Fuel for the Future

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As a regional centre for industrial activity, Sharjah is stepping up efforts to meet its energy needs, looking to open up new gas fields at home while expanding its import options abroad.

Having successfully marketed itself as a centre for industry, Sharjah is now home to around 40% of the industries based in the UAE. Domestic supplies of gas and the electricity it generates had long since outstripped demand.

However, the emirate is becoming more energy hungry, with increased demand from industry, business and the growing population. Despite reserves of around 1.5bn barrels of oil and some 303bn cu metres of natural gas, production is currently insufficient to fuel the expanding economy.

According to projections by the Sharjah Electricity and Water Authority (SEWA), the call on power production is set to more than treble from last year's 1700 MW to 5181 MW by 2025. Despite investing in new generating capacity and at times resorting to importing from the wider UAE grid, Sharjah sometimes struggles to meet its electricity needs, especially in times of peak demand, such as summer.

While generation capacity can be stretched, one of the biggest problems is securing gas to run the emirate's power plants, with local supplies only adequate to meet half of annual demand. This has prompted a renewed push to identify new reserves and open up new fields.

Local firm Dana Gas has begun working to bring a potential major gas field on-line off the Sharjah coast, estimated to contain 8.9bn cu metres of recoverable gas reserves. Last March, the government granted Dana operating rights for a 25-year period at the Zora gas field, after previous concession holders Crescent and Norway's Atlantis Holdings withdrew due to the Norwegian firm being taken over by China's Sinochem.

In late January, Dana announced it was in the process of placing orders for the equipment and materials necessary for the 25-km pipeline to carry the gas ashore and for production facilities. It was also in negotiations with three major offshore rig contractors to obtain a platform and begin work on-site. Dana said it was committing at least $135m to the project and $65m for further exploration, a well and further development. If the Zora field proves viable, its output could ease some of the emirate's reliance on imported fuels.

The Zora project will be the first that Dana has undertaken in its own backyard, having concentrated on successfully developing fields in Egypt and northern Iraq. Since being founded in late 2005, the company has established itself as the Middle East's largest private natural gas company, becoming the sixth-largest gas producer in Egypt and taking the lead in developing the extensive gas fields in Kurdish-controlled northern Iraq.

While seeking to identify and exploit new reserves at home, Sharjah is also looking further afield to guarantee its energy security for the future. The emirate has been in long-running talks to import gas from Iran's offshore Salman field. Though an initial agreement was struck in 2001 for Iran to supply 17m cu metres per day, there have been a series of obstacles to the deal, with ongoing disputes between Sharjah's Crescent Petroleum and Tehran over pricing and delivery terms.

Crescent still sees Iran as an opportunity for investment and a long-term source of energy for Sharjah. In early March company officials announced it was keen on investing in Iran's South Pars gas field, which lies in the Gulf between Iran and Qatar. The field is estimated to hold reserves of 14trn cu metres of gas, making it one of the largest in the world.

"If the oil ministry accepts this suggestion, we are ready to begin negotiations over the development of some of the phases of the South Pars field," Zaheri told the Iranian news agency Shana on March 7.

Getting in on the ground floor of such a massive project could see Crescent become a leading player in the regional gas industry and help secure Sharjah's energy security for the future.

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