Getting to grips with a big problem

Power station would be ample for emirate's 250,000 people.

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Ras al Khaimah is trying to solve its worsening power shortages to cash in belatedly on the Gulf's development boom. But its planned solutions may not be enough. Ras al Khaimah Energy plans to build a 200 megawatt gas-fired power station. Running flat out, it would generate ample electricity for the domestic and commercial needs of RAK's 250,000 people.

But typical new gas-fired stations range from 300MW to 500MW, and RAK Energy's design will probably not be enough for existing and future industrial projects. That is why RAK Energy shareholders, Union Cement and Gulf Cement, are taking steps to secure a dedicated power supply for their operations. However, such calculations are meaningless in the absence of a reliable supply of natural gas. RAK's current gas supply of about 30 million cubic feet per day, mostly from the Bukha fields offshore Oman-administered Musandam, satisfies only 10 per cent of the emirate's gas demand.

Production from Umm al Quwain's Atlantis offshore field, with the gas processed by the government-owned Ras al Khaimah Gas Company (RakGas), will yield 80 million cubic feet per day more. But that still leaves a major shortfall, and the current answers to the problem are not convincing. Plans to explore around the borders of the depleted Saleh field are being held up by a border dispute with Umm al Quwain.

RakGas hopes to add minor volumes later this year from wells to be drilled in the West Bukha gas field, offshore Musandam, close to the Bukha field. The problem is that West Bukha straddles Omani and Iranian territorial waters, necessitating an interstate development agreement. Not only is Iran under US-led sanctions over its nuclear programme, but its famously inefficient bureaucracy holds back development of vast Iranian oil and gas resources.

RakGas also has a contract to take delivery of 100 million cubic feet per day of Iranian gas imports from Dana Gas in Sharjah. The gas is already three years overdue, as Iran and a Dana affiliate, Crescent Petroleum, haggle over pricing and Iran drags its feet on completing export facilities. RakGas's ambition eventually to import gas from East Africa will not be realised for years, if at all. The company holds exploration prospects offshore in Tanzania, in Kenya and the breakaway province of Puntland in Somalia, but it has yet to drill. None of these countries have export facilities for liquefied natural gas (LNG). Somalia in particular is exceptionally unstable politically, making the success of commercial energy ventures a dicey proposition.

Ras al Khaimah's other options are limited and unattractive: continue to burn expensive and polluting diesel to make up for the gas shortfall; import costly LNG from as far away as Algeria, as closer Qatari supplies are all taken until at least 2013; build one or more coal-fired power plants - requiring four years for construction and coal supplies from as far away as Australia or Indonesia; wait 10 years or more for the UAE to build nuclear plants.

With such uncertainties, only one thing seems sure: RAK's electricity shortage will not diminish in the near future. @Email:[e-mail]