By Tom Arnold
Oil will continue to retain its position as the predominant source of energy once the global economy emerges from the present financial crisis, UAE energy minister Mohamed bin Dhaen Al-Hamli, said on Monday.
But a new round of heavy investment was required in the energy industry to avoid another cycle of high oil prices, Al Hamli said.
“Maintaining prices at reasonable levels was vital,” he said.
The general consensus among analysts was that after the current economic downturn, world energy demand would start to grow, he said during a speech at the Middle East Petroleum and Gas Conference in Dubai.
“Looking beyond the crisis the long term for the industry is bright,” he told the audience.
“The heavy demand for fossil fuels will continue, with oil keeping its position as the predominant source of energy.”
He said gas and renewable energy would continue to increase their share of the energy market.
He said the Organisation of the Petroleum Exporting Countries (OPEC) was concerned about the impact of energy demand uncertainty on investment strategies for future production expansion in the hydrocarbon sector.
He said consumer countries’ energy policies, advances in technology and world economic growth patterns had been identified by OPEC as factors determining hydrocarbon demand.
Referring to the economic crisis and the slide in oil prices since last summer, he said a “sense of shock” had been felt throughout the industry with the unexpected rapid pace of events since last summer.
“The hydrocarbon sector has had to adjust quickly to an emerging new and severe threatening reality,” he said. He said this new reality had been characterised by heavy cutbacks in human and material resources, the scaling down of investment plans, the near collapse of credit facilities and deepening levels of uncertainty about future outlook.
“Despite the passage of time that has allowed the industry to adjust to the new situation, the outlook remains uncertain and bleak. It still remains uncertain when the financial crisis will abate,” he said.
He said OPEC believed world oildemand would continue to grow by around a third to reach 113 million barrels a day by 2030. Ninety percent of this growth would be in developing countries, with the transport sector accounting for more than half of the growth.
He said recent cuts by OPEC had enabled oil to stabilise at around $50, a level which would provide much-needed support to the global economy while allowing some room for investment.
But Al-Hamli said the industry needed to work towards meeting the challenges of a more carbon constrained world economy.
“The world has enough oil resources to meet rising demand for the years to come. Technology and the development of non-conventional sources of energy will complement these resources,” he said.
He said the UAE firmly believed the growing move towards renewable energy was a trend that hydrocarbon producers must embrace.
Asked by reporters afterwards whether the UAE’s economy could operate at $50 a barrel, he said: “The prices are market determined. We have lived with prices of oil much lower than $50.”
He said the oil market was well supplied but because of the recession stocks were building as refineries were not running at full capacity, with a lot of oil going into storage.
He said Asia represented the UAE’s biggest market for oil.
Earlier during a speech marking the opening of the event, Sheikh Ahmed bin Saeed Al Maktoum, president of the Department of Dubai Civil Aviation, and chairman and chief executive of Emirates Group, said the hydrocarbon industry had to put in place preparations for when oil demand and price upturned.
“We must not drift and allow events to carry us along as this will make things worse,” he said. “We must seek to hold the initiative.”
The UAE has the sixth largest reserves of oil and is fifth for natural gas reserves.
Source: Arabianbusiness.com
