The EIU: Why the Middle East will import more LNG

The idea of the Middle East importing liquefied natural gas (LNG) may seem strange: after all, the region holds two-fifths of global gas reserves. Moreover, in countries lacking bountiful domestic gas resources, piping in gas from neighbours (where the option arises) is usually cheaper than liquefying it and shipping it in. Middle Eastern states, especially Qatar, are at the heart of the LNG export business, providing around 40% of world supplies. But this liquefied gas goes mainly to distant customers, especially in Asia and Europe—customers otherwise unreachable without building prohibitively expensive or impractical pipeline links.

Yet a handful of states in the Middle East are importing LNG to meet their growing gas demand (see chart), and roughly three-quarters of this is sourced from their near neighbours. The volumes are small by global standards and dwarfed by regional pipeline imports (overwhelmingly from Qatar to the United Arab Emirates (UAE) through the Dolphin pipeline, which also delivers smaller quantities to Oman). But LNG imports are set to grow. Planned re-gasification terminals in the UAE and Kuwait will be able to process 9m tonnes/year and 11.2m t/y, respectively. Kuwait, which must meet climbing summer power demand, recently signed agreements with Qatar Gas, Royal Dutch Shell (UK/Netherlands) and BP (UK) to import 2.5m t/y. MORE