GE wins $1.8 billion worth of power plant business in Middle East
Some energy market observers believe that the current mismatches in natural gas supply around the world represent an opportunity for expanded international trading via long distance pipelines and/or LNG tankers. In some places like Qatar and Kuwait, gas can be purchased for as low as $0.50 per million BTU while in other markets like the US, the selling price has averaged in excess of $6.00 per million BTU for a number of years.
As economists would say, there is a potential for arbitrage that takes advantage of those price differentials. The key is a mechanism for transportation that overcomes the distance challenge without causing the cost advantage to evaporate.
However, there is another possibility that is just as likely as pipelines or LNG tankers. The cheap, reasonably clean energy source can be used closer to home to develop other industries. The growing petrochemical industry in the Middle East is already consuming larger and larger quantities of the available gas, and it looks like there is a rapidly growing gas fired electricity production industry that will add to the growth in local demand.
For example, yesterday, GE announced a rapid fill order for 32 gas turbines and associated gear to be sold into Qatar and Kuwait. Here is an article the provides additional information about the sale – GE Energy wins US$1.8 billion contracts for new power plants in the Middle East.
According to the article, Qatar’s power demands grew by an average of 9% per year from 2001-2005 and at an astonishing 17% in 2006!
