Energy security and green transition not mutually exclusive, Dubai forum hears

Energy security and green transition not mutually exclusive, Dubai forum hears
The panel discussed ways in which countries can shift their energy priorities to meet these challenges. (Atlantic Council)
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Updated 31 March 2022

Energy security and green transition not mutually exclusive, Dubai forum hears

Energy security and green transition not mutually exclusive, Dubai forum hears
  • Panelists say path to decarbonization must be realistic, efficient, and complemented by affordable technologies
  • Experts caution that starving oil and gas of investment may actually hinder long-term transition to renewables

DUBAI: Energy security and the green transition must go hand in hand if the world is to address the climate crisis, experts participating in a panel discussion at the World Government Summit in Dubai said on Monday.

As Western governments respond to Russia’s invasion of Ukraine by imposing a raft of stringent sanctions on Moscow’s financial infrastructure and vast hydrocarbon economy, European nations have been left casting around for alternative sources of energy.

At the same time, governments urgently need short-term solutions to meet domestic energy demands until renewables like wind and solar can be scaled up. The result is a dual-crisis of energy security and creeping climate catastrophe.

During a summit session titled “Meeting the 2022 challenge: Will energy security derail the energy transition?” organized as part of the Atlantic Council Global Energy Forum, the panel discussed ways in which countries can shift their energy priorities to meet these challenges.

Claudio Descalzi, CEO of Emirates National Investment, who was on Monday’s panel, said African energy producers could offer European nations the energy security solutions they need as the continent weans itself off Russian oil and gas.

“We don’t have our own energy so we never thought about a strategy on energy security,” said Descalzi. “When you don’t have something like that to think about, (how) can you cope with the future? Africa is a good opportunity because they need development, we need gas, and that is a good combination.”

Indeed, buying from a region of the world in dire need of investment to assist its development has an obvious social value, but arguably does little to further the transition away from fossil fuels.

For his part, Majid Jafar, CEO of Crescent Petroleum, contended that energy security and energy transition do not need to be as mutually exclusive as they are so often depicted.

In fact, there can be no energy transition without energy security and affordability, he told the panel. In that context, the focus has been too much on starving supply and investment in oil and gas in an attempt to solve the climate crisis, while demand keeps soaring.

“It’s as ridiculous as trying to solve obesity by starving funding to sugar and wheat farmers, and not making any changes in diets or policies on how food is consumed,” said Jafar. “Climate change is fundamentally a consumption issue.”

Starving the developing world’s oil and gas industry of investment may actually be hindering the long-term transition to renewables, said Jafar, and “platitudes and prescriptions” from Western governments doled out to Africa and Asia do little to address their actual needs.

Indeed, almost 1 billion people worldwide still do not have access to electricity — a figure made worse over the course of the COVID-19 pandemic. Meanwhile, some 3 billion people do not have access to clean cooking solutions, forcing them to rely on dangerous and polluting sources of heat.

As an indication of the inequality around responsibility for carbon emission, around 80 percent of the global population is yet to board a plane.

“It’s like saying: ‘You don’t need stable grid power like we have, and you can make do with a solar panel on a battery,’” said Jafar.

In search of cheaper energy solutions, many developing countries have been forced to reach for even more damaging fuel sources.

“What has happened is there has been more burning of coal, so you have more emissions and higher energy prices,” said Jafar. “So this issue of underinvestment has been key and it cannot just be that we need more oil and gas in the short-term.”

The oil and gas industry is a long-term business, which requires hundreds of billions of dollars of investment in order to make production cleaner, said Jafar. He also believes these hydrocarbon products will be used differently in future.

“Gas is a fundamental enabler of renewables because it backs it up and it’s the path to future technologies like hydrogen, and oil is used for solar panels and wind turbines,” he said.

“That message of the ongoing need for oil and gas hasn’t been understood, especially in Western markets.”

Indeed, hydrogen is being widely touted as the missing link in the green energy transition. Speaking on Monday’s panel, Anna Shpitsberg, deputy assistant secretary for energy transformation at the US State Department, described hydrogen as a game-changing technology that speaks to a variety of different sources thanks to its ability to underpin nuclear, gas and renewables.

“That’s why we are putting billions of dollars into hydrogen research and development,” she said.

“It cannot always be about putting new infrastructure. We often talk about energy access and how countries sometimes need to build infrastructure, but they also have underutilized infrastructure, and we don’t want them to have debt when they are not even using what they have.”

The path to decarbonization needs to be realistic, efficient, and complemented by the development of new technologies to help bring down the cost of renewables, she added.

In the meantime, the world’s biggest oil and gas producers are committed to maintaining energy market stability. Saudi Arabia, the UAE, and Kuwait have all set aside spare capacity worth an estimated $500 billion, according to Fahad Al-Ajlan, president of the King Abdullah Petroleum Studies and Research Center in Saudi Arabia.

“They had the long-term vision of saying that if there is a disruption in demand or a hiccup in the global oil supply, then there is a way of compensating for that,” Al-Ajlan told the panel. “But if we can talk about energy security, it’s not new.”

Al-Ajlan highlighted the recent missile and drone attacks on Saudi Arabia and the UAE’s hydrocarbon infrastructure by Yemen’s Houthis and the need to pay special attention to energy security. All the while, cutting carbon emissions must remain a top priority.

“We are not achieving our climate goals tomorrow or in the next two years, yet our policy looks like it is,” he said. “We should be very focused on emissions and how to reduce them.”


Saudi economic growth projected at 8.3 percent in 2022: World Bank forecast

Updated 17 sec ago

Saudi economic growth projected at 8.3 percent in 2022: World Bank forecast

Saudi economic growth projected at 8.3 percent in 2022: World Bank forecast

RIYADH: The economic growth of Saudi Arabia is expected to accelerate to 8.3 percent in 2022 according to a forecast by the World Bank. 

In its report, the World Bank noted that the economic growth of the Kingdom will be moderated to 3.7 and 2.3 percent in 2023 and 2024, respectively.

According to the report, the oil sector will be the key driver of this economic growth with the output estimated to grow by 15.5 percent in 2022, while the non-oil sector is also expected to continue its growth trajectory estimated at 4.3 percent this year. 

“The Saudi Arabian economy is on an accelerated growth path in 2022; driven by higher oil and non-oil activities as the oil sector strengthens and pandemic pressures fade,” wrote the World Bank in the report. 

The report further noted that headline inflation is expected to stay subdued during 2022 and hover around 2.5 percent as a result of a stronger US dollar, subsidies and price controls, and stable rents. 

The report added that inflation is expected to average 2.3 percent in the medium term. 

The World Bank projected that the budget balance will register a surplus of 6.8 percent of gross domestic product in 2022, the first surplus in nine years, driven by higher oil receipts. 

On Oct.4, S&P Global revealed that Saudi Arabia continues to maintain ongoing expansion in its non-oil economy as output and new orders recorded gains, leaving the Kingdom’s Purchasing Managers’ Index at 56.6 in September. 

Earlier in October, Al-Rajhi Capital projected that Saudi Arabia’s real gross domestic product would increase by nearly 8 percent year-on-year in 2022 and 3.1 percent year-on-year in 2023. 

Inflation is expected to be 2.6 percent and 2.1 percent in 2022 and 2023 respectively, Al-Rajhi said. 

In September, a report published in Economist Intelligence said that Saudi Arabia is expected to become the fastest growing economy in 2022, outpacing Asian giants like China, India, and other struggling economies in Western Europe and North America. 

The Economist Intelligence report also projected that the GDP of the Kingdom is expected to reach 7.5 percent this year, the kingdom’s fastest rate of growth since 2011. 

 


Oil Updates — Crude up; Kuwait says OPEC+ works to serve global economy

Oil Updates — Crude up; Kuwait says OPEC+ works to serve global economy
Updated 06 October 2022

Oil Updates — Crude up; Kuwait says OPEC+ works to serve global economy

Oil Updates — Crude up; Kuwait says OPEC+ works to serve global economy

RIYADH: Oil prices rose for a fourth session on Thursday, with Brent at a three-week high, after the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, agreed to cut output by about 2 million barrels per day, the largest reduction since 2020.

Brent crude futures for December settlement rose 12 cents, or 0.13 percent, to $93.49 per barrel by 08.30 a.m Saudi time, after settling 1.7 percent higher in the previous session.

US West Texas Intermediate crude futures for November delivery gained 11 cents, or 0.13 percent, to $87.87 per barrel. 

OPEC+ works to serve the global economy not threaten it: Kuwait

Kuwait’s acting oil minister Mohammed Al-Fares said on Wednesday that the OPEC+ decision to cut production by 2 million barrels per day will have positive ramifications on the oil markets, the state news agency reported.

“The decision places a big responsibility on us to follow up on market developments in case supply or output increases,” Al-Fares told the agency in an interview.

He asserted OPEC+ works to serve the global economy, not threaten it.

Russia may cut oil output if price caps introduced

Russian Deputy Prime Minister Alexander Novak said on Wednesday that Russia may cut oil production in order to offset the negative effects of price caps imposed by the West.

Novak was also cited by the TASS news agency as saying that Russia will produce 530 million tons of oil, equivalent to 10.6 million bpd in 2022 and 490 million tons in 2023.

He said Russia was ready to supply gas to Europe via one line of the Nord Stream 2 pipeline if necessary.

(With input from Reuters)


Marketing firm Tihama receives CMA’s approval for 700% capital hike

Marketing firm Tihama receives CMA’s approval for 700% capital hike
Updated 06 October 2022

Marketing firm Tihama receives CMA’s approval for 700% capital hike

Marketing firm Tihama receives CMA’s approval for 700% capital hike

RIYADH: Tihama Advertising and Public Relations Co. received the Capital Market Authority’s clearance to increase its capital by 700 percent.

The marketing firm’s capital will be increased from SR50 million to SR400 million ($107 million), according to a bourse filing.

Tihama is issuing rights worth SR350 million for the capital increase.

The final clearance is subject to the approval of the shareholders and the completion of the necessary procedures.


Al Sagr Insurance gets CMA node to cut capital by 65% to $37m

Al Sagr Insurance gets CMA node to cut capital by 65% to $37m
Updated 06 October 2022

Al Sagr Insurance gets CMA node to cut capital by 65% to $37m

Al Sagr Insurance gets CMA node to cut capital by 65% to $37m

RIYADH: Al Sagr Cooperative Insurance Co. got the Capital Market Authority's nod to cut its capital by 65 percent.

The Saudi insurer aims to reduce its capital from SR400 million to SR140 million ($37 million) in order to reduce its losses, according to a bourse filing.

The final approval is conditional on the extraordinary general assembly’s approval and completion of the necessary procedures.

 


WTO slashes 2023 global trade forecast as fears of recession looms

WTO slashes 2023 global trade forecast as fears of recession looms
Updated 05 October 2022

WTO slashes 2023 global trade forecast as fears of recession looms

WTO slashes 2023 global trade forecast as fears of recession looms
  • WTO economists said they expected the volume of global merchandise trade to grow 3.5 percent this year

GENEVA: The World Trade Organization on Wednesday dramatically lowered its global trade forecast for 2023, as Russia’s war in Ukraine and other shocks take their toll on the world economy.

Presenting a revision of their annual trade forecast, WTO economists said they expected the volume of global merchandise trade to grow 3.5 percent this year, which is slightly higher than their expectations in April.

But they forecast it would grow by only one percent in 2023 — dramatically down from their expectations of 3.4 percent growth six months ago.

“The picture for 2023 has darkened considerably,” WTO Director General Ngozi Okonjo-Iweala told reporters in Geneva.

“Today the global economy faces multi-prong crises. Monetary tightening is weighing on growth across much of the world.”

As for the global economy as a whole, WTO economists stuck with their April forecast of 2.8 percent gross domestic product growth this year, but said growth in 2023 was now expected to be just 2.3 percent — down a full percentage point from the previous forecast.

By way of comparison, the Organization for Economic Co-operation and Development has maintained its 2022 forecast at 3 percent, and expects 2.2 percent growth next year.

The International Monetary Fund, meanwhile, forecasts growth at 3.2 percent this year and 2.9 percent in 2023.

The WTO pointed out that its April forecasts were presented only weeks into the start of Russia’s full-scale war in Ukraine, making them very uncertain.

The estimates for 2023 “now appear overly optimistic, as energy prices have skyrocketed, inflation has become more broad-based, and the war shows no sign of letting up,” it said.

The WTO said surging energy prices in Europe, stemming from the war in Ukraine, were expected to squeeze household spending and raise manufacturing costs on the continent.

Meanwhile, monetary policy tightening in the US was hitting the housing, motor vehicle and fixed investment sectors, and China was still grappling with COVID-19 outbreaks and production disruptions.

Furthermore, the growing import bills for fuel, food and fertilizer risked leading to more food insecurity and debt distress in developing countries, the WTO said.