UAE - Abu Dhabi & Dubai To Import From Qatar.

Both Dubai and Abu Dhabi are facing rapidly rising demand for natural gas. Both will be major importers of gas from Qatar, where the Dolphin Energy (DEL) project is developing a portion of the North Field to feed the emirates as from late 2006.

Dubai will need over 1,500 MCF/d of natural gas by August this year, when demand reaches its peak, and more than 1,700 MCF/d by August 2005. Its gas requirements will exceed 2,300 MCF/d by 2010, with demand growing about 17-20% per annum, compared to less than 450 MCF/d in 1995. But it cannot get such volumes as none of its sources is able to increase supplies at the moment. As a result, Dubai will resort to gasoil for power generation during the peak summer season.

For the time being, Dubai is receiving 550 MCF/d by pipeline from Abu Dhabi under a deal with ADNOC's GASCO, plus 420 MCF/d from its Margham gas field, and about 200 MCF/d from BP Sharjah. At its request, Abu Dhabi is expanding the pipeline to Jebel Ali to 800 MCF/d by 2005. But Abu Dhabi will need all the gas it is producing from late 2006, which means Dubai will lose that source. As a result, Dubai will have to raise its imports from Qatar to 1,800 MCF/d from 2007.

Crescent Petroleum (CPC) is negotiating with the National Iranian Gas Export Co. (NIGEC) a long-term contract to buy 15 MCM/d (525 MCF/d) of Iranian gas from the offshore Salman field (an extension of Abu Dhabi's Abu Al Bukhoosh field). The Salman gas will be pumped to Sirri and from there, CPC will supply 350 MCF/d of this to Dubai and will take the rest to its Mubarak field for consumption in Sharjah. The deal with Dubai is being negotiated directly with the emirate's strongman, Shaikh Mohammed Bin Rashid.

The UAE President and Ruler of Abu Dhabi Shaikh Zayed, however, is said to be opposed to Dubai's deal for the Iranian gas in view of the UAE's territorial dispute with Iran. Another complication is that the Iranian side is said to have agreed to match Abu Dhabi's price for the gas being supplied to Dubai, which is $1/m BTU, whereas the Dolphin (DEL) venture is insisting on a minimum price of $1.30/m BTU for the Qatari gas.

The Abu Dhabi-controlled UAE Offset Group (UOG), promoting the huge DEL gas project to supply several markets from Qatar, says by 2005 demand will have risen to 73 BCM/year in Abu Dhabi (see Abu Dhabi survey in Vol. 60) and about 15 BCM/year in Dubai.

The growth in Dubai's demand for gas is owed to a rapid rise in the number of industries at the Jebel Ali free zone. This is one of the fastest growing industrial parks in the Middle East, as Dubai has become the leading centre for free trade. The main gas consumers at Jebel Ali are the following:

The Dubai Electricity & Water Authority (DEWA) uses both imported gas and Margham gas for its plants. The expanding aluminium smelter of Dubal, a key industry in Dubai, depends heavily on this. Dubal, DEWA and the other state-controlled enterprise, Dugas, have set up a joint concern, Dubai Supply Authority (Dusup), to procure gas. Dubal is to have its own power plant to fuel its major expansion.

The LPG/NGL plant of Dugas buys imported gas. Dugas may expand this plant if more gas is made available from nearby sources. The Dugas plant exports most of its liquids to Japan but also supplies LPG to a 500,000 t/y MTBE plant at Jebel Ali which went on stream in 1995.

Dubai has a wide variety gas or power consuming industries, including chemical plants, set up at the free zone for export markets.

One possibility is to introduce city gas to cover Dubai's urban consumers, as Sharjah is now doing (see DT No. 20). If gas for this particular market becomes available, Dubai's demand would be far above the 2,300 MCF/d forecast for 2010, when dependence on oil will have been reduced considerably.