In the rugged mountains near the mineral spring famous in the UAE as a local supplier of bottled water, Dolphin Energy is laying pipes to carry another precious resource - natural gas. A gale is blowing grit everywhere and construction workers, their faces swathed in chequered cotton scarves, take shelter beside and sometimes within the 1.2-metre diameter steel pipe sections that are waiting to be laid in trenches lined with fine red sand. The sand is not locally sourced. It is trucked in from the dunes of the neighbouring emirate of Sharjah along rough mountain tracks.
As the pipe descends at an angle of about 25 degrees from the mountains to sea level, each 12-metre pipe section, weighing 5.5 tonnes, must be suspended chain-like from the one higher up. It is a remarkable feat of civil engineering and involves a lot of heavy equipment. This is the most challenging section of a pipeline that is being built by Abu Dhabi's Dolphin consortium, which comprises Mubadala, a strategic investment company owned by the Abu Dhabi Government, and the US and French oil groups Occidental Petroleum and Total. It will run across the Emirates from the port of Taweelah on Abu Dhabi's Gulf coast to Dibba, in Fujairah, on the Arabian Sea. It is part of an enormous effort to distribute imported gas from Qatar throughout the UAE and to additional customers in Oman.
In a region not well known for its successful completion of cross-border construction projects, Dolphin's pipeline network is an outstanding example of energy co-operation within the GCC. The project's completion will not come a moment too soon. The UAE and most of its Gulf neighbours are already running short of gas to fuel power generation. Expanding the regional gas-transmission grid is one way to ensure available gas is at least deployed more efficiently, helping to avert power cuts during the sweltering summer months. Other measures needed include gas and electricity conservation, experts warn. "Blackouts and 'brownouts' are already common during peak times," the Economist Intelligence Unit noted in a recent report. It went on to warn that the region could soon face a "crippling" shortage of natural resources. "Governments realise that current consumption patterns are not sustainable," it said.
Apart from Qatar, which has the world's biggest known gasfield and is easily the leading exporter of liquefied natural gas, every GCC country is short of gas this year. Throughout most of the region, gas development has lagged behind demand for a number of reasons, primarily low, government-subsidised domestic gas prices that have discouraged investment in the sector. The UAE, Kuwait and Oman are already importing gas to fill growing gaps between supply and demand.
It does not help that most of the region's undeveloped gas deposits are deeply buried and heavily laced with hydrogen sulphide, a highly toxic gas. This makes them difficult, dangerous and expensive to exploit. Abu Dhabi's Shah gasfield is one such reservoir. Uncertainty hangs over a US$10 billion (Dh36.72bn) project to exploit the gas, after the US energy major ConocoPhillips in April quit the development joint venture it had formed with Abu Dhabi National Oil Company.
Despite the popularity of low fuel prices among the region's consumers, there is a growing realisation within industry and government circles that gas subsidies are threatening rather than helping economic development in most GCC states. That is creating pressure for change. "There is an increasing trend in the Gulf and the Middle East to move towards market pricing," says Badr Jafar, the executive director of Crescent Petroleum, a privately owned Sharjah energy company.
On Saturday, Crescent and the Russian oil giant Rosneft started drilling an exploration well in Sharjah in the hope of finding gas that they may one day profitably sell to local customers. tcarlisle@thenational.ae