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Emirates get an early whiff of a Western bugbear – energy shortage

Carl Mortished, UK Times
The Emirates have an energy problem. It is not obvious to outsiders, who see in the Gulf a bottomless lake of hydrocarbons. Nevertheless, the tiny kingdoms that make up the United Arab Emirates are struggling with energy.

It is not only Dubai, the ambitious city-statelet that is reinventing itself as the Singapore of the region, pumping the wallets of tourists and financiers as its oil wells run dry. The whole region needs more power and, above all, it needs more natural gas to generate the electricity that keeps the lights on, the water desalinated and the air chilled in the hothouse petrodollar economy. Like tigers chasing their tails, the Emirates are in a frantic dash for gas.

Natural gas is the fuel that keeps the Emirates’ economic motor running. Gulf states once burnt barrels of crude to generate electricity, but that wasteful and polluting practice is being phased out rapidly. Priced at $93, oil is the export cash crop that must be harvested daily, but gas is the fuel of choice for domestic power stations.

Gas used to be cheap in the Gulf. A decade ago, the methane that bubbled up with the oil was flared – a massive and extravagant bonfire. Now, it is piped into power stations and gas is becoming the new political and economic currency in the Gulf’s great energy game.
(31 October 2007)

UK: Rising fear of energy crisis this winter

Terry Macalister, Guardian
Electricity shortages and gas supply problems predicted to push bills up

Britain faces the prospect of power shortages and soaring prices this winter after the National Grid warned of a shortfall in electricity-generating capacity yesterday. The alert coincides with a surge in gas prices, which are now 40% higher than in continental Europe, and the confirmation that a vital import plant in South Wales will not be operational this winter.

And it emerged last night that the energy minister, Malcolm Wicks, met power providers and users last week to discuss mounting concerns that the UK was heading into another winter of soaring prices and power shortages, similar to the one that forced some manufacturers to shut down capacity 24 months ago.

The warning by the Grid, which operates the pylons and other parts of the electricity transmission system, came days after it reassured ministers that an earlier alert was nothing to worry about and that there were no expectations of power blackouts this winter.

The fragility of the country’s power infrastructure is partly the result of a series of breakdowns at the UK’s ageing nuclear reactors. It is an embarrassment to the government, which has often insisted that two years of price peaks and insecurity would end in 2007 as Britain benefited from extra investment in pipelines and import facilities.
(31 October 2007)
Related: Analysts play down concerns over UK energy supplies this winter (Thomson Financial)

Azerbaijan passed quite pessimistic medium-term forecast with GDP growth cutback to 3.5%

Azerbaijan Business Center
The Azerbaijani government is forecasting almost 10-fold decline of country’s GDP growth by 2012.

Milli Majlis (parliament) informed that the governmental forecast (for period until 2011) on socio-economic development of Azerbaijan says of GDP growth in 2008 by 18.2%, in 2009 by 14.1%, 2010 by 5.9%, 2011 by 3.5%.

“For comparison, in 2006 GDP growth made 35.4%. The government, however, forecasts that in 2008 GDP will be AZN 31.47 bn (over $37 bn), in 2009 – AZN 36.58 bn, 2010 – AZN 39.39 bn, and in 2011 – AZN 41.42 bn,” a Parliament source said.

At the same time the Ministry of Economic Development indicates that the forecast is extremely oriented and is based on pessimistic scenario of world market conditions.

Heydar Babayev, the minister of economic development of Azerbaijan, stated that country’s economy depends much on world oil prices.

“Our forecast was made on the basis on oil price of $50 per barrel that fails to conform to real oil price. That is why we have all reasons to expect more essential GDP growth in 2007 and in the medium-term prospect,” Babayev said.

Current price of main export grade of Azeri oil has exceeded $90 per barrel.

“Perfect forecast of world market conditions is impossible even for three-month period and we have stopped on pessimistic scenario,” Babayev emphasized.

In 2009-10 the country is forecasted to reach peak oil production (around 65 million tons a year) to start reducing since 2011-12.

Next peak (30 bn or 40 bn cu.m. of gas a year) in oil and gas sector is expected after 2012 when Phase 2 of Shah Deniz Gas Project is launched.
(31 October 2007)