UAE Energy Forum: Shale Gas Is Not A Threat

UAE Energy Forum: Shale Gas Is Not A Threat

Arab Gulf States, which hold some 60 percent of the world’s known energy reserves, should introduce new legislation to cut domestic energy consumption in order to maintain supply obligations to international customers, the United Arab Emirates’ Energy Minister said.

“Given the trend we’re observing with Gulf countries emerging as major energy consumers, it is clear that the region has entered a new era,” His Excellency Suhail Mohammed Al Mazrouei told the 150 delegates gathered at The 5th Gulf Intelligence U.A.E. Energy Forum, held in Abu Dhabi Monday under the theme Global Energy Outlook 2020. “It will now require new policies to manage and meet domestic energy demand, while at the same time ensuring our commitment to our customers across the world,” he said.

Securing reliable energy sources for any country is one of the most fundamental basics for building future economy.

“We decided to adopt a diversified energy sources policy to ensure growth of our economy and to ensure our position as a reliable oil supplier,” said Dr. Mattar Al-Neyadi, under-secretary of UAE Ministry of Energy, who was speaking on behalf of the Energy Minister. “We are working to increase our oil production capacity to 3.5 million barrel per day by 2017,” he added.

The UAE is also developing the required framework to enable such diversity and promote energy conservation through the use of technology and changing behavior of consumers, to ensure the wise resources.

“The status quo of high income and low energy price has created some inefficiency, adding pressures on hydrocarbon resources and the environment. A general change in habits would help drive the region’s competitiveness and boost efficiencies on the long term.”

Gulf States, including the UAE, are among the world’s largest energy exporters, shipping both crude and gas to customers around the globe. However, the countries are also emerging as major energy consumers in their own right, which could raise concerns amongst Asian customers that soaring domestic consumption in OPEC states may eat into export capacities, with Saudi Arabia – the world’s largest oil exporter – now consuming a quarter of its oil output.

The demand for electricity in the UAE, which is almost exclusively generated from natural gas-fired power plants, is set to rise at a rate of about 9 percent per year through 2020. Rising gas demand from power stations and industrial users such as petrochemical makers and steel manufacturers has turned the UAE into a net gas importer in the past decade, triggering multi-billion dollar investments into nuclear power and renewable.

“UAE needs creative, efficient, green ways to generate electricity as Dubai prepares for Expo2020,” Al-Neyadi added.

Al-Neyadi also said that the production of shale gas has helped to fulfill part of the growing demand of natural gas, especially in the United States and Canada; adding that the shale revolution in North America has led to a rapid increase in gas production and helped keep a lid on gas price growth, which in turn has provided a boost to industries such as chemicals that use natural gas as a feedstock. Shale gas production in the United States is rising rapidly and, according to the U.S. Energy Information Administration’s Annual Energy Outlook 2014, will jump 56 percent between 2012 and 2040 to 37.6 trillion cubic feet (Tcf).

The UAE’s top energy official rejected the view that shale would be a game-changer beyond the United States, saying “the rise in the cost of production of shale oil and the environmental effects associated with it show that the production procedure may face significant challenges or be on a smaller scale, thus disqualifying it from competing with conventional oil production,” he said.

Commenting on the impact of shale gas revolution, Al-Neyadi said that it will have a positive effect in balancing the traditional gas market.

“The demand for gas is increasing and the competition between the different energy sources, including renewable or clean energy, offers multiple choices to these countries to choose from.”

Shale oil would also not compete with conventional oil and thus would not lower oil prices, said Al Niyadi in his speech on behalf of Al Mazrouei.

“The rise in the cost of production of shale oil and the environmental effects associated with it show that the production procedure may face significant challenges or be on a smaller scale, thus disqualifying it from competing with conventional oil production.”

Ali Al Yabhouni, the UAE’s OPEC governor, said that the UAE has a clear message for those who believe the shale revolution in North America will challenge OPEC’s status as supplier of 40 percent of the world’s oil.

“This is a great thing for all human beings and all industries and our business. I don’t understand why some people look at this as a threat at OPEC producers.”

By 2030, annual energy consumption in the Middle East may increase fourfold to 900 million tons versus 1990 consumption levels, Martin Bachmaan, member of the board, head of exploration and production at Wintershall Holding, told the Gulf Intelligence Forum.

“These figures are impressive. But they also raise the question of how these countries will be able to meet their own energy requirements in the future without losing their position as the world’s most important export region for oil and gas,” he said.

Dr. Bachmaan said that companies that want to come out ahead in the global race for energy resources and form partnerships directly at the source, have to offer more today. But what makes an international company attractive for national oil companies (NOC)? What do the NOCs need and want?

“They need technologies,” he said. “They need technological know-how to get more energy out of their fields.”

Turkey: Needs More Energy

Hasan Murat Mercan, Turkey’s Deputy Minister of Energy, said in his presentation that 5 million barrels  of oil is transported through Turkey daily, adding that his country needs 72 percent of energy demands from imports so political priority to harvest indigenous resources.

“Currently, we import 92 percent of our oil consumption, and 97 percent of gas consumption,” the Minister said.

Turkey deputy energy minister noted that his country produces little oil but transports 5 million bpd, 5 percent global production. The Minister said that Turkey set to increase transport capacity for global crude.

 “I wished if we could be able to increase our production capacity rather than increasing our transport capacity,” he added.

Commenting on the recent spat with Iraq’s central government over the import of oil from The Kurdistan Regional Government, Iraq’s Oil Ministry expressed “deep regret and astonishment”  Jan. 10 over plans announced by the Kurdistan Regional Government to begin pumping oil to Turkey without central government approval.

"Anything that can flow will flow ... but Turkey will honor Iraq constitution," Mercan said.

Turkey is in a delicate position as it facilitates discussions between the Kurdish region and the Iraqi federal government over a new pipeline to connect Kurdish oil to global markets through a Turkish port. The pipeline became operational this month in spite of Baghdad’s opposition to independent exports of Kurdish oil, which it says is produced under contracts that violate the Iraqi constitution. 

“Oil will flow because the world markets will demand it,” Mercan said.

“The internal dynamics of Kurdistan Regional Government and Iraq is their own issue and we will help them solve their problems. Political stability in that region is the most important issue. Don’t expect me to say anything that would endanger the relationship between KRG and Iraq.”

The outcome of the talks will be closely watched by UAE operators in Iraq’s Kurdish region, including Dana Gas of Sharjah, Abu Dhabi National Energy (TAQA), and DNO International, which is part-owned by RAK Petroleum.

UAE Key for South Asia

Sri Lanka’s Minister of Petroleum Industries Anura Yapa said that a rising and expanding middle class from Asia is looking to continue their progress towards increased prosperity and consumption, but this growth can only be sustained if Asia continues to have access to clean forms of energy.

“By 2040, china energy consumption is predicted to be double that of the U.S,” he said.

As the global center of economic gravity shifts from west to east and north to south, the world is seeing the emergence of new energy corridors and new alliances aimed at meeting soaring energy demand over the next five years. Today, Asia is the principal consumer of Gulf hydrocarbons, with as much as 70 percent of Gulf production now being consumed in countries such as India, China, Japan and South Korea. This dependence is going to grow – and with it the need to deepen collaboration between energy consuming nations in Asia and hydrocarbon producers in the Gulf.

“The UAE will play a crucial role in South Asia’s new energy corridor, and the GCC countries will remain main suppliers to the Asian market despite increased Gulf consumption,” he added.



WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Most Popular Articles