A pipeline to fuel Mid-East energy security

Not many people outside the energy industry know much of it, but the Arab Gas Pipeline (AGP) is quietly shaping up to be an important player in regional and even global energy security.

This is a submarine and overland pipeline that carries natural gas throughout the Middle East. There are plans to connect the pipeline to Europe, a move that will make Middle East gas resources more accessible to European countries.

The AGP began as a Memorandum of Understanding between Egypt, Jordan, Syria and Lebanon in 2001. This outlined the route of the AGP network through Al-Arish and Taba in Egypt; Aqaba, Amman in Jordan; and Hims and Damascus in Syria.

The pipeline exports mainly Egyptian natural gas. Egypt possesses the third highest estimated natural gas reserves in Africa at 58.5 Tcf (trillion cubic feet), after Nigeria (185 Tcf) and Algeria (159 Tcf).

It is a net exporter of natural gas, producing approximately 1.9 trillion cubic feet (Tcf) while consuming 1.1 Tcf in 2008. In 2009, Egypt exported 646 billion cubic feet (bcf), 30 per cent of this through pipelines, 70 per cent as Liquefied Natural Gas.

The AGP thus helps Egypt secure markets for its natural gas exports in the Middle East and possibly Europe. At the same time Egypt, like other Middle Eastern countries, faces increasing domestic demand for gas resources and continually monitors export volume to ensure the domestic markets are sufficiently supplied.

There is still excess capacity in the AGP, with the current volume of gas flowing through the AGP standing at 4 billion cubic metres per year (bcm/y) while its capacity is 10 bcm/y.

This provides tremendous opportunities for the expanding AGP to spur exports to other Middle Eastern countries. This is important in a region known for its conflicts and helps secure regional energy security by offering Egypt's natural gas resources to its neighbours in a stable and relatively low-cost manner. Experts have said that it is shared energy insecurity that "provides an incentive for regional collaboration on renewable energy".

Despite having 40 per cent of the world's remaining natural gas reserves, Middle Eastern countries are struggling to become exporters. This is due to growing domestic demand, as well as obstacles in developing the export market due to low prices, poor bill collection systems, and uneven distribution. Only with improved and increased infrastructure will the Middle East be able to reverse this trend, meet domestic demand and become net exporters of natural gas.

As the AGP expands its footprint, countries currently tied to it for natural gas resources will need to develop domestic infrastructure in order to reap the greatest benefits from participation in the AGP project. This has the salutary effect of spurring the development of regional energy infrastructure, which allows the whole region to be well-positioned for eventual integration into European markets.

Global gas demands are predicted to grow by about 2 per cent per year for the next several decades. Natural gas demand is set to rise from the present 3.1 trillion cubic metres (tcm) to 4.5 tcm by 2030, a rise of nearly 50 per cent. Most of that demand will come from electricity, as it is a clean (low CO2 emissions), affordable way to power the region and the world. The Arab Gas Pipeline (AGP) will play a pivotal role in securing access to natural gas in the region and beyond.

Already, the signs are good that the AGP will see additional extensions of its pipeline into Turkey, Iran, Iraq and possibly the European Union. It will do so by linking into existing or planned natural gas pipelines in these areas. If fully successful, the AGP would carry a total volume of gas of 14,000 million cubic metres per years (MCM/y).

Examples of extensions

In 2006, the original signees (Egypt, Jordan and Syria and Lebanon) agreed with Turkey to build an extension from Hims, Syria across the Turkish border. They also agreed to allow Iraq's natural gas access to the Arab Gas Pipeline and, in turn, access to the EU market if plans to tap into the Nabucco pipeline succeed. This pipeline is currently under construction and will run from Austria, Hungary, Romania, Bulgaria to Turkey.

The AGP is by no means the only regional gas pipeline of significance. Middle Eastern nations have been accessing collective and individual energy security policies to create regional co-operation and, ensure greater regional stability. There have been other natural gas pipeline projects in the region, most notably the pipelines connecting Algeria with European markets.

Algeria is the fourth-largest supplier to the EU after Russia, Norway and the Netherlands. It has two main natural gas pipelines, with a third expected to be fully operational in the middle of the year.

Other pipelines are also being planned for the Middle East region.

The AGP is a commendable effort of four nations (Egypt, Jordan, Lebanon and Syria) to streamline exports and allow greater ease of access for Arabs to natural gas. It acts as a spur to regional development of gas infrastructure. It is also far-sighted in foreseeing the export potential of extending the AGP into Israel and Turkey, as well connecting to other regional pipelines, such as lines originating in Iraq and Iran.

Plugging itself into this network of pipelines, the AGP will play an important role to stabilise the region's energy security, at least in regards to natural gas.