New base 24 march 2020 energy news issue 1326 by khaled al awadi

Copyright © 2020 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 24 March 2020 - Issue No. 1326 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Strategic agreement signed to build first commercial bulk
liquid storage terminal in Abu Dhabi
WAM/Hassan Bashir/MOHD AAMIR
Abu Dhabi Ports has signed a strategic agreement with Saudi-based Arabian Chemical Terminals,
ACT, that will see the development of the emirate’s first greenfield commercial bulk liquid storage
terminal at its flagship, deep-water Khalifa Port.
Further diversifying Abu Dhabi Ports’ portfolio with enhanced capabilities in the handling of liquid
bulk products and gases, the project will benefit existing as well as new customers in the region
seeking liquid bulk storage.
Serving as the first terminal to be developed by ACT in the UAE and specifically in Abu Dhabi, the
facility’s strategic location and advanced facilities, which will deliver world-class logistics and
industrial services, is expected to appeal to ACT’s current clientele that includes some of the world’s
largest oil and gas firms.
Both new and existing customers will be able to take advantage of Khalifa Port’s strategic location
combined with its improved maritime, logistics, and industrial capabilities The agreement for the
bulk liquid terminal, which will be developed on a 50,000 square metre land plot adjacent to 16-
metre deep-water quay access, with an option for an additional 150,000 square metres of land, was
www.linkedin.com/in/khaled-al-awadi-38b995b

signed by Captain Mohamed Juma Al Shamisi, Group CEO of Abu Dhabi Ports and Rakan Alireza,
Managing Director of Arabian Chemical Terminals Ltd and Deputy Managing Director of Reza
Investment Company.
As per the agreement, the project is set to be completed in two phases with the first stage slated for
commissioning in the second half of 2022 entailing the deployment of 44 storage tanks sized 1250
and 3000 tonnes each. The terminal’s second phase will commence following expansion of the
surrounding area and will consist of a number of larger industrial storage tanks and spheres.
Upon completion, the facility will be able to handle a number of liquid bulk products. Broadening the
range of capabilities and value offering for Abu Dhabi Ports’ clients, the new bulk liquid storage
terminal at Khalifa Port will provide customers with the opportunity to reduce their costs of
outsourcing their liquid and gas expenditures.
Captain Al Shamisi said, "Providing technology-rich, end-to-end logistics solutions for customers of
all sizes and industries is at the core of Abu Dhabi Ports’ diversification strategy.
"Working closely with ACT, we are pleased to now offer a comprehensive suite of integrated logistics
solutions that are powered by the most advanced technologies available in the market."
Alireza said, "We’re excited to be spearheading the development of our first commercial tank farm
in the UAE, here in Abu Dhabi, as we previously pioneered in KSA.
"Located between Abu Dhabi, Ruwais, and Dubai industries, the new liquid terminal will not only
prosper as a result of its strategic location, but will be further bolstered by Khalifa Port’s multi-modal
connectivity with access to the sea and UAE’s extensive road and future GCC railway network.
"In addition to supporting our overseas expansion strategy, the project will also provide the
foundation for other potential terminal activities within the emirate of Abu Dhabi."
Beyond the development of the bulk liquid terminal, the ACT is exploring different opportunities to
expand its service offering at Khalifa Port and its surrounding environment. This expansion includes
the facilitation of fuel bunker services for port customers, drumming and ISO filling services, the
development of an independent laboratory, realisation of MARPOL slops reception facilities, ADR
qualified trucking and distribution services, as well as offering stevedoring services that will support
other liquid product custody transfers.
ACT is also considering new avenues to support KIZAD and its clients, such as providing them with
feedstock offerings or assistance in selling their yields, in addition to cooperating with the industrial
zone to develop warehouses for both dry and liquid goods.

Saudi Aramco CEO reiterates production, supply commitments
REUTERS/Anushree Fadnavis
"We have been carrying out continuous preventive plans in all our business areas."
The CEO of Saudi Arabian Oil Company (Saudi Aramco), Amin H. Nasser, said that his company
has developed strategies to ensure production and supply commitments to its worldwide customers
as businesses across the world continue to face challenges over the coronavirus.
"The cornerstone of our company is energy production, reliable supply and our commitment to our
customers, especially in such difficult times; therefore, we have developed emergency and
prevention plans in all areas of our business to ensure the ongoing [operation] of our business so
that we can meet the needs of our customers around the world from energy products," he said.
Nasser said that he has considered the health and safety of the company's employees and facilities.
"We have been carrying out continuous preventive plans in all our business areas, in addition to
detailed emergency plans and leading medical support services, in order to reduce risks, ensure
the best possible care and curb COVID-19 infection," Saudi Press Agency reported, citing the CEO.
Saudi Arabia's Energy Ministry has directed Saudi Aramco, the world's top oil producing company,
to keep supplying crude oil at a record rate of 12.3 million barrels per day (bpd) in the coming
months.
Khalid al-Dabbagh, Saudi Aramco's CEO said the company was "very comfortable" with $30 a barrel
oil prices and that it can meet its dividends commitments and shareholders expectations even with
current low oil price.
Saudi Aramco’s 2019 net profit fell almost 21 percent over low crude oil prices and plunge in
production volumes. The state-owned oil giant’s 2019 net profit stood at of 330.69 billion Saudi riyal
($88.11 billion) after zakat and tax, down from 416.52 billion riyals in 2018.

China oil imports over 10 MPD in 2019 and what is next, COVIV-19
China General Administration of Customs, based on Bloomberg, L.P. + NewBase + EIA
The Chinese government has in recent weeks removed most restrictions on internal travel and is
pushing for the resumption of "normal" economic activities. Consequently, while oil demand outside
of China is still in the midst of an unprecedented decline, consumption within the country is now
firmly on the upswing.
However, COVID-19 will continue to cast a shadow on the country's economy and consumer
behavior. While COVID-19 continues to spread throughout the world, the number of active infections
within China has been declining since mid-February.
In fact, yesterday marked the first day since the outbreak began that China reported no new locally
transmitted infections. As a result, the Chinese government has in recent weeks removed most
restrictions on internal travel and is pushing for the resumption of "normal" economic activities.
Consequently, while oil demand outside of China is still in the midst of an unprecedented decline,
consumption within the country is now firmly on the upswing. Fuel sales by Chinese retail stations,
for example, have recovered to more than 80% of their pre-outbreak level.
However, as the Chinese saying goes, "the last leg of a journey merely marks the halfway point"
and COVID-19 will continue to cast a shadow on the country's economy and consumer behavior.
Most notably, cratering demand outside of China and the resultant slowdown in global GDP will
certainly dent China's oil demand. Specifically, while IHS Markit expects Chinese demand will return
to growth in the second half of this year, the scope of that growth is 200,000 b/d lower than our pre-
outbreak forecast.

The global demand slowdown - and delayed effects from the 5.6 million b/d product demand drop
within China last month - will have a major short-term impact on Chinese refiners. Domestic product
storage tanks are already running close to full after a hefty build last month and export opportunities
will obviously be limited.
As such, even as domestic product demand rebounds, IHS Markit expects Chinese crude runs to
average about 2.0 million b/d below last year during March and April. Chinese crude imports,
meanwhile, will decline significantly from the typical 10+ million b/d level next month, even though
oil prices are now well under $30 per barrel.
However, China has, unlike most countries, definitively passed the nadir of the COVID-19
pandemic. Crude runs and product demand have already begun to increase from their February
low, while crude arrivals are expected to ramp up quickly after April.
This is obviously welcome news for a global oil industry reeling from the recent price collapse,
though China is just one piece of the puzzle. The world is still facing an unprecedented oil supply
imbalance, the worst impacts of which are yet to come.
China’s oil imports surpassed 10 MB/D in 2019
China’s annual crude oil imports in 2019 increased to an average of 10.1 million barrels per day
(b/d), an increase of 0.9 million b/d from the 2018 average. China remains the world’s top crude oil
importer, surpassing the United States in 2017.
China’s new refinery capacity and strategic inventory stockpiling, combined with flat domestic oil
production, were the major factors contributing to the increase in China’s crude oil imports in 2019.

Source: China General Administration of Customs, based on Bloomberg, L.P.
In 2019, 55% of China’s crude oil imports came from countries within the Organization of the
Petroleum Exporting Countries (OPEC), the smallest share since at least 2005. China’s crude oil
imports from Saudi Arabia increased by more than 0.5 million b/d in 2019 to 1.7 million b/d, or 16%
of total crude oil imports.
From 2017 until earlier this year, OPEC members and other partner countries had been
voluntarily reducing crude oil production, which resulted in some non-OPEC producers increasing
their shares of China’s crude oil imports in recent years. In addition, in 2019, sanctions were placed
on Iran and Venezuela that significantly affected their ability to export oil, reducing their shares of
imports.
Source: China General Administration of Customs, based on Bloomberg, L.P.
Note: OPEC is the Organization of the Petroleum Exporting Countries.

Russia remained the largest non-OPEC source of China’s crude oil imports in 2019, averaging 1.6
million b/d, or 15% of total crude oil imports. Brazil overtook Oman as the second-highest non-
OPEC source of China’s crude oil imports, increasing by less than 0.2 million b/d to average 0.8
million b/d for the year.
China’s crude oil imports from the United States declined in 2019, primarily as a result of trade
negotiations that imposed tariffs on many U.S. goods, including crude oil.
Several factors contributed to China’s increase in crude oil imports in recent years. Although China’s
domestic crude oil production increased 0.1 million b/d in 2019—averaging 4.9 million b/d—it has
remained essentially flat since 2012, ranging between 4.8 million b/d and 5.2 million b/d.
In contrast, the U.S. Energy Information Administration (EIA) estimates China’s consumption of
petroleum and other liquids grew 0.5 million b/d in 2019 to 14.5 million b/d, and China’s net imports
for crude oil and other liquids grew 0.4 million b/d to 9.6 million b/d in 2019.
China’s crude oil imports also grew in 2019 because of strategic stockpiling of crude oil and
increases in commercial crude oil inventories following refinery expansions, which require increases
in storage as refineries begin operations.
Last year, China’s refinery capacity increased by 1.0 million b/d, primarily because two new refining
and petrochemical complexes came online with capacities of 0.4 million b/d each. As a result, the
country’s refinery processing also increased to an all-time high in 2019, averaging 13.0 million b/d
for the year.
EIA estimates China’s domestic petroleum and other liquids consumption averaged 13.9 million b/d
in the first quarter of 2020, a decline of 0.6 million b/d from the 2019 annual average, primarily as a

result of the Chinese government’s containment measures related to the outbreak of the 2019 novel
coronavirus disease (COVID-19). The economic and transportation effects from this outbreak are
still developing and will likely affect China’s crude oil imports, refinery runs, and domestic
consumption through the second quarter of 2020.
China Oil Demand Has Plunged 20% Because of the Virus Lockdown
Chinese oil demand has dropped by about 3 million barrels a day, or 20% of total consumption, as
the coronavirus squeezes the economy, according to people with inside knowledge of the country’s
energy industry.
The drop is probably the largest demand shock the
oil market has suffered since the global financial
crisis of 2008 to 2009, and the most sudden since
the Sept. 11 attacks. It could force the hand
of OPEC and its allies, which are considering an
emergency meeting to cut production and staunch
the decline in prices.
“It is truly a black swan event for the oil market,”
said John Kilduff, a partner at Again Capital LLC in
New York. “There was some hope for the demand
outlook this year before the outbreak, but that has
been knocked off its block. OPEC+ has to react. If
there are no further production cuts, there will only
be more price losses.”
Crude futures fell to one-year lows on Monday as traders reacted to the magnitude of the health
crisis in China. Brent, the global oil benchmark, dropped 1.3% to $55.91 a barrel as of 1:53 p.m. in
London. West Texas Intermediate declined as much as 2.2%, and traded 0.5% lower at $51.33.
Demand Hit

China is the world’s largest oil importer, after surpassing the U.S. in 2016, so any change in
consumption has an outsize impact on the global energy market. The country consumes about 14
million barrels a day -- equivalent to the combined needs of France, Germany, Italy, Spain, the U.K.,
Japan and South Korea.
Chinese and Western oil executives, speaking on condition of anonymity because they aren’t
authorized to discuss the matter publicly, said the decline was measured against normal levels for
this time of year. It’s a measure of the current drop in demand, rather than the average loss since
the crisis started, which would be smaller.
Beijing has locked millions of people in quarantine and the New Year holiday has been extended.
Flights have been canceled and authorities across the globe are trying to contain the virus’s spread.
Traditionally during the New Year holiday, gasoline and jet-fuel demand increase as hundred of
millions go back home, while gasoil consumption drops as industrial activity slows.
The collapse in Chinese oil consumption is starting to reverberate across the global energy market,
with sales of some crudes slowing to a crawl and benchmark prices in free-fall. Sales of Latin
American oil cargoes to China came to a halt last week, while sales of West African crude, a
traditional source for Chinese refineries, are also slower than usual, traders said.
Oil Import Kings
China shipped in more oil last year than the U.S. did at its peak in 2005
Source: China Customs, U.S. Energy Information Administration
Chinese refineries are storing unsold petroleum products such as gasoline and jet fuel, according
to the executives. But stockpiles are growing every day, and some refineries may soon reach their
storage limits. If that were to happen, they would have to cut the amount of crude they process. One
executive said that refinery runs were likely to be cut soon by 15-20%.
There are signs that’s already happening. Sinopec Group, the nation’s biggest refiner, is in the
process of reducing runs at its plants by an average of about 13-15% and will review whether further

cuts are needed Feb. 9, according to one of the people. The company declined to comment on its
operations.
As many as 18 independent oil refineries may be cutting rates or shutting completely as storage fills
up, according to traders familiar with operations at the plants known as teapots. China has as many
as 40 of these independent refineries, which are located primarily in the eastern region of Shandong
and account for about a quarter of the nation’s processing capacity.
Beyond the headline price for Brent, every other indicator in the physical and derivatives market
also points to a weakening market. So-called time-spreads, which measure the price difference
between contracts for delivery at different times, have collapsed -- an indication that short-term
demand is expected to remain weak.
In China, stocks plummeted by the most since an equity bubble burst in 2015 as they resumed
trading to the worsening virus outbreak. The CSI 300 Index slumped as much as 9.1% as onshore
financial markets opened for the first time since Jan. 23, while the yuan tumbled and crude futures
in Shanghai also sank by more than 7%.
OPEC and its allies, which include Russia, are weighing their options to respond to the crisis and
there have been discussions about calling an emergency meeting. Saudi Arabia is pressing for a
gathering sooner than the one scheduled for March 5-6, though it has run into resistance from
Russia. The Saudi and Russian oil ministers spoke on the phone for an hour on Thursday and
another 30 minutes on Friday, according to Russians officials.
For now, OPEC has called a technical meeting this week to assess the situation, and the Joint
Technical Committee will report back to ministers.
According to consultants at Energy Aspects Ltd., OPEC is considering an informal proposal to
deepen current production curbs by about 500,000 barrels a day. But there’s no consensus on the
idea, which was floated by at least one country. As OPEC and its partners are already in the midst
of steep cuts, many analysts are skeptical on how much more they’re willing to do.

Mozambique: Coronavirus, gas slump put brakes on Exxon's
giant Mozambique LNG plan Reuters + NewBase
Exxon Mobil is likely to delay the greenlighting of its $30 billion liquefied natural gas (LNG) project
in Mozambique as the coronavirus disrupts early works and a depressed gas market makes
investors wary, six sources told Reuters.
Top U.S. oil and gas company Exxon said on Tuesday it was evaluating “significant” cuts to capital
spending and operating expenses. Energy firms worldwide have slashed spending this month as oil
prices plummeted to 18-year lows after global travel curbs and reduced economic activity destroyed
demand.
The coronavirus pandemic is forcing delays to projects worldwide. Qatar, the world’s largest
producer of liquefied natural gas (LNG), is delaying a big expansion in which Exxon is a major
partner.
The Rovuma LNG project, which will produce from a deepwater block off Mozambique containing
more than 85 trillion cubic feet of natural gas, was expected to get the go-ahead in the first half of
2020.
But three sources familiar with the project told Reuters that Exxon’s partners want to push back a
final investment decision (FID).
A further three sources said the pandemic is disrupting work on the project to such a degree that
FID before the second half is unlikely.
Any delay would leave Exxon’s project further behind rival Total, which took FID last June on its
neighboring project.

Exxon might be left with no choice.
“COVID-19 is affecting guys going into Mozambique, it’s affecting Chinese and Korean financiers,
and clearly you’ve had the arse drop out of the oil market,” said a source with knowledge of the
project.
The pandemic is causing delays to the financing needed for the project, the source added.
Rovuma LNG is managed by Mozambique Rovuma Venture, a joint venture owned 35.7% each by
Exxon and Eni with the remaining stake of 28.6% held by China National Petroleum Corporation
(CNPC).
LNG prices hit a record low of $2.7 per million British thermal units (mmBtu) last month, and Rovuma
requires an average price of $7 per mmBtu throughout its life to be profitable, according to Bernstein
analysts.
Another source with knowledge of internal discussions said with the energy outlook uncertain and
LNG supplies set to rise sharply by 2025, some of the project partners want to “cool Exxon’s heels”
and delay.
Exxon spokesman Todd Spitler declined to discuss whether partners are seeking to push back the
FID. “This is a complex project that will be developed over several years,” he said.
China’s CNPC did not respond to Reuters’ request for comment and Eni declined to comment.
Mozambique’s state oil firm ENH, Galp Energia and KOGAS, which each have 10% stakes in the
project, either did not provide a comment or referred Reuters to Exxon.
EARLY WORKS HIT
Exxon has already committed to $500 million in initial investment, and FID is the next stage in
funding based on which banks can extend lines of credit.
But early works are being disrupted by coronavirus travel restrictions. International workers travel
regularly to the project site on the Afungi peninsula in Cabo Delgado province, where they live
cheek-by-jowl and share a canteen for six- or eight-week stints.
Many hail from countries that have been hit hard by the coronavirus and have put in place travel
restrictions. Mozambique has imposed a 14-day quarantine for those entering the country.
That has left key personnel unable to reach the site.
“It seems as though they are electing to postpone some of the early stage works and contracts for
now,” another source familiar with the matter said. “I doubt we can expect their FID before the end
of 2020.”
Exxon’s Spitler said employees’ health and safety was a priority and declined to comment on the
day-to-day details of its operations.

NewBase March 24-2020 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices climb as U.S. ramps up economic support measures
Reuters + Bloomberg + NewBase
Oil prices rose on Tuesday on hopes that the United States will reach a deal soon on a $2 trillion
coronavirus aid package which could blunt the economic impact of the outbreak and in turn support
oil demand.
Brent crude oil LCOc1 futures for May delivery rose by 76 cents, or 2.81%, to $27.79 a barrel by
0646 GMT while West Texas Intermediate (WTI) crude CLc1 futures gained 82 cents, or 3.51%, to
$24.18. Both price benchmarks had risen over $1 earlier before pulling back slightly.
“Oil is clawing its way higher mainly on the back of the weaker dollar that stemmed from the Fed’s
unprecedented measures,” said Edward Moya, senior market analyst at broker OANDA.
Oil price special
coverage

“WTI crude volatility will remain high and traders should not be surprised if this rally eventually gets
faded.”
The U.S. Federal Reserve on Monday rolled out an extraordinary array of programs to backstop an
economy reeling from restrictions on commerce that scientists say are needed to slow the
coronavirus pandemic.
While a $2 trillion coronavirus economic stimulus package remained stalled in the U.S. Senate on
Monday as lawmakers haggled over its provisions, U.S. Treasury Secretary Steven Mnuchin voiced
confidence that a deal would be reached soon.
The expected stimulus pushed the U.S. dollar lower as it will increase the cash supply. The dollar
index .DXY, which measures the greenback against six major currencies, fell 0.5% on Tuesday.
A weaker greenback boosts dollar-denominated oil prices since buyers paying in other currencies
will pay less for their crude.
Still, the overall crude demand outlook remains low as long as travel restrictions are in place and
governments curtail commercial activities to prevent the coronavirus spread.
Prices and profit margins for motor and aviation fuels globally are under severe pressure from a
plunge in demand as countries enforce lockdowns and airlines ground planes, forcing more
refineries to reduce output and lower their crude oil demand.
Concerns over oil demand were also stoked by a doubling of new coronavirus cases in China, the
world’s biggest oil importer, caused by a jump in infected travelers returning home from overseas.
That is raising the risk of transmissions in Chinese cities and provinces that had seen no new
infections in recent days.
“While the anticipated lengthy absence of air traffic presents a significant obstacle in its own right,
... the expected ramp in supply, which suggests storage will fill very quickly, and then prices will
plummet as physical demand continues to evaporate,” said Stephen Innes, chief global markets
strategist at AxiCorp.
Oil Drops Toward 17-Year Low as Hopes for OPEC-Texas Truce Fade
Oil dropped toward the lowest level since 2003 as prospects for a deal between OPEC and Texas
to limit production appeared to fade, while a U.S. coronavirus rescue package ran into political
delays.
Futures in London fell around 4% to near $26 a barrel, while West Texas Intermediate edged higher
after the April contract expired Friday. Texas Railroad Commissioner Ryan Sitton landed a rare
invitation to attend OPEC’s June meeting on Friday, but just hours later hopes for an agreement
began to unravel as his call to curb output was criticized by fellow regulators and drillers.
Democrats in the U.S. Senate blocked a Republican economic recovery package of nearly $2
trillion, describing it as too focused on corporations at the expense of workers. Major support
measures remain likely but could take additional time for the two parties to work out their differences.
Asian stocks tumbled, while U.S. equity futures dropped 5% and hit their down limit.

The chance that either Saudi Arabia or Russia will back down from their price war seems remote,
with President Vladimir Putin unlikely to submit to what he sees as the kingdom’s oil blackmail,
according to Kremlin watchers. The brinkmanship is taking place against a rapidly darkening
demand outlook with more nations going into lockdown to tackle the virus. Some traders see crude
demand collapsing by as much as 10 to 20 million barrels a day.
“Oil could head to $10 to $15 a barrel very quickly” if OPEC and Texas can’t reach an agreement
on cutting production, said Stephen Innes, chief Asia market strategist at Axicorp Ltd. “Any traders
with the capacity to store oil are probably putting their hands up, looking at the contango.”
Brent for May settlement lost 3.7% to $25.98 a barrel on the ICE Futures Europe Exchange as of
11:01 a.m. in Singapore after dropping to as low as $24.68 earlier. That’s less than its close
of $24.88 a barrel on Wednesday, which was the lowest since May 12, 2003 when it settled
at $24.63
WTI for May delivery rose 0.5% to $22.75 a barrel on the New York Mercantile Exchange after
falling to as low as $20.80 earlier. The April contract plummeted 29% last week, the most since
1991.
The unprecedented demand and supply shock was reflected in a range of oil-market indicators.
Brent’s six-month timespread was more than $8 a barrel in contango, the widest since 2009, a
market structure indicating over-supply. A gauge of WTI volatility surged 24% on Friday to more
than 200 index points, the highest level on record. Meanwhile, hedge fund wagers against the U.S.
benchmark dropped 26% in the week ended March 17, although that was likely short-covering
before the next round of speculative attacks.
Even if crude demand recovers to normal levels by the middle of the year, 2020 is still on course to
suffer the biggest decline in consumption since reliable records started in the mid-1960s. Until now,
the biggest annual contraction was recorded in 1980, when it tumbled by 2.6 million barrels a day
as the global economy reeled under the impact of the second oil crisis.

NewBase Special Coverage
The Energy world - Special 02- March-2020
Organic waste has huge untapped potential to provide clean
energy around the world … IEA
The world is only using a fraction of the potential to produce gas from organic waste, which could
cover around 20% of today’s global demand for gas, according to a new report by the International
Energy Agency released today.
Modern societies and economies produce increasing
amounts of organic waste – such as agricultural residues,
food waste and animal manure – that can be used to
produce biogas and biomethane, clean energy sources
with multiple potential benefits for sustainable
development. Biogas offers a local source of power and
heat for communities, and a clean cooking fuel for
households. Upgrading it to biomethane brings all the
energy system benefits of natural gas without the
associated net emissions.
“Biogas and biomethane can play major roles in a
sustainable energy future, but for the moment we’re
missing out on this opportunity to cut waste and cut
emissions,” said Dr Fatih Birol, the IEA’s Executive
Director. “A push from governments can give biogas and
biomethane the necessary momentum, with benefits
across energy, transport, agriculture and the
environment.”
Every part of the world has significant scope to produce biogas and/or biomethane. The availability
of sustainable feedstocks for these purposes is set to grow by 40% by 2040, according to the IEA
report, The Outlook for Biogas and Biomethane.
The largest opportunities lie in the Asia-Pacific region, where natural gas consumption and imports
have been growing rapidly in recent years. There are also significant possibilities across North and
South America, Europe, and Africa.
Most of the biomethane resources examined in the IEA report are currently more expensive to
produce than the prevailing natural gas prices in their region, but the cost gap is projected to narrow
over time. Recognition of the value of avoided carbon dioxide and methane emissions goes a long
way towards improving the cost-competitiveness of biomethane.
The production and use of these gases embody the idea of a more circular economy in which
resources are continuously used and reused – and in which rising demand for energy services can
be met while also delivering wider environmental benefits.
“As governments seek to accelerate their clean energy transitions, they should not forget the
importance of low-carbon gases such as biomethane and biogas,” added Dr Birol. “Among other
benefits, biogas and biomethane also offer a way to bring rural communities and industries into the
transformation of the energy sector.”

Biogas and biomethane production pathways
Modern societies and economies produce increasing amounts of organic waste that can be used to
produce clean sources of energy, with multiple potential benefits for sustainable
development. Biogas and biomethane are different products with different applications, but they
both originate from a range of organic feedstocks whose potential is underutilised today.
The production and use of these gases embody the idea of a more circular economy, bringing
benefits from reduced emissions, improved waste management and greater resource efficiency.
Biogas and biomethane also provide a way to integrate rural communities and industries into the
transformation of the energy sector.
A detailed, bottom-up study of the worldwide availability of sustainable feedstocks for biogas and
biomethane, conducted for this report, shows that the technical potential to produce these gases is
huge and largely untapped.
These feedstocks include crop residues, animal manure, municipal solid waste, wastewater and –
for direct production of biomethane via gasification – forestry residues. This assessment considers
only those feedstocks that do not compete with food for agricultural land.
Biogas and biomethane production in 2018 was around 35 million tonnes of oil equivalent (Mtoe),
only a fraction of the estimated overall potential. Full utilisation of the sustainable potential could
cover some 20% of today’s worldwide gas demand.

Every part of the world has significant scope to produce biogas and/or biomethane, and the
availability of sustainable feedstocks for these purposes is set to grow by 40% over the period to
2040. The largest opportunities lie across the Asia Pacific region, where natural gas consumption
and imports have been growing rapidly in recent years, and there are also significant possibilities
across North and South America, Europe, and Africa.
The overall potential is set to grow rapidly over the next two decades, based on increased availability
of the various feedstocks in a larger global economy, including the improvement in waste
management and collection programmes in many parts of the developing world.
Biogas offers a local source of power and heat, and a clean cooking fuel for households
Biogas is a mixture of methane, CO2 and small quantities of other gases that can be used to
generate power and to meet heating or cooking demand. Its uses and competitiveness depend on

local circumstances, but a common element is that biogas offers a sustainable way to meet
community energy needs, especially where access to national grids is more challenging or where
there is a large requirement for heat that cannot be met by renewable electricity.
In developing countries, biogas reduces reliance on solid biomass as a cooking fuel, improving
health and economic outcomes. In the SDS, biogas provides a source of clean cooking to an
additional 200 million people by 2040, half of which in Africa. Biogas can also be upgraded to
produce biomethane by removing the CO2 and other impurities.
When upgraded, biomethane brings all the energy system benefits of natural gas
without the associated net emissions
Biomethane is a near-pure source of methane produced either by “upgrading” biogas or through the
gasification of solid biomass; since it is indistinguishable from the regular natural gas stream, it can
be transported and used wherever gas is consumed, but without adding to emissions. Biomethane
grows rapidly in IEA scenarios.
It allows countries to reduce emissions in some hard-to-abate sectors, such as heavy industry and
freight transport. It also helps to make some existing gas infrastructure more compatible with a low-
emissions future, thereby improving the cost-effectiveness and security of energy transitions in
many parts of the world.

Biomethane in the SDS avoids around 1 000 million tonnes (Mt) of GHG emissions in 2040. This
includes the CO2 emissions that would have occurred if natural gas had been used instead, as well
as the methane emissions that would otherwise have resulted from the decomposition of
feedstocks.
Most of the biomethane potential is more expensive than natural gas, but the cost
gap narrows over time
With the exception of some landfill gas, most of the biomethane assessed in this
report is more expensive than the prevailing natural gas prices in different regions.
The average price for biomethane produced today is around USD 19 per million
British thermal units (MBtu), with some additional costs for grid injection.
However, this report estimates that around 30 Mtoe (~40 billion cubic metres [bcm])
of biomethane – mostly landfill gas – could be produced today at a price that
undercuts the domestic price of natural gas; this is already ten times more than total
biomethane consumption today.

The cost gap is projected to narrow over time as biomethane production technologies improve and
as carbon pricing in some regions makes natural gas more expensive. Recognition of the value of
avoided CO2 and methane emissions goes a long way towards improving the cost-competitiveness
of biomethane.
Low-carbon gases are essential to energy transitions; supportive policies are required
to unlock the potential for biogas and biomethane
Multiple fuels and technologies will be required to accelerate energy transitions, and low-carbon
gases – led by biomethane and low-carbon hydrogen – have critical roles to play. The 20% share
of electricity in global final consumption is growing, but electricity cannot carry energy transitions on
its own against a backdrop of rising demand for energy services.

Biomethane is the largest contributor to low-carbon gas supply in the time horizon of the World
Energy Outlook (WEO) Scenarios. How the biogas and biomethane industry evolves will vary by
country depending on the sectoral focus, feedstock availability, prevailing market conditions and
policy priorities. In all cases, however, realising the multiple benefits of biogas and biomethane
requires co-ordinated policy-making across energy, transport, agriculture, environment and waste
management.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
The Editor :”Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
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For additional free subscription emails please contact Hawk
Energy
Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 28 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE operations
base , Most of the experience were spent as the Gas Operations Manager in
Emarat , responsible for Emarat Gas Pipeline Network Facility & gas
compressor stations . Through the years, he has developed great experiences
in the designing & constructing of gas pipelines, gas metering & regulating
stations and in the engineering of supply routes. Many years were spent
drafting, & compiling gas transportation, operation & maintenance agreements along with many
MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences
held in the UAE and Energy program broadcasted internationally, via GCC leading satellite
Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 2020 K. Al Awadi

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