GCC states urgently need to boost power and water capacity, but a shortage of gas after 2009 means a series of major projects will have to be delayed.
GCC states are struggling to make their planned power and water projects, which are needed to sustain the expanding populations of the region, a reality as a lack of available gas to use as feedstock holds up schemes planned from next year onwards.
Gas-fired projects that are now out to tender or have been recently awarded all have gas allocations, but problems arise for projects that will be tendered in 2009 and 2010, particularly for Dubai, Oman and Bahrain.
The root of the problem is largely self-imposed. The price for gas paid by regional utilities is so low compared with global market prices that it has dampened appetite for regional trading, the result being a shift in the region's gas policy from regional supply to exporting outside the GCC.
There are three main, Qatar-focused liquefied natural gas (LNG) projects in the GCC that are due to be completed in the next two years. The two Qatargas and one Rasgas LNG schemes have a combined value of US $2 billion.
But these projects have suffered a series of delays because of labour shortages and rising engineering and construction costs, adding six to 12 months to their completion schedules.
GCC states without large gas reserves are preparing their infrastructure for gas imports. Both Kuwait and Dubai have signed deals this year to build terminals to receive LNG by 2010.
The few projects that have brought some hope of averting a serious supply crisis in the Gulf have come from Iran, which has the world's second-largest gas reserves.
Several schemes have been talked about, but as with the intra-GCC pipelines, negotiations have been fraught with difficulties. One of the few projects to have gone beyond the feasibility stage is Dana Gas's plan to deliver Iranian gas to utilities and industrial customers in the UAE, but negotiations between Dana and Tehran over the pricing of gas have been under discussion for more than 18 months.
Under the proposals, 600 million cubic feet a day (cf/d) of gas will be supplied from Iran's Salman field to the UAE's Crescent Petroleum, the major shareholder in Dana Gas.
Iran blames the delay on Dana's refusal to pay a higher price for the gas. However, Dana says a series of technical issues have been behind the delays.In October, Iran's National Iranian Gas Export Company (Nigec) sealed a long-awaited deal to export gas to Kuwait via a trunk pipeline. The first phase of the deal, to export 1 billion cf/d of gas, will start by 2011.
Discussions on the price of the gas are ongoing. Ghasemi Javid, gas marketing director at Nigec, says the price Kuwait will pay will be based on "international market value", and that further expansion could take capacity up to 1.5 billion cf/d.
Looking ahead, it is unlikely that there will be any further energy projects on this scale for some time, at least until gas-rich Qatar reassesses its position on its giant North field, the single largest non-associated gas field in the world.
Concerned over the long-term stability of the field, Qatar has imposed a moratorium on new projects including a new phase of Qatar's Dolphin project, a 430 kilometre-long pipeline running from Ras Laffan to Taweelah in Abu Dhabi, on to the rest of the emirates and finally Oman.
"Substantial Qatari LNG or pipeline gas expansion in addition to the pre-moratorium contract is unlikely," says Justin Dargin, research fellow at the Belfer Center at Harvard University.
Qatar's North field is the centrepiece of the project, with the pipeline carrying up to 2 billion cf/d of natural gas from Qatar to the UAE for a period of 25 years.
A separate plan to build a pipeline to Kuwait was abandoned because of Saudi opposition, despite the crucial issue of a gas price having been agreed.
One of the biggest regional gas projects is Saudi Aramco's US $3.5 billion Karan gas development in Saudi Arabia. The offshore Karan field is thought to contain more than 9 trillion cubic feet of gas. Initial flows in July 2007 were reported at 80 million cf/d of associated gas and 1,400 barrels a day of condensate.
Qatar's domestic feedstock requirements are dependant on development of the Barzan field. Phase one is worth about US $2.2 billion and is at the engineering phase, with a completion date of 2012, just in time for a possible reassessment of the North field and its production capacity.
Barzan will be in three phases, and has grown almost four-fold from its initial target of 1.7 billion cf/d. Plans are now in place for six gas trains to be developed by 2015. The first will deliver 1.7 billion cf/d of gas by 2012, the second 1.8 billion cf/d and the third up to 2.5 billion cf/d.
"Most of the upstream internal pipeline projects in Qatar that have been sanctioned, such as the offshore elements that include pipelines to Ras Laffan, are pretty much all commissioned," says Ross Cassidy, an analyst at UK-based energy consultant Wood Mackenzie.
"I don't think there will be any new projects. Expansion will all be post-moratorium."
Qatar's main focus is on developing LNG supplies for foreign markets, in particular the US and Europe, concentrating its efforts on the implementation of Qatargas 2, which will lift LNG capacity from 9 million tonnes a year to 25 millions tonnes a year by the end of 2008.
On top of that capacity increase, further plans have been announced to scale up Qatar's overall LNG capacity to 77 million tonnes a year by 2012.
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