Home Blogs Asian Chemical Connections GCC gas shortage expected to last till 2015

GCC gas shortage expected to last till 2015

Business, Middle East
By John Richardson on 15-Jun-2010

By Malini Hariharan

After enjoying years of plentiful supplies the Gulf Cooperation Council (GCC) countries face a gas shortage that could last another five years, says consultancy Booz & Co.

And this is happening at a time when other countries around of the world, especially the US, are seeing a surge in availability.

middle east gas.png
Source: Booz & Co

The consultancy has identified five factors responsible for the demand and supply imbalance in the GCC countries. There has been a rapid rise in power consumption and gas is increasingly needed by this sector. Gas is also being used for re-injection of depleting oil fields to maintain reservoir pressure and oil production. The growth in petrochemicals, steel and aluminium sectors have also contributed.

On the supply side, the region ‘faces extraordinary challenges in maintaining and increasing gas production at a level that would allow it to meet demand,’ says Booz. An Opec-led cut in crude oil production has meant lower volumes of associated gas and new sources of non-associated gas have been difficult to locate.

And, lastly, long-term export agreements for liquefied natural gas (LNG) have limited local supplies.

The bad news, says Booz, is that the shortage will become more acute over the next five years despite forecasts of slower economic growth.

GCC governments need to act fast to resolve the situation. Suggested actions include improve in energy efficiency through regulation, a gradual increase in local prices, use of alternatives in the energy mix and providing incentives to international oil companies to participate in the gas sector.

The report adds to what the blog has been writing about – the imminent rise in costs and shortfall in associated gas constraining petrochemical plant operations.

The gas equation has changed affecting not only current production but also future petrochemicals development.