GCC faces natural gas dilemma

DUBAI - Gulf states are facing an energy dilemma as intense international competition for supply is putting pressure on domestic demand. Record natural gas prices in the EU and the move by a number of countries to secure supply is forcing gulf states to reconsider energy intensive projects such as aluminum and either postpone or cancel the projects.

By (By Mark T. Townsend)

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Published: Fri 8 Aug 2008, 11:52 PM

Last updated: Sun 5 Apr 2015, 11:51 AM

Aluminum smelting uses 30 times much power as the typical 500-600 KWh per tonne used by an electric steel plant.

According to Reuters analysts have cast doubt on three Middle East projects. Last month Rio Tinto said its Abu Dhabi aluminum smelter project was on hold pending a review by the government of its own energy requirements. However Dubai Aluminum Co. was quoted as saying the Emirates Aluminum project was on track having secured 30 years of power supplies. Any potential shortfall in the additional supply of aluminum may have an impact on prices as demand for aluminum continues to rise.

Gulf states are seeking to diversify their economies away from oil dependency but appear to have incorrectly calculated gas supply and demand both domestically and internationally. GCC governments are under growing pressure to take steps to resolve the energy problem as some heavy industry companies reconsider long-term development plans in the region and look elsewhere. Both Libya and Algeria have large untapped gas reserves.

Qatar, the world's largest exporter of liquefied natural gas has also put on hold further development of its gas resources citing the need to devote supply for domestic need.

Some moves have been aimed at addressing the shortage. In 1999 the Dolphin Gas Project was launched by the UAE, Qatar and Oman.

It is the GCC's first cross-border refined gas transmission project and the largest energy-related venture ever undertaken in the region.

The potential energy crisis has also prompted governments to consider other energy sources.

Recently the UAE said it would develop a peaceful nuclear power capability in partnership with the governments and companies of responsible nations.


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