In perhaps the strongest sign of the impact that the North American shale boom is having on the world, the United Arab Emirates, a member of OPEC and the eighth largest producer of crude oil in the world, has said that it is considering importing cheap natural gas from the US and Canada.
Production volumes for natural gas have soared to record levels thanks to the success of fracking and horizontal drilling in formations across North America. As a result prices have fallen, making US natural gas much cheaper than that available in other markets, and generating interest from foreign buyers.
Reuters states that already nearly a dozen long-term natural gas deals, each worth billions of dollars, have been recently signed in secret between US producers and buyers in China, Japan, Taiwan, France, and Chile.
Suhail bin Mohammed al-Mazroui, the Oil Minister for the UAE, said that they “may follow the same trend of considering investments in the United States and Canada to bring some of that gas back home.”
The country’s natural gas sector has experienced slow growth over the past few years, and is now unable to meet the rising demand. Whilst the UAE does produce large volumes of crude oil, it is interested in importing cheap natural gas in order to meet its domestic energy demands, whilst reserving the more expensive crude oil for selling on the market.
The state-run Abu Dhabi National Energy Company (Taqa) has already privately invested in Canada’s oil and gas sector, but has not yet declared a public involvement in exporting natural gas from North America. Al-Mazroui stated that “the United Arab Emirates is seriously thinking about that now.”
Last year the UAE began to build an LNG import terminal at Fujairah as it prepares to begin bringing in foreign LNG to help the country’s energy sector. Reuters reports that the country already pipes in a large volume of gas from Qatar.
When asked for more details of the deal al-Mazroui added that they “have a team in Mubadala as well as in Taqa looking at the optionality. Any investment needs to go through the vetting of the board of directors, not to me as an energy minister.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com