Cheap energy in UAE is over

The UAE’s electricity demand projections are staggering. Based on future development plans, the current installed capacity of energy will need to double by 2015. The amount of energy the UAE consumes is set to treble by 2020 – a reflection of a very energy-intensive lifestyle. Even as the energy-producing Middle East sells its wares in lucrative global markets, the UAE looks set to suffer from the resulting demand and price rise.
The UAE has one of the highest per capita gas consumption rates in the world. Until recently, the assumption was that demand growth would be met by creating additional generation capacity, fed by limitless gas resources. Governments in the region acted in line, seeking to locate energy intensive industries such as aluminium smelting and sponsoring the building boom.

However, a significant shift occurred in the past year. Although gas, the principal fuel for power generation and desalination, is abundant in the region, the assumption that it would flow as a cheap resource to underpin the UAE’s growth no longer makes sense.

Abu Dhabi’s gas is increasingly used in the oil recovery process. Using this gas for electricity generation instead could cost millions of barrels of oil left unrecovered. Abu Dhabi’s untapped Shah Field gas resource can produce the equivalent of 50 per cent of current UAE consumption. However, this resource is earmarked for supporting the oil recovery process. Furthermore, the gas has a high content of sulphur which has to be removed at a cost nearly equivalent to the current wholesale price.

Gulfnews