GCC embarks on mega projects to develop gas reserves

Dec 28, 2004 01:00 AM

The six nation Gulf Cooperation Council (GCC) states are set to play a key role in gas supplies in the future, as they control 40 % of the world's proven natural gas or 72 tcm of natural gas. However, current production does not exceed 245 bn cmpy, or around 10 % of the global gas output, a report said.
This imbalance is going to be changed soon when several gas projects like the ambitious Dolphin Gas Project led by the UAE, which is progressing satisfactorily and is seemingly on track and several other gas projects in Saudi Arabia and Qatar are completed. Currently, gas constitutes around 24 % of the total energy demand, while oil accounts for 40 % and coal the remaining 26 %. However, by 2010, natural gas will climb to second place, surpassing coal.

According to the Organisation of Arab Petroleum Exporting Countries (OAPEC), the UAE ranked fifth in the world in terms of proven natural gas reserves at the end of 2003 while it was the third biggest gas producer in the Arab region. The UAE's gas reserves are estimated at nearly 6 tcm, the fifth largest after Russia, Iran, Qatar and Saudi Arabia. Its production of natural gas touched 54.6 bn cm in 2002, the third largest after gas output in Algeria and Saudi Arabia.
In late September, the UAE and Qatar, formalised the inter-governmental gas pipeline agreement to transport natural gas from Qatar to the UAE. Dolphin also announced it would sell natural gas to the emirate of Ras Al Khaimah in the UAE via a tie-in, near Qidfa in Fujairah with the existing Emarat pipeline network that serves the northern emirates. Some 40 mm cf of gas will be supplied daily for two years and five months till the end of July 2007.

In other new developments, the Sharjah Government has set up a new joint venture to develop gas. The Dh 400 mm ($ 109 mm) venture, Sajaa Gas (SajGas) is between the Government of Sharjah, Crescent Petroleum and six prominent investors from the GCC states. A standalone gas plant will be set up to sweeten sour gas with capacity of 600 mm cfpd of gas.
The privately owned Crescent Petroleum is also planning to import gas from Iran for supplies to Sharjah and the northern emirates. "A contract has been awarded to a Sharjah-based company to build an offshore platform and the project is moving ahead for bringing in gas," said an informed source.

In LNG, the UAE is the second largest producer in the Arab World after Qatar. Qatar’s gas reserves are estimated at 25 tcm and the country produces nearly 18 mm tpy of LNG. Qatar’s current output is set to more than quadruple to 77 mm tpy by 2011 as it moves swiftly to exploit its giant North Field -- the world’s largest single natural gas reservoir.
Multi-billion dollar gas projects are under way in the country to increase LNG exports to Asia, the US and Europe. Currently, Qatar exports some 75 % of its LNG sales of 18 mm tpy to Asia. Interestingly, to push forward its escalating gas exports, Qatar is launching an initial public offering (IPO) in January for the Qatar LNG Shipping Co, which will be the world’s largest shipping firm.

Neighbouring Saudi Arabia has also embarked on a massive programme to tap its gas reserves and is optimistic about major gas discoveries by the global energy giants in its vast Empty Quarter desert. The South Rub Al Khali Company (SRAK), a new $ 2.5 bn joint venture between Saudi Arabia’s state-owned Aramco, Shell and France’s Total, is exploring for gas in the Rub Al Khali area.
The concession covers an area of nearly 210,000 sq km in the desert. Shell controls 40 % in SRAK while the remaining stake is equally shared by Total and Aramco. The venture has been given five years for its exploration programme, but the period is extendable under a deal signed last year.

Another major concession was awarded in 2004 to a consortium of Russian, Chinese, Italian and Spanish companies covering 120,000 sq km in the Rub Al Khali desert. Saudi Arabia already has some six trillion cm of natural gas but these reserves will increase substantially after expected new discoveries in Rub Al Khali.
Oman, another GCC member has also injected around $ 6 bn into an LNG project and is planning to lift its capacity by at least 50 % to 9 mm tons. Kuwait also has some 2.5 tcm of gas, much of the deposits being associated gas that has to be exploited.
Given the sudden and many developments, both big and small, it seems the Gulf states have realised the value of developing their massive gas reserves and thus reduce the imbalance between production levels and the size of the region’s recoverable gas reserves.

Source: Emirates News Agency
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