The call by Mohamed Al-Mady, SABIC vice chairman and CEO, for the establishment of regional think tanks to identify and pursue new areas of competitive advantage fits well in the changing industrial environment in the GCC.

Governments have done much to enhance competitiveness around the GCC but more efforts are needed to promote innovation.

Saudi Arabia has realized the importance of innovation and is taking appropriate measures.

For their future competitive advantage, regional governments have set up King Abdullah University of Science and Technology (KAUST) and the Masdar Institute of Science and Technologies as well as technology parks such as the Dhahran and Riyadh techno valleys.

The changing business environment in the region has made the drive for innovation more important than ever.

It is surprising that there is only one innovation think tank in the Gulf region, whereas more than 550 think tanks listed on Wikipedia are in other parts of the world.

If you look at the shale gas revolution in the US, it has driven down the cost of natural gas from double-digit to low single digit in the space of only a few years.

In June, 2008 the spot price of natural gas quoted on the NYMEX commodity exchange peaked at $12.69 per million British Thermal Units (BTU). In 2012, the price went as low as $1.95.

US shale production has had a greater impact on GCC-based natural gas producers than on oil producers.

Saudi Arabia, however, holds a competitive advantage as it has abundant resources.

Industrial leaders in Saudi Arabia have to be more innovative to take advantage of the Kingdom’s considerable shale resources with its shale gas potential estimated to be over  600 trillion cft. It is a wise decision taken by the Kingdom to go ahead and exploit such resources.

Though there was some reluctance, some oil and gas majors have started investing in shale gas, signaling the start of a new era for energy exploration.

The shale boom could impact the oil price in a medium- to long-term scenario where shale oil supplies increase substantially from the United States and potentially other countries, and where sufficient infrastructure is put in place to render shale oil exports competitive with GCC oil exports.

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