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Kuwait still chasing Qatar LNG deal

The National, Tamsin Carlisle, Last Updated: May 26. 2009 7:10PM UAE / May 26. 2009 3:10PM GMT

Kuwait is close to completing receiving facilities for liquefied natural gas (LNG), but has ailed to conclude a deal with Qatar to import the gas.

“Our marketing division is working very hard, and we hope they strike a deal soon,” ohammad Hussain, the deputy chairman of Kuwait Oil Company, said on the sidelines of he Gastech conference in Abu Dhabi.  

“Kuwait is already building the infrastructure.” The hold-up in securing offshore gas supplies exemplifies the problems that several Gulf states are facing in securing enough gas to supply their burgeoning domestic needs.

Qatar’s RasGas, one of two government owned LNG exporters in the  emirate, said in January it was in talks regarding a five-year deal to supply Kuwait with 1.4 million tonnes per year of LNG. Hamad al Mohannadi, the managing director of the firm, said he expected shipments to start in the middle of this year.

Mr Hussain and Excelerate Energy, the US firm building a floating regasification terminal in Kuwait, said the import facility would be ready in July.

Kuwait is seasonally short of gas for electricity generation, and burns oil in some of its power plants in summer, when Middle East electricity demand peaks. It was seeking a deal to import LNG that Qatar’s Asian and European do not need in summer, when their own seasonal gas demand falls.

For similar reasons, Dubai reached a 15-year deal with Qatar for summer LNG shipments starting in 2011.
Unlike Dubai, Kuwait sits on significant gas reserves of its own that it is seeking to develop. However, the projects have been plagued by delays.

Mr Hussain predicted yesterday that Kuwait would boost its gas output to 2 billion cubic feet per day by 2015 from the current level of about 180 million cu ft per day. Kuwait is one of a number of Gulf states that have been slow to develop significant gas resources, leaving them short of gas to meet for burgeoning domestic requirements. Others include the UAE and Saudi Arabia.

Hamed al Marzouqi(CK), the acting head of market research at Abu Dhabi Gas Liquefaction Company (ADGAS), said the company is conducting a feasibility study to decide between increasing LNG exports from Abu Dhabi as the emirate boosts its gas production and keeping the extra gas for domestic consumption.

Abu Dhabi has large and rising demand for gas in its oilfields, where 1.7 billion cubic feet per day of gas is pumped into aging fields to push out more crude. This leaves the emirate short of gas in summer for power generation. It currently burns  oil to produce about 2 per cent of its electricity, Mr Marzouqi said.

Rajnish Goswani, the head of Asia and Middle East gas and power consulting for the British firm Wood Mackenzie, told the conference that the Middle East’s share of global LNG exports would fall 10 per cent between 2012 and 2020, due to rising gas demand in the region.

Dr Fereidun Fesharaki, the chairman of Singapore-based FACTS Global Energy, said domestic markets in the Middle East would absorb any additional gas supplies developed in the region. He predicted that Middle Eastern gas consumers would have “no choice” but to switch to market based from state subsidised gas pricing.
tcarlisle@thenational.ae