07-08-08 Middle Eastern gas supply cannot keep pace with the region's rapid expansion and fierce competition between industries could force some energy-intensive projects, such as aluminium, to be delayed or even shelved.
In their bid for cheap, captive power, several aluminium majors have plans to site new plants in the Middle East, which is fast becoming an important growth area for the metal used in transport, power and packaging. But the region's fast expansion has forced them to vie for lower-than-expected gas and power supplies coupled with rapidly rising demand.

Aluminium producers are competing for energy with the steel and petrochemicals sectors, and Asian customers are also willing to pay more for liquefied natural gas.
"A lot of [aluminium] projects that have been put forward have been over-optimistic -- the energy for them is not really there, capital costs are enormous and the price of energy is high," independent consultant James King said of the region.
Exorbitant capital costs, put at $ 9,000 per ton of aluminium, and insufficient energy might force some aluminium firms to abandon plans and look to other locations, such as Libya and Algeria, which have undeveloped gas reserves, to ensure global supply keeps up with demand. Delays could cause supply blips.

Some analysts have cast doubts on up to three Middle East aluminium projects. In July, Rio Tinto said its Abu Dhabi aluminium smelter project was on hold pending a review by the government of its own energy requirements.
Qatar is the only Gulf Arab country that is not suffering gas shortages. It is the world's largest exporter of liquefied natural gas. But even Qatar has put future development of its natural gas resources on hold and says it needs to devote more fuel to domestic need.