Gaining as an Energy Partner

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Estimates suggest that by 2050, up to half of the electric energy for the United Arab Emirates (UAE) could come from renewable sources.

As the price of oil hit a record high on August 1, the Northern Emirates are eager to mitigate the rising cost of oil by investing in alternative energy sources to meet increasing power demand.

The emirates have recently announced the formation of various new international partnerships in energy supply projects in an effort to cope with energy and water supply shortages.

On the same day oil prices hit the record books, British Petroleum (BP) and the government of Sharjah announced they would be working together on developing a new long-term energy strategy.

"We are assisting the government of Sharjah with a review of its long-term gas strategy and what alternative sources of energy may be feasible," said a BP spokesman.

The partnership is part of Sharjah's objective to develop an energy Master Plan for the period up to 2025. State-owned Sharjah Electricity and Water Authority (SEWA) has turned to BP, Europe's second largest oil company, and Abu Dhabi's Dolphin Energy to supply the emirate with gas in the short term. The emirate was forced to partner with other gas suppliers due to the rising cost of meeting the domestic power demand.

Another reason behind this newly formed partnership is strategic. For more than a year, Iran has delayed Sharjah's gas imports from Crescent Petroleum, a privately owned UAE-based oil company. The emirate has been forced to operate without its daily supply of 2bn cu ft of gas due to Iranian demands to renegotiate the gas sales price, which has put immense pressure on Sharjah's power supply network.

Similar to other Northern Emirates, Sharjah's current population is rising steadily and currently sits at 650,000. This is in part attributable to a growing number of people choosing to live outside Dubai because of rising rental prices and the rapid industrial boom. As a result, the emirate's power demand has increased dramatically, reaching 1650MW for 2007. The output of Sharjah's Sajaa field can only meet 60% of this demand.

On August 1, SEWA began operating two new power-generating units with a combined capacity of 80MW at Wasit Power Station, boosting the plant's total capacity to 960MW. Earlier this year, SEWA implemented plans for a third and fourth unit at Sharjah's Hamriyah power station, with a combined capacity of 200MW.

These new projects aim to increase power generating capacity to 2382MW during the current summer to ensure smooth and regular supply of water and electricity to SEWA's clients, SEWA Director General Waled bin Khadem told local media.

Fujairah is quickly becoming the UAE's preferred destination for new power plants, energy storage and water treatment facilities. The emirate is being considered for a number of new projects as it is the only emirate positioned along the Gulf of Oman.

Fujairah will be home to a new $2.8bn power and water desalination plant, built by Abu Dhabi Water and Electricity Authority (ADWEA), which is partnering with the UK's International Power (IP) and Japan's Marubeni Corporation. The power plant will produce 2000MW of power and around 130m gallons per day of water and is expected to start up in 2010, according to an IP statement.

Plans also exist in the emirate for a $2bn liquefied natural gas storage (LNG) facility. The state-run Dubai Multi Commodities Centre has partnered with LNG Impel, a subsidiary of Canada's Galveston LNG, for the development of the facility, a senior official stated. Fujairah is under consideration due to its strategic geographic location as tankers do not have to pass the heavily congested chokepoint of the Strait of Hormuz. In addition to its convenient location outside the Arabian Gulf, the eastern emirate of Fujairah is one of the world's biggest ship refuelling ports. Also, its location enables savings on transport costs, as shippers have to pay a war risk insurance premium for entering the Gulf. The planned facility will have the capacity to store up to 3m cubic metres of LNG.

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