Private sector needs to play bigger role in Gulf

Mar 20, 2002 01:00 AM

Private sector participation in the development of capital intensive gas transport infrastructure is crucial in the Gulf as governments alone cannot fund the massive investments required, experts told a conference. The participation from the private sector is increasing and expected to expand in developing gas infrastructure for production, delivery and consumption but they need to play a bigger role, said Dr. Mostefa A. Ouki, manager, Gas Economics, Nexant, London.
"In several GCC countries, gas infrastructure remains limited or covers only certain regions," he said, adding that the uneven size distribution of gas reserves in the Gulf necessitates cross-border gas trade within the GCC area. The Gulf has rich gas reserves but development of gas supplies will require significant upstream, midstream and downstream investments that cannot be funded by governments alone, said Dr. Naji Abi-Aad, senior adviser, Observatoire Mediterranean de L'Energie, France.

Proven gas reserves in the Gulf were estimated to be around 25,640 bn cm, accounting for 17 % of the world's total in early 2001. The reserves in most Gulf countries are in associated (gas with crude oil) form with the exception of Qatar which has large non-associated reserves. "Associated gas is between 80 and 100 % of total output in most countries."
Ouki noted that with projected electricity demand growth rate ranging from 5 to 10 % annually, power will be the main driver of gas demand in the Gulf. Major gas infrastructure projects underway in the GCC are valued around a phenomenal $ 40 bn, he said. Apart from the Saudi Natural Gas Initiative valued at around $ 25-$ 30 bn, Oman's gas-based projects (pipelines, fertilisers etc) are valued at $ 3-$ 4 bn, while the UAE's Dolphin Energy initiative is worth $ 3.5 bn.

Moreover, Adnoc's OGD3 and AGD2 are estimated at another $ 2.5 bn. The Qatar-Kuwait gas pipeline project is valued at $ 500 mm. "There is an increasing role for the private sector in development of gas supplies but developers will be looking for best netback/returns," he said.
Ambitious energy interconnection projects should be revisited and new approaches considered as also domestic energy pricing adjustments are crucial, he said. Importantly, GCC project funding mechanisms or facilities or coordinated funding approach should be considered although external funding remains crucial.

Source: Gulf News Online
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