November 2016 No. 71 Vol. 11


Global Energy, Pipeline Outlook

By Rita Tubb, Executive Editor

Underground Construction’s 2016 survey shows 47,693 miles of pipelines are planned or under construction. Of these, 19,115 miles are in the planning and design phase, while 28,578 miles are in various stages of construction. The following reflect pipeline mileage in the six geopolitical regions discussed in the report: Africa –1,739; Asia Pacific – 21,126;  South-Central America and Caribbean – 5,440;  Middle East –5,604; Western Europe and European Union countries – 1,278; and the Former Soviet Union and Eastern Europe – 12,506.  For additional information on these and other pipeline projects, see our sister publication, Pipeline News.

Energy outlook

While low crude prices have plagued the industry for months and produced cheaper gasoline prices, lower prices are not good for everyone. They have negatively impacted the oil and gas industry and the economy in general. Oil and gas producers and companies throughout the energy industry have shelved planned development projects and thousands of layoffs have occurred in virtually every sector of the industry.

As to when oil prices may rise, the U.S. Energy Information Administration’s International Energy Outlook 2016 forecasts oil prices to remain lower in the near-term.

In the report’s reference case, the Brent crude oil price averages $37 bbl in 2016, increasing to $77 bbl in 2020 as demand and supply come into balance. After 2020, prices continue to rise, as growing demand results in development of more costly

The Outlook’s annual average natural gas price forecasts a rise from the 2015 level, $2.62/MMBtu at the benchmark Henry Hub, to roughly $5/MMBtu in the mid-2020s through 2040. Technology improvements allow natural gas production to rise even as
prices stabilize.

The report projects world energy consumption to increase by 48 percent over the next three decades, led by strong increases in the developing world, especially in Asia.


Oil and gas activity is being curtailed in several African nations due to pipeline theft, attacks on existing infrastructure, and threats to oil and gas personnel. Nigeria, in particular, has been hard hit with a string of attacks on its oil infrastructure by militants. This, coupled with crude prices hovering in the mid-$30-$45-plus range, has hurt economies in the region dependent on oil revenue.
Construction of the Uganda-Tanzania crude oil export pipeline is planned to start in January. Uganda’s Energy Minister Irene Muloni said the two countries agreed to fast-track the project covering 897 miles, over 683 of which will be on the Tanzanian side. The construction of the pipeline will get Ugandan crude oil to the international market and is planned to be finished by 2020.

Over 6.5 billion barrels of crude oil reserves from about 40 percent of the Albertine basin in western Uganda have been reported. Officials met in Tanzania in October to start the front-end-engineering design for the project, Muloni said, adding that feasibility studies estimate the project may cost $3.55 billion. Land acquisition assessments, surveys, and environmental and social impact studies will be conducted before construction starts. The project was named the East African crude oil pipeline (EACOP).

Asia Pacific

The Asia-Pacific Economic Cooperation’s latest Energy Demand and Supply Outlook shows energy demand in the Asia Pacific region reaching 7,000 million tons of oil equivalent in 2040, rising 32 percent compared to 2013 levels. China and Southeast Asia are the main growth drivers, with China accounting for over half of the growth. Aggressive, strategic efforts are expected to control demand growth over the next decade, flattening demand after 2030.

Not surprisingly, the Asia Pacific region accounts for 21,126 miles of new and planned pipeline projects, highest in the P&GJ survey.

Engineers India Ltd. is building three natural gas pipelines totaling 2,486 miles for Gujarat State Petronet Ltd. Capacity of all three pipelines is 76.25 MMcm/d. They will carry gas north from the Krishna-Godavari basin off Andhra Pradesh. Construction should be completed in 2017.


While Australia’s LNG supply is heating up just as prices hit 18-year lows, the outlook remains solid, said Josh Frydenberg, Northern Australia minister for resources and energy. Despite his optimism, over $400 billion of proposed energy projects have been delayed since mid-2014, pushed into 2017 and beyond as oil prices slid about 60 percent in the past two years, according to consulting firm Wood Mackenzie Ltd.

Australia also accounts for several pipeline projects.

Jemena was selected by the Northern Territory government to build and operate the North East Gas Interconnector, which will be known as the Northern Gas Pipeline (NGP). The 387-mile pipeline will connect Northern Australia’s vast gas fields to the east coast gas market, running from Tennant Creek in the Northern Territory to Mount Isa in Queensland, at a cost of about AU$800 million. Intertek will provide third-party inspection services to support the procurement of Jemena’s NGP Project. First gas is scheduled to flow by 2018.

Construction began earlier this year on the Esso-operated, 116-mile Longford to Long Island Point pipeline near Sale, Victoria. The pipeline, which replaces a pipeline built in 1969, will be constructed by Nacap Australia, a Quanta Services company. The pipeline is being constructed by Esso Australia as part of the Gippsland Basin Joint Venture in which Esso Australia Resources Pty Ltd and BHP Billiton Petroleum (Bass Strait) Pty Ltd. each have a 50 percent interest.

Middle East

The outlook for the Middle East remains positive. As the world’s largest oil-producing region, its share of global supply rises from 32 to 33 percent by 2035, according to BP’S Middle East Outlook. Moreover, oil production is projected to expand by 22 percent, with growth in Saudi Arabia, Iraq and Iran. Oil consumption is expected to rise by 42 percent from 2014-‘35. The region remains the world’s largest oil exporter with volumes rising from 20 MMbpd in 2014 to 23 MMbpd in 2035.

The Middle East accounts for 5,600 miles of new and planned pipelines. This includes work by Petrofac on phase one of Kuwait Oil Co.’s (KOC) Lower Fars heavy oil development program. The scope of work covers greenfield and brownfield facilities; and engineering, procurement, construction, pre-commissioning and commissioning. It includes a 100-mile pipeline to transport the heavy crude from the CPF to Ahmadi, where KOC has the option to send it to the proposed Al-Zour refinery in southern Kuwait.
In Oman, Punj Lloyd won a $404 million EPC contract from Oman Oil Refineries and Petroleum Industries Company and Oman Gas Company (OGC), which are owned by the government of the Sultanate of Oman and Oman Oil Company SAOC.

The work includes a new 14-inch, 186-mile NGL pipeline and a 32-inch, 186-mile gas pipeline. The 14-inch pipeline, part of Orpic’s $6.4 billion Liwa Plastic Industries Complex, will travel from the New Fahud NGL plant to the steam cracker unit in Sohar, Oman. Both pipelines are scheduled to be completed within 38 months. Punj Lloyd will also lay another 32-inch gas pipeline parallel to the existing 32-inch Fahud-Sohar pipeline for OGC to supply fuel for the power station.

Saudi Arabia and Bahrain have contracted with Al Robaya Holding Co. and the National Petroleum Construction Co. to build a 350,000-bpd, 72-mile oil pipeline between the two countries. Completion is scheduled for 2018.

Former Soviet Union, Eastern Europe

Russia continues its focus on exports with several pipelines planned that involve exports to China. According to Gazprom, construction of the Power of Siberia gas trunkline is on track with the Chayanda-Lensk-Olyokminsk section under construction. Once completed, it will provide gas to the Russian Far East and China.

Work in this region is also centered on the BP-operated Shah Deniz Stage 2 project offshore Azerbaijan. Once completed, it will bring Caspian gas to markets in Europe for the first time. About $28 billion of investment will be required to produce the gas and transport it to the Georgia-Turkey border. From there, additional pipeline systems will deliver 6 Bcma of gas to Turkey and another 10 Bcma to markets in Europe.

Shah Deniz gas will ultimately travel 2,175 miles to elevations exceeding 8,200 feet, and over 310 miles of subsea pipelines will link the wells with the onshore terminal. This requires enhancement of some existing infrastructure and development of a chain of new pipelines which will form the final European leg of the Southern Gas Corridor.

This requires expansion of the existing South Caucasus Pipeline (SCPX) with a new parallel pipeline across Azerbaijan and Georgia, construction of the Trans Anatolian Pipeline (TANAP) that will transport Shah Deniz gas across Turkey, and construction of the Trans Adriatic Pipeline (TAP) to take gas through Greece and Albania into Italy.

All three projects are under construction. First gas is targeted for late 2018, with supplies to Georgia and Turkey. Gas deliveries to Europe are expected a year after first gas is produced offshore Azerbaijan.

South America

The oil price collapse, dependence on exports and heavy debt load are largely blamed for several nations in the region experiencing a recession or being on the brink of one. In fact, the Business Times reported in June that Brazil’s state oil company, Petrobras, is close to selling an 81 percent stake in its Nova Transportadora do Sudeste SA pipeline network in Brazil for nearly $6 billion to a consortium led by Brookfield Asset Management Inc.

Tipiel S.A., Technip’s subsidiary in Colombia, won a contract from Consorcio Constructor Ductos del Sura for a pipeline to transport gas from the Camisea field to southern Peru. The project consists of 1,055 miles of 32-inch pipeline.

Technip won a contract from Libra Oil & Gas BV to supply flexible pipes for the Libra field, located in Brazil’s Santos Basin pre-salt area. Libra is Brazil’s biggest oil field. First production is scheduled for 2017 with peak production of 1.3 MMbbl/d expected by 2030.

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