INTERVIEW: The woman aiming to bring some Texas energy thinking to the UAE

Illustration by Luis Grañena
Updated 17 March 2019

INTERVIEW: The woman aiming to bring some Texas energy thinking to the UAE

  • Fatima Al-Shamsi is planning the emirate’s future energy strategy with the lessons of Houston’s CERAWeek in mind
  • Solar energy has been the mainstay of future UAE energy strategy for some time, she explained

DUBAI: Fatima Al-Shamsi was in the UAE energy ministerial party at the CERAWeek by IHS Markit forum in Houston, Texas, because of her expertise in future energy strategy, but she was also there to pick up some tips on how to organize a global energy conference.

In September in Abu Dhabi, the UAE will stage the World Energy Council (WEC) Congress, the first time the event has been held in a Middle East oil-producing country in its near 100-year history. Al-Shamsi is chief of the organizing committee for the event.

The UAE assistant undersecretary learned a lot from CERAWeek on her first visit. “I’m really impressed with the content of the program and how it is alive to what’s going on in the energy sector. It is a really important subject now, and CERAWeek is a platform where discussion can be going on,” she told Arab News, highlighting the Agora technology exhibition as a standout part of the event for her.

The Abu Dhabi conference will be similar in terms of content — “a 360-degree look at energy from upstream, to power to the end user, focusing on energy as a whole. It’s a congress and also an exhibition,” she said. IHS Market, the information company behind CERAWeek, will be one of the partners for the WEC Congress event in the UAE.

Because the Houston event takes place in the capital of the American oil industry, much of the focus is on US energy issues, but Al-Shamsi believes that there is universal application of the issues discussed in Texas.

“I think now with the transformation of the energy sector it’s not only the Middle East, but the whole world that is having the same concerns, the same questions — what will be the role of fossil fuel, what will be the future of renewables, or decarbonization? All these questions apply equally for the Middle East and for the rest of the world,” she said.

One big issue in Texas was the dramatic increase in US oil production sparked by its shale reserves, and Suhail Al-Mazrouei, the energy minister who led the UAE delegation, took the opportunity of the forum to reveal that the country was looking at the potential exploitation of shale in the Middle East.

Al-Shamsi agreed the UAE should examine all its energy options. “All the resources are there for the UAE and we have to look at the opportunity to balance our sustainability from a financial, social and environmental viewpoint. In the UAE we’re looking at a model that would benefit the country from all angles of sustainability,” she said.

Her brief is to steer the renewable strategy through. It is a big feature of the Vision 2021 program for development in the UAE, as well as what is known as the “Energy Strategy 50/50,” by which half of the UAE’s energy needs would be satisfied by cleaner fuels by the year 2050.

It is an ambitious plan. The non-fossil half of the equation will be made up of 44 percent renewables — almost entirely solar — and 6 percent nuclear. The other half will be mainly gas, regarded as the cleanest of the fossil fuels, as well as “clean coal” — imported and burned in a special plant to be built in Dubai that burns the fuel at such high temperatures that emissions are dramatically reduced.

Solar energy has been the mainstay of future UAE energy strategy for some time, she explained. “In the 1990s we were almost 100 percent dependent on gas for power generation, but our leadership decided in the beginning of this century to start investing in renewables, so we launched Masdar City and other projects. At that time, solar was very expensive but now we have achieved the best prices for solar.”

Photovoltaic (PV) solar-power generation in the UAE is already cheaper than traditional gas generation, she said. The UAE is working on the essential question of solar energy storage, and also has to take into account factors such as land scarcity in the big cities, which will be using solar power in the future. 

“You also have to factor in continuity and stability of supply, today we don’t have the storage technology that will promote the flexibility of solar within the network,” Al-Shamsi said.

Gas will remain a vital part of the UAE energy strategy, however. “It is the cleanest form of fossil fuel. Some countries are taking the first step toward decarbonizing the power sector by moving from coal to gas. We in the UAE achieved this in the 1990s, and now we’re going ahead with different resources, even cleaner sources. Demand for gas is bound to increase worldwide. Gas offers flexibility of operation for the power sector, which increases the resilience of the power network. Demand for gas will continue not only in our country but all over the world,” she said.

The nuclear element will be provided by the four reactors being built using Korean technology at the Barakah coastal site by the Emirates Nuclear Energy Corporation (ENEC). 

“We went through a process of site selection, choosing the best site which is not affected by other issues,” she said of the sometimes controversial technology.

The move toward renewables and more sustainable energy sources is a vital part of the grand economic diversification plan the UAE has in place to reduce dependency on volatile global oil markets. “Diversification of income strategy that the UAE started, so that we are not severely affected by changes in the prices of oil — this is a great strategy,” she said.

Another element of the strategy is the removal of subsidies for energy consumption that existed for many years in the UAE and other parts of the Middle East. 

The four utilities companies — in Abu Dhabi, Dubai, Sharjah and Federal — have different tariff structures, so it is hard to generalize, but Al-Shamsi believes the UAE must pay market rates for its power. “This is the model for the future, to be market-based, and I think we’re almost there,” she said. 

On the CERAWeek stage, Minister Al-Mazrouei was quizzed about the “happiness” concept that has become a feature of UAE public policy, and Al-Shamsi was happy to elaborate.

“When we started the energy strategy, we considered the impact on health, the impact on your pocket, those kinds of key performance indicators (KPI) that will affect our personal lives. That was the initial index, and that took happiness into consideration. Happiness is not about letting people not work, happiness is the totality of life. When you achieve your targets in all the sectors it is impacting the happiness of society and the wellbeing of our nation,” she said.

One of the ways to promote national wellbeing is to improve the quality of the environment, and the UAE, through the national oil company ADNOC, is working on projects for CCUS — carbon capture, use and storage — that will mitigate CO2 emissions. “It is a complete business-case project a commercial project. Also the demand side management program, to significantly reduce demand for energy, which will have a good impact on the environment,” she said.

Al-Shamsi is one of a number of women who are advancing in the energy industry in the UAE. Also at CERAWeek was Fatima Al-Nuaimi, CEO of the liquified natural gas business at ADNOC.

“In some areas of the world there are not enough women in energy, but this is not true in the UAE. Women’s participation in the solar and nuclear sector is very high, and there are more coming in to the oil and gas sectors,” she said.

Young women have been attracted into the energy sector by the scholarships and in-job training government agencies’ funding in cooperation with the UAE’s universities, technical colleges and engineering schools, which also ensure a steady supply of your talent for the energy and technology sectors.

The next phase of the transformation of the UAE energy sector will be accelerated by the WEC Congress in September, and Al-Shamsi will go back to plan that event with invaluable lessons gained in Houston. “We’re looking into other experiences, but definitely we have been inspired by CERAWeek,” she said.

Oil tankers ‘go dark’ off Venezuela to beat tariffs

Updated 20 min 28 sec ago

Oil tankers ‘go dark’ off Venezuela to beat tariffs

  • High-risk tricks allow ‘rogue ships’ to evade US sanctions, industry insiders warn

MIAMI: In May, after pulling out of a Chinese shipyard for repairs, a giant oil tanker set out on a perilous journey.

Dialing in “Caribbean” on a mandatory tracking system, the captain of the Liberia-flagged vessel headed west. Then, weeks later, as it neared Venezuelan waters, the VL Nichioh suddenly stopped transmitting its location, course and speed in violation of international maritime rules, essentially vanishing on the high seas without a trace.

What happened while the ship was offline remains a mystery. But when it resurfaced nine days later while steaming toward Asia, the Nichioh was riding low in the water — a sure sign to ship-tracking experts that it had turned off its transponder to cloak a valuable cargo targeted by US sanctions: Venezuelan crude oil.

As the Trump administration has clamped down on President Nicolas Maduro with sanctions set on depriving him of easy cash from Venezuela’s vast oil reserves, some ship captains and their employers are eager to help the embattled socialist by “going dark” to hide tankers brimming with crude.

But industry experts say this evasive behavior, perfected by what the US considers rogue ships transporting oil for Iran in violation of US sanctions, comes at a great risk.

“These ships are carrying
2 million barrels of crude oil,” said Russ Dallen, the Miami-based head of Caracas Capital Markets brokerage, who tracks maritime activity near Venezuela to identify sanctions-busting activity. “They can’t be blindly wandering around in the dark. It’s an environmental disaster waiting to happen.”

Under a United Nations maritime treaty, ships of over 300 tons have been required since 2004 to use what is known as an automated identification system to avoid collisions and assist rescues in the event of a spill or accident at sea.

While ship captains have the discretion to turn off the transponders as they traverse flashpoints like the Strait of Hormuz, or to evade pirates off the coast of Somalia, ship-monitoring companies have become adept at tracking a vessel’s movements and draft to help law enforcement monitor for sanctions violations and criminal behavior.

Until recently, tankers docking in Venezuela had little reason to switch off their transponders — a tactic more associated with illegal Chinese fishermen off the Pacific coast of South America or human traffickers in the eastern Mediterranean.

But in January, after Maduro was sworn in for a second term many nations considered illegitimate, the Trump administration barred US companies from dealing with the Venezuelan state-run oil giant PDVSA and threatened retaliation against foreign companies that continue to do business with it.

As part of that offensive, PDVSA’s entire fleet of 34 vessels was frozen, essentially barred from ports in the US and other Western nations, as well as a several private fleets caught delivering oil to Maduro’s ally Cuba. The move has accelerated a collapse in Venezuela’s crude production to its lowest level in seven decades despite sitting atop the world’s largest crude reserves.

“Once blacklisted, these vessels become lepers and are very hard to operate,” said Omer Primor, head of marketing at Windward, a maritime analytics firm that assists law enforcement in hunting down potential sanctions violators. “Nobody will deal with them, so they essentially become floating storage devices.”

In the nine months since sanctions were imposed, there have been 14 suspicious dark activities spotted near Venezuelan waters, according to Windward. That is about 22 percent of the 50 reported port calls to Venezuela during the same period, a sharp decline in above-board maritime traffic in the nine months prior to sanctions.

Windward said that most of the cloaked crude is going to China or Russia — Maduro’s two biggest financial backers, for whom US sanctions are less of a deterrent — as well as India.

There are other tricks companies use to duck detection, such as reporting a false destination, frequently changing management or carrying out high-risk ship-to-ship transfers in which “dark” vessels come together on the high seas to hand over their cargo. Officials in Brazil initially suspected a dark ship loaded with Venezuelan crude of being behind a mysterious spill last month that has hit 2,100 km of coastline.

In the case of the Nichioh, it unloaded cargo in early September in the Indian port of Sikka, where Reliance Industries runs the world’s largest refinery. It then sailed through the Suez Canal and Strait of Gibraltar, reporting as its destination “Carribs for Order.”

But after docking for a few days in Trinidad, the Nichioh switched to “Aruba” and went dark for 10 days, once again picking up Venezuelan crude, according to ship-tracking firm Kpler. As of Nov. 12, the ship was heading past South Africa en route to China.

According to Kpler the two voyages by the Nichioh were chartered by Russia’s state-controlled Rosneft, which itself has been sanctioned by the US for the crisis with Ukraine. Prior to US sanctions, the ship had never reported sailing in the Western Hemisphere.

The ship’s registered owner, a Liberia-based company named Major Shipping SA, could not be located for comment. Liberia is one of the world’s most popular flag states because owners can register ships with few restrictions and little more than an email address. Most of the dark activities spotted by Windward off Venezuela involved Liberia-registered ships.

But it’s not just aging hulks at the fringes of the maritime industry cashing in on Venezuela’s desperation.

In June, Cosrising Lake, owned by an affiliate of China’s shipping giant Cosco, went silent for 14 days after loading 1.9 million barrels of crude in the Venezuelan port of Jose, according to Kpler. A few weeks later, it unloaded its cargo in the Chinese port of Dongjiakou.

Cosco didn’t say why the Hong Kong-flagged ship went silent. But in a statement, it said that it operates in compliance with laws and regulations and that its ships have maintained normal operations of their AIS systems in accordance with the international convention for the safety of life at sea.

The Trump administration is also looking into reports that Hurd’s Bank off the coast of Malta is becoming a staging ground for ship-to-ship transfers to hide Russia’s supplying of chemicals that Venezuela’s industry desperately needs to dilute its heavy crude, a senior US official said. He spoke on the condition of anonymity because he wasn’t authorized to discuss the matter publicly. Previously Venezuela imported diluents from the US

“Criminals connected to Venezuela are getting increasingly creative as they manipulate the laws that govern international maritime commerce to bypass sanctions,” said Ian Ralby, head of I.R. Consilium, a US-based consultancy.

“Authorities in the region and beyond need to be both alert and proactive in preventing the Maduro regime from using illicit activity to convert Venezuelan resources into cash.”