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Gas Pipelines Still ‘Viable’ for Exports: U.A.E. Minister

Russia’s agreement to sell natural gas to China confirms that pipelines are still a viable way to transport the fuel even as geopolitical obstacles complicate projects, the United Arab Emirates’s energy minister said.

“I would call it the deal of the century,” Suhail Mohammed Al Mazrouei said yesterday in an interview with Bloomberg Television in Vienna. “It means the pipeline option is still a viable solution,” even as Russia’s dispute with its Ukraine raises concern that supply via such routes could be interrupted in an argument between states, he said.

Russia and China agreed last month to a 30-year accord for 38 billion cubic meters a year (3.7 billion cubic feet a day) of supplies to be shipped by pipeline from eastern Siberia starting in 2018. Russia has threatened to cut supplies to Ukraine, which carries about 15 percent of Europe’s demand for the fuel, as the two former Soviet states hold talks on prices and debt payments.

The U.A.E., the fifth-largest oil producer in the Organization of Petroleum Exporting Countries, has been a net importer of gas since 2007, Al Mazrouei said. The country gets about 2 billion cubic feet a day of gas by pipeline from Qatar, he said. It exports less than half that amount as liquefied natural gas and about 200 million cubic feet a day passes through the U.A.E. to Oman, Al Mazrouei said.

The emirate of Dubai buys about 3 million metric tons of LNG a year. Two Abu Dhabi government-run investors, Mubadala Development Co. and International Petroleum Investment Co., are developing an LNG receiving terminal in the emirate of Fujairah with a capacity of about 9 million tons a year.

U.A.E. natural gas prices for industrial users are “very, very low,” Al Mazrouei said. The country is implementing new efficiency measures to cut domestic energy use, he said.

The oil market would continue “to see stability in supply and stability in the price, because the price has been right for producers and consumers,” Al Mazrouei said before today’s OPEC meeting, at which the producer group kept unchanged its target to produce 30 million barrels of crude a day.

To contact the reporters on this story: Caroline Connan in London at cconnan@bloomberg.net; Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net; Anthony DiPaola in Dubai at adipaola@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net Rob Verdonck, Bruce Stanley

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