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Exploration & Production: The Oil & Gas Review - 2003, Volume 2
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First of all, there is no question that the world’s need for oil and gas will continue to increase over the next 20 years and that the Middle East will be responsible for satisfying much of this demand. By 2020, oil is still expected to provide about 40% of the world’s total energy supply, and natural gas, 30%.
Renewables and other alternative forms of energy will certainly grow in importance and contribute to the energy mix, but they will meet only a fraction of rising demand. The International Energy Agency (IEA) estimates that – at best – renewables will provide less than 10% of the world’s energy needs by 2020.
Without question, oil from the Caspian Sea, West Africa, Latin America and other nations that have opened their doors to foreign investment will help provide new sources of supply. The Middle East, however, will remain at the centre of the stage. In fact, its contribution to global energy supplies will become even more critical. The region holds more than 65% of the world’s proven oil reserves and virtually all of the world’s excess capacity. This is important as was witnessed during the Iraq crisis, the Nigerian disruptions and the Venezuelan oil strike.
As for natural gas, the Middle East contains some 36% of the world’s gas reserves – a repository of energy that is virtually untapped. Thus, there is huge growth potential for this energy resource. Although the region’s gas was once considered a stranded resource, advancements in technologies for both liquefaction and gas-to-liquids are making it a viable part of the future energy mix.
It will take billions of dollars in new investment, the latest technologies and highly skilled human resources to unlock this region’s full energy potential. It will be an enormous challenge, but not one that the producing nations should have to meet on their own.
For years, self-imposed restrictions have limited the ability of many Middle East countries to involve foreign companies in the development of their energy resources. However, there are encouraging signs that this situation is changing.
Across the region, governments are moving towards economies that are invigorated by the private sector. This trend is widespread and is growing.
Saudi Arabia
Saudi Arabia has adopted new laws to promote investment and, under Crown Prince Abdullah, is moving towards opening its gas sector to new exploration and development. In July 2003, Saudi Aramco entered into a joint venture that will allow an international energy consortium access to natural gas acreage in the Rub Al-Khali desert. It has also invited other energy companies to explore other acreage. These are landmark events that signal Saudi Arabia’s desire to partner with foreign interests in a truly significant way.
Kuwait
The Kuwaiti government has committed to a programme designed to reduce the state’s role in the economy, to increase the role of the private sector and to decrease subsidies and barriers against foreign competition. Recently, three international oil consortia – including one led by ChevronTexaco – expressed their intent to bid on the opportunity to manage and increase production from oilfields in northern Kuwait. While this is basically a contract for services, the successful bidder will have the opportunity to demonstrate its technical expertise and be rewarded for exceeding performance targets.
Bahrain, Qatar and Oman
On-going encouragement of outside investment is being sought in energy and in virtually all other sectors of the economies of the states of Bahrain, Qatar and Oman.
United Arab Emirates
Foreign investment in the energy sector has long been welcome in the United Arab Emirates (UAE). Dubai has earned the title ‘the Singapore of the Middle East’ by taking the lead in encouraging foreign trade and investment, while Abu Dhabi is spearheading the privatisation of utilities in the UAE. The UAE’s foreign partners, in turn, recognise that management, skilled employment and technology must go hand-in-hand with their investment.
Within the past several years, an increasing number of Middle East nations have been accepted into the World Trade Organization (WTO), with its commitment to free trade and open markets. It is the author’s hope that Saudi Arabia and Oman will soon achieve their goal of becoming full members. Also encouraging are steps being taken by the US to work with the nations of this region to create a US-Middle East Free Trade Area.
Category:
Overview & Strategy
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Peter J Robertson is Vice Chairman of
the ChevronTexaco Corporation,
having been elected a Director in
January 2002, and is responsible for
worldwide exploration and production.
Previously, he was Corporate Vice
President and President of Chevron
Overseas Petroleum, Inc. Mr Robertson
was elected President, Chevron USA
Production Company, responsible for
North American exploration and
production in 1997, having originally
joined Chevron in 1973.
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