3 PAIRING COAL WITH SOLAR: THE UAE’S FRAGMENTED …
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Egypt. The four closed airspace and borders, banned trade and travel, and
ejected Qataris from their national territories. In the UAE, even Qataris
married to Emirati citizens were forced to flee. 40
One factor that appears to have prevented the UAE-Qatar conflict from
escalating is the dependence of the UAE on imports of Qatari natural gas
via the Dolphin Pipeline, a 50-mile undersea link that delivers about 2
bcf/day or 20 bcm/year, roughly half the UAE’s annual requirement for
power generation.
Despite the UAE-led blockade, Qatar has treated the gas exports as
outside the bounds of the dispute, keeping the gas flowing at contracted
prices around $2/mmbtu, below normal prevailing rates at most international hubs. 41 In fact, Dolphin’s uninterrupted provision of gas has
allowed Abu Dhabi to maintain its lucrative LNG exports at much higher
prices. Qatari officials have long complained about the terms of the longterm contract (expiring in 2032), which, they argue, leaves Qatar in the
position of cross-subsidizing the UAE.
Perhaps as a result, the UAE has never fully leveraged its access to
Qatar’s massive gas reserves. A third of the volume of the Dolphin
Pipeline, with a capacity of 3.2 bcf/d, remains unused (Fig. 3.6). In the
1990s and 2000s, Qatar was unwilling to commit to increases in longterm supply at prices then on offer from the UAE. 42 But Doha has since
sold so-called interruptible shipments during the UAE’s peak summer
demand period at prices around $5/mmbtu and has agreed to further
higher-priced shipments to Ras al-Khaimah and Sharjah until 2026. 43
The UAE’s role in the blockade of Qatar leaves both countries cautious
on the risks of expanding trade. Qatar appears unwilling to export further
gas at prices inconsistent with its LNG netbacks. And the UAE’s critical dependence on Qatari gas has exposed a weakness, while providing
Doha a strategic trump card to deter the UAE from escalating hostilities
against Qatar directly, and perhaps, against some Qatari interests in the
region. In short, UAE dependence on Qatar serves as a dampener on Abu
Dhabi’s freedom of foreign policy maneuver in the Gulf region and therefore provides another rationale for the UAE’s program of diversification
in power generation.
Gas Trade with Saudi Arabia?
Another potential future source of supply that is often overlooked lies
in neighboring Saudi Arabia. For the time being, the kingdom neither
71
Egypt. The four closed airspace and borders, banned trade and travel, and
ejected Qataris from their national territories. In the UAE, even Qataris
married to Emirati citizens were forced to flee. 40
One factor that appears to have prevented the UAE-Qatar conflict from
escalating is the dependence of the UAE on imports of Qatari natural gas
via the Dolphin Pipeline, a 50-mile undersea link that delivers about 2
bcf/day or 20 bcm/year, roughly half the UAE’s annual requirement for
power generation.
Despite the UAE-led blockade, Qatar has treated the gas exports as
outside the bounds of the dispute, keeping the gas flowing at contracted
prices around $2/mmbtu, below normal prevailing rates at most international hubs. 41 In fact, Dolphin’s uninterrupted provision of gas has
allowed Abu Dhabi to maintain its lucrative LNG exports at much higher
prices. Qatari officials have long complained about the terms of the longterm contract (expiring in 2032), which, they argue, leaves Qatar in the
position of cross-subsidizing the UAE.
Perhaps as a result, the UAE has never fully leveraged its access to
Qatar’s massive gas reserves. A third of the volume of the Dolphin
Pipeline, with a capacity of 3.2 bcf/d, remains unused (Fig. 3.6). In the
1990s and 2000s, Qatar was unwilling to commit to increases in longterm supply at prices then on offer from the UAE. 42 But Doha has since
sold so-called interruptible shipments during the UAE’s peak summer
demand period at prices around $5/mmbtu and has agreed to further
higher-priced shipments to Ras al-Khaimah and Sharjah until 2026. 43
The UAE’s role in the blockade of Qatar leaves both countries cautious
on the risks of expanding trade. Qatar appears unwilling to export further
gas at prices inconsistent with its LNG netbacks. And the UAE’s critical dependence on Qatari gas has exposed a weakness, while providing
Doha a strategic trump card to deter the UAE from escalating hostilities
against Qatar directly, and perhaps, against some Qatari interests in the
region. In short, UAE dependence on Qatar serves as a dampener on Abu
Dhabi’s freedom of foreign policy maneuver in the Gulf region and therefore provides another rationale for the UAE’s program of diversification
in power generation.
Gas Trade with Saudi Arabia?
Another potential future source of supply that is often overlooked lies
in neighboring Saudi Arabia. For the time being, the kingdom neither