Andrew England has an article in the FT today on the widening gas shortfall expected in the GCC countries, felt most acutely in the UAE. Essentially, heavy industry and the desalinization plants necessary to serve the region’s growing populations are creating a boom in demand for gas. Yet the two most logical gas sellers Iran and Qatar (who have the world’s second and third largest gas reserves respectively ) are not in a selling mood. Qatar has a moratorium on expanding its North Field until 2013 at the earliest while it completes a geological survey and Iran is playing hardball in its lengthy pricing negotiations over gas sales to the UAE’s Crescent Petroleum.
This story is hardly new; GCC states have been seeking to make up for lost time on gas infrastructure — largely a consequence of focusing on oil production — for years with initiatives like the Dolphin Project (PDF). The problem now is that the credit crunch has made it harder to for states to make the investments in domestic gas production needed to make up the shortfall. This could end up giving Tehran the upper hand in gas price negotiations. But it also provides powerful incentives to put political squabbles aside and explore more cooperative ways to develop the huge fields straddling Gulf maritime boundaries. -WW
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