Dolphin Energy, the strategic natural gas joint venture, is expanding its facilities to boost gas exports from Qatar to the UAE.
Faced with a gas crunch in the UAE, Mubadala Petroleum and joint venture partners Total and Occidental are keen to increase the supplies that come to Abu Dhabi and are distributed to Dubai and Oman by 1 billion cubic feet. The Dolphin pipeline, which runs under the sea from Qatar to Abu Dhabi, can accommodate 3.2 billion cubic feet today, but compression facilities in Qatar and existing long-term sales contracts allow for only 2.2 billion to actually pass through it. The gas comes at a substantial discount to international liquefied natural gas (LNG) prices.
"We're working hard in cooperation with Qatar to increase the capacity of the pipeline, and hopefully bring even more natural gas to Abu Dhabi," said Maurizio La Noce, Mubadala Petroleum's chief executive.
The extra gas could come from LNG trains undergoing maintenance, said Arnaud Breuillac, Total's president of Middle East exploration and production.
Although the pipeline would not transport 3 billion cu/ft every day of the year, there should be enough gas to make expanding the compression units economic, he said. The pipeline has transported gas above its contracted capacity for short periods in the past. The compression facilities expansion is scheduled for completion in 2015.
"We are thinking maybe by then a new contract will be signed for the supply of more gas," said Mr Breuillac. The main stumbling block to further imports is gas pricing. Dolphin reportedly pays only US$1.30 (per million British thermal units for its gas, far below the price fetched for Qatari gas in the international markets - as high as $17/mmbtu in Japan. A new deal is unlikely without a considerable mark-up on the current price.
Dolphin is also building more pipelines to bring additional gas to the Northern Emirates.
"We are continuing to develop the transportation network in the UAE by adding new pipelines, in particular to feed the northern emirates," said Mr Breuillac. "This is really important to address the gas balance and the energy balance of the UAE."
Dolphin is not the only gas import project involving Mubadala Petroleum, and the company has teamed up with the International Petroleum Investment Company (Ipic), another Abu Dhabi investor, for an import terminal in Fujairah. The floating terminal will be able to receive 9 million tonnes of LNG by 2016.
The project will further help to diminish the gap between supply and demand that is widening in the UAE, a consequence of economic development and population growth, coupled with wasteful consumption of electricity.
Mubadala Petroleum, the oil and gas subsidiary of its parent company, also aims to broaden its upstream portfolio in the Arabian Gulf and in South-East Asia, where it was awarded a gas block in Indonesia last month.
Recent oil and gas finds in Africa have caught the company's attention. Tanzania and Mozambique are on the brink of a gas boom, while significant oil reserves have been discovered in Kenya.
"We are investing heavily in exploration," said Mr La Noce. "We have identified East and West Africa as an area for growth."
The chief executive also believes that risk premium in the aftermath of the Arab Spring has made upstream assets in North Africa more lucrative.
"We see many [opportunities], in particular in North Africa, in parts of the Gulf, and in many other areas that have suffered from a fall in investments," said Mr La Noce.