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ID: 171377

Assessing energy policy instruments: LNG imports into Saudi Arabia / Shabaneh, Rami; Schenckery, Maxime

Shabaneh, Rami	Journal Article
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Summary/Abstract

Saudi Arabia relies heavily on oil-based generation to meet its power needs within a geographically unbalanced pattern of natural demand and supply. Many initiatives are currently being assessed to reduce the high opportunity cost of burning oil for the country. This paper examines the cost and implication of a disruptive policy where Saudi Arabia imports liquefied natural gas (LNG). To determine the possible and optimal sources to procure LNG into Saudi Arabia we use and configure a partial equilibrium model, specified as a linear programming problem. Two import scenarios were tested: the first assumes an import terminal with a capacity of 5 million tonnes per annum (MTPA) and the other scenario assumes 22 MTPA. Results show that Saudi Arabia can import LNG for power generation at a discount to the opportunity cost of oil. Especially during the summer months, as Saudi Arabia's gas demand is counter-seasonal to major importing regions it leads to even more interesting market pricing conditions. It also shows a small difference in landed cost of LNG between the two scenarios which implies the global LNG market can accommodate relatively large demand from Saudi Arabia without distorting significantly the global market pricing mechanism.

Key Words

Natural Gas ; Saudi Arabia ; Optimization ; Power Generation ; Electricity Sector ; LNG Trade

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ID: 180162

Economic analysis of gas pipeline trade cooperation in the GCC / Rioux, Bertrand; Shabaneh, Rami; Griffiths, Steven

Shabaneh, Rami	Journal Article
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Natural gas plays an important role in the global energy system. Thus, optimizing trade in natural gas is a key concern for many countries. This study investigates the value of expanding the Gulf Cooperation Council's (GCC) natural gas grid. We consider the documented successes and failures of the regional gas trade in Europe and Asia and weigh them against a GCC case study. The case study uses a partial equilibrium model of energy production, trade and demand calibrated to 2018 conditions to assess regional pipeline gas trade opportunities. The model incorporates parameters that are relevant to energy policy issues, including fuel allocation and energy price reforms. We also incorporate the regional liquified natural gas (LNG) trade strategy of Qatar, a regional and global leader in LNG production and exports. We find that pipeline gas trade cooperation in the GCC can contribute up to $3.1 billion to the regional economy by reducing transportation costs. More accessible gas offers a substitute for liquid fuel consumption and can offset the opportunity costs of using domestic oil to meet domestic energy demands. We also investigate the influence of an integrated gas market and price reforms on the power trade along the GCC interconnector.

Key Words

Investment ; Natural Gas ; Pipeline ; Gulf Cooperation Council Trade Cooperation ; Integrated Energy Model

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