Energy & Mining

Power On

Facing power shortages and energy import dependency, Sharjah is taking on a revamping of its energy sector in all fronts, promoting exploration, creating LNG import facilities, and optimizing production.

The biggest development this year within Sharjah’s energy sector is undoubtedly the agreement on the deployment of the Emirate’s first floating storage and regasification unit (FSRU). This will allow it to import liquefied natural gas (LNG) for the first time and become the third LNG importing Emirate within the UAE, after Dubai and Abu Dhabi.

In June 2017, Sharjah finalized its plans for the development, although it has still yet to secure a vessel. A joint venture between Sharjah National Oil Company (SNOC) and the LNG trader Uniper will be in charge of importing 4 million tons of LNG per year from 2019 onward. The re-gasified gas coming from the FSRU will be channeled to the Hamriyah gas processing facility and then distributed to the Emirate’s gas-fired power generation plants.

The gas sales agreement has already been established between SNOC and the Sharjah Electricity and Water Authority (SEWA), which will use the gas to power three of its power stations.

This agreement follows an MoU signed between the Sharjah Petroleum Council and Uniper back in October 2016. SNOC plan to reach a final investment decision on the project by the end of 2017, as it aims to start importing as soon as possible. According to the company, the FSRU will have a regasification capacity of 14.2 million cbm per day (MMCM/D). The feedstock flow will constitute a great relieve for SEWA, which despite its 1.8GW power generation capacity has been limited to use less than half of it and to burn oil to produce power due to gas shortages.

Talking to TBY, Hatem Al Mosa, CEO of SNOC, states that “this project essentially closes the gap between demand and supply for Sharjah and for the Northern Emirates. The capacity of energy imports will be much higher than Sharjah’s remaining demand, and there will be plenty of extra capacity to satisfy any other demand within the Northern Emirates.”

Al Mosa also adds, “We have even looked to collaborate with Dubai and Abu Dhabi because we see this as a strategic energy project for the entire UAE. This project supports the energy security of the entire country.”
The ability to buy LNG in parcels, paired with the FSRU’s storage capability, will allow SNOC to buy extra cargo and to deliver it at whatever rate it desires depending on its own and export markets’ needs. It will not be enough, however, to compensate for the great disparity between summer and winter needs, but will provide a level of relief for the national grid.

In response to the storage limitations, SNOC is also considering the development of a gas storage project next to the Sajaa gas production facility, the Emirate’s largest. According to the SNOC, the level of capital needed to develop the project is considerable enough to phase it out in different stages. Al Mosa told TBY that once the FSRU project is online in 2019, SNOC can start working on the storage facility, aiming to conclude phase one by 2021.

Finally, as an immediate venture, Sharjah has decided not to renew its contract to supply its production of liquefied petroleum gas (LPG) to Japan and to divert it instead to the local market. “Our production has declined a great deal in recent years while demand within the UAE has exploded. Thus, we decided that it would be beneficial and profitable to put our (LPG) production into the domestic market,” Al Mosa clarified, further stating that the supply of LPG into the local market should start in early 2018.

New exploration Boost

It is surprising that a country like the UAE, endowed with the world’s seventh-largest reserves of natural gas, would become reliant on imports. This is due to the complex geology, high levels of sulfur in the gas reservoirs, and the need to re-inject gas to enhance oil production, which limit the Emirates’ ability to produce natural gas economically and to become self-reliant, particularly in the face of strong energy demand growth. Also, Abu Dhabi holds 94% of the country’s natural gas reserves, Dubai has 4%, and Sharjah not more than 1.5%. Despite that, Sharjah is once again betting on promoting exploration and production in its territory to be able to reduce dependency on imports in the years to come.

SNOC has started an extensive 1,000sqkm 3D seismic survey at the end of 2016, which concluded in February 2017, the results of which are now being processed. It is the first such endeavor in the Emirate in over a decade. SNOC expects to have the results by the beginning of 2018.

“Initial indications show that there are potential reservoirs, but we cannot say anything with certainty until the interpretation of the data has been complete,” Al Mosa told TBY, adding, “The high-quality resolution of the technology we are using now allows us to pinpoint sights with much greater accuracy. The geology of the Northern Emirates is extremely complex, which is why many wells missed their targets in the past.”

Every KW counts

For a fast-expanding economy like that of Sharjah, power shortages can be highly damaging. Hence, besides the longer-term import and production boost, the government has put in place a set of initiatives to promote citizen participation as part of the solution.

The “One Saving Hour” initiative, for instance, asks customers to switch off all lights and any appliances to rationalize the use of electricity between 2.30pm and 3.30pm on July 1. The initiative has, for the last couple of years, been an annual affair in Sharjah, aimed not only at saving power, but also being an educational tool to raise awareness among consumers of the struggles the Emirate has with power generation, as well as with the conservation of water and the reduction of CO2 emissions. High temperatures and humidity over the last five years, along with population and industrial growth has put tremendous pressure on the Emirate’s power generation capacity.

According to SEWA, which is developing these initiatives in partnership with the Islamic Affairs Department and the clean energy leaders project with the Women’s Union in Sharjah, 2,300 individuals and establishments took part in the “One Saving Hour” initiative in 2016, among private and government establishments.

Awareness campaigns have become central to the Emirate’s energy strategy as it aims to reduce power consumption by 30% by 2020, a goal that will be highly dependent on its ability to optimize energy consumption and reduce load-sheds and inefficiencies.

Along with the rationalization hour, other initiatives include the “Peak hour marathon,” an event that gathered 200 staff from two government bodies in a 5km route across Sharjah in April, and gathering energy rationalization partner entities and handing out awards for projects and people that have been remarkable in the fight to rationalize power.