Ever since the discovery of the giant gas-fields Tamar, Leviathan and Zohr in the Eastern Mediterranean, the area has attracted growing international attention, with Egypt at the centre of it.

A lot is happening in the Eastern Mediterranean. Aside from the long-standing Cyprus issue and a number of other tense geopolitical standoffs, hydrocarbon exploration and production is taking centre stage, with more expected in the near future (see Figure 1).

The key question, however, revolves less around the size of new discoveries and international investments in the area. More important will be to assess how global gas markets and prices will affect these discoveries, spurring or dashing the high-hopes of an emerging export-oriented “gas hub” in the Eastern Mediterranean.

As we enter 2019, two events stand out in the region: the drilling by ExxonMobil in block 10 off Cyprus (already in progress) and the potential for a sizable new gas discovery by the Italian company Eni in the Nour North Sinai concession, offshore from Egypt’s Sinai peninsula.

Both are very promising. Should major discoveries be confirmed, for which there are high hopes, these could transform the region, not just in terms of the gas industry and exports, but also geopolitically.

Both developments are happening at a time when Bloomberg forecasts increasing global demand for liquefied natural gas (LNG) with a gap between demand and supplies developing after about 2025 if one follows its base projections (see Figure 2), or earlier, if higher demands actually materialise.

This would open opportunities for LNG exports from the region, from both Egypt and Cyprus. But there will be strong competition from new projects emerging in North America, Qatar, Africa, Australia and Russia.

The global gas and LNG market is in a state of flux. This is driven in part by China’s slowing economic growth, but also due to concerns about the global economy, with global GDP growth expected to slow over the next few years.[5]

Sanctions and the trade war between the US and China are posing increasing threats to global LNG trading. These have brought home to China its vulnerability in energy supplies, where these rely mostly on imports. On top of this, China is going through an economic slowdown, expected to be long-lasting.

In response to these developments, China moved to change its energy policies in mid-2018, allowing regional governments to increase clean coal production and consumption.[6]

Combined with a rapid increase in renewables and nuclear capacity, China is countering these threats by boosting indigenous resources. In doing so, it has relaxed its clean air policies that led to the massive increase in LNG demand in late 2017 and for most of 2018. In addition, the Power of Siberia pipeline, with 38 billion cubic metres (bcm) per year capacity, is expected to start delivering gas to China in 2019.[7]

Meanwhile, in mid-2018, Japan also released its new energy plan to 2030, which includes a return to nuclear power and a reduction in the use of imported LNG, a process that has already started. On this latter aspect, Tokyo aims to reduce LNG imports from 84 million tonnes in 2017 to 62 million tonnes a year by 2030.[8] South Korea is also moving in a similar direction, continuing to rely on nuclear and coal power to the middle of the next decade.

Moving to India, while there is much talk about increased gas use in the future, New Delhi’s pipeline infrastructure cannot handle increased LNG imports beyond the existing import terminal capacity of 30 million tonnes a year.[9]Building new pipelines is very challenging, not least due to complex right-of-way processes. New Delhi is also not giving up coal – quite the contrary. The priority in India is a rapid increase in cheap renewables, with a target to increase capacity to 175 gigawatts (GW) by 2022.

These developments are already having an impact on prices and are slowing LNG demand in Asia.

Looking to Europe does not provide much respite either. Europe is well supplied with gas. At the Platts gas and LNG conference in London last October, Gazprom confirmed it could sell gas at 4 US dollars per million British thermal units (mmBTU) and still make a profit.[10] In addition, US LNG companies are confident they will increase their sales to Europe at about 6.5 dollars/mmBTU.

Longer term gas price forecasts made at the international gas and LNG conferences in October and November 2018 confirmed that, with record LNG supply, by mid-2020s spot LNG prices will return back to about 8 dollars/mmBTU in Japan and 6 dollars/mmBTU in north-western Europe.[11]

East Med gas will have to compete with such prices if it is to secure export markets. With US shale on the resurgence, renewables penetration becoming an unstoppable phenomenon and coal holding its own competition to secure markets is going to be as fierce as ever.[12]

Global LNG demand can of course be expected to increase but, given recent developments in Asia, it will probably be nearer to Bloomberg’s base projections (see Figure 2).[13] Moreover, such increases will be price-driven.

New LNG projects in Qatar and North America, which are at an advanced stage of approval, may lead to supplies in excess of Bloomberg’s base projections, with the risk that over-supply may extend to the end of the next decade, keeping prices low.

Figure 2 | Global LNG supply and demand capacity

Source: Maggie Kuang, “The Future of LNG”, cit.

New energy outlooks expect a peak in fossil fuel demand in the 2030s,[14] warning that expensive gas could hasten the penetration of renewables and lead to a faster decline in hydrocarbon use. On the other hand, with low prices, gas could continue doing well.

International efforts to combat climate change can also be expected to impact the global energy market, including East Med gas.[15]

The EU has upped its 2030 climate targets, with renewables set to account for 32 per cent, energy efficiency 32.5 per cent and CO2 emissions reductions at 40 per cent in comparison to 1990 levels.[16] In addition, carbon pricing is increasing fast, promoting renewables and impacting fossil fuels. Renewables accounted for over 70 per cent of net additions to global power generation capacity in 2017. They now comprise over 26 per cent of global electricity.

While major oil and gas companies remain steadfast in their defence of the industry, the risk of increased divestment by the insurance industry and institutional investors, as well as litigation by activists, do pose threats to the industry.

As a result, and in addition to pursuing exports, Eastern Mediterranean countries should consider ways to maximise use of discovered gas in the region.

ExxonMobil’s Vice-President of Europe, Russia and the Caspian, Tristan Asprey, made clear at the Economist Summit in Nicosia in November 2018 that competitiveness will be essential in demonstrating commercial viability of an LNG export project in Cyprus.[17]

As also stated at the Economist Summit, there is a need to find ways to reduce regional geopolitical risk. LNG projects involve multi-billion dollar investments, the returns from which take decades to materialise. Such projects and investments need certainties.

Among the key challenges is Turkey’s effectively untenable position that islands, including Cyprus, are not entitled to Exclusive Economic Zones (EEZs). Turkey does not recognise the United Nations Convention on the Law of the Sea (UNCLOS) and takes the view that mainland continental shelves take precedence over islands.

On this basis, Turkish authorities continue to challenge Cyprus’s right to develop its EEZ, disputing all related hydrocarbon activity. However, this is at odds with the EU, the US and the international community who recognise Cyprus’s rights to its EEZ and its exploitation for the benefit of all Cypriots.

Overall, the Eastern Mediterranean still has strong prospects for more gas discoveries, especially ExxonMobil in Cyprus and Eni at Noor in Egypt, but unlocking this potential by securing export markets remains a challenge due to global markets, price viability and the fraught geopolitics of the region.

A prerequisite for further integration and realisation of the full gas potential of the Eastern Mediterranean is geopolitical and regional stability through resolution of regional conflicts. The recent establishment of the East Med Gas Forum should contribute to this and is a welcome development.[18] The EU and the US could also play a central role by putting diplomacy into action and developing incentives and disincentives for regional players.

Against this backdrop, a diplomatic solution on Cyprus could go a long way in improving regional geopolitics in the Eastern Mediterranean. But is this likely to happen? There is a glimmer of hope that negotiations may resume mid-2019, but few are holding their breath.

Yet, in addition to looking for exports, which is proving to be challenging, Eastern Mediterranean countries should consider ways to maximise use of this gas regionally, an approach that would likely be more commercially viable and perhaps even lead to increased intra-regional cooperation in the area.

Gas exports from Israel and Cyprus face political and commercial challenges. But with Israeli and Cypriot gas exports to Egypt looking more likely, there is hope for Egypt to emerge as an energy hub in the Eastern Mediterranean, triangulating gas from multiple sources while improving its infrastructure for a better distribution and export potential. Egypt has already turned from an LNG importer to an LNG exporter in 2019, making Egypt the first true “winner” in the emerging East Med gas rush.

* Charles Ellinas is CEO of EC Cyprus Natural Hydrocarbons Company Ltd (eCNHC), Nicosia, and nonresident Senior Fellow with the Atlantic Council’s Global Energy Center.

[1] Charles Ellinas, “Exxon’s Drilling: All Outcomes Are Possible”, in Cyprus Mail, 13 January 2019, https://cyprus-mail.com/?p=225852.

[2] Mohamed Adel, “Noor Gas Field Reserves Record 10tn Cubic Feet”, in Daily News Egypt, 14 November 2018, https://dailynewssegypt.com/?p=681060.

[3] Charles Ellinas, “Optimism Over Gas Drilling, But It’s the Sharing That Counts”, in Cyprus Mail, 18 November 2018, https://cyprus-mail.com/?p=217519.

[4] Maggie Kuang, “The Future of LNG”, in Bloomberg NEF, 4 May 2018, https://about.bnef.com/blog/the-future-of-lng.

[5] World Bank, Global Economic Prospects, January 2019: Darkening Skies, Washington, World Bank, 2019, p. 231, http://hdl.handle.net/10986/31066.

[6] Feng Hao, “China releases 2020 action plan for air pollution”, in Chinadialogue, 6 July 2018, https://www.chinadialogue.net/article/show/single/en/10711.

[7] Jessica Jaganathan, “China Overtakes Japan As World’s Top Natural Gas Importer”, in Reuters, 12 November 2018, https://reut.rs/2T60vJO.

[8] Charles Ellinas, “Japan Hovers Between Gas and Nuclear”, in NGW Magazine, Vol. 3, No. 16 (13 September 2018).

[9] Charles Ellinas, “India Natural Gas Needs: An Open Question”, in NGW Magazine, Vol. 3, No. 18 (9 October 2018).

[10] Charles Ellinas, “EastMed Gas Pipeline Increasingly Doubtful”, in Cyprus Mail, 2 December 2018, https://cyprus-mail.com/?p=219757.

[11] Charles Ellinas, “Natural Gas in 2019”, in NGW Magazine, Vol. 4, No. 2 (21 January 2019).

[12] Ibid.

[13] Maggie Kuang, “The Future of LNG”, cit.

[14] DNV GL, Energy Transition Outlook 2018, September 2018, https://eto.dnvgl.com/2018.

[15] Charles Ellinas, “UN Climate Change and Energy Security”, in NGW Magazine, Vol. 3, No. 20 (30 October 2018).

[16] European Commission, Commission Welcomes European Parliament Adoption of Key Files of the Clean Energy for All Europeans Package (IP/18/6383), Brussels, 13 November 2018, http://europa.eu/rapid/press-release_IP-18-6383_en.htm.

[17] Charles Ellinas, “Dreams Versus Reality in the Push for Cyprus Gas”, in Cyprus Mail, 16 December 2018, https://cyprus-mail.com/?p=222210.

CAIRO, Feb 27 (Reuters) – Egypt is currently exporting 800 million cubic feet of liquefied natural gas (LNG) per day from its Idku export plant, ‘s the petroleum minister has told financial newspaper Al-Borsa.

Egypt said it exported about 520 million cubic feet per day of LNG in early January and 300 million cubic feet per day in 2018.

The gas is exported from Idku by Malaysia’s Petronas, Royal Dutch Shell, and Egypt’s two main state oil and gas companies.

Egypt, which became self-sufficient in natural gas in late 2018, is seeking to become a regional hub for energy trading by liquefying gas and re-exporting it.

While Israeli leaders have turned their attention to campaigning for the April 9 election, Cyprus and Egypt have been working behind the country’s back to advance plans for an undersea gas pipeline.

Cyprus and Egypt in September signed an agreement for a subsea pipeline to carry natural gas from Cyprus’ Aphrodite field to Egypt. Two weeks ago, the Cypriot cabinet took another step forward by approving the September deal.

In doing so, Cyprus ignored Israeli claims to a portion of Aphrodite, which lies in Israeli economic waters. The Cyprus-Egypt pipeline also weakens the economic justification for the projected East Mediterranean pipeline, a $7 billion undertaking that would deliver Israeli and Cypriot natural gas directly to Europe via Greece.

‘Regarding confidence-building measures, the leaders committed to intensifying the work of the Technical Committees with the objective of improving the daily lives of all Cypriots.’

The President of Cyprus, Nikos Anastasiades, and Turkish-Cypriot leader Mustafa Akinci agreed at a meeting today to implement confidence-building measures (CBMs) mainly in the sectors of telephony and electricity grids.

The move comes a year-and-a-half after the collapse of Cyprus settlement talks at Crans Montana, Switzerland with a new push to jump-start the talks underway.

It also comes amidst bellicose moves by Ankara to impede and undermine the hydrocarbons programme of the Republic of Cyprus and to conduct illegal drilling in Cyprus’ Exclusive which for many renders the need for a settlement all the more pressing.

The talks were conducted under the auspices of UN Cyprus envoy Elizabeth Spehar.

A lengthy statement issued by the spokesperson of the United Nations in Cyprus today offered details about the CBMs and left open the prospect of agreeing to more such measures.

The full text of the statement is as follows:

“Today, the Turkish Cypriot leader, Mr. Mustafa Akıncı, and the Greek Cypriot leader, Mr. Nicos Anastasiades, met at the Chief of Mission’s residence in the United Nations Protected Area under the auspices of Special Representative/Deputy Special Adviser to the Secretary-General on Cyprus, Ms. Elizabeth Spehar.

They had a constructive exchange of views in a cordial atmosphere. Mr. Anastasiades presented his ideas on decentralization and the two leaders discussed in depth the basic principles.

Regarding confidence-building measures, the leaders committed to intensifying the work of the Technical Committees with the objective of improving the daily lives of all Cypriots.

The two leaders decided to implement the confidence-building measure regarding mobile phone interoperability through separate agreements of the operators on both sides with a hub based in Europe, in order to facilitate greater interaction between the two communities.

They announced that the inter-connectivity of the two electricity grids, as agreed in 2015, has now been achieved. In this regard, they decided to make the temporary electricity supply arrangement permanent and without restriction. They acknowledged that the transfer of electricity will continue on an as-needed basis.

The leaders agreed to the clearance of nine suspected hazardous areas on both sides of the island, with a view to working towards a mine-free Cyprus.

As a gesture of good will, Mr. Akncı conveyed the decision of the Turkish Cypriot side to return paintings by Greek Cypriot artists that remained under protection on the Turkish Cypriot side since 1974.

Mr. Anastasiades similarly conveyed to Mr. Akıncı the Greek Cypriot side’s decision to hand over visual and audio recordings of Turkish Cypriot artists that exist in the archives of the CyBC, belonging to the pre-1963 period.

The two leaders have tasked the Technical Committee on Culture to realize the exchange of these invaluable works of art, belonging to the respective communities.

Mr. Anastasiades and Mr. Akncı also discussed additional potential confidence-building measures.”

Tensions between Cyprus and Turkey over energy could soon come to a head, with ExxonMobil apparently poised to announce a significant natural gas find off the divided island’s southern coast.

After more than three months of deep-water exploration in the eastern Mediterranean, the US firm is expected to unveil findings this week in what is being described as a seminal moment in the race to tap potentially profitable underwater resources.

Charles Ellinas, an industry expert and former head of Cyprus’s national hydrocarbons company, said: “All the seismic data suggests that enough has been found to excite ExxonMobil to continue exploration. Potentially there could be great reserves.”

But stakes could not be higher in the region. Amid escalating friction over the potential offshore energy find, Turkey has declared it will dispatch its own drilling ships to the area, a year after deploying gunboats to stop the Italian company Eni exploring for offshore wealth at the behest of Greek Cypriots.

Last week Ankara said natural resources in the eastern Mediterranean and the Aegean, where tensions have also risen with Greece, remained “a strategic goal and national issue”.

“In the coming days we will start drilling with two ships around Cyprus,” said the Turkish foreign minister, Mevlüt Çavuşoğlu, ratcheting up the rhetoric. “Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing can be done in the Mediterranean without Turkey; we will not allow it.”

Gas fields were first discovered in waters off Cyprus in 2011. ExxonMobil, one of five international oil companies exploring around the island, has focused on Block 10, adjacent to Egypt’s giant Zohr field, which is believed to be the most promising of all the licensed areas.

If unlocked, the deposits beneath the seabed could radically reshape energy geopolitics and – western politicians hope – ultimately lessen Europe’s reliance on Russia for gas.

CAIRO – 23 February 2019: Leaders and government heads of 28 European countries and 21 Arab states will be convening a two-day summit in Sharm el-Sheikh, on Sunday, to discuss joint challenges and boost mutual cooperation opportunities.

This is the first ever platform that brings together the Arab and European heads of state and government to tackle the pressing issues, atop of which terrorism, organized crime and illegal immigration.

Chairman of the Egyptian Council for Foreign Affairs (ECFA) Ambassador Munir Zahran told MENA that the upcoming summit represents a great opportunity for enhancing the Arab-European cooperation and dialogue, where they will discuss problems of mutual concern and exchange views on various regional and international issues.

Several political issues will be also raised during the summit, topped by the Palestinian cause, Zahran said, stressing the importance of maintaining the unity and territorial integrity of Syria and putting an end to the Libyan and Yemeni crises.

Egypt’s Sharm el Sheikh International Airport is on high alert in preparation for receiving the high guests and heads of Arab and European countries, who are participating in the upcoming Arab-European summit due on February 24 and 25, said the Egyptian Ministry of Civil Aviation in statement on Thursday.

First Arab-European Summit 

The summit will be co-chaired by President Abdel Fatah al-Sisi and President of the European Council Donald Tusk.

On February 18, Sisi said that “Sharm El-Sheikh conference is a key step towards more cooperation that will be followed by other steps,” adding that the instability of some Arab countries led to the illegal migration to Europe.

“Not a single illegal migration case has crossed the Mediterranean Sea from Egyptian shores since September 2016,” President Sisi announced, adding that his country held a series of bilateral talks with a number of European countries to deal with illegal migration from Africa to Europe.

“Egypt hosts millions of registered and unregistered migrants who are integrating into the Egyptian society,” Sisi continued.

According to a statement issued by the EU, leaders from both sides will seek to strengthen Arab-European ties. They will also address a wide range of issues and common challenges, such as multilateralism, trade and investment, migration, security and the situation in the region.

The meeting is expected to start on Sunday, February 24 and end with a press conference on Monday, February 25. It will take place in the International Congress Centre in Sharm El-Sheikh.

Ambassador of the European Union to Egypt Ivan Surkos told Egypt Today on Wednesday that trade, investment, immigration and security will be among the top priority issues to be discussed during the upcoming Arab-European summit. He added that the cooperation between the European Union, the Arab league, European Council and the European Commission will enhance communication between the European and Arab regions and will boost stability in both regions.

Egypt’s strategic location made the North African country the link between Africa, the Arab region and Europe through the Mediterranean Sea, according to Sisi.

The Egyptian president said Egypt’s strategic location made it the link between Africa and the Arab region, and between Europe, the Arab and African regions through the Mediterranean.

EU-Arab relations 

Ahead of the summit, the Egyptian cabinet’s media center has published several infographs detailing cooperation between European Union and the Arab League; the trade exchange volume between Arab states and EU, in addition to investments by the European Bank for Reconstruction and Development (EBRD) in Egypt and Arab countries.

The volume of trade exchange between Egypt and the European Union states rose to €28 billion in 2017, compared to €17.4 billion in 2007, the cabinet media center said on Saturday.

The infographics indicated that trade exchange between the EU and Arab countries increased 7 percent to €315.9 billion in 2017, compared to €295.5 billion in 2016.

Arab exports to the EU states rose 20 percent to register €121.6 billion in 2017, against €101.2 billion in the previous year, they showed.

The infographics pointed out to cooperation between the EU and the Arab League (AL) in combating arms smuggling via a project that aims to enhance means of monitoring conventional weapons in the Arab League’s member states at a total cost of €2.7 billion.

The two sides also work together to support efforts of the anti-Daesh international coalition, while ensuring human rights and the rule of law, they added.

Bilateral cooperation also includes efforts to activate political dialogue that targets stability at the regional level, they said.

Media coverage 

More than 750 Arab and foreign correspondents will participate along with local journalists in the Arab-European Summit set to held in Sharm el-Sheikh, Egypt Sunday.

The two-day summit will witness the attendance of country leaders and heads of governments representing 28 European countries and 21 Arab states.

A month ago, the Ministry of Foreign Affairs have started receiving demands from around 550 foreign correspondents to attend the summit, in addition to 250 reporters from different local and foreign media outlets and news agencies. Mohamed Emam, the head of the press center of the State Information Service Authority said that more than 200 journalists will be accompanying the presidential delegations from Arab and European countries participating in the summit.

According to Emam, all media personnel approved to attend to the summit will receive required press allowances upon their arrival. He further assured that facilitations guaranteed to their and their equipment entrances.

MELBOURNE (Reuters) – Australia’s Oil Search is confident its partners ExxonMobil Corp and Total SA will be ready to sign off on two big projects in 2020 that together will double liquefied natural gas (LNG) exports from Papua New Guinea.

Oil Search had first hoped the projects to fuel an expansion of Exxon Mobil’s PNG LNG plant would be approved in 2019, but talks with the government took longer than expected after an earthquake hit the country a year ago.

“It was a very tough year in Papua New Guinea for a range of reasons and it started with the earthquake,” Oil Search Chief Executive Peter Botten said.

The quake killed more than 100 people in the rugged highlands region of one of the world’s poorest countries, destroyed homes, roads and runways and knocked out gas and oil facilities.

It also stoked long-running antagonism against the PNG LNG project, as the country’s take from the development has been much lower than anticipated and the government has been slow to pay out royalties to local communities.

Some people even blamed oil and gas operations for triggering the quake.

“In that context, we were doing a lot of negotiations on major projects and those sensitivities, I think, have been really well addressed,” Botten told Reuters after the company reported its annual results.

Total’s Elk and Antelope fields, new gas from PNG LNG fields and P’nyang are set to feed gas into three new processing units at PNG LNG, roughly doubling its output to 16 million tonnes a year, at a cost of around $13 billion, according to analysts.

“I’m very confident that a 2020 final investment decision is very achievable,” Botten said.

Oil Search, which has a 29 percent stake in the PNG LNG project, posted a 13 percent rise in annual profit, boosted by higher prices for its LNG and oil, which offset a loss of output after the earthquake.

Net profit for the year ended Dec. 31 rose to $341.2 million from $302.1 million a year earlier, but fell short of analysts’ forecasts around $360.83 million, according to Refinitiv data.

Oil Search raised its full year dividend to 10.5 cents from 9.5 cents in 2017.

Oil Search’s shares fell 1.5 percent in a slightly firmer broader market.

Production is expected to return to pre-quake levels in 2019 and unit production costs are forecast to fall 15-20 percent on the back of higher production, it said.

Qatar Petroleum (QP) signed three agreements worth QR9bn ($2.47bn) with leading international companies on Monday as part of QP’s ‘Tawteen’ initiative that aims to localise the energy sector’s supply chain and expand the country’s small and medium-sized enterprise (SME) base.
QP signed the agreements on the sidelines of Tawteen’s launch ceremony, which was led by HE the Prime Minister and Interior Minister, Sheikh Abdullah bin Nasser bin Khalifa al-Thani at the Sheraton Grand Doha Resort & Convention Hotel.
Speaking at a press conference after the signing ceremony, HE the Minister of State for Energy Affairs, Saad Sherida al-Kaabi, who is also CEO of QP, said the agreements “will give an important momentum” to the programme’s objectives, which aims to add QR15bn worth of in-country economic investment value to the local economy, “which reflects investor confidence in the Qatari economy.”
QP and Baker Hughes, a GE company, signed a memorandum of understanding (MoU) designed to help create new opportunities to expand its presence Qatar, and to enhance its operations through continued investment in future technologies and services. The MoU would also help strengthen Qatar’s oil and gas supply chain and boost the skills of Qatari talent in the industry.
QP also signed an MoU with Schlumberger, which recently celebrated 70 years of presence in Qatar. The agreement will help increase Schlumberger’s footprint, which plans to expand its current operations in Zikreet, to open a new integrated base facility in Ras Laffan by the end of 2019, and to establish a Centre of Efficiency in the Free Zone to be used as a regional maintenance centre.
On the sidelines of the launch ceremony, Nakilat and McDermott signed an agreement to form a joint-venture company, providing offshore and onshore fabrication services in Qatar.
The new company will help increase productivity levels at Nakilat’s Erhama Bin Jaber Al Jalahma Shipyard and developing local construction capabilities to meet the increasing demand for the construction of offshore and onshore structures.
The project will provide a range of new services that will support the construction, maintenance, repair and refurbishment of offshore and onshore structures, and all types of vessels.
The launch of Tawteen was part of a dedicated two-day conference and exhibition held with a large participation of official bodies and entities, energy sector companies, and a wide spectrum of service providers and supporting industries.
The activities during the event, which concludes Tuesday, are designed to present a unique opportunity for private sector companies to know more about the initiative, and about the incentives it offers to guarantee effective participation in the energy sector’s supply chain and to generate high-quality job opportunities.

Brent prices may average between $50 and $70 a barrel until 2024, Bank of America Merrill Lynch has said in a report.
“As prices become more anchored around $60, we believe volatility implied in oil options could trend lower in the medium term. But in contrast to last year, we see growing downside risks to our price outlook on rising US shale supply and slowing consumption growth,” Bank of America Merrill Lynch noted.

Its projections assume Opec+ is prepared to lose share in the global oil market. More broadly, it expects oil as a share of the global energy pie will drop too as the petroleum consumption mix rotates away from gasoline and ends into distillates and natural gas liquids (NGLs).
While medium-term trends pose some challenges, Bank of America Merrill Lynch still sees a balanced oil supply/ demand outlook this year. Brent should average $70 in 2019, helped by “voluntary and involuntary declines” in Opec supply. It projects a 2.5mn bpd drop in Opec supply from fourth quarter (Q4, 2018) into Q4, 2019 and then assumes stable output for the group through 2024.

As global oil demand growth slows from 1.2mn bpd in 2019 to 600,000 bpd in 2024, Bank of America Merrill Lynch sees non-US, non-Opec contributions averaging 190,000 bpd per year.
Shale should fill the balancing gap as US producers rush to deliver the marginal barrel. Total average US crude oil and liquids supply is projected to grow from 15.5mn bpd in 2018 to 21.9mn bpd in 2024.