GCC states, particularly the UAE, Qatar and Saudi Arabia, plan to award contracts worth nearly Dh250 billion ($68.5 billion) during the next five years to raise gas production, despite the focus on renewable and nuclear energy, according to a latest report by Deloitte.
“Although oil is still projected to remain the primary fuel, significant advancements in technology will cause natural gas to overtake coal as the number two fuel source,” Deloitte’s white paper titled ‘Middle East Energy and Resources: Managing scarcity for the future’, said.
“In the Middle East, gas is forecasted to overtake oil in demand after 2025, with 50 per cent of all energy demand coming from gas in 2040. Most National Oil Companies (NOCs) in the Middle East already have multi-billion dollar investment plans for gas exploration and production,” it said.
The GCC places a very strong emphasis on identifying and tapping renewable energy sources, said Saeed Mohammad Al Tayer, Vice-Chairman of the Dubai Supreme Council of Energy and MD and CEO of Dubai Electricity and Water Authority (Dewa). He emphasized closer co-operation between GCC nations and the Eurozone that can take global renewable energy initiatives to the next era of growth.
“In this, the UAE has been at the forefront of several landmark initiatives. These reflect the ‘Green Economy for Sustainable Development’ initiative announced last year,” he said.
“We have adopted a two-pronged approach in achieving our goal: one, by targeting a 30 per cent reduction in energy demand by 2030, and secondly, by increasing the contribution of renewable energy to our total energy mix. By 2030, we envisage that the electricity needs of Dubai will be met through four sources: natural gas at 71 per cent, nuclear power and clean coal generating 24 per cent and solar power at 5 per cent,” explained Al Tayer.
However, despite these, oil and gas will supply about 60 per cent of global energy demand in 2040, up from 55 per cent in 2010.
“Although the share of demand for oil and gas is set to rise, it is important to note that alternative energy sources such as nuclear, wind, solar and biofuel will also take on an increasingly significant role in meeting the world’s energy needs in the future,” said Kenneth McKellar, Energy and Resources leader at Deloitte in the Middle East.
With the nature of oil and gas production diversifying, strategies shifting to the unconventional, and an unprecedented rise of energy demand globally, research and development (R&D) will play a crucial role in the longevity of the industry, the report shows. “This is especially significant to the Middle East, where capacity building in local knowledge capital is critical to the development of the socio-economic fabric of the region,” it says.
Deloitte’s whitepaper also explores the challenges facing the energy industry, which include the serious issue of skills shortages, the report says. “This is a global problem but even more pronounced in the Middle East where students across the region are choosing to pursue business careers outside of technology, physical sciences and technical process industries.” it said.
These trends are stimulating high demand for a powerful combination of technology and talent in the Middle East.