The slump in prices and surging power demand is spurring demand for liquefied natural gas in the Middle East and North Africa.
Even the UAE, which earlier this year decided to put on hold indefinitely plans to build a huge onshore LNG plant at the Indian Ocean port of Fujairah, instead recently chartered a floating storage and regasification unit (FSRU) from Texas-based Excelerate to meet domestic gas demand.
Throughout the region there are a growing number of such facilities under way or on the drawing board to meet rising demand.
The slump in world seaborne gas prices is a major factor, driven largely by the waves of supply that have hit the market as huge long-term projects came onstream in Australia, Papua New Guinea, the US and elsewhere.
Last year, worldwide gas trade was surpassed only by oil as the most actively traded commodity, and the surplus of supply over demand reached its highest in a decade, according to data from BP.
There have even experimental shipments of LNG from as far afield as the US Gulf coast to buyers in the Arabian Gulf, including delivery to the Jebel Ali LNG facility in Dubai.
“The external conditions are driving Mena LNG demand growth,” said Emma Richards, an analyst at BMI Research, part of Fitch Ratings.
“The fact of the collapse in LNG prices and so much readily available supply has put companies in a position to negotiate favourable long-term supply deals,” she said.
At the same time, buyers have been favouring the more flexible FSRU option, which can be chartered for a five or 10-year period, rather than a multibillion-dollar investment over 20 or 30 years in an onshore facility.
Excelerate confirmed that its namesake FSRU, which moored at Ruwais in Abu Dhabi’s Al Gharbia region earlier this month, was chartered by Gasco – a joint venture between Adnoc, Shell and Total.
The ship has been commissioned initially to take LNG from the Das Island LNG export facility and feed into the UAE grid about 14 million cubic metres a day, or about 7 per cent of last year’s average daily gas demand.
The UAE’s demand for gas grew by nearly two-thirds over a decade to last year’s consumption of 69 billion cubic metres, and although it has slowed it is still forecast to rise at a rate of 5 to 6 per cent a year through 2020.
Domestic supply has been limited as the national oil company, Adnoc, prioritises the use of gas for reinjection into oilfields to enhance production.
Other GCC countries have similar rates of gas demand growth and outside the troubled hotspots like Yemen, Syria and Iraq, even faster rates of growth are expected.
“Egypt has low power consumption per capita and tremendous demand potential,” said Ms Richards. “The country is building out its gas power sector, which will be supported by domestic gas projects, but will nonetheless remain dependent on LNG imports for many years. A third FSRU could be installed, allowing for increased LNG imports.”
Bahrain is expected to install an FSRU at the port of Hidd by 2018 and start importing an increasing amount of LNG over the subsequent decade.
Morocco, Tunisia and Lebanon are also expected to become new LNG markets, BMI Research said.
In Morocco, there is already a proposal for an LNG import facility at Mohammedia, about 30 kilometres east of Casablanca, while Lebanon needs to overcome some political squabbling to greenlight its FSRU plans.
Follow The National's Business section on Twitter