Raising GCC’s Gas Prices Will Prevent Shortage – Experts

Gas shortage in the GCC region will become more pronounced by 2015, as demand will outpace supply, according to a latest Booz & Co report.

Increasing power consumption, depleting oil fields, gas exploration and long-term gas export commitments have limited the local supply of gas in the region, said the report.

However a demand-supply imbalance can be addressed by raising local gas prices gradually, improving energy efficiency and investing in alternative methods to overcome the shortage.

“Governments need a mix of short- and long-term measures to address the gas shortage,” said Robin Mills, head of consulting at Manar Energy.

“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.”

Mills said that gas sector investment has been rapidly increasing across the GCC with all countries maintaining their focus on gas developments.

As per earlier reports, the UAE has plans to invest nearly $25 billion on gas development projects in the next five years.

The UAE is swiftly developing its own gas sector – in May this year, Royal Dutch Shell won a multi-billion-dollar project to develop the Bab sour gas field with Abu Dhabi National Oil Company (ADNOC). The Bab field has been valued at around $10 billion.

Meanwhile, the Shah sour gas project, which is being developed by Occidental Petroleum, is on track for completion by the end of 2014.

The country also has plans to tap into nuclear power in a bid to diversify its fuel sources for power generation.

“According to research reports, the UAE has set an ambitious target of generating one-quarter of its power from nuclear sources over the next 15 to 20 years,” said Anita Mathews, director of Informa Energy Group.

Abu Dhabi plans to construct at least six nuclear plants, each costing more than $5 billion, in order to reach that target.

“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.”