Arab Energy Organization Calls for 30%-40% Boost in Underground Gas Storage

The Arab Energy Organization (AEO) has recently emphasized the need for accelerated development of underground gas storage facilities in the Arab region. The organization's latest report, "Underground Natural Gas Storage and Its Role in Achieving Energy Security," underscores the strategic advantages that Arab countries possess in this area, including favorable resource conditions, infrastructure, and geological structures. The report calls for increased investment to bolster energy security and meet the demands of the ongoing energy transition.

Underground gas storage facilities are designed to store natural gas in depleted oil and gas fields, aquifers, or salt caverns. This method allows for the extraction of gas during periods of high demand or supply disruptions. Unlike above-ground storage tanks, underground facilities offer larger capacities and longer storage periods, capable of supporting supply for several months. This is especially important in markets where demand fluctuates significantly between winter and summer.

The Secretary-General of the AEO highlighted that underground gas storage is essential for ensuring a continuous energy supply, mitigating energy crises, and supporting the integration of hydrogen energy. The Secretary-General further noted that underground gas storage not only balances seasonal demand but also supports the integration of renewable energy sources, contributing to the sustainable development of the energy system and driving the energy transition.

Currently, only the United Arab Emirates and Saudi Arabia operate three underground gas storage facilities in the Arab region. Most other countries rely on pipelines or LNG tanks for storage, which typically cover only a few days of demand. In contrast, underground storage can support supply for several months and meet 30% to 40% of peak daily demand in import markets.

The report outlines five key areas to promote investment in local underground gas storage in the Arab region. These include conducting comprehensive geological and geophysical surveys and selecting sites near existing natural gas networks; establishing robust legal, licensing, and safety standards and strengthening regulatory authority; providing tax incentives, early government support, and long-term gas purchase agreements; collaborating with international enterprises for pilot projects and subsequent scaling; and sharing experiences within the region, learning from the successful cases of the United Arab Emirates and Saudi Arabia.

Meanwhile, China is rapidly advancing in the development of underground gas storage facilities. By the end of 2023, there were 76 underground natural gas storage projects under construction globally, with a total storage capacity of approximately 610 billion cubic meters. China accounts for more than half of this capacity, with about 340 billion cubic meters. By the end of 2024, China will have completed 38 underground storage facilities, with a peak-shaving capacity of 266.7 billion cubic meters, accounting for approximately 6.3% of the country's annual natural gas consumption. It is expected that China's underground gas storage peak-shaving capacity will exceed 300 billion cubic meters and continue to grow steadily.

In July of this year, China's largest underground gas storage cluster, the Zhongyuan Gas Storage Cluster, underwent further expansion, increasing its scale to seven facilities with an additional storage capacity of 7.08 billion cubic meters. This expansion provides seasonal peak-shaving and emergency gas supply for the Beijing-Tianjin-Hebei region, the Greater North China region, and the Yellow River basin.