2013 August 16

The Master Resource Report 2013-08-16

New Chatham House report

Saving Oil and Gas in the Gulf is a new Chatham House report on the six countries that make up the Gulf Cooperation Council (GCC). The MRR has repeatedly referenced the risks not only to the oil exporting countries but the oil importing countries as well that may result from declining net exports from these countries. The Chatham House report reviews the current situation and proposes specific measures it feels could reduce these risk if implemented at the GCC level.

Click image for larger view.

Click image for larger view.

The systemic waste of oil and gas in the Gulf is eroding economic resilience to shocks and increasing security risks, including to citizens’ health. Success or failure in setting and meeting sustainable energy goals in the Gulf Cooperation Council (GCC) countries will have a global impact.

The six GCC countries – Saudi Arabia, Qatar, Kuwait, Oman, the UAE and Bahrain – now consume more primary energy than the whole of Africa. Yet they have just one twentieth of that continent’s population. Energy intensity in the region is high and rising in contrast to other industrialized regions and is driven by systemic inefficiencies.

Almost 100% of energy in the region is produced from oil and gas without carbon dioxide abatement, and water security is increasingly dependent on energy-driven desalination. If the region’s fuel demand were to continue rising as it has over the last decade, it would double by 2024. This is a deeply undesirable prospect for both the national security of each state and the global environment.

One of the graphics in the report illustrates the situation concerning consumption as a percentage of domestic production for oil and gas. It is interesting to note that four of the six countries either is today or could be very soon a net importer of natural gas unless things change quickly. With the world entering the “Gold Age of Gas” as the IEA has put it this may not be a good trend that goes beyond the situation concerning net oil exports that is usually the focus of discussion.

GCC oil and gas consumption v exports - Chatham House 2013-08

Click for larger image.

The report included energy use graphs like this one for Kuwait for each of the GCC members. One look at this and it is clear it will not be easy bringing energy costs into line with market prices. The removal of subsidies will be painful and politicially difficult across all the GCC member countries.

Click for larger image

Click for larger image