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Gulf countries facing shortage of gas: report

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Press Trust of India Dubai

The hydrocarbon-rich Gulf countries are facing shortage of gas and might find themselves in a position where they have to import the fuel, a new report said.

Although the global economic slump has reduced the need for gas in most regions, demand in the Gulf Cooperation Council (GCC) for power generation has outpaced the region's gas exploration and production.

"Bahrain, Kuwait, Oman, Saudi Arabia and the United Arab Emirates are facing a reversal of a decades-old status quo: an increasing gas shortage in the region amid a significant supply overhang in the rest of the world," said the report.

"As a result, GCC find themselves in uncharted territory, an almost contradictory position of having to import gas, when they have exported gas for decades," according to the report by Booz and Company.

 

"Importing gas into the resource-rich countries of the GCC seems counterintuitive. The six member countries of the GCC collectively hold roughly 23 per cent of global gas reserves," the report said.
   
"However, the extent of the gas supply-demand imbalance in the region has mandated that the countries of the GCC, with the exception of Qatar, at the very least consider importing gas to meet rapidly rising demand," said George Sarraf a partner at Booz & Company.
   
According to the report, increasing power consumption and the share of gas in power generation: Between 1998 and 2008, GCC economies grew at a rate of about 7.6 per cent per year.
   
Demand for both gas and electricity has kept pace with regional GDP growth and economic diversification, posting annual gains of 5.5 per cent and 6.1 per cent, respectively.
   
Depleting oil fields, where natural gas is used for re-injection to maintain reservoir pressure and oil production capacity, are another major source of gas consumption in the GCC.
   
GCC countries currently manage their gas shortage by reducing gas re-injection and directing gas to end consumers.
   
That strategy, however, is not sustainable over the long term.
   
"Although groundbreaking alternative technologies are currently being developed and deployed on a pilot basis, it is unlikely that they will significantly reduce the demand for gas," said Dr Raed Kombargi, a partner at Booz & Company.
   
The emergence of the gas-based petrochemical sector has been one of the great GCC success stories over the last three decades.
   
Low gas prices provide a competitive edge for GCC businesses to increase investment and add significant new capacity within the next few years.
   
As a result, production of polyethylene and polypropylene in the Middle East will more than double between 2008 and 2012 and steel and aluminium production may increase as much as six-fold in the same period, the report said.

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First Published: Jun 14 2010 | 1:27 PM IST

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