Oman eyes Gulf's first coal power plant -report

DUBAI, Jan 26 (Reuters) - Oman is considering building the first coal-fired Gulf Arab power plant in the latest sign of concern about a gas supply shortage in the world's biggest oil exporting region, the Middle East Economic Digest reported.

Gulf Arab states have about 30 percent of the world's oil reserves and 8 percent of its gas, but an economic boom spurred by record crude prices is driving demand for power and water so rapidly that many are considering turning to coal imports.

Oman Power & Water Procurement Co has told consultants they may have to study the option of using coal as fuel at its next power and water project, the London-based weekly said in its latest edition, citing sources close to project.

"There is an option to do a feasibility study," the magazine quoted one source as saying.

The plant will have capacity of 700 megawatts of power and 26 million gallons a day of desalinated water, it said.

Oman needs to increase gas supplies by 48 percent to 7.2 billion cubic metres (254.3 billion cu ft) a year by 2013 to fuel power and desalination plants, the magazine said, citing Oman Power & Water Procurement Co.

Saudi Arabia, the United Arab Emirates and Bahrain are also looking at the possibility of building coal-fired power plants, industry sources said last year.

Gulf Arab states were struggling to feed the appetite for gas because the speed at which economic growth was driving demand has taken the region by surprise, UAE energy minister Mohammed al-Hamli said last year.

According to data from the World Coal Institute, benchmark London Brent light crude cost five times more than coal in 2006. Gas was about four times the price of coal. Even adjusting for the lower amount of energy in coal, coal is still far cheaper a fuel source than oil. (Writing by Dayan Candappa; editing by Tony Austin)