State-owned Sharjah National Oil Company and Italian firm Eni have begun development of the Mahani gas field, which was found to have significant gas deposits last year.
The Italian firm will drill for gas from the Mahani-1 gas well.
The gas field was the first to be discovered in Sharjah in nearly 37 years.
The partners have now completed the laying of a 23,000 metre pipeline in the desert and connected it to existing infrastructure to produce and transport gas to the nearby Sajaa gas processing plant.
"The commencement of the first gas production from Mahani, less than a year after discovery, is a tremendous achievement for Sharjah, meeting our commitment to contribute to the efforts of making reliable gas supplies widely available for the local energy needs of Sharjah and the UAE," Snoc president Sheikh Sultan bin Ahmed Al Qasimi said in a statement to Wam.
The well has been drilled to a total measured depth of 14,597 feet and has tested gas flow rates of up to 50 million cubic feet per day, alongside some condensate from the adjacent Thamama formation.
The developers plan to drill further to assess the full extent of the structures.
Snoc, which operates area B of the formation, holds a 50 per cent stake in the concession, with Eni holding the remaining stake
The discovery is critical as it could help Sharjah meet its growing power needs. Home to more than 1.4 million people, the emirate is actively looking at various options to diversify its power mix to meet the rising demand of a growing population.
The extraction of new reserves will support Sharjah's plans to reach self-sufficiency in power generation by the end of 2021. The emirate's utility has been looking to boost its power capacity as well as privatising parts of its business.
The potential of the domestic supply of gas will eliminate the need for more expensive options to support the power grid. Snoc previously planned to support Sharjah Electricity and Water Authority by deploying a floating storage and regasification unit moored offshore at the Hamriya Port. However, the plans are now on the back burner following the successful award of three concessions to Eni.
Unlocking domestic gas reserves will also help the emirate diversify its supply and lower its import bill. Sharjah imports gas via the Dolphin Gas Pipeline from the North Dome field in Qatar. Snoc has plans to launch more licensing rounds following the success of its recently concluded tender.
Natural gas prices were up 4.02 per cent to $2.65 per million British thermal units at 6.09pm on Monday as energy prices rose ahead of the conclusion of the first Opec meeting of the year in Vienna, at which leaders were expected to leave output curbs unchanged.
Brent crude, the global benchmark for two-thirds of the world's oil, rose 1 per cent to $52.32 per barrel, while West Texas Intermediate traded 0.56 higher at $48.79.
Members of the Opec+ alliance led by Saudi Arabia and Russia reached a historic agreement to cut back output by 9.7 million barrels per day in April last year to counter a record drop in crude demand due to Covid-19 related travel restrictions.
Cuts have since been gradually scaled back as energy demand has strengthened, with production increasing by a further 500,000 barrels per day this month.
“Amid the hopeful signs, the outlook for the first half of 2021 is very mixed and there are still many downside risks to juggle,” Opec secretary general, Mohammad Barkindo, said in a statement late on Sunday during the two-day meeting.
He expects crude oil demand to shift from “reverse to forward gear and rise to 95.9m bpd this year, a gain of 5.9m bpd from 2020”.
“The non-OECD [countries] will be in the driver’s seat with growth of around 3.3m bpd.”