UAE will continue investing in oil sector to ensure market remains well-supplied : Hameli

Paris - May 3, 2012 (WAM) - The UAE will pump heavy investment in oil and gas sector to ensure the world oil market receives the supplies it needs, Mohammed bin Dhaen Al Hameli, UAE Minister of Energy, has affirmed. ''Over the past years, the UAE and other producers have invested billions of dollars in increasing long term sustainable capacity. We will continue to invest in order to ensure that the oil market remains well supplied, not just in the short term but over the coming years,'' the UAE minister told the 13th International Oil Summit in Paris. ''This implies heavy investment, not just in hydrocarbon production, but also in renewable energy sources that will allow us to maximise our exports. The construction of nuclear power stations, for example, will ensure that we can maintain the present level of hydrocarbon exports at a time of growing demand for domestic power supplies,'' he added. The UAE, he indicated, would continue focusing on its core markets in Asia where long term supply relationships will continue to bear fruit for both sides. Globally, he said the technological advances that are making tight oil and shale gas a reality in the United States will have important spin-off benefits for oil producers globally, including those in the Middle East. ''Looking back over the last two decades, it is clear that the energy market has been driven by the rise of emerging economies such as China and India, which between them account for a substantial proportion of energy demand growth. Looking ahead, it could well be that the biggest changing trends might well come from the United States. Changes in supply and demand patterns will, inevitably, have an impact on energy markets outside the North American continent. ''Should producers in the Middle East and elsewhere be concerned? Absolutely not. Continued economic growth in the world's biggest economy is good for the global economy irrespective of who supplies the oil which fuels that growth. Even if US oil imports continue to fall, he noted, other key markets are set for rapid growth. Demand for oil in Europe will continue growing as North Sea oil production falls. Oil demand in Asia, excluding Japan, will more than double in the years to 2035. The UAE will continue focusing on its core markets in Asia where long term supply relationships will continue to bear fruit for both sides. The International Oil Summit will provide the opportunity to analyse the geopolitical and technical factors that structure our industry. The summit will discuss how producers will be meeting new challenges of the oil sector and impact of non-conventional oil and gas on the relations between IOC and NOC. Full text of Al Hameli's speech: I would like to thank Petrostrategies and IFP for inviting me to this important annual conference. It is good to be back in Paris among so many old friends. Today, I would like to share with you some thoughts on the energy landscape and to highlight some of the new challenges oil producers are likely to face in the coming years. There has been much talk in recent weeks about fundamental changes in the United States energy industry, particularly how shale gas and tight oil have helped the US dramatically reduce its dependency on energy imports. These two sources coupled with greater efficiency have enabled the US to import just 45% of the liquid fuels it used in 2011, down from a peak of 60% in 2005. Indeed, the US could soon be exporting LNG, something unthinkable just a year ago. Recent technology breakthroughs have now made unconventional oil reserves such as tight oil, and oil sand commercially exploitable, especially at current oil prices. A recent forecast suggests total US oil production will increase from just over 9 million barrels per day to above 12 million barrels per day by the end of this decade. As a result, US oil imports could fall by at least 1 million barrels per day by 2020. Even bigger change in the US can be expected from the production of gas from shale. Already US natural gas prices are at the lowest level in a decade and, as new technologies are harnessed to tap unconventional reserves such as shale gas, prices will continue to remain low. Analysts point out that this has the potential for fuelling US manufacturing industries and could even lead to a new industrial age in America. This will, in turn, fuel growing demand for energy, including oil. Looking back over the last two decades, it is clear that the energy market has been driven by the rise of emerging economies such as China and India, which between them account for a substantial proportion of energy demand growth. Looking ahead, it could well be that the biggest changing trends might well come from the United States. Changes in supply and demand patterns will, inevitably, have an impact on energy markets outside the North American continent. Should producers in the Middle East and elsewhere be concerned? Absolutely not. Continued economic growth in the world's biggest economy is good for the global economy irrespective of who supplies the oil which fuels that growth. Even if US oil imports continue to fall, other key markets are set for rapid growth. Demand for oil in Europe will continue growing as North Sea oil production falls. Oil demand in Asia, excluding Japan, will more than double in the years to 2035. The UAE will continue focusing on its core markets in Asia where long term supply relationships will continue to bear fruit for both sides. Ladies and Gentlemen; The technological advances that are making tight oil and shale gas a reality in the United States will have important spin-off benefits for oil producers globally, including those in the Middle East. Already, technologies such as fracking and enhanced oil recovery techniques used to produce tight oil are being widely applied in the GCC countries. Of course, a substantial price tag is attached to these technologies. These are not cheap fixes but are needed as easy oil comes to an end, including in the GCC region, and we have little choice but to resort increasingly to technology-intensive oil production operations. This brings me to the key theme of investment. Over the past years, the UAE and other producers have invested billions of dollars in increasing long term sustainable capacity. We will continue to invest in order to ensure that the oil market remains well supplied, not just in the short term but over the coming years. This implies heavy investment, not just in hydrocarbon production, but also in renewable energy sources that will allow us to maximise our exports. The construction of nuclear power stations, for example, will ensure that we can maintain the present level of hydrocarbon exports at a time of growing demand for domestic power supplies. As many of you know, the harsh climatic conditions of the Gulf region mean that we are among the world's highest per capita users of energy and, as a result, we have a large carbon footprint. By generating power from nuclear sources, we can help reduce carbon emissions and make a valuable contribution to protection of the environment. Reducing greenhouse gases is one of the major challenges facing the oil industry, not just in the Middle East but all across the world. Many of the new technologies being applied to produce unconventional oil are more pollutant and destructive to the environment as well as underground water resources. Accidents if they occur in the presalt oil fields of Brazil or in the pristine arctic environments that have opened up for oil exploration as a result of global warming could be catastrophic. Carbon capture and storage is one technology that is a natural fit for the oil industry. By capturing carbon emissions from oil and industry operations and re-injecting it into oilfield reservoirs, as miscible gas to promote oil production makes it beneficial to the oil industry while at the same time keeping it away from polluting the environment. The UAE is taking a leading role in promoting CCS. Recently, Masdar Carbon announced plans for a carbon capture usage and storage facility that will capture nearly 800,000 tonnes of CO2 per annum from a local steel plant. The CO2 will be compressed and transported through a 50km pipeline network and will be injected in an onshore field, operated by Abu Dhabi Company for Onshore Oil Operations (ADCO). The implementation of cutting edge technology could enable the UAE to maintain its role as a major oil producer. Growing demand in our core markets makes it incumbent upon us to continue investing for decades to come. – Emirates News Agency, WAM