gas developments, involving two production platforms and 17 attendant unmanned platforms, all situated in waters up to 40 meters deep and up to 10km from Italy's eastern coast. The gas would be produced via a complex network of pipelines and over 80 wells, but the Italian authorities fear subsequent subsidence in the Bay of Venice. The development remains on hold pending results of an Italian Environment Ministry study. Agip says its own research suggests localized subsidence amounting to a few centimeters at worst. Italian fabrication yards dependent on this project await the outcome with anxiety. Agip does have other strings to its bow in its struggle to supply Italy's gas-fired industries. At OMC, parent company ENI's Gug-lielmo Moscato and Andrija Kojakovic, president of Croatian state oil company INA, signed a memorandum of understanding over incr-eased co-operation. This would extend to joint exploration of an area around 2,500 sq km in size offshore the city of Zara in Croatia, with Agip bearing the initial five-year, $25 million exploration costs. The companies had previously signed an accord to develop a gasfield discovered by INA in the Croatian Adr-iatic, with supplies bound for a new Croatia-Italy pipeline. To the south, Libya is one of five North African countries almost wholly dependent on oil and gas for its energy, Moscato said, but its huge resources allow it to remain a net exporter. Like Egypt and Algeria, Libya is gearing up for gas exports on a large scale, starting with last fall's agreement between Agip and Libya's National Oil Company to jointly develop the NC41 offshore field and the Wafa Field onshore.
Gas from these fields will be collected and processed at Sabrata on Libya's north-west coast. From there, a newly installed subsea pipeline will send 8 bcm/yr to Italy, with 2 bcm reserved for domestic Libyan needs. Moscato sounded defiant against implicit pressure from the US. If the senior Libyan official were barred from flying direct to the next OMC, Moscato said he could be routed over instead via Baghdad. Moscato also attempted to justify ENI's deal by emphasizing that Italy's government favors integration of Libya into the recently formed Europe-Mediterranean Partnership. As for Egyptian gas, the options for export are an eastward-bound pipeline along the coast or subsea supplying Palestine, Jordan, Israel, Lebanon and maybe Turkey, said Moscato. The Egyptian gas network could also link in with Libya's. Alternately, an LNG project could emerge supplying potential regasification centers in Turkey, Greece and elsewhere. ENI is working with Amoco and the Egyptian authorities to define a solution. Moscato forecast intra-Mediterranean gas trade rising from 30 bcm in 1990 to 86 bcm in 2010, mostly through pipelines. But this would be bolstered by outside supplies from the FSU and LNG from Nigeria. However, he warned that a Mediterranean gas market based on the current pipeline transmission system might prove too rigid, with receiving centers neither widespread nor diversified enough. For that market to become more vigorous and dynamic, he suggested, the present structure should be integrated with new LNG projects, allowing each new exporting country to be linked to the importing countries through trunklines and unloading points. In turn, a `spot' component should be encouraged. There are obstacles to such a development in the Mediterranean, he said, above all the cost of the technologies involved. Only over distances of 1,500-2,500 km, and in large quantities, are LNG projects cost-competitive with subsea pipelines. There is also environmental opposition to building of regasification terminals along the Mediterranean coasts. Agip's own solution, which it has worked on with Tecnomare since 1992, concerns floating receiving terminals located far out at sea. These would house regasification plants that could feed directly into existing pipeline networks. The terminals (specially designed vessels) would be anchored offshore, preferably close to the producing fields or gas pipelines. There could even be multiple centers of various sizes supplied by a series of LNG carriers.
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