Sharjah's new discovery of natural gas and condensate - it's biggest in more than three decades is a game changer in some respects for the emirate. The Mahani well, which was drilled by state-owned Sharjah National Oil Company (Snoc) and Italian major Eni, has tested gas at flow rates of 50 million standard cubic feet per day and has also found condensate - valuable liquid that fetches a high price in the markets. Here's why the new discovery is significant for the emirate's economy.
Sharjah requires more power generation capabilities to keep up with demand from a growing population that is set to reach almost two million by 2020, making it the second-most populous emirate. The emirate is 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 and easing pressures on the existing supply of electricity.
The emirate's utility has embarked on a plan to achieve self-sufficiency in power generation by 2021, by boosting domestic capacity as well as looking to privatise parts of its business. As part of the overhaul, the Sharjah Electricity and Water Authority plans to add 1.5 gigawatts of capacity to the grid to offset the 700MW to 1.2GW of power being imported from the national grid by 2021.
Snoc supplies the gas to the Sharjah state utility, with the state oil company earlier planning to deploy a floating storage and regasification unit moored offshore at the Hamriya Port to plug the shortage of gas in the emirate. However, the plans are now in the backburner following the launch of an upstream licensing round and the successful award of three concessions to Eni. Sharjah's plan to look for new gas finds in 2018 came amid an increasing uptick in upstream activity across the UAE, with Abu Dhabi National Oil Company as well as Ras Al Khaimah also launching bidding rounds focused on gas to increase domestic production of the clean fuel. For Sharjah, it was particularly important as the emirate also buys gas via the Dolphin Pipeline, from which it has looked to diversify. Snoc also plans to launch more licensing rounds as it looks to plug its gas deficit.
Eni which is active across the Middle East including offshore exploration in the Eastern Mediterranean, has bought into Sharjah's potential. With the first well, Mahani, now tested to have a flow rate of 50 million cubic feet per day, the European energy firm has the potential to commercialise its find.
"That's a very good rate and they should be able to sustain it in a commercial flow rate. So far promising and encouraging for them and they have more wells to drill," said Robin Mills, chief executive at Qamar Energy.
"Most will go to the power sector which is the biggest consumer in Sharjah, perhaps some will go to industry as well," he added.
The discovery “has the potential to boost local energy supplies and economic development,” said Majid Jafar, chief executive of Crescent Petroleum and board managing director of Sharjah-based Dana Gas. “Sharjah has the largest number of industrial companies in the UAE, and is the gas hub for the Northern Emirates.”