Under pressure to provide more power for their growing populations, Middle East governments are trying to increase liquefied natural gas imports to boost energy supplies
Ever-increasing domestic gas demand from the regions power sector has forced several Middle East governments to look to liquefied natural gas (LNG) imports over the past five years.
Kuwait was the first in the region to install a floating storage and regasification unit (FSRU) in 2009, with the commissioning of the Mina al-Ahmadi Gas Port, followed by Dubai in 2010.
Now even gas exporters, such as Egypt and Abu Dhabi, are looking at imports to meet their gas imbalances.
They are joined by Bahrain, Jordan and Morocco in either building or planning new LNG import facilities. Even Saudi Arabia, the dominant force in the regions hydrocarbon industry, is studying import options. The projects are at various stages of design, bid and execution, but by the end of the decade it is likely that most will be completed.
The Middle East is following a wider global trend, according to the Norway-based International Gas Union (IGU). Global regasification capacity grew in 2012 to 642 million tonnes a year (t/y), reflecting increased gas demand, and it is not just in the Middle East that traditional oil and gas exporters are turning to imports. This year, Malaysia too commissioned its first import terminal.
Just five years ago, few would have expected countries such as Malaysia and the UAE to become LNG import markets, but the widespread adoption of FSRU technology has changed this.
The terminals offer a flexibility that allows countries to add new import capacity relatively cheaply with a quick turnaround, compared with more expensive, time-consuming fixed import terminals, which require heavily front-loaded capital expenditure.
With their own associated gas production, the UAE and Kuwait make up only a small fraction of global LNG imports. The IGU lists them in its 2013 annual report under smaller markets, alongside Greece, Indonesia, Puerto Rico, Norway and Sweden, consuming 17 million tonnes in 2012 between them. Japan alone imported 180 million tonnes that year.
LNG imports in Kuwait represent 20 per cent of total gas demand. The figure is much lower in the UAE, at close to 6 per cent. The imports are more of a stop-gap solution for both countries, while they wait for upstream projects to deliver new sources of gas.
Kuwait has pinned its hopes on the development of its technically challenging Jurassic gas reserves in the north of the country. In August, state-refiner, Kuwait National Petroleum Company awarded a $213m contract to the Bermuda-based Golar LNG to provide a new 170,000-cubic-metre FSRU for the gas port, covering imports from June to August, when demand is at its peak. It is expected to be delivered in March 2014.
Dubai Supply Authority completed its FSRU in Jebel Ali at the end of 2010, with a capacity of 3 million t/y. What began as seasonal imports to help meet peak power demand, is likely to become year-round imports as the emirates demand continues to rise.
A second UAE import facility is expected to be completed in 2015. South Koreas Samsung Engineering submitted the lowest bid for the construction of a new storage and regasification unit at Fujairah on the UAEs eastern coast in July. The estimated $600m project will be built for Emirates LNG, a joint venture of Abu Dhabi-owned Mubadala and International Petroleum Investment Company. Two phases are planned, with a final capacity of 9 million t/y.
The two facilities will take the UAEs total import capacity to 12 million t/y, compared with exports of 8 million t/y, making it a net LNG importer.
Not all the new planned facilities will be temporary stop-gap solutions. MEED revealed in April that Saudi Arabia had revived plans to build a receiving terminal to supply its industrial demand along its Red Sea coast. State-energy firm Saudi Aramco is conducting the feasibility study for the $200m terminal, although a site has not yet been selected.
[Storage] terminals offer a flexibility that allows countries to add new import capacity relatively cheaply
Jordan is also carrying out studies for a permanent receiving terminal at Aqaba on the Red Sea and is in talks with Qatar for supplies. Jordan is energy poor compared with its neighbours. It has been trying to diversify its sources since the downfall of former Egypt president Hosni Mubarak in 2011, due to disruptions to the import pipeline supplies from Egypt, which provides 220 million cubic feet a day (cf/d).
A contract for the terminals civil infrastructure is set to be awarded, including the construction of a single-berth jetty for the FSRU. Golar LNG concluded a charter for an FSRU in August with Jordans Energy & Mineral Resources Ministry for 10 years. The port is expected to be operational in 2014.
Cairo also has plans to add new imports. Egypt has made considerable gas discoveries in the last few years, particularly in its offshore Mediterranean and Nile Delta concessions, but production has failed to match the countrys rampant domestic demand. The government issued a tender in late 2011 for the supply of a 3.7 million t/y FSRU, but was forced to cancel the deal after a disappointing response. It has now put out another call and hopes to have the unit in operation by April 2014.
Global regasification capacity grew in 2012 to 642 million tonnes a year
Source: International Gas Union
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.