Winning with regional gas grids

Natural gas from Dolphin Energy’s production wells offshore Qatar started flowing to UAE customers for the first time in July.

That was the culmination of a nine-year project, linking Qatar, the UAE, and shortly Oman in a unique regional gas grid.
However, the GCC needs to take measures to expand this small grid into a truly comprehensive gas network firing a power grid and providing energy for the high-potential petrochemical sector.
For this, individual countries need to speed up the implementation of long-standing gas projects and be ready to link up with the gas network as and when it comes on stream.
A grid will match deficit countries with supply from member states that have surplus resources like Qatar.
Gas demand in the region is rising at about seven per cent a year because of new projects including power plants.
Therefore, if one looks at a time-frame for grid expansion, it should be completed by the start of the first phase of the $7 billion GCC power grid to be commissioned by the first quarter of 2009.
More than 30 per cent of the power grid construction in the $1.1-billion first phase, which will link Saudi Arabia to Bahrain, Kuwait and Qatar through 800 kilometres of transmission lines, was completed at the end of June.
Studies estimate the overall gas deficit in the GCC at about 7.5 billion cubic feet (cfd) per day.
According to BP, the Gulf region is struggling to meet spiralling gas demand despite holding some of the world’s largest reserves that make up 22.7 per cent of the world’s total. Moreover, undiscovered gas reserves in the GCC countries are about 1,025.5 trillion cubic feet or 72 per cent of the proven reserves.
But the Gulf share of global output now is far less at just 6.5 per cent in 2006. The lag was chiefly due to the lack of advanced infrastructure for production and distribution.
Qatar, which has the world’s third largest gas reserves, has invested billions of dollars to tap its vast gas riches. Saudi Arabia, the world’s biggest oil exporter and producer, has invited international firms to tap its huge gas potential.
The Gulf needs to put the joint infrastructure in place now if it wants to be a major force in gas production as it is in oil.
The Dolphin grid was first proposed by the six GCC states of Oman, Qatar, UAE, Kuwait, Bahrain and Saudi Arabia in the 1990s. It aims to transport Qatar’s North Field gas in the first stage to Saudi Arabia and Kuwait.
The pipeline would be extended to other GCC states in a second stage.
Producers have been reluctant to develop gas fields without guaranteed demand due to the difficulties of transporting and storing the fuel. But it is time they started thinking outside the box.
The European Union is planning an ambitious gas pipeline project, the Nabucco, linking the Middle East with Europe via Turkey, Bulgaria, Romania and Hungary to the Eastern border of Austria.
The original plan was to develop Iranian gas fields and make it the source for the pipeline project. With the current US stand-off with Iran, it is likely that the European Union might explore the possibilities of an alternative source. A well-supplied GCC gas grid could be the answer.
Also, ample gas supplies would reduce reliance on expensive petroleum products as feedstocks for water desalination and power plants.
Primary energy demand will more than double in the Mena region by 2030 and to meet this demand countries within the region will have to invest on an average $56 billion per year in energy infrastructure alone.
Vastly increased domestic consumption of electricity throughout the region in addition to the growing demand for domestic hydrocarbons for power generation, petrochemicals and desalination means that there has been a significant increase in the use of natural gas.
Saudi Arabia has made increased natural gas production a priority, aiming to triple output to 15 billion cubic feet a day by 2009, while Abu Dhabi’s Dh1 billion natural gas distribution network is just one example of the importance being placed on natural gas as an alternative to oil.

Talking Business
K S Sreekumar
sreekumar@tradearabia.net