Dolphin Energy to expand as UAE gas demand surges

Production milestone of 5 million trillion standard cubic feet reached.

Dolphin Energy said it had touched the production milestone of 5 trillion standard cubic feet since operations began in 2007. Ryan Carter / The National

Dolphin Energy is set to expand significantly early next year as demand for natural gas continues to surge in the UAE.

“Energy requirements are on the rise to sustain the country’s economic development and additional volumes are needed,”said Ibrahim Ahmed Al Ansari, the chief executive of Dolphin Energy.

Yesterday, Dolphin said it had touched the production milestone of 5 trillion standard cubic feet (scf) since operations began in 2007.

Mr Ansari said that to meet surging summer demand, the company recently had soaked up diverted liquefied natural gas (LNG) supplies from Qatar, taking up to 300 million scf/day between June and September.

He would not discuss commercial terms, but LNG prices in the key Asian market have been weak for much of the year because of slower than expected economic growth, especially in China.

Dolphin Energy, which is 51 per cent owned by Abu Dhabi via Mubadala Development, with Total and Occidental each owning the rest equally, was the first in the region to link energy facilities across national borders, bringing natural gas from Qatari offshore fields via undersea pipeline from the Ras Laffan processing plant to receiving facilities at Taweelah, where it can then can be shipped on to Fujairah and Oman via overland pipeline.

The gas is use primarily to generate electricity and accounts for 30 per cent of the UAE's total energy requirements.

As with other countries in the region, the UAE’s natural gas consumption has been rising sharply in recent years to meet industrial expansion and consumer demand, growing by an average of more than 5 per cent a year between 2003 and 2012, when it reached a record 2.2 trillion cu ft, according to data from the US Energy Information Agency. Imports during that period grew from just 7 billion cu ft in 2003 to 662 billion cu ft in 2012.

“The outlook is that the demand for natural gas will continue to rise due to industrial development and population growth,” Mr Ansari said. To help meet that demand, he added: “we are expecting three new export gas compressors to be commissioned in the first quarter of 2015 at our gas processing plant in Ras Laffan. This will help enhance the availability and reliability of natural gas exports to the UAE and Oman”.

In addition, Mr Ansari said: “We are at the Feed [front end engineering design] stage of the Northern Emirates Pipeline Project, which will see a new spur line extend from the existing Taweelah-Fujairah Pipeline to receiving facilities at Saja’a, Sharjah.”

The planned addition to the northern pipeline is yet to receive approval from the shareholders.

In June, Suhail Al Mazrouei, the Minister of Energy, said the country must cut energy subsidies to curb its inefficient use of energy, especially electricity, which he put at two to three times above the international average.

Fast-growing demand for energy is a particular challenge for the region because of rapid economic growth and the climate.

Last month, the International Energy Agency reported that Saudi Arabia’s electricity demand was rising at such a rate that by 2028 it might have to divert an average of 3 million barrels per day of crude oil to its power sector, potentially cutting export revenue significantly and taxing world markets.

Saudi not only needs to increase its natural gas production but also to make a much more concerted effort on solar power to address the situation, the report concluded.

Although UAE electricity is mostly gas-generated, it has recognised that it faces similar challenges, especially after experiencing gas shortages in the previous decade, and is developing a renewable energy strategy.

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