'Mideast energy sector may still face challenges in 2011'

Even as the global economic downturn begins to ease, the energy sector is still likely to experience challenging conditions entering 2011 in the Middle East and worldwide, according to the report titled ‘Energy Predictions 2011’ by Deloitte’s Global Energy and Resources Group.

Serving as a global and unified measure of economic recovery, the price of oil – testing the upper limits of $70-$80/barrel – and the strength and sustainability of the recovery will impact the ways in which all forms of energy are produced and consumed.
 
“Since the Middle East is home to around 75 per cent of the world’s oil reserves, energy plays a pivotal role in driving economies in the region,” said Mutasem Dajani, oil and gas partner at Deloitte in the Middle East.

“Anticipating the course of the energy and resources sector over the next 12 months is not easy. Deloitte’s ‘Energy Predictions 2011’ report aims to highlight possible industry directions and help identify opportunities and potential courses of action,” he added.
 
Dajani said: “Deloitte continues to offer insight into trends and challenges that affect the energy industry worldwide. Because of the Middle East’s central role as an oil and gas producer, an understanding of the current and future landscape that may affect the region is paramount.”
 
Highlights of the report include: 
 
M&A activity - A second wave of M&A is now occurring that involves state-owned companies from Russia, South Korea, Brazil, and Malaysia. The third wave, which is only now beginning to take shape, involves national oil companies from India and the CIS region.
 
Refining – During 2009, five new refineries were brought online, all in the Middle East and Asia. This trend is expected to continue, with an additional 2.75 bbl/d predicted to be added in Asia between 2011 and 2015. 
 
Nuclear power – Many oil-rich nations are embarking on a new road map destined to shape future energy usage in the gulf region.  Kuwait, the fifth largest oil producer among OPEC countries, plans to build four nuclear power reactors by 2022, joining a push toward atomic energy among Gulf countries.
 
Solar energy - In 2011 and beyond, solar technologies will increasingly trickle down from industrial users to be embraced by residential consumers and small businesses.

According to the International Energy Agency (IEA), solar power production will depend on dedicated transport lines that will bring electricity from the world’s deserts to large consumption centers, such as the Desertec Industrial Initiative that aims to provide Europe with solar-powered electricity from the Sahara via high-voltage direct current transmission cables under the Mediterranean Sea.
 
Water usage - Sustainability considerations are not only becoming key inputs for business decisions but also decisive factors affecting competition worldwide and in the Middle East. Water management during the fuel lifecycle is becoming increasingly important.
 
The “China effect” – As China’s involvement in the oil and gas sector continues to grow, China’s trade with resource-rich countries is expanding. Trade with Saudi Arabia, for example, is forecast to reach $60 billion by 2015.

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