Al Sada Underlines Pivotal Role of Energy Sector in Global Economy

HE Minister of Energy and Industry Dr. Mohammed bin Saleh Al Sada on Wednesday emphasized that the energy sector is at the heart of the global economy, stressing that energy will continue to play a vital role and to be the driving force behind the world’s economic prosperity.
In a speech during the opening of the Symposium Energy Policies and Economic Diversification organized by Qatar Leadership Center and the Baker Institute at Rice University in collaboration with the Ministry of Energy and Industry and the University of Qatar, Dr. Al Sada said that within the energy mix, Fossil fuels are likely to form the major share of the world energy mix in the foreseeable future, with a huge resource base, adequate to meet global requirements for decades to come.
'Fossil fuels are forecast to continue to meet about three-fourth of the world’s energy needs in 2040', he said, adding that all the projections widely acknowledge that Oil will have the largest share of primary energy for the next few decades and Natural Gas demand will grow the fastest among them.
During this period, Gas will surpass coal as the second biggest energy source. As per Global Gas Outlook of GECF, an apex Gas Exporting Countries Forum, the gas share of global energy demand will increase from 21% in 2015 to over 25% in 2040, he explained.
Oil and Gas are of central importance to the hydrocarbon-based economies of the GCC countries and they play an important and strategic role in their socio-economic development and growth, he went on saying.
As the biggest producers in the Middle East, the GCC countries together hold nearly one-third of the world’s oil and one-fifth of its natural gas reserves, Dr. Al Sada said, adding that the region is energizing the Global economy and plays a vital role in world energy security.
Since the major financial credit crunch of 2008, and more so over the past Two-and-a-Half years, the oil market has been in a state of flux as a result of over-supply and the fragile global economic recovery, Dr. Al Sada said.
Energy market has been characterized by uneconomic prices which are damaging to both producers and consumers which hinder critical industry investments, needed for energy security few years down the line, he explained.
In this context, the Minister stressed that the security of energy cannot be addressed unilaterally, saying that:" It is a double sided coin that needs to be addressed by both producers and consumers, calling for a shared responsibility that can be attained by constructive and transparent dialogue between both sides." "GCC countries have been very active in participating in such dialogues and establishment of bodies that carry on such work further. The International Energy Forum- IEF, is such an interactive Forum headquartered in Riyadh. Energy policies already in place or widely anticipated by consuming countries such as environmental impact mitigation, promotion of energy efficiency, and increasing the share of renewable energy should not jeopardize energy security, nor should measures to gain energy security exacerbate climate change," Dr. Al Sada added.
He asked the question are these low oil prices, "a boon or a curse" for the world economy? explaining that unprecedented level of investment drop over two consecutive years is jeopardizing security of supply which can manifest itself 2 to 3 years from now. While it may appear to be positive, fitting a lower energy bill, the inevitable consequences have been lower World GDP, job losses and deflation.
He added that when Oil price was more than $100, the World GDP was healthier scoring more than 5% Growth; it is anemic, at less than 3%, during the current low Oil price period.
He stressed that there are no winners from the Oil Price Drop; "it has been a negative sum game, stressing that a healthier Oil industry leads to a healthier World economy.
In this context, Dr. Al Sada explained that Oil as a major industry has been around for more than One-and-a-Half Century. It has gone through a lot of challenges – Wars, Price Shocks, Turbulences, and managed to weather the crisis, while always striving to achieve long term stability, he added. 
Dr. Al Sada reviewed the role being played by the State of Qatar in 2016 as President of both OPEC and the Gas Exporting Countries Forum - GECF. 'Qatar played a responsible role in addressing the global energy needs and the associated market turbulence,' he said. 
In this context, he explained that Qatar embarked on a mission to find out the best ways and means to restore balance to the oil market and the much needed recovery of the world economy. In doing so, Qatar was relying on its solid relations with the international community. 
Despite the difficulties and challenges faced during this period, Qatar successful in its mission and spearheaded a cohesive, credible, and continuous effective action to build a firm and common ground based on collaborative efforts among producers, both within and outside OPEC. 
'Through a series of meetings culminating in the historic resolutions made on 30th November and 10th December, OPEC agreed to reduce its production by around 1.2 mb/d and 11 Non-OPEC producers agreed to cut an additional around 600 mb/d, supporting OPEC efforts in expediting the rebalancing of supply & demand and drawdown of the stock overhang, currently at a high level,' Dr. Al Sada explained. 
'The dramatic drop in the price of oil from a peak of $115 per barrel in June 2014 to under $30 in January 2016 negatively affected the economies of the GCC countries which heavily rely on oil exports,' he added. 
The drop in Oil price and the World economic slowdown has opened up windows of opportunities for the GCC countries, the Minister of Energy and Industry said, noting that his situation gave a thrust to GCC economic diversification in the wake of these challenges, and also embarked in improving efficiency through cost reduction, mergers and so on. 
Qatar's strategy in energy sector covers a range of objectives to contribute to the development and growth of its economy and meet all the energy needs of the domestic market, he explained. 
In this context, Dr. Al Sada said that the successful investment in hydrocarbons has been the main engine for sustained and rapid economic growth in Qatar, stressing its plan to keep monetizing hydrocarbon resources to support further development and transform the nation into a sustainable and diversified economy. 
Qatar has intensified the use of all applicable means for increasing efficiency of production, while focusing on cost reduction and maintaining safety and reliability, thereby increasing the competitiveness of its hydrocarbon industry, he explained in this regard.

Source: QNA