3 PAIRING COAL WITH SOLAR: THE UAE’S FRAGMENTED …
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unused to paying world market prices for natural gas. Most wholesale
natural gas sales are done below the marginal cost of production, at fixed
prices that range from $1.25 to $2.50/mmbtu.
Thus, while the average cost of gas looks reasonable, marginal increases
in domestic production are increasingly costly, while import prices—and
Qatari supplies—are uncertain.
Regional Gas Politics
As mentioned, the UAE lies close to two major potential suppliers, Iran—
the world No. 2 holder of gas reserves—and Qatar, the No. 3 reserves
holder. Both countries have long histories of commercial trade with the
sheikhdoms that now make up the UAE. Dubai, in particular, harbors
close ties to Tehran and Doha. However, the UAE’s deteriorating relationship with both countries makes it unlikely that utility planners would
choose to deepen their reliance on either state for critical energy needs.
Relations with Iran
The UAE has had shifting relations with Iran since the 1979 Islamic
revolution. Dubai’s historically warmer ties with Iran have been counterbalanced by those of Abu Dhabi, where initial estrangement was tempered
in the 1990s when the UAE joined a collective agreement to reduce
GCC-Iran tensions. At the time, Tehran developed its most constructive working relations with Qatar, Oman, and the UAE, although ties
with Abu Dhabi were hampered by a territorial dispute over three Gulf
islands. A high point came in 2007 when Iranian President Mahmoud
Ahmedinejad made the first-ever state visit by an Iranian head of state
to the UAE. Ahmadinejad gave a major public address in a stadium in
Dubai, home to nearly half a million Iranian expatriates and thousands of
Iran-owned businesses.
Since then, UAE relations with Iran have plummeted as Abu Dhabi’s
Crown Prince Mohammed bin Zayed has countered inroads of political
Islam and Iran-backed Shia paramilitaries across the Middle East. The
Abu Dhabi leadership opposed the US diplomatic outreach to Iran under
US President Obama that resulted in the 2015 nuclear agreement. Abu
Dhabi supported the Trump administration’s pullout of the agreement
and the re-imposed US trade embargo on Iran.
69
unused to paying world market prices for natural gas. Most wholesale
natural gas sales are done below the marginal cost of production, at fixed
prices that range from $1.25 to $2.50/mmbtu.
Thus, while the average cost of gas looks reasonable, marginal increases
in domestic production are increasingly costly, while import prices—and
Qatari supplies—are uncertain.
Regional Gas Politics
As mentioned, the UAE lies close to two major potential suppliers, Iran—
the world No. 2 holder of gas reserves—and Qatar, the No. 3 reserves
holder. Both countries have long histories of commercial trade with the
sheikhdoms that now make up the UAE. Dubai, in particular, harbors
close ties to Tehran and Doha. However, the UAE’s deteriorating relationship with both countries makes it unlikely that utility planners would
choose to deepen their reliance on either state for critical energy needs.
Relations with Iran
The UAE has had shifting relations with Iran since the 1979 Islamic
revolution. Dubai’s historically warmer ties with Iran have been counterbalanced by those of Abu Dhabi, where initial estrangement was tempered
in the 1990s when the UAE joined a collective agreement to reduce
GCC-Iran tensions. At the time, Tehran developed its most constructive working relations with Qatar, Oman, and the UAE, although ties
with Abu Dhabi were hampered by a territorial dispute over three Gulf
islands. A high point came in 2007 when Iranian President Mahmoud
Ahmedinejad made the first-ever state visit by an Iranian head of state
to the UAE. Ahmadinejad gave a major public address in a stadium in
Dubai, home to nearly half a million Iranian expatriates and thousands of
Iran-owned businesses.
Since then, UAE relations with Iran have plummeted as Abu Dhabi’s
Crown Prince Mohammed bin Zayed has countered inroads of political
Islam and Iran-backed Shia paramilitaries across the Middle East. The
Abu Dhabi leadership opposed the US diplomatic outreach to Iran under
US President Obama that resulted in the 2015 nuclear agreement. Abu
Dhabi supported the Trump administration’s pullout of the agreement
and the re-imposed US trade embargo on Iran.