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Natural Gas

Formation:

Natural Gas is a mixture of hydrocarbon compounds, produced from decaying of living matter subjected to high levels of heat and pressure over many centuries. Natural Gas is similar to other fossil fuels, such as charcoal and petroleum, however, it is considered less harmful to environment, due to its high efficiency and low polluting emissions.

Production:

Natural Gas is produced from wells similar to oil wells, and is transported by pipelines to gathering and processing centers to be dewatered, desalted, treated, cooled down and then separated into different components for different applications. The remaining gas is transported to loading centers through pipeline networks in liquid form, after it is pressurized and condensed.

Natural Gas Reserves:

World reserve of Natural Gas is estimated at about 180 trillion cubic meters, 28% of which are in reservoirs within the Arab countries, the largest of such reserves are in Qatar, followed by Saudi Arabia, United Arab Emirates, Algeria, Iraq and other Arab countries. It is widely believed that Arab reserves, not yet discovered, are equal to the discovered reserves.

Importance† and usages of Natural Gas:

Natural Gas is an important energy source due to its efficiency and environmental advantages, compared to other fossil fuels.

Natural Gas is utilized as fuel in industries, homes, power generation, water desalination, petrochemical production, petroleum industry, and as a source of hydrogen. It can be used as an alternative fuel for transportation, with fewer environmental pollutants. The world is witnessing a actual steady increase in Natural Gas demand, as consumption in the Arab countries reached 232 billion cubic meters in 2007 and is expected to reach 275 cubic meters in 2010.

Natural Gas Networks:

The major difficulty in the use of natural gas on a large scale is the physical separation between the sources of production and the consumption centers, which requires transporting the natural gas over long distances through†pipelines,†since these pipelines are considered to be the best form of transportation to end users, hence, industrial countries have developed their gas networks and linked them to production centers that used to be considered far away.

The Arab Fund believes in the importance of developing the Arab Gas Network and has always been willing to finance Natural Gas projects due to their impact on Arab economic development.

Arab Gas Pipeline:

The Arab Gas Pipeline consists of several sections, of several stages: two of the stages have been completed and one is under construction.

Phase 1 is a pipeline that runs from Arish to Taba in Egypt, ending in Aqaba in Jordan at a length of 265 kilometers and a width of 36 inches. The total cost of this phase was about US 280 million (about KD 82 million). In addition to the Arab Fund loan, valued at KD 17 million, the Kuwait Fund and the Egyptian Government covered the balance of the costs of the project. The pipeline was completed in 2004 and since then, Egyptian natural gas has been provided to the Aqaba thermal station.

Phase 2 of the pipeline involved establishing a gas network in Jordan that runs from the Aqaba power station to the Syrian border in order to provide the Samara, Rehab, and Manakhir power stations with gas. A group of investors, and Egyptian and Jordanian banks financed this phase, which was completed by mid 2007.

Phase 3 constitutes the gas network in Syria, which runs from the Jordanian-Syrian borders to the Syrian-Turkish borders, ending in Lebanon. This phase is of four parts, as follows: part one which is a pipe running from the Jordanian-Syrian borders to the city of Homs in Syria, while the second part is a pipe connecting the Syrian city of Aleppo to the Syrian-Turkish borders, the third part is the pipe connecting the cities of Homs and Aleppo, while the fourth and final part is the pipe connecting the city of Homs in Syria with Tripoli in Lebanon. The first and fourth parts have been completed. The Arab Fund has contributed to the financing of the second part by providing a loan valued at KD 10 Million. As for the third part (connecting the cities of Homs and Aleppo), it will be completed at a later date, as gas will be transported between the two cities, in the interim period, using the current local gas network in Syria.

The Arab Gas Pipeline is considered the backbone of the future Arab Gas Network. The benefits of what has already been established can be seen†in the fact that 80% of the power, generated in Jordan, is fueled by this pipeline. An agreement was signed between Iraq and Syria to connect the western Iraqi gas fields to the gas processing centers in Syria, in order for Iraq to become a part of the Arab Gas Pipeline, in addition to Egypt and Jordan, which will facilitate marketing Arab gas (Egypt and Iraq) in Turkey and Europe.

Other Gas Pipelines:

The Dolphin project links Qatar with the United Arab Emirates via pipelines having a total length of about 440 km. Omani gas is being transported to the United Arab Emirates using a pipeline that was established to provide gas to the water desalination plant and to the power stations in Fujairah.

Algeria is connected to Europe through two pipelines, the first passing through Tunisia to Italy and the second linking Algeria directly with Spain. Currently, Algeria exports 35 billion cubic meters of gas, annually, through this network.

Several projects are being considered to link the Arab gas producing countries to gas consuming countries. These network projects include linking Qatar to Bahrain, Qatar to Kuwait, Iraq to Kuwait, Libya to Egypt and Libya to Tunisia. The Arab Fund participated in the preparatory studies for the latter project, and has expressed willingness to participate in financing it.

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