Welcome to official website of PRES

The shifting energy roadmap

The growing Saudi crude consumption continues to be a major irritant. The Pakistan Oil, Gas & Energy Exhibition (POGEE) conference in Lahore last week was no different.

As soon as one finished the talk on ‘Changing Global Crude Scenario,’ Antoine Halff, Head of Oil Industry and Markets Division and the Editor, Oil Market Report of the Paris based International Energy Agency, was quick to raise the issue of low gasoline prices and government subsidies in the oil producing countries (read Saudi Arabia), its contribution in the galloping, rather unacceptable, domestic consumption levels and the inefficiency it breeds into the overall system.

In hindsight, perhaps one knew the question coming. For this is one of the issue, that keeps cropping up. A few years back, while this scribe was invited to the board room of the International Energy Agency in Paris, to give his take on the global energy scenario; ‘Oil — the Other View,’ Halff’s predecessor at the IEA, David Fyfe too had asked an almost the identical question.

Low gasoline prices and the subsequent rising consumption within the GCC is an issue before the energy world — none can dare deny. It breeds inefficiency and at the same time could strain the global demand — supply balance — some argue even today, while the shale revolution is about to inundate parts of the globe.

In a recent report, consulting firm Oliver Wyman underlines that energy consumption in the Middle East has grown so fast that “continued projected consumption growth of three per cent per annum and the level of investments that will be required are likely to lead to an even wider gap between supply and demand.”

And energy managers are more than aware of the situation. If it remains business as usual, the galloping domestic consumption may even touch the seven million barrels per day mark soon, they underline. And the day domestic consumption reaches that level; what would be left for exports? A major issue indeed — with serious consequences — most agree and concede.

And the scenario is not limited to Saudi Arabia alone. The entire oil rich GCC is faced with an identical scenario. The current lifestyle is extracting a price of its own. Kuwait will also have to burn 700,000 to 900,000 barrels per day by 2030 to meet its growing electricity and water needs. And the consumption by the transportation sector would be in addition to it, leaving little for exports. And this would again carry huge social consequences. For all the glitter that one sees today in Kuwait, as elsewhere in the Gulf, is owed basically to crude exports. From where that couldbe sustained, if most of this crude is consumed domestically, is anybody’s guess?

Efforts to change the direction, to turn the tide, are on — throughout the region — from Riyadh to Kuwait and Abu Dhabi. Courtesy, the Saudi Energy Efficiency Center (SEEC), Riyadh is seriously focusing on reducing power consumption through audits, load management, regulation and education. Similarly investments in environmentally friendly building projects in the Kingdom is also set to reach Saudi riyal 100 billion (over $26bn).

The United Arab Emirates has also launched its National Energy Efficiency and Conservation Program, which seeks to promote efficient utilisation of energy in the residential sector. It also is pursuing an active solar and nuclear energy program.

Kuwait is likewise pursuing energy efficiency programs. As per Dr. Mershan Al-Otaibi, Asst. Undersecretary for Planning and Training, Ministry of Electricity and Water, Kuwait, short-to-medium term savings for electricity generation could be derived with a new energy-saving code for new buildings that will also reduce costs by 20pc. Over the long-term, he underlined Kuwait could be generating 15pc of its electricity requirements from renewable energy by 2030.

Indeed some politically painful decisions may also have to be taken to reverse this disastrous course. Politically this may not be easy; however the direction is very much there. And this remains a major consolation.

Comments are closed.