MEDREG, profile of the association of Mediterranean regulators for
Electricity and Gas
ENAGAS, a major energy company joins oME
intErViEW WitH H.E. fouad douiri Moroccan Minister oF energy,
Mines, Water and environMent
KEy MEssaGEs on tHE Main cHallEnGEs of tHE EnErGy sEctor Pierre
gadonneix, chairMan Wec
BoostinG sustainaBlE EnErGy in tHE MEditErranEan PartnEr countriEs
PhiliPPe de Fontaine vive, vice President eiB
contEnt
05 I a messaGe From the General dIreCtor Pedro moraleda
06
06 I InterVIeW WIth h.e. FoUad doUIrI - moroccan minister for
energy, mines, Water and environment
10 I BoostInG sUstaInaBle enerGy In the medIterranean Partner
CoUntrIes - the eIB VIsIon
Philippe de Fontaine Vive - Vice President of the european
Investment Bank
14 I Key messaGes on the maIn ChallenGes oF the enerGy seCtor,
FoCUsInG on enerGy eFFICIenCy and sPeCIFICItIes oF the
medIterranean reGIon Pierre Gadonneix - Chairman of the World
energy Council, honorary Chairman of edF, Former Chairman and Ceo
of GdF
and President of the harvard Business school Club of France
special features
Members’ corner
21 I eGas InternatIonal BId roUnd
18
44 I medreG, the assoCIatIon oF medIterranean eleCtrICIty and Gas
reGUlators tiziana tronci - Communication manager medreg
secretariat
Profile 44
oME life 48
oME Members 59
22 I medIterranean oIl and Gas sUPPly-demand ProsPeCts sohbet
Karbuz and Bruno Castellano - ome
28 I GrId ParIty oF solar PV In mena eleCtrIC marKets roberto
Vigotti - ome
36 I CUrrent and FUtUre PersPeCtIVes oF solar thermal In the
medIterranean reGIon: the role oF KnoWledGe manaGement and
netWorKInG to aCCelerate marKet transFormatIon nicolas Cottret and
emanuela menichetti - ome
analysis 22
4
I am very pleased to introduce this ninth issue of Gem magazine and
much honored with the contributions from distinguished guests: he
Fouad douiri, moroccan minister for energy, mines, Water and
environment, mr. Philippe de Fontaine-Vive, Vice-President of the
european Investment Bank and mr. Pierre Gadonneix, Chairman of the
World energy Council. I would also like to warmly welcome enaGas as
new member company. We very much look for fruitful
cooperation.
our association has been very active the first six months of this
year as you could read in the section “ome life”. I am in
particular satisfied with the success of our mediterranean energy
Perspectives flagship publication issued late december 2011. this
book is definitely a reference in all energy issues and
perspectives in the mediterranean region and confirms the role of
our association as the energy expert in the region. I take this
opportunity to congratulate the ome team for their excellent work
and express my gratitude to our members for their continuous
support.
meP 2011 was welcomed by the euro-mediterranean community and ome
has been invited to present its results in several high level
regional events. numerous presentations also took place upon
invitation of member companies and also of the european Commission
and the Union for the mediterranean secretariat.
the recognition of the value of our association has also been
translated in new projects signed with third parties, the
publication for medener of a report on “energy efficiency in the
south and eastern mediterranean Countries: overview of policies and
good practices” with support of ademe and a cooperation agreement
with Plan Bleu to jointly elaborate a “rupture scenario”.
editorial
last but not least, we are very happy about the cooperation with
Union for the mediterranean secretariat and the signature of a
memorandum of Understanding last may in marrakech in this
regard.
at the time of printing this magazine, the world leaders are
meeting in rio de Janeiro (Brazil) at the occasion of rio+20 to
debate about the future of sustainable development of our planet.
While there is complete uncertainty about the outcome of this
event, there is no doubt that energy is essential for economic
development and energy efficiency and renewable energy are key
drivers of any sustainable energy future.
ome has always devoted high attention to both energy efficiency and
renewable as our region is endowed with high potential for
renewable energy and significant chances for improving efficiency.
our meP clearly highlights the benefits of better exploiting these
potentials both for economic and environmental purposes. But not
only for these reasons, complementarities between the different
countries in the euro-mediterranean area call for strengthened
regional cooperation and ome will continue its effort to link its
members around the sustainable energy future for our region.
enjoy reading our Gem!
Eng. Raafat El Beltagy
5
the exchange of prime fuels has been for years a key driver for
north-south cooperation, but new energy challenges bring further
opportunities.
the number and type of initiatives blossoming to promote
cooperation among mediterranean neighbors are a clear indication
that opportunities exist and that different approaches are
possible.
an immediate energy challenge for south and eastern mediterranean
countries is to meet fast growing electricity demand. driven by
increasing population, economic development and urbanization rates,
demand for electricity is bound to multiply by three in less than
20 years.
many of these countries can much do to improve energy efficiency
and most of them will need to use all available means to increase
their electricity supply capacity. ome estimates that improving 20%
electricity efficiency by 2030 in the south of the mediterranean is
a feasible and necessary objective. Besides, around 160 GW of
additional generation capacity will be required.
a longer lasting challenge shared by all mediterranean neighbors is
the need to reduce fossil fuels dependency and develop more
sustainable power generation technologies.
natural gas seems to be the option of choice for power generation
today but should not be the main option for neither gas producing
countries willing to meet their internal demand thereby forgoing
export revenues, nor for importing countries willing to minimize
the impact of increasing and volatile hydrocarbons price.
meeting steep rising electricity demand while deploying cleaner
generation technologies in large scale are enough
daring challenges to convene all mediterranean neighbors; both
challenges can also be the drivers to mobilize the resources that
trigger economic development at a time when growth and employment
are the top priority.
an appropriate step towards effective cooperation in the
mediterranean should be to structure and coordinate the multiple
initiatives pursuing similar objectives such as the Union for the
mediterranean, dii, IPemed, medeleC, medener, medreG, medGrId,
etc.
An immediate and daring challenge for the South and East of the
Mediterranean is to
meet fast growing electricity demand.
a Message FroM the general director
Pedro Moraleda let us work together for the Mediterranean
region
A step towards effective cooperation in the Mediterranean should be
to
structure and coordinate the multiple initiatives pursuing similar
objectives.
this coordination could be best carried out by intergovernmental or
multilateral entities, for instance the secretariat of the Union
for the mediterranean. We have often called for a neutral entity,
where all regional interests are represented and with strong
political support to play this structuring role. Proper
coordination is a prerequisite for avoiding confusion and
overlapping, and to optimize the synergy among such diverse and
qualified contributions.
dialogue and partnership are a part of ome’s nature and long
history. We have cooperation agreements with some of the above
mentioned entities and we have recently signed a memorandum of
Understanding with the secretariat of the Union for the
mediterranean. through these agreements ome is well positioned to
contribute to the common challenges the mediterranean is facing by
doing what we do best: analyzing mediterranean energy perspectives
and setting the links with the industry, our dear and supporting
associates.
let us, then, work for the future of the mediterranean region. the
opportunities are as outstanding as the challenges and there is
room and need for everybody willing to help but, to play as a team,
let us start by appointing a coach and align the players.
6
sPecial FeatUres
intervieW With h.e. FoUad doUiri Moroccan Minister oF energy,
Mines, Water and environMent
GEM I Global energy for the mediterranean
What are the driving lines of the Moroccan energy policy under the
new government?
our main energy issues remain the same: high dependency on imports
(around 94%), heavy energy bill and volatility of international
energy prices and their impacts on domestic market. thus, the main
objectives of the moroccan energy policy are to provide sufficient
and reliable energy to the economy and the population as well as to
ensure environment preservation. this energy policy is set up on
five strategic axes:
1) security of supply with diversification of fuel types and
sources;
2) availability and generalization of energy access to all segments
of society at affordable prices;
3) mobilization of domestic energy sources, mainly renewable energy
and at the same time intensification of hydrocarbons’ exploration
and oil shale valorisation;
4) promotion of energy efficiency and
5) regional energy integration among the african and the
euro-mediterranean markets.
the challenge on the ground is to meet future energy demand through
a balanced energy mix where clean fossil fuels will be combined
with renewable energies, mainly wind and solar. the development of
these resources along with energy efficiency are a national
priority.
Do you envisage significant changes in the energy mix?
Globally, the new government has opted for pursuing the
implementation of existing strategies and projects initiated by the
previous Government; this is especially true for energy sector.
however, the operational steps to achieve our objectives need to be
improved or corrected: the continuity of strategy should take into
consideration needed changes to ensure the success.
as a concrete example, in order to reduce coal and fuel oil shares
in electricity generation, the government is aiming at developing
natural gas use either by import through gas pipes and/or by
importing lnG. studies undertaken have permitted the identification
of the best site for lnG terminal. Currently, the different aspects
related to this
7
important project are under analysis. a natural gas law project is
being prepared in order to regulate gas activities and give clear
vision to investors and operators.
For renewable energy, morocco is developing its resources with the
objective to increase their share in installed electricity capacity
from 26% currently to 42% in 2020 (14% from solar, 14 % from wind
and 14% from hydropower). We have the necessary assets to achieve
this goal as our potential, mainly in wind and solar, are
considerable. In fact, morocco is endowed with large wind and solar
energy potentials.
according to the national strategy, two important programs have
been launched and their realization is underway: solar program
aiming at installing 2,000 mW and wind program: 2,000 mW to be
realized by 2020 the horizon.
last but not least, a balanced long-term energy mix combining
renewable and natural gas can allow us scaling up renewables use
and their appropriate integration into grid by having natural gas
as back up source.
How to cope with the coming electricity demand challenge, which is
expected to multiply by 3 in less than 20 years?
In comparison with their current level, primary energy and
electricity consumption will double from 2008 to 2020, whilst they
will be respectively three times and four times higher in 2030. the
challenge we are facing, is to meet this increasing demand.
so, in the medium term 2012-2020, the national Plan of power
generation capacities based on performant and economic technologies
(clean coal, natural gas and increase of renewable energy use) is
under implementation.
this plan is, of course, in line with the national energy strategy
that sets up at the top of its agenda the security of supply in the
country’s electric power, renewable energy development and energy
efficiency. It is planned to provide during this period an
additional capacity of around 9,000 mW, of which 4,540 mW will come
from renewable sources.
Any anticipated change in the regulatory framework?
since the announcement of the solar program in november 2009,
appropriate legal, institutional and regulatory frameworks have
been adopted to accompany the national strategy for developing
electricity sector and renewables, such as the law creating a
dedicated agency in charge of supervising the solar program, masen,
or the law 13-09 related to renewable energies as well as the
creation of Iresen (research Institute of solar energy and new
energy Institute).
the ministry of energy, mines, Water and environment has also
launched in 2011 a consultation for developing a national
regulation scheme for the electricity sector.
the proposed regulation scheme is aiming at responding to the
requirements of sector evolution and to the opening of the
electricity market to high voltage consumers, in accordance with
the law 13-09 for renewable energy. We need to implement the
required regulation for a free market under build up by the
exchange of electricity from renewable sources.
regarding the electricity grids, this expected scheme will allow
the unbundling activities of the national office of electricity
(one) through separate activities: generation / supply,
transmission system / distribution.
the framework envisaged expects the creation of an independent
authority of regulation. Indeed as you know, in an open market, it
is necessary to have such authority to ensure the transparency,
objectivity and non-discrimination actions including the mission to
set the rules of market organization, conditions of access to
electricity grid, the rules for access to the interconnections and
to set the tariffs for the use of the electricity grid as well as
the disputes resolution between the parties.
regarding the schedule of this process, the ministry of energy,
mines, Water and environment intends to launch before the end of
this year, a consultation in order to support the implementation of
the national regulation scheme of electricity sector and the
establishment of the authority of regulation by 2014.
on another hand, as I mentioned, a project law dedicated to natural
gas activities has been prepared and we started already to discuss
it with the main users and potential actors. our objective is to
reinforce the use of gas within a national plan for developing this
energy in industry as well as in the electricity sector. the legal
framework is necessarily needed to give investors visibility in
this field.
Credit: Ministery of Energy, Mines, Water and Environement.
8
GEM I Global energy for the mediterranean
What is your approach to energy subsidies?
energy pricing policy is an important issue for morocco as a net
importer of energy: we face directly the impacts and fluctuations
of the international energy market prices. some petroleum products
are subsidized: butane, diesel oil, fuel oil and premium gasoline.
With the rising trends of crude prices, the compensation fund has
serious difficulties to meet its role: the expected global gap by
the end of this year was estimated at 30 billion dirhams unless
domestic prices are increased.
the Government has decided last week to raise the prices of premium
gasoline, diesel and fuel oil in order to partially absorb a part
of the gap and in parallel, the Government is finalizing the
Compensation fund reforms. these reforms are aiming mainly at
setting up a better targeted subsidies to citizens with limited
income and to gradually move towards real energy prices sending the
right signals to consumers for a more rational use of energy.
What role you see for private investors, foreign initiatives and/or
independent power producers (IPP) especially in solar and wind
Moroccan programs?
We firmly believe that private sector plays an important role in
developing energy sector in morocco and that morocco has a
successful history of Independent Power producers (IPPs) since
1994. I think also that we have succeded in building a tight
public/private partnership in the field of producing energy.
of course, the IPP success is based on ensuring needed and adapted
legal context: the attractiveness of such projects to investors
depends on the institutional scheme adopted, importance of scale
and potential profitability. the past experience within this regard
has led the way to all the new projects such as solar or wind
programs.
For example, the realization of the wind program will involve a
Public/Private partnership and will be based on the IPP’s model
with criteria of selection that takes into consideration the
imperatives of proposed industrial integration as well as
profitability.
Morocco has organized the 5th edition of MENAREC (Middle East and
North Africa Renewable Energy Conference) on 15-16 of May, what
were the main outcomes?
the main topics of menareC 5 were the prospects and challenges for
a sustainable socio-economic development in the mena region through
renewable energy. this Conference highlighted the strong growth in
energy demand in mena countries due to demographic and economic
growth, and the urgent need to ensure a
transition towards a more sustainable global energy system as well
towards more secure energy markets.
the conference highlighted the issue of climate change that the
mena region is facing together with increasing desertification and
degradation of biodiversity. this situation presents a threat to
the economies and the ecosystems of the region.
through this conference we wanted to propose a work framework that
allows going beyond discussions and ensuring precise actions.
a joint committee has been set up for this purpose.
one of the priority issues we agreed to focus on was the creation
of a structured industrial approach in the mena region to renewable
energy and energy efficiency. an industrial approach that also
provides new employment opportunities while benefiting from
synergies and scaling effects.
What are the chances for reinforcing cooperation with neighboring
countries?
Integration in euro-mediterranean and african space is a major
component of the national energy strategy, as the strategic
geographical position of the Kingdom sets it to become an important
energy platform and a central actor in the increasing electricity
exchanges between the countries around the mediterranean sea.
thanks to the interconnections developed with spain and algeria,
morocco constitutes an essential gateway in the future
“mediterranean electric loop.”
In this perspective, our country has adhered to the mediterranean
solar Plan, the deserteC Industrial Initiative and medGrid project,
whose goal is to favour synergy in the development of wind and
solar energy in the euro-mediterranean area.
the advanced status with the european Union enables morocco to be
integrated more rapidly in the european energy market. For this
purpose, we are harmonizing the reforms of our energy market to fit
the european practice in this domain. In this field, we have
initiated negociations to find the suitable modalities to apply the
article 9 of the european directive that will enable us to export
surplus green electricity to europe.
at the same time, morocco, algeria and tunisia are working towards
the objective of integrating their electricity markets into the
european one. the implementation of such integration needs the
reinforcement of the interconnections to allow the exchange of
important volume of energy and the harmonization of laws and energy
regulations with european ones.
Progress has been made through the reinforcement (400 kV) of the
existing interconnection between morocco
9
and algeria. morocco has an ambitious program to reinforce its
local grid in 400 kV which is a pre-requisite for an efficient
euro-maghreb market of electricity. this program will allow
reinforcing the security of electricity supply, improving the
volume of exchange between the north and the south of mediterranean
sea and will give morocco the opportunity to play an important role
as a transit country.
What is your opinion about an eventual Mediterranean Energy
Community?
mediterranean countries have in common several challenges to face
in the fields of energy and environmental sustainability.
reliable access to affordable supplies is a prerequisite for
development and the mediterranean region is considered as a “hot
spot” for climate change. there are no boundaries when it comes to
sustainability and vulnerability.
It is obvious that energy is at the heart of the mediterranean
cooperation, and the shared objective of our countries is to grant
security of energy supply in the long term; a security of supply
that takes into consideration the eventual depletion of fossil
reserves and the effects of climate change on this region.
the core for this cooperation is renewable energy based electricity
generation and large scale development of energy efficiency.
these objectives could be better achieved by working together for
our common goal with the multilateral initiatives such as the
mediterranean solar Plan (msP), dii, medGrId, etc.
as a matter of fact, we can meet the challenge by assuming our
interdependency and working out stronger links and
interconnections.
so yes we can, we can have a mediterranean energy Community.
A last word?
I was very much pleased at the occasion of the menareC Conference
to meet and to learn more about ome, a pioneering energy
association that is playing an important role in promoting
co-operation between all energy actors of the mediterranean
region.
For the “future” mediterranean energy Community, ome will certainly
be needed.
Credit: Ministery of Energy, Mines, Water and Environement.
10
sPecial FeatUres
sustainable energy is the only viable solution to overcome the
triple challenge of increase in energy demand, of environmental
stress and of high unemployment in the southern and eastern
mediterranean.
Indeed, the energy and climate change challenges are among the
greatest tests which europe’s mediterranean partner countries1 have
to face. their long term economic performance is dependent on
reliable, sustainable and affordable energy supply, including
mitigating and adapting to climate change impacts.
Meeting increasing energy needs is a priority for the EIB
the energy sector of the mediterranean partners have been
characterised by rapidly growing demand on fossil fuels, subsidised
energy tariffs, and inefficient energy use. renewable energy
accounts for a very small share of the total energy demand, despite
the large renewable potential of the region, in particular for
solar and wind. the development of the sector is challenging in
most of the countries, as it needs to both meet growing demand,
reducing environmental impacts by improving energy efficiency and
developing the renewable potential. this will imply mobilising the
substantial financing needed in a context of limited access to
capital, due to political risks considerations and the impacts of
economic crisis. all these challenges must be addressed and require
strong action. eIB has a substantial role to play in this
context.
GEM I Global energy for the mediterranean
Financing needs for sustainable energy in the southern &
eastern mediterranean region are very significant in the medium and
long-terms. despite a recent slowdown in energy demand growth,
earlier trend is expected to resume in the coming years, driven by
economic development and the needs of a fast growing
population.
In the short-term, existing and already advanced energy generation
projects can provide enough capacity to meet expected demand in the
short-to-medium term. In the longer term, however, new capacity
will be required. renewable energy should cover a significant part
of the additional demand needs, if the energy sector in these
countries is gradually moving into a more environmentally
sustainable path. Indeed, investments for energy networks and their
upgrades will be needed, both to ensure the quality of supply and
in the medium long term to support the sources as renewables become
a significant part of the mix.
The energy sector represents 56% of EIB commitments in the
region
With lending amounting to almost eUr 5.9 billion since the creation
of the FemIP (Facilité euro-méditerranéenne d’Investissement et de
Partenariat) in 2002, the energy sector has been one of the largest
beneficiaries of eIB loans in the region. at present, it absorbs
about 56% of eIB commitments in the region and stands out as one of
the top priority sectors for eIB action in the field of
infrastructure.
Boosting sUstainaBle energy in the Mediterranean Partner coUntries
- the eiB vision PhiliPPe de Fontaine vive, vice President oF the
eUroPean investMent Bank
11
eIB can provide financing for projects using a variety of
instruments ranging from senior loans to equity. In addition the
eIB has also developed other means of financing, such as equity and
carbon funds, to further support renewable energy and
energy-efficiency projects. It also works upstream with project
promoters, providing technical assistance to develop
projects.
eIB financing for mediterranean partner countries has contributed
to major investments in power generation, electricity transmission,
as well as in the distribution, exports and transmission of natural
gas. the electricity generation projects have included wind, solar
and hydro projects, along with high-efficiency natural gas power
plants. In addition, the eIB has supported the expansion and a
better integration of the energy networks with the eU networks (for
example via its financing of electricity interconnections and gas
networks).
among the many projects approved in 2011, attention should be drawn
to the ouarzazate solar plant, the first large-scale plant of this
kind in north africa, which FemIP—as the lead lender for european
financing—will fund to the tune of eUr 300 million. this
large-scale project has unique production potential (500 mW at the
site ultimately), which is expected to help reduce annual carbon
dioxide emissions by 240,000 tonnes. the work is scheduled to
actually begin in 2012. other key renewable energy projects under
preparation in the region are being currently appraised, such as
wind farm projects in egypt, Jordan, morocco, and a solar thermal
project in Israel. Furthermore the eIB is financing a study on
possible means to diversify the supply of natural gas in
morocco.
renewable energy projects still account for a limited part of eIB
energy financing. In the future this part should increase, as the
objectives of the mediterranean solar Plan are gradually
realised.
Cornerstone for the next decade: the Mediterranean Solar Plan
the mediterranean solar Plan (msP) is one of the priority projects
of the Union for the mediterranean (Ufm) and aims to promote the
implementation of sustainable energy solutions concerning renewable
energy (re) and energy efficiency (ee). Its objective is to develop
an additional re capacity in the region of 20 GW by 2020 along with
the
eIB sIGned eUr 5.8 BIllIon oF loans For enerGy ProJeCts In
medIterranean Partner CoUntrIes oVer 2002-2011
Regasificacion & liquefact.
20.9%
Refineries 5.9%
Ten years of EIB financing for energy in the region
activities undertaken by eIB in the mediterranean in the field of
energy are wide-ranging and far- reaching. Following the record
year of 2010 (where eUr 1.8 billion of eIB loans were signed for
energy projects), and despite the political unrest following the
arab spring, 2011 saw the approval of eUr 600 million of eIB
financing for 4 energy projects in the region.
In the past ten years, eIB financing for mediterranean partner
countries has contributed to major investments in power generation,
electricity transmission, as well as in the distribution, exports
and transmission of natural gas. In the past three years, financing
was mainly provided for electricity networks and gas-fired power
stations in egypt and tunisia. more such projects are currently
under eIB appraisal in Jordan, tunisia, and morocco as well as a
major natural gas transportation and treatment project in
tunisia.
12
necessary electricity transmission capacity, including
international interconnections. We strongly support the
implementation of the msP master Plan led by the Ufm secretariat,
and actively participates in the working group on the msP financial
implementation and on regulation to support re development.
despite mediterranean partner countries’ awareness on the region’s
huge potential for re and ee, and some encouraging steps towards
their deployment under the msP, the overall contribution of re and
ee to meeting a growing energy demand has remained limited. there
is a real need to accelerate the development of re and ee projects
in the region to fulfil national re and ee targets and to achieve
the regional msP objectives.
EIB accelerates the MSP with a new Project Preparation
Initiative
achieving the msP objectives requires identifying and supporting
pilot projects able to serve as significant test cases and policy
drivers for the large scale development of renewable energy and
energy efficiency.
In close partnership with the european financiers and using
european Commission neighbourhood Investment Facility funds, the
eIB has launched the msP Project Preparation Initiative (msP-PPI)
that is expected to accelerate the implementation of up to 20
renewable energy and energy efficiency projects in the mena
region.
the msP-PPI provides grants for technical assistance so as to
unlock the msP projects. In doing so it supports the preparation of
investment projects in the following areas:
• renewable energy: Proven re technologies, including wind, solar
(PV and CsP), sustainable biomass, small hydro;
• energy efficiency and energy savings projects in all sectors
(e.g. industry, housing, transport) including combined heat &
power;
• Projects connecting re projects to the national grid.
the initiative also represents a cooperation platform for promoting
best practices for energy efficiency and renewables projects.
Finally, all projects that would receive grants from the msP-PPI
will be eligible to receive.
thinking about the future, today: eIB wind farm project in
tangiers, morocco.
eIB green energy investments provide much-needed sustainable jobs
in the mediterranean.
13
energy projects
Cooperation amongst financiers, the european Commission, the Ufm
and the beneficiary countries is key to attain the msP objectives.
such collaborating efforts are embodied in KfW, aFd and the eIB’s
jointly pledge to provide up to 5bn eUr financing for msP
projects.
the eIB notably participated in the launch of the Inframed Fund,
the first financing facility of the Ufm, and the largest fund
dedicated to investment in infrastructure in the southern and
eastern mediterranean region. Furthermore a dedicated eUr 5 million
msP project preparation initiative (msP-PPI) was recently launched,
financed by the eC’s neighbourhood Investment Facility, and managed
by eIB with other interested european Financing Institutions.
eIB is also trying to develop ee projects in the mediterranean
partner countries. a study has just been launched to assess
dedicated technical assistance needs in the region. the study
includes the provision of technical assistance for the preparation
of pilot energy efficiency
projects in different cities of the region together with the
european Commission, and in support of the Covenant of mayors
initiative of the eU Commission.
Time for action
the energy system of the southern & eastern mediterranean
region should enter in a phase of rapid transition towards a more
sustainable energy system with far-reaching implications for the
next decades. the time for action is now.
eIB’s strategy is to support this transition, and to further assist
mediterranean partner countries to develop new projects and
initiatives in the area of renewable energy, energy efficiency, as
well as energy networks in support of both a better integration
with the eU energy markets and the integration of re sources.
1 the mediterranean partner countries are: algeria, egypt,
Gaza/West Bank, Israel, Jordan, lebanon, morocco, syria (currently
suspended), tunisia, and libya in the near future.
meeting increasing energy needs is a priority for the eIB in the
mediterranean.
14
sPecial FeatUres
key Messages on the Main challenges oF the energy sector, FocUsing
on energy eFFiciency and sPeciFicities oF the Mediterranean region
Pierre gadonneix, chairMan oF the World energy coUncil, honorary
chairMan oF edF, ForMer chairMan and ceo oF gdF and President oF
the harvard BUsiness school clUB oF France1
GEM I Global energy for the mediterranean
Secure energy supply to fuel economic growth and human
development
Growth in energy demand slowed in 2009 due to the economic crisis,
but shot up by 5% in 2010. According to the IEA, with a GDP
multiplied by 4 by 2050, energy demand will be multiplied by 1.5
and electricity demand by 2, even with huge demand- side management
efforts.
demand is increasing for all energy sources, notably those used to
generate electricity.
• oil demand will continue to rise until the air transport and
automobile industries have found an alternative to oil. even with
the barrel reaching more than 110$ last march, oil demand growth
was steady in 2011 and will continue to grow. this means we have no
other option but optimize the existing conventional and
unconventional oil reserves and develop alternative fuels through a
determined r&d policy.
• Coal is likely to continue to be widely used across the globe: in
the Usa, China and India for example, where coal respectively
accounts for 50%, 70% and 80% of the electricity mix.
• Gas is an increasingly important energy source, notably with the
development of unconventional resources. In the Us, which will soon
be able to export gas, gas prices are disconnected from oil prices,
and will supposedly remain so for at least another five to ten
years. Gas is
even though long-term challenges are the same for every country and
the final goal has to be common, there are as many different paths
to sustainability as there are countries boasting specific
geographies, histories, cultures, resources, technologies etc. We
at WeC, with more than 93 countries on board, know that. But we all
concur to reaching to global energy sustainability and finding
global solutions to: security of energy supply to drive growth, and
acceptance of energy as regards environment protection and energy
poverty.
I will first present the great challenges of security of energy
supply with a special focus on energy efficiency, then the
challenge of energy acceptability regarding both the climate and
social equity, before I end up with presenting the set of solutions
that are urgent, crucial... but reachable.
15
also becoming very competitive, at about $3-5/mbtu in the Us, which
is almost three times cheaper than in europe ($11/mbtu) and Japan
($14/mbtu), and also because it is less emitting than coal. Will a
“golden age of gas” take place?
even with an abundant resource, energy security can still be an
issue when resources are located far from consumption sites. For
example, in 02/2012, gas supply became problematic in most of
europe with a very cold winter that put great pressure on gas
shipments from russia to southern europe and the border of the
mediterranean, in a global context of a geopolitical unrest in
libya and Iran. new infrastructures, like south stream, for example
have been made to relieve the pressure and this is good news.
Unless great developments continue to be made in gas
infrastructures, pipelines or lnG terminals all over the world, gas
development can be hindered.
moreover, burning gas emits. If by 2050, Co2 is valued at about
50/tonne, gas will be less competitive, all the more as carbon
capture and storage (CCs) is nowhere near maturity.
lastly, as the recent accident on the elgin-Franklin pumping
platform in the north sea reminded us, the exploitation of
unconventional gas will have to cope with more stringent
regulations as regards environment protection that could affect its
competitiveness.
• the world will also rely on nuclear power. WeC recently published
a report on the future of nuclear industry one year after Fukushima
showing that 50 countries are operating, building, or considering
nuclear generation. half of them are “newcomers”. more than 60
nuclear power plants are now under construction and 90% of those
are in only 4 countries: China, India, russia, Korea... Undoubtedly
nuclear power will continue, although a handful of countries have
decided to abandon nuclear power, provided that nuclear safety and
transparency and public acceptance are continuously being
reinforced.
• In addition to conventional energy resources, and hydropower,
which still harbors significant potential especially in africa,
south america and asia, “new renewable energies” will have to
develop quickly to meet the energy supply challenge. europe, the
Us, China have developed wind power on a large scale, cumulating
238 GW of installed capacity worldwide, among which 97 GW in europe
and 29 GW in Germany alone. PV has also bloomed very recently,
reaching 67 GW worldwide, of which 25 GW in Germany alone and
approx. 4 GW in the Usa and the same portion in China, and with 27
GW of new capacities installed worldwide in the year 2011. these
energies are bound to develop more globally and account for an
increasingly large share of the world total mix, provided that they
are exploited in countries that have good potentials, that their
cost go down, and that intermittency and storage issues are
resolved.
Energy efficiency will be a priority. According to COP 17 it can
reap almost 40% of the expected CO2
emissions mitigation by 2050, provided that the best technologies
are selected and supported by most efficient regulations to keep
cost in check.
energy efficiency is a key mechanism to achieve progress towards a
lower carbon economy. It can also contribute to social equity by
reducing energy cost and increasing energy availability, which is a
growing concern in countries that see energy poors increasing in
numbers with the economic crisis.
Promoting energy efficiency is widely viewed as being the largest,
cheapest, and fastest option for tackling key energy problems, and
many solutions are available already. some even say that “the
cheapest kWh is the one we do not consume”. It’s partly true, but
also partly wrong: indeed great challenges remain, as our WeC
energy efficiency report stated in 2010 and our WeC report on
energy and climate policies 2011 underscored. to name a few:
• energy efficiency can be expensive (when it comes to completely
retrofit fleets of buildings) and entails transaction costs that
are hard to measure and reduce (for example when energy efficiency
measure implies lifestyles changes).
• attracting financing for energy-efficiency initiatives and
encouraging consumers (residential and industrial) and energy
suppliers to adopt existing solutions is also one of the biggest
challenges facing energy policymakers— especially when the payback
periods are long or when the advantage is perceived by someone else
than the payer (this is the case in a rented house for
example).
• … all the more as evaluation of the effectiveness of expenditure
on energy efficiency is difficult and rebound effects are
important. a recent study by the european Union highlighted that as
much as 30% of the gains from energy efficiency are lost because
the savings are put back into energy-consuming activities.
as a consequence, taking energy efficiency as an example, I cannot
stress more the need for policymakers to consider consumer (and
corporate) behavior as much as technologies.
The implication of these huge demands in energy sources and energy
efficiency is a thirst in investments.
Indeed, existing generation and transmission infrastructure are not
sufficient. massive investments are required in all energies and
networks, amounting to 1.4% of global GdP a year through 2030, at a
time of “peak money”... Investments must be made now, in order to
have infrastructure in place ten years from now—and in the right
places… two thirds will be made outside oeCd countries, which also
implies a certain amount of technology transfers through
international trade
16
frameworks, so that developing countries directly put in place the
cleanest and most energy efficient technologies. most of the
infrastructure that will have to be in place in 2030 does not exist
today. If we do not act now, energy security is at threat.
Acceptance of the energy system, which embraces economic cost,
climate and environmental protection and the struggle against
energy poverty, will be the other big challenge for the
sector
The acceptability of cost
all these investments and efforts will only be made if they are
compatible with the current economic context and are affordable to
all countries. that is the reason why each country must assess the
cost of energies in its specific context and keep in check the cost
of its developments. this is all the more true as we are now facing
great uncertainties regarding the price of energies, for both
energy importers and exporters. If the price of the oil barrel is
to surpass 150$ on the long run as Iea predicts, will the importers
be able to afford the cost? and will the exporters be able to
secure their revenues? this is a very sensitive question for the
mediterranean region.
The protection of our climate, environment and of our safety
Public acceptance of technology is now also driven by each
technology’s capability to contribute to curb climate change. all
international experts agree that we must do all we can to keep
global warming at below 2°C by 2050. specialists say it is almost
too late, and that we may already be on a trajectory of more than
6°C. In 2010 despite the crisis, Co2 emissions rebounded at a
record level of +5.3%, i.e: 30 Gt and energy intensity/GdP went up
+o.4% (vs a long term trend of -1%/year). and preserving the
environment means more than protecting the climate. In everyone’s
mind—and this was reinforced by the events of 2011—it also requires
an essential improvement in the safety of all energies and
technologies. nuclear is obviously on the front line after
Fukushima, gas as well after elgin-Franklin but all technologies
are in fact targeted.
The struggle against energy poverty
again, acceptance of energy goes far beyond environment protection.
the global population is expected to grow from 7 billion today to 9
billion by 2050, with most of this growth occurring in developing
countries, where the tragedy of fuel energy poverty is the most
tangible. In 2011, close to 2 billion people still live without
access to modern energy. these people are exposed on a daily basis
to toxic emissions from fires they light, live in darkness and
insecurity, and do not have access to neither medical care nor
education. more globally, energy must develop hand in hand with
human development. as the same 1 billion
people on earth suffer from energy scarcity and water stress,
energy development must go hand in hand with water
development.
Need for a new governance at both national and international
levels
At national level, we need smart energy regulatory framework and
public policies, adapted to each country’s specificities in terms
of natural resources, geographies, history and culture, skills,
etc.
theses smart regulatory frameworks should all, in the present
context of economic crisis, keep costs under control, and hence
strictly promoting the most competitive technologies. Indeed, we
have in the world a wide range of generation technologies, but
degrees of maturity and competitiveness vary:
• on the one hand, some technologies are economically mature and
ready to be used today (average costs of between €60 and €100/mWh,
for instance onshore wind, hydropower, supercritical coal, nuclear,
combined- cycle gas turbines, and even solar technologies in some
very sunny regions of the world like California for example etc.).
these should be prioritized, deployed and promoted through a range
of tools: taxes, feed in tariffs, regulations etc. I insist these
mature technologies should be prioritized when it comes to
deployment, because we must overall avoid “stop and go” policies
that are very damaging to energy industries, as the recent european
“stop and go” policies on solar PV reminded us. yet, some
technologies, though still not mature, economically or socially,
need to be further developed. their costs are two to ten times too
high to be competitive. examples include solar photovoltaic in some
regions of europe which (contrary to California), costs about
€250/mWh; offshore wind, which costs €170/mWh; storage, smart
grids, CCs, gas-coal to liquids, and second-generation biofuels.
all of these will require r&d as well as demonstration, and/or
bidding processes to bring prices down and resolve technical issues
like for some new renewable: intermittency and storage.
• this is also true for energy efficiency where some technologies
are competitive (renovation of attics for example) while some
others are still too expensive or not accepted and some tools are
very efficient (labels) while others are not, burdened by rebound
effects.
Here, I would like to focus on the Mediterranean region, because it
really synthesizes the key challenges and questions of the energy
future:
mediterranean countries see their population grow rapidly and
urbanization sprawl, putting some pressure on the energy demand and
energy infrastructures but also offering opportunities for energy
efficiency (making efficient buildings from scratch and putting in
place the cleanest technologies).
GEM I Global energy for the mediterranean
17
nevertheless, some countries are luckily gifted with conventional
sources of oil and gas and are also now searching for
unconventional oil and gas. these are undisputable assets but these
countries will have to cope with their technological and
environmental risks and opportunities while at the same time paving
the way to cleaner technologies and to development paths that no
longer rely on their capacity to export fossil fuels.
mediterranean countries have great opportunities in renewables as
the region is endowed with sun, deserted spaces and some windy
areas. Countries should work on renewable projects but only on
those with very competitive costs and with limited risks as regards
the environmental impact. I am thinking of the technologies that
will not put a stress on local water resources for example, in
areas already suffering from water scarcity.
I was in oran, algeria last november and I was impressed by the
vision of the energy policy makers, whose programme deploys only
competitive technologies by incentivising investments on the long
run; while at the same time boosts r&d and on the field
demonstrations of various future solar technologies (PV with
different cells, concentration...), so that the winner technology
proves itself out to be the most competitive, the least damaging
for the environment, and the best accepted etc.
as a conclusion, the mediterranean region’s essence in the future
can be a laboratory for the world where solutions have to be
developed on all key aspects of the global energy development: on
the technological side (with great potentials in efficiency,
renewables and unconventional), on the environmental and social
side (with great population growth, over-exposure to the effects of
climate change, potentials to better manage the water
resource).
At international level, common rules are necessary
there is a real need for more integration, cooperation between
countries at an international level. the aim is tree-fold:
• mitigate costs of energy transition to low carbon future,
otherwise new industries will not develop and one part of the world
population, who could not afford expensive technologies, would be
left aside of development.
• While at the same time, ensure the three key energy issues are
preserved: security of supply, struggle against climate change and
energy poverty.
• and moreover, promote an efficient international governance
on:
- energy safety, for all sources of energy and especially nuclear,
since risks are global. In the world after Fukushima, I think this
goal is achievable with reasonable efforts, building on existing
institutions.
- energy trade, in order to promote ways for developing countries
to directly access low carbon technologies.
Conclusion
now what can you do, for your region and for the global energy
sector?
We all know solutions and technologies that can help us meet these
challenges but we all know that there is not one silver bullet for
everyone: taking stock on our respective experience and expertises,
knowledge and visions, we shall try to capture possible paths to
energy sustainable.
energy requires technical solutions, raw materials and, mostly
important, human and social innovation. this is why, in the energy
sector, dialogue, meetings and experience-sharing are essential.
this is what WeC is created for and I hope to see you again
soon.
I wish you very profitable days at enermed.
1 this paper is based on the introduction speech of mr. Gadonneix
to the third enermed session and during which he was invited to
share with participants his vision of the major energy challenges
on the long term, focusing especially on two areas that have
fuelled this enermed session: energy efficiency and the specific
challenges of the mediterranean region. For more information on
enermed, cf. ome life section and www.ome.org
From left to right: L. Guarrera (OME), P. Moraleda (OME), P.
Gadonneix (WEC) and H. Ben Jannet Allal (OME).
18
GEM I Global energy for the mediterraneanGEM I Global energy for
the mediterranean
MeMBers’ corner
enagas a MaJor Mediterranean energy coMPany
Antonio Llardén, Chairman & CEO of ENAGAS.
enaGas is a basic gas infrastructure operator, leading european lnG
import facilities, the spanish Gas transmission operator (tso) and,
by law, the technical overall operator of the spanish gas
system.
enaGas assets in spain include around 10,000 km of high pressure
pipelines, three underground gas storages (serrablo, Gaviota and
yela), three lnG regasification terminals (Barcelona, Cartagena and
huelva), a 40% shareholding in the Bilbao lnG receiving terminal,
is developing a terminal in musel (Gijon) and in the projects of
two other lnG receiving terminals in the Canary Islands. enaGas has
recently reached an agreement to take a 40% share of Quintero lnG
terminal in Chile.
Over 40 years of experience in the gas industry
enaGas has played a key role in the introduction of natural gas
into the spanish energy market by setting up an extensive transport
infrastructure that contributed to make of the spanish gas system
one of the most reliable and best prepared to diversify sources and
means of supply.
19
International connections with France, Portugal and the
Maghreb
Main Control Centre from which the Spanish Gas System is
coordinated
Compressor stations and regulation and/or metering stations
throughout the country
Carrying natural gas to the furthest corner...
10,000 km of high pressure gas pipelines
3 regasification plants:
Total emission capacity:
GEM I Global energy for the mediterranean
anticipating an impressive growth in energy demand, the spanish
energy authorities opted to give an important role to natural gas
in the energy mix and called enaGas to develop the necessary gas
infrastructure.
according to this plan, enaGas built the first lnG receiving
terminal in spain, and the first one in Continental europe, in
Barcelona. this lnG plant, which was commissioned in 1969 with a
storage capacity of 40,000 m3, has now 8 tanks with a total storage
capacity of 840,000 m3 and a maximum send out capacity of 1,950,000
m3 (n/h).
the role that such a secure, clean and competitive source of energy
as natural gas plays now in the spanish energy mix proves that the
decision was correct. the network of lnG terminals currently in
operation has certainly contributed to the security and
diversification of energy supply in spain. as a matter of fact, the
spanish gas supply system is one of the most diversified in the
world; in 2011 spanish lnG terminals received cargos from 12
different source countries, major mediterranean countries among
them (algeria, egypt, libya).
this large and diversified receiving capacity in the Iberian
Peninsula could be an excellent alternative to ensuring gas supply
to europe when the Iberian-French Corridor is fully developed, more
specifically when its eastern axis is built.
French and spanish tsos have been working for years in developing
the necessary infrastructures and there are currently two
interconnections in operation between spain and France: larrau and
Biriatou. enaGas is fully committed to this project which is
essential for the internal european gas market and very helpful to
further
link south mediterranean gas producers with north mediterranean gas
markets.
after more than 40 years building and operating gas infrastructures
enaGas has developed a unique expertise in gas transport, lnG
regasification, underground storage and technical operation of gas
systems.
enaGas expertise in engineering and construction makes of this
company a strategic partner in the international context for
projects related to regasification, transport and underground
storage.
Committed to sustainability
sustainability is among enaGas’ mission and values. the company has
formulated a sustainable energy model focussed on innovation and
improved performance in all areas, and has formally announced a
Corporate responsibility Policy that includes the commitments with
stakeholders and sets a benchmark in this field. last year enaGas
was classified as world’s number one in the Utilities sector of the
dow Jones sustainability Index.
Committed to the Mediterranean
enaGas welcomes the opportunity of joining ome as it is completely
aligned with ome objectives of promoting cooperation in the
mediterranean region. enaGas is convinced that the collaboration
among all energy companies operating in the region will permit to
make of energy a driver for enhanced integration.
With this objective in mind, enaGas is willing to offer its
experience and knowledge to ome.
21
ARAB REPUBLIC OF EGYPT Ministry of Petroleum and Mineral
Resources
Egyptian Natural Gas Holding Company “EGAS”
Interested companies can review and/or purchase the available data
of the bid round blocks starting on Monday June 4th, 2012 according
to the procedures and determined prices from EGAS premises
addressed:
85 EL Nasr Road, 1st district, Nasr City, Cairo, Egypt, 11371 Data
summary, coordinates, procedures, Terms & Conditions and the
Model Agreement can be obtained
through EGAS website: www.egas.com.eg Offers sould be delivered to
EGAS premises, 7th floor on Wednwsday Nov. 14th, 2012 before 12:00
o’clock noon
Cairo local time
The Egyptian Natural Gas Holding Company “EGAS” Invites oil &
gas exploration & production companies for 2012 international
bid round to explore / exploit for Gas and Crude Oil in Egypt
Under the production sharing agreement (PSA) The 2012 bid round
includes (15) exploration blocks in the Mediterranean Sea &
Nile Delta Sedimentary basin of Egypt
Further information or clarifications through: Vice Chairman for
Agreements & Exploration
Telephone: +202 24055830 / 31 Fax : 202 24055832 e-mail :
[email protected]
Announcement for 2012 INTERNATIONAL BID ROUND
We have opened a new section in our Gem magazine dedicated to
presentations, views or information that our members wish to share
with other regional partners.
In addition to the presentation of enaGas, new member of our
association, we are glad to show here the International Bid round
2012 just launched by eGas, one of our egyptian partners and
current Chairman of ome.
this Bid round may represent a quantum leap in egypt’s exploration
policy responding to the needs of encouraging production of
hydrocarbons, which the internal market so eagerly needs, and to be
competitive in the current international context.
When presenting the Bid round, eng. mostafa el Bahr, Vice Chairman
for agreements and exploration of eGas, highlighted that it is the
first time that egypt is offering blocks along its eastern maritime
border.
he also clearly addressed pricing issues, the creation of a cost
recovery pool in case costs are higher than expected in deepwater
and the abandonment clause, presented by first time in this Bid
round .
egypt wants to remain a major player in the gas market and this Bid
round aims to be a competitive offer to investors.
egas international Bid roUnd
22
introdUction this article is a condensed and updated summary of the
oil and gas chapter in the ome’s flagship publication
“mediterranean energy Perspective 2011” released in november 2011.
the following sections give an overview of the developments in oil
and gas reserves and resources, exploration activity,
unconventional resources, and oil and gas supply-demand evolution
in the past and next two decades with a focus on the south
mediterranean. Pressing challenges and opportunities in the region
is presented in the final section.
reserves and resoUrces the mediterranean region contains an
estimated 68 billion barrels (Gb) of proven oil reserves
representing 4.6% of global proven oil reserves. alone, libya
accounts for 69% of the proven oil reserves in the region. With
regards to natural gas, proven reserves are estimated at 8.9
trillion cubic metres (tcm), representing 4.7% of the world’s
total. half of these gas reserves are in algeria and a quarter are
in egypt.
Sohbet Karbuz and Bruno Castellano - OME
Mediterranean oil and gas sUPPly-deMand ProsPects
many of the countries in the mediterranean region have been well
explored for hydrocarbons; however, those in the south are
relatively under—explored or unexplored. In addition, some mature
fields could see their recoverable reserves increase with the use
of enhanced recovery techniques. so, there could be further
increases in mediterranean hydrocarbon reserves in the
future.
the size of future oil discoveries in algeria is likely to be small
and deeper formations are more likely to contain natural gas rather
than oil. While libya has the largest proven oil reserves in the
mediterranean region, some observers think that the reserves may be
higher based on potential in both onshore and offshore sedimentary
basins. In egypt, a number of frontier areas are gaining interest
for their hydrocarbon resource potential: the sinai Peninsula,
Upper egypt and the red sea. International attention has recently
turned to Upper egypt, the area below 28° latitude, where the
geology is not yet well understood.
a United states Geological survey (UsGs) report in march 20101
assessed the undiscovered oil and gas resources of the levantine
basin province in the eastern
an al
ys is
medIterranean oIl and Gas reserVes, 2012
Source: OME database based on Oil and Gas Journal and US Energy
Information Administration.
Mediterranean oil reserves: 68 Gb Mediterranean gas reserves: 8 948
bcm
others 6.4%
others 5.3%
libya 69.2%
libya 16.7%
Israel 3.0%
algeria 17.9%
algeria 50.3%
egypt 6.5%
egypt 24.7%
23
mediterranean.2 according to the report, the mean estimates of
undiscovered technically recoverable crude oil and natural gas
liquids (nGl) resources in the basin are about 1.7 Gb and 3.6 Gb
respectively. however, what makes this basin important is its
estimated large volume of undiscovered natural gas resources. the
UsGs estimates for undiscovered gas volume is about 3,465 billion
cubic metres (bcm).
according to another UsGs assessment in may 2010,3 the nile delta
contains an estimated 6,321 bcm of undiscovered, technically
recoverable natural gas; 1.76 Gb of oil; and 5.97 Gb of nGls.4 By
far, the largest resource is estimated to be in the nile
Cone.5
the figures pronounced in these assessments are simply eye rowing.
large scale offshore discoveries in the levantine basin since 2009
have raised the expectations about the hydrocarbons potential in
the eastern mediterranean. the offshore tamar (discovered in 2009)
and the leviathan (discovered in 2010) fields are the world’s
largest deepwater gas discoveries of the last decade. several other
offshore discoveries, albeit much smaller in size, and especially a
large discovery offshore southern Cyprus in 2011 (the Cyprus-a
field) have significantly augmented perceptions of natural gas
potential in the east mediterranean. total amount of gas resources
discovered in the region since January 2009 is some 950 bcm.
exPloration eFForts are set to intensiFy
In algeria, the national agency for the development of hydrocarbon
resources (alnaft), established in 2007, was given responsibility
for managing international licensing rounds. It held so far three
bidding rounds in 2008, 2009 and 2010. these bidding rounds yielded
disappointing results for the authorities due to very low award
success rates. the last round, to which sonatrach for the first
time also participated, was the worst to date, with a success rate
of 20%. alnaft will launch the tenth licensing round (algeria’s
eleventh) which is expected to offer more attractive contractual
terms and/or blocks.
In libya, there have been four international licensing rounds after
the United nations and United states sanctions against the country
were lifted in 2003 and 2004 respectively. three rounds were
oriented to oil, while the most recent focused on natural gas. the
competition in those licensing rounds was so tough that analysts
thought the companies would struggle to make a profit. yet, all the
rounds were a success for libya. libya has not held a licensing
round since 2007, although it has signed exploration and production
licenses with individual companies. In some cases the arrangements
for the successful bids in previous rounds were still under
negotiation before the civil war broke out in February 2011. the
country is expected to change the hydrocarbons law and hold an
exploration and production bidding round soon afterwards.
In egypt, the state-owned egyptian General Petroleum Corporation
(eGPC) together with the egyptian natural Gas holding Company
(eGas) and the Ganoub el Wadi
Petroleum holding Company (Ganope) invite exploration companies to
bid for concession areas, which may be in unexplored or
relinquished areas. egypt has a long and successful record of
attracting international interest from major investors to
participate in oil and gas exploration and production activities. a
new bidding round offering 15 blocks for exploration of oil has
been launched in september 2011 by eGPC with a closing date of 29
march 2012. twelve of the blocks offered in this bid round are
located onshore in the Western desert (seven), the eastern desert
(three) and the sinai (two), while the others are offshore in the
Gulf of suez. eGas intends to launch an international exploration
bid round for gas in the coming months. the company will offer 15
blocks in the mediterranean, the nile delta and the northern
sinai.
In the east mediterranean, large-scale gas discovery of tamar field
offshore of Israel has opened up a new deepwater province.
Following this success, the countries in the region has stepped up
their exploration efforts. In 2007, republic of Cyprus had launched
its first offshore licensing round. In February 2011 the country
launched its second licensing round offering 12 offshore blocks
with 11 may 2012 as a deadline. lebanon is preparing its first
offshore licensing round which is expected to be launched by the
mid-2012. syria is also keen to attract foreign companies for
hydrocarbon exploration and production activities in order to
offset the country’s declining oil output. Before the domestic
violence has started, syria had announced an offshore exploration
licensing round for three blocks in march 2011. the deadline was
extended to mid december 2011 but no bids have yet been
reported.
although these eye catching developments have attracted
international attention, unconventional hydrocarbons potential of
the mediterranean region have been mostly neglected.
Unconventional resoUrces
traditionally unconventional hydrocarbon resources have been
considered to be too difficult technically and too costly to
produce despite their large potential. recent advances in know-how
and technology as well as rising oil prices have led to development
of these deposits to be produced at competitive costs. Increased
interest in unconventional hydrocarbon resources has been sparked
worldwide and the mediterranean region is no exception.
only a few areas in the mediterranean region have been surveyed for
unconventional oil resources. Italy, Jordan, Israel, morocco and
egypt have identified potential. due to limited scientific data,
technical and economic uncertainties related to the development of
these resources, active commercial production in the region is
negligible today and is expected to be not significant in the next
decade or so.
the development of unconventional gas is just beginning in the
mediterranean region. Current activities are centered on resource
assessment and early exploration stages. shale gas resources,
although believed to be widespread, have not yet been quantified
for most mediterranean countries. however, available studies show
that several
24
countries have good potential in shale gas and tight gas
resources.6 available estimates indicate that libya, algeria and
France have, by far, the largest shale gas potential in the
mediterranean region. many companies are already showing interests
in acquiring land access and starting exploration in the region. In
2010, the first hydraulic fracturing operation in a shale gas
reservoir in the region took place in tunisia at the el Franig
field.
several uncertainties, constraints or challenges will define
whether the so-called shale gas revolution in the United states can
be replicated in the mediterranean, especially in the north
mediterranean. For instance, in october 2011, the French government
requested the repeal of all permits related to shale gas
exploration activity following a ban by the Parliament on the
hydraulic fracturing technique for exploration and production.
thus, France became the first country in the world to prohibit this
technique. In any case, the contribution of shale gas to the
natural gas production is expected to be rather minor in the short
to mid-term.7
Mediterranean oil oUtlook to 2030
In the mediterranean region, oil production (including condensate
and natural gas liquids) has increased by more than 10% over the
last decade, reaching 5.1 million barrels per day (mb/d) in 2010
from 4.6 mb/d in 2000. algeria, libya and egypt account for about
86% of the oil production in the region.
algeria is currently the largest oil producer in the mediterranean
with more than 1.8 mb/d produced in 2010, about 36% of the total
regional output. algeria’s sahara Blend, its main export crude, is
one of the highest quality brands of crude in the world. Until the
outbreak of political/ social upheaval in early 2011, libya was the
second largest oil producer at about 35% of total mediterranean oil
output in 2010, with almost 1.8 mb/d. like algeria, libya produces
low-sulphur sweet crude oil which is easy to process and refine
into high-value petroleum products. Both economies are highly
dependent on oil production and exports which provide a substantial
part of their export earnings and government revenues.
according to ome estimates, oil production in the mediterranean
region will increase to 5.6 mb/d in 2015, due mainly to
contributions from the large producers. From 2015 to 2020, an
additional 0.4 mb/d will be produced in the region, bringing the
total regional output to 6 mb/d by 2020. most of the increase will
come from libya. While crude and condensate production will decline
in algeria and reserves in many existing fields in egypt will be
depleted, libyan oil production will continue to increase to 2030,
barely offsetting the declines in all the other mediterranean
countries. the ome expects mediterranean oil production to reach
its peak level at around 6.4 mb/d in 2028 and stay at that level to
2030. the mediterranean region’s share in global oil production
will remain over 6% in 2030.
oil demand in the mediterranean region has increased more than 65%
over the last four decades. oil demand was of nearly 400 million
tonnes of oil equivalent (mtoe) in 2010, up from 245 mtoe in 1970.
the rate of oil demand growth was most important in the south,
especially in the south West while in the north, oil demand growth
was moderate. north mediterranean accounted for almost two-thirds
of total mediterranean oil demand in 2010, and the remaining third
was more or less evenly shared by the south West and south
east.
oil demand in the mediterranean region is expected to exceed 470
mtoe in 2030 in the Conservative scenario; some 70 mtoe above the
2010 level. all the increase in oil demand will stem from the
south. In the south West, algeria and egypt are the main
contributors to the growth, whereas in the south east
mediterranean, turkey’s oil demand will increase by 23 mtoe by
2030. Currently, France is the largest oil consumer in the
mediterranean region and will remain so, though in absolute terms
its consumption will decrease during the period.
total oil demand in the mediterranean in the Proactive scenario8 is
expected to remain at about 2010 levels, slightly below 400 mtoe.
this is some 80 mtoe less than in the Conservative scenario. In the
Proactive case, demand decreases in the north mediterranean. oil
demand continues to increase in the south, albeit less strongly
than in the Conservative scenario.
In both scenarios, the north mediterranean remains the largest oil
consuming sub-region accounting for more than half of the total
mediterranean oil demand in 2030. the south West and south east
each account for some 20% - 25%.
transport will remain the mediterranean region’s largest oil
consuming sector. It will account for more than 55% of the total
oil consumption by 2030. oil demand for power generation will
decline in the region as a whole. oil will be replaced mainly by
natural gas and renewable energy sources over the period.
the mediterranean region relies on oil imports today and it will
continue to do so in the period to 2030. net oil imports (crude and
products) in the region were more than 170 mtoe in 2009. this
picture will not change dramatically in the period to 2030. the
north will continue to import large Source: OME database.
medIterranean oIl ProdUCtIon, 1990-2030
others egyptsyria algerialibya mb/d
GEM I Global energy for the mediterranean
25
volumes of oil but import levels will remain flat or decline
slightly. the decline in oil production in the south east combined
with an increase in consumption will aggravate the sub-region’s oil
balance such that its net oil import requirements will grow much
faster than in the north. In contrast, the net oil balance of the
south West will maintain an upward trend, with a surplus of 191
mtoe in the Proactive scenario and 165 mtoe in the Conservative
scenario by 2030. In sum, overall oil import dependence of the
mediterranean region will decrease in the next 20 years in both
scenarios.
By 2030, incremental oil production in the region will come from
the south West only. It will outpace increases in oil demand from
the south according to the Conservative scenario. however, libya is
the only country in the region that will be able to enhance its
ability to export oil during the forecast period. algerian oil
production is expected to fall way below the 2009 levels by 2030.
In addition, egypt and syria will become net importers in the near
future.
In the Proactive scenario, additional oil demand in the south
mediterranean by 2030 is less than half of what
it is envisaged in the Conservative scenario. decrease of oil
demand in the north is significantly more than in the Conservative
scenario. therefore, increases in oil production in the whole
region will easily outpace growth in demand, and as a result the
mediterranean net oil imports will decrease significantly by
2030.
Mediterranean natUral gas oUtlook to 2030
natural gas production in the mediterranean region increased by
more than 41% between 2000 and 2010, from 137 billion cubic metres
(bcm) to 194 bcm. the south West is the lead producing sub-region
with a 87% share of mediterranean gas output in 2010. half of this
comes from algeria alone.
natural gas production in the mediterranean region is expected to
further increase from 194 bcm in 2010 to 316 bcm in 2020 and to 364
bcm by 2030. the pace of the increase will be faster between 2010
and 2020 than in the following decade. algerian gas production will
plateau
Notes: Net trade is the difference between production and apparent
demand. CS = Conservative Scenario; PS = Proactive Scenario.
Source: OME database.
medIterranean net oIl trade, 1990-2030 medIterranean Gas
ProdUCtIon, 1990-2030
2020 2030
37.9%
medIterranean oIl demand, 1990-2030
Notes: “Other” includes consumption primarily in commercial and
services, and agriculture sectors. “Other transformation and
losses” includes all transformation processes, e.g. refining,
excluding power generation.
Mtoe
500
400
300
200
100
0
2009 2020 2030
Cs CsPs Ps20001990
2009 2020 2030
Cs CsPs Ps20001990
bcm
400
350
300
250
200
150
100
50
0
Source: OME database.
26
after 2026 so total mediterranean gas production will slow
thereafter. the share of the mediterranean region in world gas
production will increase to more than 8% by 2030.
Between 2010 and 2030, natural gas production in algeria and egypt
will almost double and will more than triple in libya. algerian gas
production will increase the most in the region in absolute terms,
up 70 bcm. Production in egypt is expected to rise by 56 bcm, and
in libya by 40 bcm, if radical changes are introduced into upstream
regulatory, fiscal and contractual terms. thanks to recent
discoveries, ome expects Israel’s gas production to approach 25 bcm
by 2030, compared to some 3 bcm today. By 2030 the four largest gas
producers—algeria, egypt, libya and Israel—will account for 97% of
total natural gas production in the mediterranean, compared with
about 87% today.
natural gas demand in the mediterranean region increased from 108
mtoe in 1990 to around 290 mtoe in 2010.9 this dramatic increase
led to the share of natural gas in the region’s total primary
energy demand to expand from 15% in 1990 to 28% in 2009. the
outlook is for it to be over 30% by 2030. In the ome outlook,
demand for natural gas in the mediterranean region reaches 407 mtoe
in the Proactive scenario and 500 mtoe in the Conservative scenario
by 2030.
the north mediterranean had a dominant share at 70% in the region’s
total gas demand in 1990. two countries, Italy and France,
accounted for 60% of that demand. algeria followed with a share of
14%. since 1990 the situation has changed with demand for gas
growing so strongly in the south mediterranean that its share in
the regional total increased from 29% in 1990 to 43% in 2010. a
major driver was a policy approach to promote natural gas for
domestic use in order to free up oil for export in producing
countries in the south West. natural gas use has also been
increasing in gas-importing countries in the south east sub-region,
particularly in turkey.
natural gas demand in the north increases steadily to 190 mtoe in
2020 in the Conservative scenario. then it continues to increase at
a slower pace to stand at
more than 200 mtoe by 2030. this region’s share in total
mediterranean gas demand falls from 57% in 2010 to 41% in 2030,
largely due to robust growth in the south mediterranean. on the
other side of the mediterranean, population growth and economic
expansion significantly increase the demand for natural gas. In the
south West, gas demand reaches 179 mtoe in 2030 in the Conservative
scenario. the south east follows the same trend with gas demand to
increase at 114 mtoe by 2030, a lot more than twice 2010
levels.
Under the assumptions of the Proactive scenario, gas demand in the
north increases moderately until 2020 and even slower thereafter.
demand for natural gas still increases firmly in the south, but at
a slower pace than in the Conservative scenario. like in the
Conservative scenario, the north retains its status as the largest
gas demand centre of the mediterranean. among the mediterranean
countries, egypt is expected to become the largest gas consumer by
2030. Power generation will remain the largest gas-consuming
sector, accounting for half of total gas demand in 2030 in the
Conservative scenario and 46% in the Proactive scenario.
Currently the mediterranean region as a whole is a net importer of
natural gas. the south West sub-region is a net exporter largely
due to production in algeria, egypt and libya. But those exports
are outweighed by imports in the north and south east countries.
the outlook to 2030 foresees that the mediterranean region will
remain a net gas importer in both Conservative and Proactive
scenarios.
the north and south east sub-regions will import more natural gas
as consumption grows and production declines (in the north) in both
scenarios to 2030. While the north will need larger import volumes,
the south east’s import requirements will grow at a faster rate.
despite the high growth of its gas demand, the south West
sub-region will remain a net gas exporter. For the whole
mediterranean region, the level of import dependence will decrease
by 2030. It is only 24% in 2030 in the Proactive scenario, due to
demand side management measures, large deployment of renewable
energy sources and increased fuel diversification.
Notes: “Other” includes consumption primarily in commercial and
services, and agriculture sectors. “Other transformation and
losses” includes all transformation processes, e.g. refining,
excluding power generation.
CS = Conservative Scenario; PS = Proactive Scenario Source: OME
database.
medIterranean Gas demand, 1990-2030
Mtoe
550 500 450 400 350 300 250 200 150 100
50 0
550 500 450 400 350 300 250 200 150 100
50 0
Cs CsPs Ps20001990
27
Gas exPort PotentIal oF soUth medIterranean CoUntrIes, 2010 and
2030
algeria, egypt and libya—the three largest gas-exporting countries
in the mediterranean—export natural gas mainly to europe. algeria’s
export potential is expected to increase to more than 85 bcm in
2030 in the Conservative scenario and 108 bcm in the Proactive
scenario. libya will expand its export potential to 42-47 bcm by
2030. Israel is expected to emerge as another major exporter during
the outlook period with gas exports at about 7 bcm by 2030.
maintaining its current gas export levels to 2030 under the
Conservative scenario could be a challenge for egypt. By 2030,
these four countries could export 142 bcm in the Conservative
scenario and 191 bcm in the Proactive scenario, compared to less
than 80 bcm of gas exports in 2010.
although gas export infrastructure capacity might be sufficient to
meet export levels by 2030 in regional level, this will not be the
case in individual country bases. For instance, Israel, Cyprus and
libya will need to create new or expand substantially export
infrastructure capacity to meet their expected export levels.
challenges and oPPortUnities
major social events taking place in south mediterranean countries
since last year have raised concerns about the oil and gas supplies
from and through the south mediterranean. the impact of the “arab
spring” on oil and gas production in tunisia and egypt has been
quite limited. the suez Canal and the sumed Pipeline in egypt, and
the transmed gas pipeline from algeria to Italy through tunisia
continued operating normally. however, natural gas flows to Israel
via the east mediterranean Gas Pipeline and to Jordan and syria
through the arab Gas Pipeline were interrupted 14 times due to
attacks against the infrastructure in the sinai. those frequent
interruptions put the importing countries in a difficult situation
with regards to their gas needs.
on the energy side, the main impact of the social unrest was the
interruption of oil supply from libya. the end of hostilities paved
the way for the return of foreign companies. against expectations,
and thanks to an
outstanding work, the oil production is nearly back to pre-war
level. Gas flows through the Greenstream pipeline to Italy was also
resumed in mid-october 2011 after the supplies were shut on 22
February 2011.
these events have changed and may further change the whole picture
of the hydrocarbon sector in the region. return of foreign
investors, especially for upstream, in the south mediterranean
countries will largely depend on the stability of the political
situation and how investor- friendly the (future) governments will
be. algeria has already given indications that a new impetus will
be given to foreign investment in exploration and to attract
foreign companies. this is expected to be achieved by revising the
hydrocarbon law. although egypt will continue to be a net gas
exporter to 2030, its future gas export situation is highly
dependent on government policies and the degree and timing of how
they are implemented. meanwhile, countries not impacted by the
“arab spring” also reconsider their policies to attract
investors.
although recently discovered major gas reserves in the east
mediterranean could, in the long term, be a potential game changer,
their geo-political implications will be more pronounced.
Converting these reserves into production capacity will be perhaps
less challenging than establishing infrastructure to export the
excess production.
Governments in the south mediterranean have three key priorities to
address: demand side management policies specifically focused on
domestic energy pricing and subsidies to ensure rational use of
resources; further development of oil and natural gas resources by
stimulating exploratory efforts and accelerating the development of
known fields; and upgrade the use of natural gas within the economy
so that it could release relatively higher-value hydrocarbons for
export.
addressing the challenges and seizing the opportunities in the oil
and gas sectors in the mediterranean region will require
formulation of a comprehensive strategy which would also take into
account of enhanced co-operation with all stakeholders as well as
interactions with other sectors of the economy.
Notes: Export potential is the calculated difference between
production and apparent demand. CS = Conservative Scenario; PS =
Proactive Scenario. Source: OME.
1 UsGs (2010), “assessment of Undiscovered oil and Gas resources of
the levant Province, eastern mediterranean”, Fact sheet 2010-3014,
march, UsGs, Boulder, Colorado.
2 the area covers onshore and offshore territory including the Gaza
strip, Israel, lebanon, syria and Cyprus.
3 United states Geological survey (UsGs), “assessment of
Undiscovered oil and Gas resources of the nile delta Basin
Province, eastern mediterranean”, Fact sheet 2010-3027, may, UsGs,
Boulder, Colorado.
4 the estimates for undiscovered resources represent technically
recoverable oil and gas resources, but if found, could be produced
using currently available technology and industry practices. so, no
attempt was made to estimate economically recoverable
resources.
5 the UsGs assessment covers two areas: the nile margin reservoir
assessment Unit (onshore and near-shore area in northern egypt with
numerous discoveries) and the nile Cone assessment Unit (in deeper
water and less drilled area).
6 see, energy Information administration/advanced resources
International, World shale Gas resources: an Initial assessment of
14 regions outside the United states, Washington, dC, april
2011.
7 For a detailed discussion see, ome (2011), “Unconventional Gas:
hype or reality for the euro- mediterranean region?”, october, ome,
nanterre, France.
8 this scenario assumes significant improvements in energy
efficiency and demand side management as well as wider use of
renewable energy sources.
9 reflecting the economic downturn, mediterranean gas demand fell
by 6 mtoe in 2009 after fifteen years of uninterrupted growth.
however, the decline was only in the north mediterranean countries.
today, the mediterranean region accounts for 10% of global natural
gas demand.
bcm
110
100
90
80
70
60
50
40
30
20
10
0
28
THE CONTExT: TOWARdS SOLAR PV COMPETITIVENESS
In less than a decade, installations of Photovoltaic (PV) power
have shown high growth rates around the world and solar PV sector
has become a $100 billion business with global reach.
among the factors contributing to this growth were governmental
incentives, significant capacity additions from existing and new
entrants, and continual innovation. PV module and system prices
have fallen dramatically and by 2011 global installed capacity
exceeded 65 GW
Roberto Vigotti Director Electricity OME
grid Parity oF solar Pv in Mena electric Markets
an al
ys is
GEM I Global energy for the mediterranean
(Giga Watt); as consequence of this growth PV electricity
generation cost continuously decreases. the contrary trend is shown
by electricity prices for end-users and fossil fuel prices for
thermal power plant operators.
the intersection of PV electricity generation cost and electricity
and fossil fuel price trends is defined as “grid- parity” and
“fuel-parity” and indicates cost neutral PV installations. PV
systems have already been the least energy cost option for off-grid
solutions in sunny regions. In the 2010s PV will also become the
least energy cost option for on-grid roof-top systems and PV power
plants in many regions in the world.
FIGURE 1. COMPEtItIvENESS: twO PERSPECtIvES
PV installed on rooftops
Large installations (rooftops or ground mounted)
Dynamic Grid Parity for electricity consumers the moment at which,
in a particular market segment in a specific country, the present
value of the long-term revenues from a PV installation is equal to
the long-term cost of receiving traditionally produced and supplied
power over the grid.
Generation Value Competitiveness for utilities the moment at which,
in a specific country, adding PV to the generation portfolio
becomes as equally attracti