US investment bank BofA Merrill Lynch has signed a short-term deal to supply LNG to Dubai from this summer.
The deal is with the Dubai Supply Authority and is for under five years. Standard-sized LNG shipments will arrive at the 3mn t/yr Jebel Ali import terminal, and the gas will be used for electricity generation.
The bank declined to comment on whether the price is oil-linked or where the LNG will come from.
This is BofA Merrill Lynch's first major supply deal with a buyer in the Middle East. Its previous activities have included importing cargoes into the Netherlands' Gate LNG terminal and trading European reloads.
The bank is continuing small-scale operations out of Gate. It signed a deal last year to supply LNG to industrial and marine transportation customers in the Baltic region. The deliveries started in summer 2013.
Small-scale shipments can be as small as 6,000m³, while a standard cargo is about 145,000m³. Use of LNG as a marine fuel is expected to increase in the next few years as stricter emissions regulations come into force in the Baltic and North Sea.
The Middle East is growing as an LNG importing region. The UAE has one LNG import terminal but is developing another. Abu Dhabi's executive council approved plans for an <a href="http://direct.argusmedia.com/newsandanalysis/article/869316">LNG import project at Fujairah</a> late last year, which will have an initial capacity of 4.5mn t/yr before rising to 9mn t/yr. It is scheduled to begin operations in 2015.
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