The United Arab Emirates' Dolphin Energy, or DEL, expects by the year-end to seal all crucial gas sales agreements, opening the way for the energy company to pursue financing options for a $3.5-4 billion project, chief executive Ali Ahmed al-Sayegh said.

DEL - majority owned by the UAE's leading emirate of Abu Dhabi - has signed memorandums of understanding for the supply of imported Qatari gas with its three main domestic customers: Abu Dhabi Water and Electricity Authority, or Adwea; Dubai Supply Authority, or Dusup, and Fujairah-based Union Water and Electricity Company, or Uwec. It has also signed an accord with Emirates General petroleum Corporation.

Sayegh said the firm would sign initial 'heads of agreement' with Adwea and Uwec in the next four to six weeks, with the Dusup heads of agreement signing expected by the end of 2003. Detailed sales agreements for the project, the first cross-border gas deal in the Persian Gulf region, would be completed next year.

Sayegh acknowledged that it was proving harder to secure the gas sales agreement with Dubai than initially expected. 'We're working on issues to get Dubai a fair and realistic deal,' said Sayegh. 'These issues are related to existing agreements between Abu Dhabi and Dubai.'

Energy-hungry Dubai, which currently receives subsidised natural gas supplies from its oil-rich neighbor Abu Dhabi, will have to pay more for DEL's natural gas.
Despite delays in securing gas sales agreements, the firm will push ahead with its development plans, Sayegh told reporters on the sidelines of the Middle East Petroleum and Gas Conference in Dubai.

DEL plans to import 3.2 billion cubic feet of gas a day from Qatar's huge North Field, via a processing plant at Qatar's Ras Laffan, to the UAE from 2006. DEL will also import natural gas from neighboring Oman for 3.5 to 5 years to fuel Uwec's power stations.
Dolphin, 51per cent owned by the government of Abu Dhabi, plans to receive commercial bids for its engineering, procurement and construction contracts and expects to award the contracts before end-2003. Total SA and Occidental Petroleum Corporation both hold 24.5 per cent equity stakes in DEL.

'We have four excellent bids,' said Sayegh of the four consortia who have submitted technical bids for constructing the $2.5 billion onshore portion of the project.
The bidders are Bouygues Hyundai, JGC Corp, ENI's Snamprogetti/Chiyioda, and Technip/Bechtel.

The memorandum of understanding with Emirates General Petroleum Corporation signed recently committed the two firms to studying the commercial viability of new joint gas ventures in the northern part of the United Arab Emirates.

The two companies will evaluate the potential benefits of the joint use of existing gas distribution equipment, joint gas sales and marketing and future gas transportation systems, a statement by Dolphin said.

The two parties are also in the process of finalising detailed agreements for Emirates to operate and maintain Dolphin's new gas pipeline from al-Ain city to Fujairah emirate, it added.

Dolphin's 24-inch, 182-kilometer long al-Ain-Fujairah pipeline will be completed by end of this year and will be commissioned during the first quarter of 2004.

It will transport natural gas, sourced from Oman, to a new power and desalination plant located on the UAE's east cost, owned by the Fujairah-based Union Water & Electricity.
Dolphin Energy was established to develop long-term energy projects throughout the Persian Gulf countries. The state-owned Emirates was established in 1981 to conduct marketing, transportation and storage of petroleum products throughout the UAE.