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Wed 21 Mar 2012 07:18 PM

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UAE's Mubadala plans LNG terminal on Oman coast

Company says project aims to secure extra gas supplies to meet demand in the UAE

UAE's Mubadala plans LNG terminal on Oman coast
AIRCRAFT DEAL: Mubadala has joined forces with Italian firm Finmeccanica. (ITP Images)

Abu Dhabi's Mubadala Oil & Gas plans to build a terminal on the Gulf of Oman coast to import liquefied natural gas into the UAE by 2015, a spokesman for the company said.

"(Mubadala) is working on a project with the aim of securing additional gas supplies to meet energy demand from the UAE's growing economy through the development of an LNG receiving facility located in the Emirate of Fujairah," he said on Wednesday.

"The project feasibility study was completed last year and the project engineering phase has now commenced with the aim of delivering first supplies in the next two to three years."

Rather than building a permanent and expensive full-scale import terminal on land, Mubadala is planning to use a floating storage and regasification unit to bring LNG into the UAE without having to ship it through the narrow Strait of Hormuz.

The UAE has exported LNG for decades, but artificially low gas prices across the Middle East have limited growth in production of the fuel.

Meanwhile, rapidly rising demand from energy-hungry domestic industries fed cheap fuel and a booming population reliant on air-conditioning have forced the UAE and Kuwait to import increasing volumes of gas, especially in summer.

The UAE lies next to Qatar, the world's largest LNG supplier, but like Kuwait it faces years of importing LNG from around the world after failing to agree on terms for Qatari gas.

Gas-starved Dubai already imports LNG to ports in the Gulf, and the UAE gets a modest volume of Qatari gas by pipeline, which feeds power and water desalination plants at Fujairah.

Building an LNG import terminal at the port, where heavy investment by the UAE government and global energy companies is driving up demand rapidly, could make up for a lack of gas from Qatar or even reduce flows that go east across the UAE, leaving more Qatari gas for Abu Dhabi or Dubai.

Building an LNG import terminal outside the Strait of Hormuz also reduces the risk that the UAE's supplies could be affected by problems in the vital oil and gas shipping lane, which neighbouring Iran has threatened to block several times over the last few months.

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