GCC gas network is a pipedream

30 May 2008
The political and economic calculations surrounding the gas network make progress unlikely.

Bahrain’s call for a GCC gas network is not new, but it is timely. With gas becoming ever more limited, thanks to the region’s economic boom and the subsequent rise in demand for power, the network could bring GCC members closer and enhance economic opportunities for everyone.

The question is whether such a project can overcome political differences between member states. By pooling gas supplies, states such as Oman, Kuwait and Bahrain could avoid burning expensive and environmentally harmful fuel oil to generate electricity. It would also help them develop their own industrial bases.

Even Saudi Arabia, which in the past burned off its gas, could benefit from a shared network. Its petrochemicals development has slowed as ethane allocations have run out

But while the idea may be a good one, in practice it looks unlikely to happen. The only GCC state with spare gas reserves is Qatar, but Doha has a moratorium on its giant North field and says any extra production will first be used for domestic consumption. Moreover, having been prevented five years ago from exporting gas via pipeline to Bahrain and Kuwait by Saudi Arabia, Qatar is hardly likely to offer Riyadh any favours on the gas front now.

Other projects such as the GCC electricity network - which is due to be switched on this year - have overcome similar doubts. But the political and economic calculations surrounding the gas network make progress far less likely.

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