Shell, Qatar to supply gas to Dubai

GAS SUPPLY: Shell and QatarGas will supply around 1.5 million tonnes of LNG a year to Dubai. (Getty Images)

Royal Dutch Shell and QatarGas plan to begin supplying liquefied natural gas (LNG) to Dubai in the peak demand summer period from 2010 after signing deals with the emirate, a Shell executive said on Sunday.

Shell aims to supply around 1.5 million tonnes of LNG a year, said Martin Trachsel, Shell's vice president for gas and power in the Gulf.

Some of the gas will come from Qatar, and some from elsewhere in Shell's portfolio, he told newswire Reuters by telephone.

The supply deal extends for about 15 years.

"We are delighted to be assisting Dubai in this project and we believe it will offer cost-competitive and clean energy supply for Dubai for many years to come," Trachsel said.

Dubai, one of seven states in the UAE, is harnessing the region's windfall from record oil prices to develop tourism, trade and financial services.

Demand for power and water in the emirate is surging by more than 20% a year, driven by rapid economic and population growth, Dubai Electricity and Water Authority (Dewa) said in November.

Dubai Supply Authority (Dusup), a government entity which owns the emirate's gas pipeline network and has the sole rights to supply gas users, is building a floating LNG regasification facility at Jebel Ali port, it said in a statement on Sunday.

Under the plans an existing LNG carrier will be converted into a floating storage and regasification unit with capacity of three million tonnes a year, the equivalent of 400 million cubic standard feet of gas per day.

Shell will advise Dusup on the vessel's installation.

LNG is natural gas cooled to liquid form so it can be loaded on special tankers. The liquid is then delivered to receiving terminals where it is regasified and pumped into onshore pipelines.

London-based Meed magazine reported on April 11 Dusup had invited contractors to qualify for the construction of a terminal to import LNG from Qatar, Egypt and Asia at Jebel Ali.

The terminal would be ready by the first quarter of 2010, Meed said without citing a source.

The UAE sits on the world's fifth-largest gas reserves but has not developed them quickly enough to meet rising gas demand as its economy expands.

Dolphin Energy imports gas to the UAE from Qatar and produced first gas from its own facilities at Qatar's giant North Field last June.

The company has contracts to supply the Abu Dhabi Water and Electricity Authority (Adwea), Union Water and Electricity Authority and Dusup.

Dolphin said on Sunday it had started supplying gas to the emirate of Sharjah on April 18. It also expects to complete a supply deal with the Oman Oil Company in 2008. (Reuters)

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