GCC gas shortage serious

Gas supplies are running out

The Gulf Co-operation Council are traditionally seen as hydrocarbon-rich, but in recent years that been a balance shift with the GGC now importing natural gas instead of exporting it.

This GCC gas shortage has been described as a "reversal of a decades-old status quo" with Bahrain, Kuwait, Oman, Saudi Arabia and the United Arab Emirates now facing an increasing gas shortage in the region amid a "significant supply overhang" in the rest of the world.

This has been highlighted in a report from Booz & Company, which states that "while the global economic slump has reduced the need for gas in most regions, demand in the Gulf Co-operation Council [GCC] for power generation from some industrial sectors has far outpaced the region's gas exploration and production. As a result, GCC countries find themselves in an uncharted territory."

Despite the six GCC countries holding roughly 23 percent of global gas reserves, the extent of the gas supply-demand imbalance in the region has seen the countries, with the exception of Qatar, consider importing gas to meet rapidly rising demand.

Even with these measures, the GCC is still facing a serious gas shortage.

With increased power consumption and gas being utilised for generation combined with steady growth, the countries of the GCC have seen their economies grow at a rate of around 7.6 percent a year. While energy demand has kept pace with such growth, it is expected that power generation needs for the region will increase by 50 percent over the next two decades.

According to studies by the US Energy Information Administration (EIA), more than 90 percent of the region's power generation will come from gas, significantly increasing the GCC power sector's reliance on gas.

Although there are other alternatives such as liquid fuels, renewable fuels, coal and nuclear energy, they only modestly compared with natural gas.

"Importing gas or LNG is the most economically and environmentally sound solution to the GCC's problem, especially for the power sector," the report said. "Furthermore, importing gas or LNG will enable GCC countries to continue their economic diversification efforts using local gas as well as allow them to continue to export crude oil, sending value-added refined products to foreign markets instead of burning them as fuel for their own power needs."

Despite this, the likes of Abu Dhabi plans to construct at least six nuclear plants at a cost of more than US $5 billion each in order to diversify its energy generation and other countries are implementing other plans to prevent an energy shortfall in the future.

Relevant articles:

Saudi Arabia's $209m power shortage | Qatar's $1.17bn energy upgrade | Saudi Arabia puts $53bn into water projects

Timon Singh

Timon Singh is a graduate of Liverpool University where he received a degree in Social and Economic History. He has previously worked for BBC Magazines on BBC Who Do You Think You Are? Magazine, the publication for the popular genealogy show.

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