Tuesday, Sep 11, 2007
DUBAI (Dow Jones)-The Gulf region will continue to attract natural gas-consuming and export-oriented value-added aluminum projects due to its cheap energy and cost benefits, according to Dr Naju Abi Aad, analyst at state-owned Qatar Petroleum.
With the Gulf region holding around two-thirds of the world's proven oil reserves, most countries there have to invest further to secure natural gas supplies, either by exploring and developing domestic resources or importing from abroad, he noted. But using natural gas rather than petroleum products would save those countries the investment needed to build oil refineries to meet local demand, and would keep petroleum products for export, he added.
"With growing challenges facing the export of natural gas from the Gulf, much of the future gas development in the area would be reoriented more and more towards domestic and regional markets," he said. This is predicted to add value to its exploitation "by boosting industrial development in the region," he added.
Already Norsk Hydro ASA (NHY) and Qatar Petroleum are building an aluminum smelter, anode plant and casthouse, in addition to a dedicated power plant, south of Doha in Qatar.
The Qatalum smelter will produce 585,000 metric tons of aluminum with first production due in 2009 and full capacity in 2010. The site layout caters for a future expansion up to 1.2 million tons a year.
Energy counts for around one third of aluminum's production costs, making a reliable and cheap source vital for producers. The Gulf is potentially a large resource base for natural gas with large resources and reserves.
Having played a historically marginal role in the international gas market, mostly to southeast Asian countries, the Gulf is nonetheless growing as a major gas supplier.
Qatar and to a lesser extent Iran are "keen to play a key role in regional and international gas markets" in the near future, he told Metal Bulletin's 22nd International Aluminium conference in Dubai. Qatar alone will see its liquefied natural gas exports increasing from around 24 million metric tons in 2006 to some 77 million tons by 2010 to become the world's largest LNG exporter. It's also been pursuing gas pipeline projects to neighboring countries with a number of routes being considered, he said, such as to Kuwait, Bahrain and Saudi Arabia.
Other aluminum smelters planned in the Gulf region include the Sohar smelter, in which Canada's Alcan Inc (AL) has a 20% stake. The smelter is in Oman and will have the capacity to produce 350,000 tons a year when it comes on-stream in 2008.
Also planned is a joint venture between Dubai Aluminium Company and Abu Dhabi's Mubadala Development Co. for a smelter in Abu Dhabi with a planned capacity of 1.4 million tons a year.
-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413; andrea.hotter@dowjones.com
(END) Dow Jones Newswires
11-09-07 1338GMT
