Tuesday, August 26, 2008

A new coal burning power plant - in the Gulf

Arabian Business.Com via the Cryptogon:
The obvious irony is that the Gulf is blessed with a wealth of natural resources. It holds about 30 percent of global oil reserves and around 8 percent of gas reserves - two of the main ingredients for generating electricity.

However the region is suffering from a shortage of one of these components, gas, as high oil prices encourage oil-producing nations to rely heavily on natural gas for domestic consumption, reserving more oil for export.

Samuel Ciszuk, a Middle East energy analyst for Global Insight, believes that in the drive to diversify their economies away from oil dependency, GCC countries have underestimated the amount of gas they require for power generation.

"The Gulf has been suffering from power problems for a couple of summers, especially in peak demand periods, and this goes back to the gas crunch where a lot of countries are failing to produce enough gas to meet growing power needs," he says.

"The main problem is that everything is built to work on gas power," he continues. "GCC countries have converted old oil plants to gas so they are completely reliant on gas in Saudi Arabia, UAE and Kuwait, but then they have failed to secure a sufficient amount of gas. There could be major problems during peak demand.

"In Kuwait it is clear that the situation is hurting growth, and in Saudi Arabia this will be one of the tests of its economic future," he adds. "Whether it will be able to source its energy will be a big question."

[. . .]

To address the long-term supply issue, some Gulf states including the UAE are considering building nuclear power stations. However, the government does not expect its first atomic power plant to be completed before 2016.

Faced by serious delays in the connection of residential and commercial property projects to the power grid, Ajman has signed a $2bn deal with Malaysian power producer MMC to build the Gulf's first coal-fired power station. It will generate one gigawatt of electricity from early 2012.

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