Driving back from Sharjah the other night, it was eerily dark as we drove through the so-called industrial area. "Do we pass the mad house?" asked a fellow passenger as we tried to maneuver around the unfamiliar streets of this UAE emirate. "What mad house?" screeched another passenger as the black car rumbled past a deserted palace, where rumor has it the chairs do jigs on the ceiling and things often go bump in the night in a building that is permanently dark.
Sharjah, which supplied itself and nearby emirates with gas until recently, has been gripped by blackouts in recent weeks during some of the hottest days on record. Newspapers report that damage to food and property as a result of the power cuts has run into the hundreds of millions of dollars. The seven emirates that make up the UAE need to keep air conditioners running around the clock during the sweltering summer months but never have they experienced such a prolonged period of interrupted power supply. They have collectively one of the highest per capita consumptions of electricity in the world. Nobody can say just why the emirate has suffered from a lack of electricity in a country that is still a major oil and gas producer.
The UAE is home to roughly 9% of global crude oil reserves and the fifth largest gas reserves in the world. But demand is rising at an average rate of 10% annually, mainly a result of rapid growth earlier this decade in the real estate and financial hub Dubai and the cash-rich capital Abu Dhabi, which is experiencing an industrial revival and growth on all economic levels. The result has been a shortage of gas available for power generation. In the absence of a proper national grid, it is difficult for one emirate to make up fully a shortfall elsewhere with a separate utility managing power supply in each of the emirates and there is very little surplus available with the Federal Electricity and Water Authority to meet any severe shortfall.
The UAE is also importing as much as it can from Qatar and efforts to secure more gas from Qatar and elsewhere have failed, partly because the only other source of gas in the region, Iran, has failed to come through.
At present, Dolphin Energy receives 2 Bcf/d of natural gas from Qatar by pipeline to Abu Dhabi, from where the gas is supplied to customers in the UAE and neighboring Oman. However, the pipeline has a design capacity of 3.2 Bcf/d and Dolphin Energy has been trying, so far without success, to obtain more gas to fill the excess capacity.
Qatar, which holds the world's third biggest natural gas reserves after Russia and Iran, has imposed a moratorium on further exploitation of its huge North Field gas field while it conducts a study on the reservoir after a massive development drive that has turned the tiny emirate into the world's biggest LNG exporter. Abu Dhabi is instead negotiating additional gas supply on an "interruptible basis," meaning that gas would be supplied only when other international customers do not want full volumes.
Dubai last year signed an agreement with Shell and Qatar Petroleum to develop a floating LNG facility offshore to meet high demand in the summer but not much has been heard since the initial deal was signed.
Sharjah's problems have been exacerbated by a bitter dispute between Sharjah-based Crescent Petroleum and Iran over a gas supply deal that is now years overdue. The case might end up in court before a drop of gas is seen in Sharjah. Privately-owned Crescent had signed a deal with Iran's NIOC in 2001 for the supply of 5 billion cubic meters/year of gas to be delivered to Sharjah's depleted Mubarak field from 2005. But a dispute over price has dragged on with no sign of an end to the long running saga. Crescent has now said it will seek international arbitration under pressure from its customers, which include the Sharjah Electricity and Water Authority.
There is more than one abandoned house in Sharjah these days but it's too dark to see if the chairs are swinging from the darkened chandeliers.
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