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Oman urges revival of Gulf gas network

By Nadim Kawach



Oman has urged its partners in the six-nation Gulf Co-operation Council (GCC) to revive plans to build the Middle East’s first cross-border gas network to ensure natural gas supplies to all its members and meet their fast growing demands.

Omani Minister of Oil and Gas, Mohammed bin Hamed Al-Rumhi, said his country would start receiving natural gas from Qatar’s mammoth offshore North Field through the Dolphin pipeline in the first quarter of 2008.

But he added that Oman needed much gas to feed its southern LNG plant, face a steady growth in domestic consumption and support a programme to reverse a decline in its crude oil output through gas re-injection.

“Dolphin gas is expected in the first quarter of 2008… Adding more gas to our system will help of course,” he said in an interview published by the latest report on Oman’s economy by the Oxford Business Group.

“But it is important for us to see a link between GCC nations with a pipeline network across our countries. This will be the first major cross-border energy deal in the Gulf. Dolphin will first focus on delivering natural gas to the industrial projects at Sohar,” he said.

Rumhi said Oman has modest gas reserves but needed more supplies to face a rapid growth in domestic use following the expansion of the domestic gas network and the additional of a third train at its southern Qalhat liquefied natural gas (LNG) plant to boost capacity by 50 per cent to 9.9 million tonnes per year.

“A large increase in demand is expected in the coming years from heavy industry projects and for oil extraction where natural gas is used for EOR (enhanced oil recovery) techniques,” the minister said.

GCC states of the UAE, Oman, Saudi Arabia, Bahrain, Qatar and Kuwait have long considered constructing a cross-border gas network to bring supplies from the Qatari offshore North Field – the world’s largest single reservoir of non-associated gas, with an estimated 900 trillion cubic feet.

But the project has been blocked by political differences and border disputes between some members despite progress in other joint ventures, including the ambitious GCC power grid that will be completed in two years.

Although there has been progress in plans to supply Qatari gas to Bahrain, a project to build a subsea gasline from the North Field to Kuwait has been suspended apparently because of Saudi objections.

Saudi Arabia, the world’s oil superpower, has maintained silence towards Qatar’s accusations that it was blocking the pipeline project that involves the supply of more than one billion cubic feet of natural gas to Kuwait.

The project was approved by Kuwait and Qatar in 2000 and it envisaged the construction of a 600-kilometre pipeline, which would run under the territorial water of Saudi Arabia and neighbouring Bahrain. Its cost was estimated at around $3 billion (Dh11bn) in 2000 but is believed now to be much higher.

Bahrain is believed to have given approval for the project following a warming in its ties with Qatar and Doha’s agreement to supply Manama with natural gas.

Last year, Kuwait was reported to be considering importing gas from Iran or Iraq despite its recent natural gas discoveries. In case it signs agreement with Tehran, Kuwait could be the second GCC country

to get Iranian gas as there are plans by the Sharjah-based Danagas to import natural gas from Tehran for UAE clients.

Gulf industry sources said a GCC gas network is economically and technically feasible on the grounds capital is available and the North Field has sufficient reserves. But they ruled out any extensions in the Dolphin pipeline. “This project is designed to supply gas to the UAE and Oman and has a maximum capacity of 3.2bn cubic feet per day.
Any plans to expand this project means constructing another pipeline not extending the existing one,” one source said.