The Gas Market.

Demand for natural gas in the UAE has risen sharply in recent years. Now the demand-supply gap in the UAE is 1,500 MCF/day, with expensive liquid fuels making up for the shortfall. Khaled Malallah al-Awadi, gas operations manager at Emarat on May 13 said: "The annual growth in [UAE] gas consumption for power ranges between 10-13%. While the current supply [of natural gas in the emirates] is 4,000 MCF/day, the demand is 5,500 MCF/day and this does not even include liquefied natural gas (LNG) and gas used for re-injection for crude [oil] production enhancement".

On the sidelines of an energy conference, Awadi said: "We need new gas supplies. The alternatives for gas are nuclear power in the long-term and further sourcing of gas from Qatar and Abu Dhabi". He said Iran should also be tapped for supplies.

Awadi said power stations in the northern emirates needed to be upgraded from open cycle to combined cycle to increase power generation for using the same amount of gas which will raise power generation by about 25%. He stressed the need for an integrated gas pipeline network in the UAE, adding: "This will ensure security of supplies and play a role in transit compression for major gas suppliers in the Gulf".

UAE consumption of natural gas in 1993 averaged 19.6 BCM/year (17.7m t/yoe) and rose to 37.5 BCM/year (33.7m t/yoe) in 2003. A big rise in the UAE's gas consumption occurred in 2007 as the emirates began to receive 2,000 MCF/day from Qatar (see OMT No. 23).

Demand for natural gas in Dubai exceeds 1,750 MCF/day. But the actual consumption averages less than 1,400 MCF/day, compared to 500 MCF/day in 1996, because of a lack of supply sources. Dubai's demand for gas is projected to rise to more than 2,000 MCF/day in 2010. The latter figure could be much higher if city gas is introduced to cover the emirate's urban consumers. The adjacent emirate of Sharjah is the first in the GCC to have a city gas grid in operation. It will be followed by Abu Dhabi.

Dubai's Jebel Ali industrial area is the main consumer of natural gas, with the top users being DEWA, the rapidly expanding Dubai Aluminium (Dubal) and the LPG/NGL plant of Dubai Gas Co. (Dugas). There are various other gas/power dependent industries in Dubai, including chemical plants built for export.

DEWA is the only Gulf utility which makes profit and has a viable tariff of $0.05/kWh. Dubai's Deputy Ruler and UAE Finance/Industry Minister Shaikh Hamdan bin Rashed al-Maktoum said in April 1999 this sector will remain under government control to protect consumer interests (see background in Vol.58).