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[DOHA] Pipelines are a cheaper way to deliver natural gas than tanker ships. They're also easier to blow up.
That's one reason countries in North Africa and the Middle East are going full steam ahead on sea transport. They also want diversity of supply. The volume of cargoes carrying liquefied natural gas climbed 31 per cent in 2014 as Middle East nations increased imports at the fastest pace in four years.
The fuel - natural gas chilled to a liquid for transport - is in demand as electricity usage surges for growing populations and industries. The Middle East and North Africa will spend US$120 billion on gas-fired power plants by 2035, more than either China or the 28 member states of the European Union, according to the International Energy Agency. Strife between nations such as Morocco and Algeria have made pipelines pawns in political power plays as well as increasingly attractive targets for sabotage.
"There is no question that pipeline gas is cheaper than LNG, but we can't rely on a single source for natural gas," Morocco's Minister of Energy & Mines Abdelkader Amara said. "It's a strategic decision."
The region is home to more than half the world's natural gas reserves. Even so, Dubai and Kuwait already are major importers, and Egypt, Jordan and Pakistan are adding import terminals with combined annual capacity equal to 80 per cent of all facilities built worldwide last year, according to the International Group of Liquefied Natural Gas Importers.
Natural gas cost only US$2.575 per million British thermal units Tuesday on the New York Mercantile Exchange, while the spot price for LNG to northeast Asia was almost three times as much at US$7.38 per million Btu.
Morocco, which closed its border with gas-rich Algeria in 1994, is building a US$4.6 billion power-plant complex to be supplied with LNG from as far away as Qatar, Russia and the US. Mr Amara, the country's energy minister, said last month that "uncertainty" over the future of a pipeline network for Algerian gas exports motivated his country to secure LNG as an alternative.
Egypt halted exports by pipeline to Israel in 2012 and Jordan in 2013 amid sabotage attacks on its network in the Sinai Peninsula. Egypt's government began importing Algerian and Russian LNG in March. Dubai, Kuwait and Israel imported 4.1 million metric tons of LNG in 2014, up from 3.1 million a year earlier.
Jordan will start receiving 150 million cubic feet per day of LNG from Royal Dutch Shell in May. The country will seek offers for an additional 100 million cubic feet of the fuel in July, Mohammad Hamed, a former energy minister, said Jan 21.
"The region is emerging as an LNG importer," Robin Mills of Dubai-based consultants Manaar Energy, said by phone on April 2. "Major energy producers as well as countries with few resources like Morocco and Jordan are looking at global energy markets because of the difficulty of getting regional gas."
A 61 per cent drop in LNG prices since February 2014 may be spurring deals, he said. LNG deliveries to the Middle East and North Africa are set to more than double to 8.4 million tons in 2015, the fastest growth rate in the world, according to London- based consultants Energy Aspects Ltd.
A US$7.4 billion project for a pipeline to Pakistan from neighboring Iran, holder of the world's largest gas reserves, has stalled. Pakistan joined a coalition fighting in Yemen against rebels from a branch of Shiite Islam, Iran's main religion, and started buying LNG from Qatar in March.
Qatar, the biggest LNG producer in the Middle East, ships 77 million tons of the fuel per year. Iran is constrained by international sanctions over its nuclear program and has postponed plans to build a US$3.3 billion LNG plant, Alireza Kameli, managing director of National Iranian Gas Export Co., said in a Dec 18 interview in Doha.
"Politics has stopped pipeline projects even though the economics of sending gas from countries with surplus supply to those with demand makes sense," Mohamed Ramady, an associate professor at King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia, said by phone on April 14.
Most of Iran's current gas exports go by pipeline to Turkey. The Islamic Republic has also signed deals to build pipelines to Iraq and Oman, but like the link to Pakistan, both have been delayed. Construction of the pipeline inside Iraq has been postponed as the country battles Islamic State militants, Kameli said.
Iran has discussed possible exports to Kuwait, 48km away, for more than a decade. A pipeline from Iran to the United Arab Emirates has been dormant since its completion in 2006. The UAE, which receives pipeline gas from Qatar, is boosting LNG capacity to allow more flexibility for power generation.
Lower prices compared with last year's peak and a wider variety of supplies are part of the liquefied fuel's appeal, Manaar's Mr Mills said.
"It stops a country from being held hostage by a neighbour that controls a pipeline," he said.