Put your foot on the gas or opportunity will bypass region

In Greek myth, Opportunity was a woman who had long hair in front but was bald at the back. She had to be seized before she passed by. The Middle East's countries, with 40 per cent of the world's gas reserves but just 16 per cent of production, are likewise in danger of letting opportunity slip through their fingers.

Signs of problems with gas policy are everywhere. Some are egregious - Iran, with the world's second-largest gas reserves, is a net importer.

In the late 1990s, as the scale of its gas resources became clear, Iran engaged in a long, fruitless national debate. Should gas be exported to earn revenues, used for domestic industry or injected to sustain oil production? In the end it achieved none of these things. Iran had exaggerated ideas of its indispensability, sought premium pricing for its unreliable gas supplies and demanded tough terms from international investors.

As a result, while Qatar, with which Iran shares the world's largest gasfield, developed the world's leading liquefied natural gas (LNG) and synthetic oil industry, Iran has not completed a single LNG plant.

Egypt's gas policy in the 1990s was highly successful - liberalising foreign investment, doubling reserves in eight years and becoming a significant exporter. But even before the revolution, signs of trouble were visible. Low state-regulated prices did not encourage new exploration, while consumption was rising unsustainably. Its LNG plants are now running below capacity, while exports to Jordan and Israel have been cut off.

Ceasing to supply Israel was welcomed by many Egyptians, but it was a commercial defeat: now Israel will become self-sufficient with its own newly discovered gas, and may build its regional clout by supplying Palestine and Jordan. Meanwhile, Egypt is turning to LNG imports from Qatar.

Iraq is in danger of making the same mistakes as Iran. While it burns off unwanted gas in huge quantities, its people get electricity for only eight to 12 hours a day. Yet Baghdad policymakers show little sign of urgency. The dispute with the autonomous Kurdish region has held up exports to Turkey and Europe, while Israel may seize the Jordanian market.

The GCC also has problems. Apart from Qatar, all the Arabian Gulf states are short of gas. Abu Dhabi is planning LNG imports via Fujairah, while Dubai and Kuwait already use expensive liquefied fuel. Development of new domestic gasfields in Abu Dhabi and Kuwait, costly because of high levels of toxic hydrogen sulphide, has lagged. More than half of Saudi Arabia's electricity comes from burning dirty oil, hampering its ability to export.

The region has relied on underpriced gas to drive industrialisation and job creation. But this strategy is reaching its limits. Petrochemical companies are returning to the United States, attracted by its abundant cheap gas, while Gulf industries struggle to secure allocations from their national oil companies.

Countries in the broader region whose gas potential would have been dismissed with contempt a few years ago are now seizing their opportunity: Cyprus, Israel, the Kurdistan region, Tanzania and Mozambique. They realised the need for attractive tax terms to woo investors, and they offer export potential and hence access to attractive world prices in Europe and Asia. The Gulf may even end up importing LNG from East Africa or, in a stunning reversal of fortune, the US.

The Middle East's vast gas resources give the false impression that there is no hurry. But markets around the world are being snapped up by hungry, agile competitors. Opportunity has almost passed by, but there is still a last chance for a bold reformer to start the required reforms: market-based pricing, openness to private investment, and a sense of urgency.

Robin Mills is the head of consulting at Manaar Energy, and author of The Myth of the Oil Crisis and Capturing Carbon