ENVIRONMENT-UAE: Slowdown in oil demand and weaker prices till 2010

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Att.Editors: The following item is by the United Arab Emirates news agency (WAM)

ABU DHABI, Feb 3 2003 (IPS) - Future demand for oil will grow at a slower rate of 1.2 percent per annum over the next 17 years, with weaker oil prices predicted up till 2010, rising thereafter as non-OPEC supplies begin to turn down, according to projections made by the Center for Global Energy Studies (CGES).

Dr. Leonidas P. Drollas, Deputy Director and Chief Economist of the CGES, who spoke on – Fundamentals of the oil market to 2030" at the second day’s session of the ongoing Environment and Energy Conference 2003 in Abu Dhabi, capital of the United Arab Emirates (UAE), indicated that the CGES has looked at the likely evolution of the oil market over the longer term by means of a simulation model that brings together key factors such as oil demand, non-OPEC oil supplies and OPEC’s policies.

Dr. Drollas said that the rate of demand for oil will drop from around 1.6 percent during 1986-2000 to around 1 to 1.2 percent in the period till 2020. The CGES’ view of oil prices, he said, is shaped by its conservative stance on future oil demand. For example, it expects global oil consumption of 97 mbpd by 2020, in sharp contrast to the optimistic predictions of the US Energy Information Administration (119 mbpd), the International Energy Agency (104 mpbd) and OPEC (107 mpbd).

Dr. Drollas attributed various factors including slowdown in world economic growth, slowdown in population, the commercial entry of hybrid gasoline-electric vehicles, particularly after 2015 and production by non-OPEC members.

Various other factors that are to influence the oil market are performance of the global economy, developments in the Middle East, particularly growth in population, which he said could pose big challenges for the region, environmental pressures on governments, competition from natural gas and the onward march of technology.

According to the CGES predictions, Middle East oil in the future will head towards the Asia Pacific countries in significant quantities, though the US will also continue to be a good market, he said.

Gerald Doucet, Secretary General of the World Energy Council (WEC), who spoke on ôSocio-Economic Aspects of Energy Management – Changing Attitudes and Behavior," cited the important role that can be played by commercial energy access in economic growth, particularly in addressing the primary issue of poverty eradication.

ôWithin this general focus on energy accessibility, there is a growing realization that keeping all energy options open, including cleaner fossil fuels, large hydro, nuclear power and niche renewables is the highest priority in terms of energy availability, while market reforms coupled with appropriate regulation can accelerate new, cleaner technologies which also address energy acceptability," he said.

Mr. Doucet said that environment is one of three pillars of sustainability, which can be addressed by bringing commercial energy to the two billion people in the world who do not now have it, using the best and cleanest technologies of the day.

The WEC official said that population and average global growth data suggest that demand for energy could be lower than expected in the next forty years, but tighter oil and gas supplies and effective emissions management could offset this impact. He believed that the world was moving towards a phase of higher real energy prices which drive technology innovation, but also end use behavior.

ôIn this world of higher real prices, the challenge of poverty eradication will be more difficult," he added. He also referred to the constructive role played by OPEC in recent years in relation to maintaining oil price stability.

Mr. Ahmed Ali Al Sayegh, Chief Executive Officer, Dolphin Energy Limited, who spoke on implications of energy related policies on environment, said that within the energy industry, environmental management and sustainable development has now evolved to a point where such initiatives and policies are in the forefront of decision making and development efforts of all regional and international companies.

Later at a press conference, Bernard Tramier, Senior Vice President, Sustainable Development and Environment, TotalFinaElf Group, said that the group was investing around $1 billion every year for environment-related issues. The focus was on reducing gases that have the potential to warm the climate, cutting emissions, reducing the discharge of oily water into the environment, prevention of oil spills into the sea, disposal of wastes and rehabilitation of its old chemical plants in Europe.

He said that the group was also adopting environmental protection measures in its operations in the Middle East as well, by adapting to the requirements of the climatic conditions in the region.