Compressed Natural Gas: Cleaning up

24 November 2006

Compressed natural gas (CNG) is struggling to take off in the Middle East, as it has elsewhere in the world. Widespread noises of support for the sector have so far been matched by little more than a few pockets of development and the industry remains at an early stage of development. But interest in CNG, and in cleaner fuels in general, is growing as environmental considerations are pushed into the foreground.


All of the Gulf states are signatories of the 1997 Kyoto protocols. The GCC countries in particular have made efforts to improve their green credentials across the board for example, the policy of zero gas flaring to reduce greenhouse gas emissions and Saudi Aramco’s recently launched campaign for a new lower octane petrol, Premium 91.

But the transport sector is where fast and relatively economical environmental reforms can most clearly be made. ‘Demand for petrol is rising everywhere and obviously the transport sector is the chief user of petrol,’ says New Delhi-based Vishvjeet Kanwarpal of Asia Consulting Group. ‘So cars and buses especially are prime candidates for conversion to CNG and the current high oil prices make such a move even more attractive. Of course, it would be better to have purpose-built vehicles, but conversion is relatively simple. Buying a kit and doing it yourself can take only a few hours and, depending on the prices, the savings [at the pump CNG is, or at least can be, cheaper than petrol] mean it will pay for itself within a year to 18 months.’

However, Kanwarpal blames governments, not consumers, for the patchy record of CNG uptake so far. ‘It requires initial policy support from the top,’ he says. ‘Firstly to secure feedstock for the CNG and secondly to demonstrate the economic viability of such a move.’ This might explain the region’s mixed, at best, and limited experiments with CNG.

The region’s big CNG story is Iran, although not necessarily because of its success. In terms of CNG experience, Iran should be leading the effort with its abundance of domestic CNG and 17 million cars. Tehran actually began a push to switch to CNG several years ago, with buses in the capital providing the main focus of a programme. However, apart from this, little has materialised of those 17 million cars, only 148,500 run on CNG.

One underlying reason is Iran’s $6,000 million a year of fuel subsidies, which makes petrol cheap enough to eradicate any economic spur for drivers to change to CNG or another cleaner (and cheaper) fuel. Neither has its domestic CNG production grown to meet demand Iran still imports the equivalent of 190,000 barrels a day (b/d) of CNG.

Kanwarpal compares this with the situation in India, where the structure of petrol taxation has created an incentive to use alternative fuels. India also has experience of a successful CNG public transport programme, with Delhi Transport Corporation running the world’s largest fleet of CNG buses.

Egypt is another regional leader, although progress has been slow. However, the government is keen to encourage the switchover, in part due to high levels of pollution in Cairo and its other major cities. Subsidised natural gas is even cheaper than subsidised petrol in Egypt, costing about £E 0.50 ($0.09) a litre compared with about £E 1.30 ($0.23) for petrol. More than 65,000 cars in Egypt, and at least 100 of Cairo’s buses, now run on CNG. But the country still lacks a real CNG infrastructure, with only 100 refuelling stations up and running. Like Iran, the government could save millions of dollars a year on subsidies simply by facilitating a major switch to gas vehicles.

In the UAE, the governments of both Abu Dhabi and Sharjah have committed to programmes that encourage gas vehicles, albeit relatively modest ones. Sharjah has plans in hand to run all public buses on CNG, as well as making available conversion kits and building refuelling stations. According to its transport plan,

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