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Thu 2 Mar 2006 04:00 AM

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Saudi Arabia refuses to budge on Qatar-Kuwait pipeline deal

Kuwait is now looking at buying LNG from Qatar after Saudi Arabia sank plans for a pipeline that would pass through its waters.

Border conflicts and infighting between the GCC members took a new meaning this month, when Qatar finally ended talks to supply Kuwait with natural gas because Saudi Arabia has not agreed to a pipeline running through its territory. Qatar had a tentative deal with Kuwait to build the submarine pipeline through Saudi waters. But the deal needed approval from Riyadh.

Earlier, when Oil&Gas Middle East spoke to the energy minister of Qatar, Abdullah bin Hamad Al Attiyah, he said that if Saudi Arabia did not give permission for the pipeline, the required gas could be converted to liquefied natural gas (LNG) and shipped to Kuwait, if necessary.

He also said if permission was being denied so that Qatar could lose money, then there was a mistake. “If somebody thinks we are going to lose money over this, we are not. We have too many customers,” he said.

However, last month the deal was finally scrapped, and he told Reuters, “We waited for three years to solve this issue, but it didn’t happen. So we have released the gas reserves for Kuwait to other projects.”

The US $2 billion gas pipeline project was first agreed to in July 2002 to export around 1 billion cubic feet per day of Qatari natural gas to Kuwait by year 2005 to feed electricity generation stations that Kuwait plans to build. Saudi Arabia and Qatar have in the recent past failed to see eye-to-eye on various issues.

A major incident that broke out in 1992 has been traced by many analysts as being the origin for the differences that exist between the neighbours. A border incident between Saudi Arabia and Qatar in Khafus escalated to unexpected proportions.

The skirmishes, which occurred on September 30 of that year between Qatari and Saudi soldiers, left three dead. Moreover, the Qatari authorities gave it maximum publicity and accused Saudi Arabia of attempting to seize part of its territory.

The Khafus incident marked the beginning of a long period of tension between Riyadh and Doha, which 14 years on, is not over yet.

Doha and Riyadh’s relationship also worsened when US took up Doha as a base and an alternative to those in Qatar. But the relationship came to a point of no-return on the controversial Al Jazeera channel, where Riyadh pulled back its ambassador from Qatar, demanding an apology from Doha for Al Jazeera’s allegedly disrespectful coverage of the Saudi royal family.

However, this pipeline deal will not affect Qatar, say industry insiders, as the country has a long waiting list of of both Asian and European customers.

In the same meet (Doha Gas Summit), Al Attiyah also said many pipeline projects may suffer in the future owing to long waiting periods.

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