JEDDAH – Gas shortage in the GCC “will become more acute” – despite forecasts for slower economic growth due to the recession, as well as current investments in exploration and production intended to increase supply, global consultancy firm Booz & Company said in a recent report titled “Gas Shortage in the GCC – How to Bridge the Gap”. The gas shortage will unfold according to either of the following scenarios – an enduring recession or the regional economies' return to pre-recession growth levels. If recession persists through 2015 or beyond in the GCC, then shortage will ensue, as this scenario assumes that the recessionary environment in the GCC economies go beyond 2015. In second scenario, if gas demand growth returns to 2008 levels, prior to the recession, then the International Monetary Fund (IMF) predicts that the GCC economies, after a contraction in 2009, should revert to pre-recession growth rates by 2012 with only a marginal decline. This implies that gas demand could return to 2008 growth rates by 2012. Irrespective of which scenario plays out, the gas supply outlook for the GCC remains bleak. In the event that scenario one prevails and a prolonged recession slows down the increase in gas demand, the gas shortage is expected to increase from about 19 bcm in 2009 to about 31 bcm in 2015. Worse yet, if scenario two materializes and growth returns to historical levels, the shortage is expected to increase to more than 50 bcm in 2015, the report said. Moreover, the report suggests that increasing power consumption, depleting oil fields, gas exploration and long-term gas export commitments have limited the local supply of gas in the region. GCC countries can address the supply demand imbalance by raising local gas prices gradually, improving energy efficiency and investing in alternative methods to overcome the shortage, the report added. In an effort to bring the gas sector back on track, Robin Mills, Head of Consulting at Manaar Energy will outline recent developments in the GCC gas and power sector and discuss the regional gas supply outlook and its impact on prices at the second “Power + Water Leader's Forum” to be held on Sept. 23 at the Abu Dhabi National Exhibition Centre (ADNEC). The conference runs alongside the “Power + Water Middle East Exhibition” on Sept. 23-25, and will provide an ideal platform for experts to discuss sustainable best practices and innovative solutions across two of the region's bourgeoning sectors. “The GCC's gas shortage can be resolved,” said Mills. “But timing is crucial and waiting for solutions to materialize might mean that GCC countries will have to burn more valuable liquid fuels to meet demand. “Governments need a mix of short- and long-term measures to address the gas shortage. They need to invest in new developments to increase production, increase local gas prices steadily to encourage efficiency, and expand the use of alternative sources in the energy mix,” he noted. Gas sector investment is expanding rapidly across the GCC. Some of the most interesting projects include the Khazzan tight gas project in Oman, the Bab and Shah sour gas projects in Abu Dhabi and the Emirates LNG import terminal in Fujairah. Other GCC countries equally maintaining their focus on gas developments include Qatar with Barzan and Saudi Arabia with the Karan and Wasit projects, the report said. Anita Mathews, Director of Informa Energy Group, organizers of “Power + Water Middle East”, said that an alternative energy source now making strides in the region is nuclear, adding: “According to research reports, UAE has set an ambitious target of generating one-quarter of its power from nuclear sources over the next 15 to 20 years. To reach this target, Abu Dhabi plans to construct at least six nuclear plants at a cost of more than $5 billion each. “Despite the global sensitiveness of using nuclear power in the region, it is these types of actions that GCC nations will need to take to diversify the fuel sources for their power generation over the long term.” — SG
