Kuwait to import Qatar gas

Kuwait has reached a deal with Qatar to begin receiving shipments of liquefied natural gas.

Kuwait has reached a deal with Qatar to begin receiving shipments of costly liquefied natural gas (LNG) to fuel power stations this summer. Qatar's RasGas will supply 1.6 million tonnes of LNG to Kuwait each summer for five years, starting in June, the Kuwaiti independent daily newspaper Al Seyassah reported yesterday, quoting Hamad al Mohannadi, the RasGas managing director and chief executive. Shipping LNG such a short distance was highly uneconomical, experts said, but Kuwait's government had no alternatives for its power stations. Domestic gas is in short supply, oil products such as diesel are expensive and polluting, and neighbouring states with large gas reserves are unlikely to agree to provide supplies by pipeline. "This is craziness to be taking LNG such a short distance," said Jonathan Stern, the director of gas research at the Oxford Institute of Energy Studies in Britain. Kuwait's government is the second in the region to import LNG, after Dubai signed a similar deal with Qatar early last year. By May, the Kuwait Oil Company (KOC) will have completed an offshore facility to re-gasify the LNG, the deputy chairman of KOC, Mohammed Hussain, said in January. KOC has rented a re-gasification ship from Excelerate, a US firm, that will dock at an offshore pumping station in the summer months. Incoming LNG carriers from RasGas will pump LNG directly into the Excelerate ship, which will then warm the liquid and inject it into the Kuwaiti pipeline network. A RasGas spokesman did not respond to a request for comment yesterday. Although importing LNG was impractical, the Kuwaiti government had little choice, Mr Stern said. The main fuel for power stations in the Gulf is gas, but Kuwait is far behind its neighbours in the race to increase domestic production. Before 2000, experts thought there were no commercial-sized reserves of gas separate from oil reservoirs, and the Kuwaiti parliament has blocked the participation of foreign partners to help KOC develop gas deposits. KOC still hopes to raise domestic gas production to 1 billion cubic feet per day by 2015. In the meantime, the government has looked to burn dirty fuel oil and import gas via pipeline. Fuel oil consumption jumped 18 per cent last year, according to PFC Energy, a Washington-based consultancy. Pipeline deals with Iran and Qatar were unlikely to eventuate, Mr Stern said. A pipeline between Qatar and Kuwait was first proposed in 2000, but remains in doubt because Saudi Arabia does not want it to cross the kingdom's territorial waters. Mr Stern said he was sceptical that any Arab country, including Kuwait, would get a pipeline deal with Iran. "Anything to do with Iran - there have been so many announcements in the past, nothing has happened over the past 20 years," he said. [e-mail]