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Gulf-Times: Shell, RAK plan to pipe Iran gas into UAE

Published: Wednesday, 1 November, 2006, 08:45 AM Doha Time
DUBAI/TEHRAN: Royal Dutch Shell Plc, Europe’s biggest oil company, may pipe gas into the United Arab Emirates from Iran as the US presses the international community to enforce sanctions to halt Tehran’s nuclear programme.

Shell and RAK Petroleum are “looking at the whole supply dynamics of the UAE in the context of supply opportunities in Iran,’’ Philip Turberville, chief executive officer of the UAE-based energy company, said in a phone interview yesterday.

Supplying Iranian gas to the UAE is an “option’’ being considered, said Jonathan Charles, a Shell spokesman in London.
Shell’s Class A shares in London gained as much as 0.8% to 1,834 pence after news of its agreement with RAK Petroleum was published.

The Hague-based company, that reported on Thursday third-quarter profit climbed to $7.03bn, traded at 1,828 pence at 12.30pm London time.

Shortages of gas in the UAE, spurred by demand from power plants, industries and new infrastructure, could derail the booming economy that is expected to gain by 11.5% this year, the fastest growing in the Middle East, according to the International Monetary Fund.

Shell and RAK would compete with Dolphin Energy Ltd, a partnership between Abu Dhabi, Occidental Petroleum Corp and Total SA, and Dana Gas PJSC, which are both planning to import gas into the federation of seven emirates to help meet rising demand spurred by a booming economy.

The US wants the UN Security Council to punish Iran for refusing to abide by an August 31 deadline to suspend uranium enrichment. The Bush administration says the Islamic Republic’s nuclear programme is cover for the development of a weapon while Iran, a signatory to the nuclear Non-Proliferation Treaty, says its work is designed to fuel power plants.

A spokesman for Iran’s oil ministry press office in Tehran couldn’t immediately comment when contacted yesterday by phone.

Iran controls 971tn cu ft of natural gas, the world’s second-largest stocks after Russia, according to the US Energy Information Administration website.

“Anything to do with boosting future gas production will be seen as positive by investors,’’ said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers Ltd in London.

Total SA, ENI SpA and Statoil ASA are among international oil companies to have completed projects in Iran even though their US competitors are prohibited from working there.

Shell’s European rival BP Plc is avoiding doing business in Iran for fear of retribution from the US which forbids oil companies from investing directly in Iran.

BP’s chief executive Lord Browne last year described doing business in Iran as “offensive.’’

On September 5, Iran set an eight-month deadline for Shell to decide whether to proceed on another liquefied natural gas project. Shell, with Madrid-based Repsol YPF SA and National Iranian Oil Co, holds a stake in a $2.5bn joint venture called Persian LNG.

Gas consumption in Dubai, the second-largest emirate in the UAE, is growing at an annual rate of 10%, EFG- Hermes Holding SAE said in a note to investors on August 3.

Annual natural gas demand among the Arabian Gulf’s Arab nations is expected to more than double to 17.1tn cu ft by 2025, from 7.8tn in 2002, the bank said.

“The need for gas in the UAE is very severe and anything that can bring more in is important to sustaining economic growth,’’ Steve Brice, a Dubai, United Arab Emirates-based economist for Standard Chartered Plc said in a phone interview today.

Dana Gas is behind schedule with a $1bn venture to pipe gas into the emirates from Iran. Iranian Oil Minister Kazem Vaziri-Hamaneh said on February 14 that Iran won’t export any gas to the UAE until the Dana agrees to pay higher prices.

Iran is planning to invite bids to develop its North Pars gas field in the Arabian Gulf by March 2007, Iran’s oil ministry has said.
The offshore field, which holds an estimated 58tn cu ft of gas, will be developed in four phases, Akbar Torkan, the managing director of Pars Oil and Gas Co, said on Petroenergy Information Network, the ministry’s press agency.

The gas produced in the first phase will be injected into the country’s domestic network, while the rest will be exported, Torkan said. The four phases will produce an estimated 134mn cu ft of gas a day, he added.

The export output was originally planned to flow through a $7.4bn pipeline between Iran and India. The pipeline, which Iran labels the “Peace Pipeline,’’ has remained in the planning stage for more than a decade. In early September, Iran gave India and Pakistan a two-month deadline to agree on the pricing of the natural gas that will flow through it. No agreement has been reached since. –

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