Although Middle East region is blessed with 43% of global proven gas reserves equivalent at 80 trillion cubic meters, of which 50 % are in the Gulf Cooperation Council (GCC) countries, apart from the challenge of historic under-investment, regional gas endowments have been highly uneven and unique.

The region is responding to gas shortages by boosting supplies through a combination of E&P developments and imports. As per IEA, the current 240 billion cubic meters (BCM) demand is expected to rise to 300 BCM by 2020 and 600 BCM by 2030. About 90% of incremental energy demand for power generation would come from gas then.

Strategic investment will have to focus on creating large volumes of storage capacity as well as peak deliverability to cope with rising imports and power demand requirements.

Currently, Dubai and Kuwait import LNG through floating storage and regasification unit (FSRU) projects. At first these imports were seasonal (i.e. summer demand for electricity for air conditioning) and on a spot or short-term basis. Now, demand extends into all but the winter months and soon demand will be year round.

The expansion of FSRU in Kuwait in to a permanent facility would increase capacity from 500 MMSCF/d to 3 BCF/d in two phases. This 11.0 million ton per annum (MMTPA) Kuwaiti LNG project under phase-I, is likely to replace the country's FSRU by 2020, mainly to replace the fuel oil firing in power plants.

Abu Dhabi is developing a 8.7 MMTPA project in the Emirate of Fujairah on the Indian Ocean outside the Strait of Hormuz. Depending on supply-demand dynamics, Abu Dhabi may be both an importer and exporter of LNG, possibly relying on gas from the Shah and Bab fields. Bahrain has plans to develop 3.6 MMPTA shore-based import facility.

Oman has combined Oman LNG and Qalhat LNG projects for integrated benefits, is developing unconventional gas reserves and would reduce gas subsidies to improve the demand equilibrium. Yemen continues to export LNG but has interruptions because of security issues.

While Qatar gains geo-political benefits from its broader LNG export customers, with plans to expand its LNG capacity further, the possibility of it supplying gas to its neighbors is remote. Whereas, Saudi Arabia is better dedicated to its oil-field development, has realized benefits of developing and commercializing its gas fields, for both power and job generation.

In view of the above, LNG thus remains a strategic choice for GCC countries mainly due to:

  1. Most environment-friendly and efficient option for rapidly escalating power demand at ~ 8% p.a.

  2. Techno-economics favoring fuel mix of LSFO and LNG for power and industries, instead of crude and diesel

  3. Refinery-Petrochemical integration becomes a more viable option

  4. Limitations on geo-technical and geo-political contentious issues on developing non-associated gas fields

  5. Challenges on speeding up trade and strengthening exchange of power using 2009-set GCC grid, at full capacity

  6. Slow diversification into high-profile renewable power projects and its bold initiatives

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