Dubai's government has signed a long-delayed contract to buy natural gas from Abu Dhabi's Dolphin Energy Ltd, erasing any lingering question marks over the $3.5 billion scheme to supply the UAE with Qatari gas.

Dubai Supply Authority agreed to buy up to 700 million cubic feet per day (cfd) of gas from 2007 for 25 years. The signing comes more than five years after a memorandum of understanding with Abu Dhabi-owned Dolphin Energy, in which Occidental Petroleum Corp and Total SA are junior partners.
Sealing the gas sales agreement is a huge boost for the Dolphin project, the region's first cross-border pipeline project, which aims to deliver two billion cubic feet per day of natural gas to the UAE by late-2006. The pipeline connecting Qatar to the UAE has the capacity to import up to 3.2 billion cfd.
The Dolphin gas pipeline project has laid the foundation for further economic integration between the UAE and Qatar.
The protracted negotiations came because Dubai, accustomed to subsidised gas from its oil-rich neighbour in Abu Dhabi, sought to drive down the gas price offered by Dolphin Energy, which operates on a commercial, non-subsidised basis.
Dolphin Energy did not reveal the price at which the agreement was struck, but people aware of the matter have said Dubai wanted a price closer to $1 per million British thermal units (btu), while Dolphin had been pressing for $1.30 per btu.
The agreement resolves years of thorny negotiations.
Rapidly-expanding Dubai is in dire need of fresh energy supplies for its array of construction, tourism and industrial projects that will see the commercial hub double its population to around two million by the end of the decade.
Gas demand in Dubai, currently around 900 million cfd, is rising by more than five per cent a year, driven largely by utilities' demand. Dubai's relatively minor oil and gas reserves mean it has to import its natural gas needs from neighbouring Sharjah and Abu Dhabi.
Dolphin Energy says the UAE's demand for natural gas, pegged at 3.8 billion cfd in 2003, is expected to rise to 13.5 billion cfd in 2030.
Dolphin Energy has already sealed gas supply agreements with Abu Dhabi Water & Electricity Authority for the supply of one billion cfd by end-2006, with another 150 million cfd for a water and desalination plant in Fujairah and 40 million cfd for Ras Al Khaimah.
Oman is also locked into the Dolphin gas grid, supplying 130 million cfd into the Fujairah plant, but in a few years' time, Dolphin will reverse the pipeline's flow and start importing Qatari gas into Oman.
Dolphin Energy has a 25-year contract to explore and produce Qatari gas from the huge North Field, the world's single largest deposit of natural gas. The firm will process the gas in Qatar and transport it through a sub-sea pipeline to the UAE.
Meanhwile, French cable maker Nexans won a 50 million euro ($64.09 million) contract from Dolphin Energy to make and install chemical injection and control umbilical cables for a Middle East gas project, it said.
The two cables, with lengths of 90 kilometres and 75 kilometres respectively, would link two offshore platforms to the Dolphin Ras Laffan processing plant in Qatar, the company said. They would supply corrosion inhibitor, hydrate inhibitor and diesel fuel to the platforms, Nexans said.