03.08.2009

There is what is known as the horns of the classic dilemma all developing world oil and gas producers eventually face. Namely, the delicate balance of how to determine how best to satisfy domestic energy demand whilst still leaving sufficient oil and gas left over for export. This is a circle few hydrocarbon producers have managed to square, as it involves juggling a number of balls. As a country’s national revenue rises from the sale of oil and gas, the domestic demand for energy rises as its wealthier citizens demand more cars, electrical consumer goods, etc. However, given that national oil and gas resources are expensive to develop it is inevitable that tension between an increasingly energy hungry population and the state’s need to earn greater amounts of foreign exchange will rise until a tipping point is reached. Indonesia for instance reached the tipping point for oil leading it to leave OPEC in 2008 on the grounds that it was no longer a net exporter. Analysts believe that it could reach a similar point for gas as the government decides to sacrifice LNG exports in favor or satisfying its rising domestic market.

Gina Cohen
Natural Gas Expert
Phone:
972-54-4203480
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