x

Abu Dhabi, UAETuesday 23 October 2018

Dubai Supply Authority agrees deal with Japan’s Jera to explore LNG opportunities

Under the terms of the deal, the two companies will focus on potential joint procurement, shipping and storage opportunities.

The Dubai Supply Authority (Dusup), which runs the emirate’s gas importation and distribution infrastructure, and Jera Company, owned by two of Japan’s largest utilities, have completed a deal to explore joint business opportunities in liquefied natural gas, the two companies said yesterday.

Under the terms of the deal, which was signed in Tokyo at the end of Gastech, a four-day annual industry conference, the two companies will focus on potential joint procurement, shipping and storage opportunities, according to a statement by Jera, a joint venture between Tokyo Electric Power Co and Chubu Electric Power Co.

Dusup and Jera are large importers of gas, particularly LNG, which is produced by freezing gas to a liquid state so it can be exported on specially designed ships and then “regasified” at import terminals and fed into distribution pipelines like traditional dry gas.

Dubai, and the UAE as a whole, has been a net importer of gas for nearly a decade because of surging domestic, commercial and industrial demand, a trend that is set to continue.

“The emirate of Dubai is a major business hub in the Middle East with further economic growth expected in the build up to hosting Expo 2020 in Dubai,” said Jera’s statement announcing the deal.

Dusup operates Dubai’s largest gasfield at Margham, imports and distributes Qatari gas via the Dolphin pipeline and operates a floating storage and regasification unit (FRSU) at Dubai’s Jebel Ali port.

Last September, Dusup upgraded its LNG capability with a new, larger FRSU chartered from Excelerate Energy, based in Woodlands, Texas. Excelerate also last August chartered to Abu Dhabi its first FSRU, which is based at the refinery town of Ruwais in the Al Dhafra (Western Region).

Although the UAE is set to remain a net importer of gas for the foreseeable future, the country’s long-term infrastructure plans are designed to facilitate its ambitions to be one of the world’s largest hydrocarbon trading hubs, including LNG.

The emirate of Fujairah has been increasing its hydrocarbons storage and shipping fac­ilitation capacity at a fast pace as it executes a plan to become a world-class trading hub.

LNG trading in the region is expected to continue to grow rapidly, reflected in the launch in January by Tullett Prebon, a large brokerage firm, and Singapore Exchange of a new contract based on an LNG index for product delivered to ports in Dubai, Kuwait and India.

Meanwhile, global energy firms like ExxonMobil and Total say that costs must be slashed to make new LNG projects profitable, Bloomberg reported. If more export plants are not built then fuel prices may rise as demand outpaces production over the next decade, Tokyo’s Gastech conference heard this week.

amcauley@thenational.ae

Follow The National’s Business section on Twitter