Depleted oil and gas reservoirs in Dubai could become the basis for a new source of income for the emirate.
Dubai mulls gas-trading hub plan
Depleted oil and gas reservoirs in Dubai could become the basis for a new source of income for the emirate. The Supreme Council of Energy is considering a plan to build a trading hub around these geological structures, which are currently used to store gas for domestic consumption.
Since Dubai's oil and gas deposits are nearly exhausted, the emirate has begun importing liquefied natural gas (LNG) in tankers supplied by Shell to fuel its power stations. Dubai also imports gas through pipelines from Abu Dhabi and Qatar.
"Dubai has pipelines, has LNG, and has storage capacity. So if you put all those together you might be in a position to create that gas hub," said Nejib Zaafrani, the chief executive of the council, adding that he expected a decision by the middle of the year.
To convert the old oil and gasfields into trading instruments, the authorities would have to build a gas-export terminal as well as a trading system on one of the Dubai exchanges to establish a benchmark price for gas in the region.
The idea is part of developing the Integrated Energy Strategy 2030, a policy roadmap designed to secure Dubai's energy needs.
There is no global price benchmark for gas because it has until recently proved impossible to trade freely. But with the emergence of LNG as a globally traded commodity over the past two decades, new pricing benchmarks are emerging. Dubai started importing LNG three years ago when a converted tanker that regasifies the product was moored off the coast and connected to Dubai's pipeline network.
Imported gas is stored underground in the Margham field and the Jebel Ali salt dome.
The idea of turning Dubai into a centre for gas trading has been under consideration since last year.
If the emirate were to go ahead with the plan, it could face strong competition from Qatar.
"Qatar is the obvious choice to create such a hub … But future natural gas demand in the Gulf is perhaps sufficient to have two hubs," saidDr Axel Wietfeld, a board member at E.ON Foldgáz Storage.