The oil industry in the gulf states is probably in the best place it has been for years. Most of the gulf states are producing more oil than they have ever produced before. Saudi Arabia is consistently delivering 10 to 11 million barrels per day to the global industry and the UAE is producing about 2.7 mln barrels and looking to expand it to 3.5 mln by 2020.
The gratifying aspect with the GCC oil industry is that the industry is no longer satisfied with just producing oil. The hunt for gas, both associated and non-associated is well underway with the cash- rich oil producers investing millions in setting up technology centres for exploration of shale oil and gas.
Saudi Arabia is already making giant strides with shale despite the gas being located in tight and remote locations. Khalid Al-Falih, the CEO of Saudi Aramco is rightfully setting the agenda for the gulf oil producers.
He has very efficiently diversified the company into being an integrated oil company. So from being a mere oil producer, the Kingdom is today a thriving manufacturing base, as well as a refining and petrochemical hub thanks to the multi- million dollar investments Saudi Aramco has committed itself to.
The United Arab Emirates is no less in its achievements. The emirates have again diversified their energy sources efficiently towards gas, solar, nuclear and other renewables. Even with regard to exploration and production of crude, the gulf countries use some of the latest and most up-to-date technology.
The gulf countries have very efficiently built and increased their spare capacity and are capturing newer and more lucrative markets in the last five years. A Financial Times Report says India imported 44 per cent of its crude from Saudi Arabia, Kuwait, Qatar and the UAE in July 2012, up 36 per cent from the previous year, while China relies on the countries for a quarter of its imports compared to 21 per cent in 2007.
Why is this rising level of production so important one may ask, apart from the obvious benefits of windfall profits to the regional oil companies? Well, this is extremely pertinent given that by the end of 2012, most industry pundits were predicting that the US Shale revolution will sideline the gulf states from their position of importance in the world energy landscape.
Saudi Arabia, Kuwait, the United Arab Emirates and Qatar, combined, set production records in July, August and September, according to new estimates provided by the International Energy Agency.
The oil industry is riding the success wave now and will hopefully continue investing in technology and manpower to stay ahead of competition especially from the United States.
One another positive outcome of this situation is that most gulf states have today realised that crude oil need not be used for power generation. The states along with the national and international oil companies are heavily investing in solar and nuclear power.
However, with 2013 nearly coming to a close, the faltering economies of Europe continue to plague the oil producers. The instability in Egypt, Libya, Algeria and some of the African countries still give the edge to the gulf states for being reliable oil suppliers over the years.
This year’s ADIPEC show in Abu Dhabi will be interesting as the ADCO concessions are still at large with no clear indication on who is going to bag it. Attendance from all the oil majors is expected at the show and journalists will certainly be walking the corridors to get a whiff of the likely concession winner.
For oil majors looking to work in the UAE, this is one of the biggest deals ever. The Adco concession is the largest in the country, having a capacity to produce about 1.5 million barrels per day (bpd).
