Qatar Gets UOG Deals For Up To 85 MCM/D To Abu Dhabi, Dubai, Oman & Pakistan.

Under deals based on a geo-strategic programme called Dolphin Gas Project, Qatar is to sell more than 21 MCM/day of natural gas to an entity that will be supplying Abu Dhabi, Dubai, Oman and Pakistan. Supply volumes will be rising rapidly. At a later stage, total sales of Qatari gas to these four markets would reach up to 85 MCM/day.

The gas will be supplied by a marine pipeline system from Qatar's giant North Field over a period of 25 years. Short overland links between Abu Dhabi, Dubai and Oman should be completed by 2002. A deepwater line from Oman to Pakistan will be ready by 2005.

The supplier is the UAE Offsets Group (UOG) of Abu Dhabi. Created in 1992 to oversee the UAE's defence offset programme, UOG is one of the wealthiest combines in the Gulf with $9 billion earmarked for the first phase of the Dolphin programme alone.

UOG first signed an agreement with the state-owned Qatar General Petroleum Corp. (QGPC) in April for the Abu Dhabi company to arrange for up to 85 MCM/day of North Field gas to be supplied to the four markets mentioned above. Each of these markets then had to sign a separate 25-year deal with UOG.

In May UOG and state-owned Abu Dhabi National Oil Co. (ADNOC) signed a memorandum of understanding (MoU) for the latter to purchase 5.4 MCM/day of North Field gas as from 2002. The volume would increase gradually and could exceed 20 MCM/day during the 25-year period of the deal.

On June 2, UOG and the Oman government signed an MoU for the latter's purchase of 8.5 MCM/day of North Field gas from 2002, with the volume to reach 17 MCM/day at a later stage. Within Oman, the gas will be distributed by the newly formed Oman Gas Co. (OGC).

A few days later, UOG and the government of Pakistan signed an MoU for the latter's purchase of 1.4 MCM/day; and the volume could reach up to 10 MCM/day during the 25-year period. Deliveries should begin in 2005, when a deepwater pipeline from Oman will have been completed.

In mid-June, UOG and the government of Dubai signed an MoU for the supply of 5.7 MCM/day from 2002. This should increase to 19.8 MCM/day by 2010. A final 25-year contract is to be signed before end-1999.

What's UOG: Its chairman, Amin Badr El Din, describes UOG as "a government think tank..., an investment bank and an internal government consultancy". It has quickly widened its scope of activities to include a series of industrial and financial initiatives. With Abu Dhabi in the lead, the Dolphin Gas Project should bring about energy and industrial integration between Qatar, the UAE, Oman and Pakistan.

It is said that energy and industrial projects to be launched by UOG and the Dolphin programme could involve up to $100 bn worth of investments. These projects could be located in several countries, as well as in the four core markets of Abu Dhabi, Dubai, Oman and Pakistan.

Dolphin will consist of units to oversea upstream, midstream and downstream operations. It will acquire E&P rights in several North Field blocks to produce the gas in partnership with QGPC and foreign companies. The units in charge of the gas supply pipelines could have foreign partners as well. Dolphin's downstream investments will feature mainly petrochemicals projects, projects to turn natural gas into sulphur-free motor fuels, and aluminium smelters.

Dolphin's director, Hatem Fawzi, a former Barclays banker, says his programme involves a lot more than Gulf energy security. He expects partnerships with banks, engineering contractors and leading chemicals manufacturers. Most financial support will come from the state of Abu Dhabi, which has $200 bn worth of investment funds available (twice the combined official overseas reserves of Kuwait and Saudi Arabia).

A new joint stock company in Abu Dhabi is being formed by UOG to develop the gas in the North Field and supply it to Abu Dhabi, Dubai, Oman and Pakistan. Another company will be in charge of the marine pipelines. Several UOG related firms would be set up to market the gas in Abu Dhabi, Dubai, Oman and Pakistan, with international engineering companies likely to be included as partners in regional distribution units.

In June 1998 UOG announced a new energy strategy. A few months later it created a joint stock company, Emirates Basic Industries (Sinaat Al-Emarat), to invest in heavy industry and petrochemicals.

UOG and the Abu Dhabi Chamber of Commerce and Industry co-organised a conference called "The Gulf Business Forum on Entrepreneurial Initiatives", held in Abu Dhabi on Nov. 22-23, 1998. The conference, addressed by UAE ministers, local businessmen and international experts, called for small and medium-sized enterprises (SMEs) to be established throughout the UAE.

Reportedly, UOG has acquired equities in gas marketing ventures in India and Pakistan. It is said to have signed MoUs with the Pakistani government to get shares in Sui Northern Gas Co. and Sui Southern Gas Co. It is also believed to be one of eight big companies shortlisted to acquire a stake in Karachi Electric Supply Corp.