<DrumBeat: July 14, 2008 The Oil Drum DrumBeat: July 15, 2008>

51 comments on Algeria & Morocco: Natural Gas Cartels, Fertilizer Mercantilism, and Rising Tensions

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jonathan.s.callahan on July 14, 2008 - 11:20am Permalink | Subthread | Comments top

Jeff,

Fascinating in-depth article! I knew about Algeria's role as a supplier of natural gas to Europe but not about Morocco's production of phosphate.

Looking at the historical data in the Energy Export Databrowser it appears that Algeria's increasing production of Gas is unable to keep up with skyrocketing demand from the three top consumers: Spain, France and Italy. Here's the graph that shows the sum of production and consumption for all 4 nations combined:

For most of the time series, Algerian production increased at the same rate as demand in Spain, France and Italy. But things have gotten dangerously out of balance since about 2000. Looking at the individual graphs for Algeria, Spain, France and Italy it's hard to fathom how Algeria will have enough Gas to further expand LNG exports given that:

  1. North Sea gas production is now in serious decline.
  2. Internal consumption has yet to pick up in dramatic fashion in Algeria as has happened in all of the Middle East producers.

Looking at the charts it seems that Spain, France and Italy will be forced into a cozy relationship with Algeria, sucking up as much of the Algerian output as possible.

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Euan Mearns on July 14, 2008 - 6:02pm Permalink | Subthread | Parent | Comments top



Figures 13 & 14 The import sources of gas to France.

Jonathan, France, Spain and Italy all have diversified sources of nat gas imports which I suggest you learn about before posting rubbish like this here again.

And whist North Sea gas production may peak next year its is not yet in serious decline.

You may want to spend some time reading this:

http://www.theoildrum.com/node/3283/

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jeffvail on July 14, 2008 - 7:46pm Permalink | Subthread | Parent | Comments top

Euan: I don't think Jonathan's post was "rubbish" at all, and I think it's the kind of comment that should be discussed, rather than just dismissed. You can disagree with his Jonathan's contention that France, Spain, and Italy will be "forced" into a cozy relationship with Algeria, and he did overstate the current state of North Sea gas decline, but I don't think his overarching argument is off the mark--after all, North Sea gas will decline in the not-too-distant future. Natural Gas is less globally fungible due to infrastructure issues, as you know, than oil and the diversified nature of a nation's gas supply doesn't make a geographically proximate supplier unimportant. I think Jonathan's point is actually well taken, that a disruption to Algerian natural gas supplies would be highly significant to France, Italy, and Spain. Additionally, despite France's diversified supply, disruption to pipelines serving Spain or Italy would impact France because gas is highly fungible among neighbors that share significant pipeline infrastructure--Spain and Italy would bid up lost Algerian gas in an effort to maintain supply, and France (and other parts of Europe) would feel the impact. To my knowledge, existing LNG trains and associated infrastructure (esp. tankers and port infrastructure) are insufficient to make up lost pipeline supply by merely transferring to LNG. Likewise with disruption of LNG infrastructure--it can't be merely diverted to waiting pipelines...

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Euan Mearns on July 15, 2008 - 9:07am Permalink | Subthread | Parent | Comments top

I was in a bad mood.

If there was a serious disruption to Algerian gas exports it would have a massive effect throughout Europe and the world since the European market is highly interconnected. But this is like saying that a serious disruption to Saudi oil exports would have a major impact upon oil markets. So I'm really not sure what the point is.

Has something happened that makes the threat of such disruption more likely, and in particular more likely in Algeria than anywhere else? What about Egypt and Libya. And if terrorists were seriously intent on disrupting nat gas supplies why not blow up unguarded pipelines in Scotland or N Holland?

Of the thousands of miles of pipeline, most of it will be small diameter gas flow lines - if it gets blown up it would take them a day to repair it. The main targets would be the main arteries and gas processing plants and pumping stations - but those I imagine will be well guarded - like the Abqaiq complex in Saudi.

There has been low grade threat of terror activity in Algeria for so long as I can remember. The main base - Hassi Messoud - in the middle of the Sahara desert is heavily guarded by thousands of Algerian troops.

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jonathan.s.callahan on July 14, 2008 - 10:41pm Permalink | Subthread | Parent | Comments top

Euan,

Point taken to do a little more homework here at TOD before posting.

Had I read your in-depth article on The European Gas Market I would not have made those off-the-cuff comments based on a single graphic.

This points out the problem with artificially grouping nations together without having a very good reason for doing so. Algeria, Spain, France & Italy do not constitute anything approaching a closed system as the graphic implies and I'll need to review the various groupings I have set up in the databrowser. (Groupings were one of the main requests from the initial batch of users.)

I should probably stick to groupings that are either geologic in nature like the North Sea or political in nature like the EU or OECD.

-- Jon

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Euan Mearns on July 15, 2008 - 9:21am Permalink | Subthread | Parent | Comments top

Jon - as I've said before many of your charts are useful for quick checks on exports. But I think you agree this one's not that helpful and could even be misleading for a reader not experienced enough to know what lies behind the numbers.


Figure 27 Destinations for Algerian pipeline gas exports.


Figure 28 Destinations for Algerian LNG gas exports.

The European gas market is complex with a high degree of interconnectivity of supplies. many countries would be affected by a failure of Algerian gas exports - not only those countries that actually receive Algerian gas directly.

But I'm still left wondering if the threat level in Algeria has some how increased significantly that shoudl make us more concerned now than before.

As explained above I was in a bad mood yesterday - sorry for being a bit gruff.

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jonathan.s.callahan on July 15, 2008 - 12:34pm Permalink | Subthread | Parent | Comments top

Euan,

No offense taken. I understand how it can be frustrating to have to explain things over again when you've done such an excellent job of explaining them the first time.

We both agree that this particular chart is misleading and I'll be removing it. Part of the reason I've been posting so many charts is to gauge their usefulness and your comments let me know that this one in particular, and arbitrary groupings in general, are problematic. This is very valuable information for me as I definitely don't want to add to the confusion!

I hope to be adding more styles of charts in the future and I'll be looking to your work and that of others here at TOD for inspiration. A couple of ideas I'm working on include:

  • per capita plot option that displays import/export per capita
  • flow of money chart that multiplies import/export by the BP provided yearly price
  • fossil fuel use chart (superimposed timelines for coal, oil & gas (mtoe) and their sum)

I look forward to the continuing conversation and discussion about how best we can bring this information to the non-cognoscenti.

Happy Exploring!

-- Jon

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51 comments on Algeria & Morocco: Natural Gas Cartels, Fertilizer Mercantilism, and Rising Tensions

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