Law to rationalise energy sources in the pipeline

Suhail bin Mohammed Faraj Faris Al Mazrouei, Minister of Energy has unveiled a new draft  'Rationalisation Law’, being prepared in cooperation with the Ministry of Environment and Water ahead of referring it to the Cabinet this year for endorsement.

The law will be endorsed as a balanced policy to help a consumer understand his important role in preserving of energy sources and also helps the government to study its future options, as well as continue in 'awareness initiatives' with all bodies and institutions in a campaign to reduce energy and water consumption in conjunction with the Federal Water and Electricity Authority that targets housewives, worshippers, schools and major industrial facilities.

In an exclusive interview with Emirati anchor, Khadijah Al Marzouei during the ‘'Emirates Tonight’ Programme on Dubai Radio, Energy Minister said, "The general features of the country's general strategy in the field of energy, focuses on resources and future challenges, as well as rationalisation and consumption patterns, in addition to the focus on the role of technology, green economy and buildings on the preservation of environment."

He referred to the electricity consumption, tariff, and the government subsidy, internal and external investment, future plans, alternative energy and shale oil and others, emphasising that the energy and natural gas sector is deemed vital since the inception of the UAE, whose government-led by the late Sheikh Zayed bin Sultan Al Nahyan and the Rulers of the Emirates, took interest in the sector to ensure decent life for the citizen.

Al Mazrouei pointed out the importance of diversifying energy sources and use of fossil gas at average of 70 per cent to 75 per cent of energy consumption and 25 per cent of nuclear energy, five percent of renewable energy by 2020, expecting that the increase in energy sources through liquefied gas would be local and imported gas, while the third source will be natural liquefied gas, being the most expensive among the three sources.

The liquefied gas is being imported through Jebel Ali Port at a capacity of three million tonnes annually.

He added that work is underway to establish a new port in Fujairah at a threefold capacity of energy compared to that of Dubai, with additional capacity of nine million tonnes of liquefied gas from Fujairah Port.

Tenders will be invited to this year.

Al Mazrouei said that there are no signs of delay to 2017 date slated for the operation of the first plant, adding that the fourth plant will start operation by 2020.

It will contribute 5, 600 MW of electric energy which represents, more or less, 25 per cent of the consumption of electricity sector in the country.


Renewable energy

Regarding renewable energy, the minister pointed out that the year 2013 witnessed the launch of two important projects ‘Shams’ which is deemed the biggest of its kind in the field of using the technology in solar energy generating and storage, with a capacity of 100 MW in the Western Region.

The second project, ‘'the Mohammad Bin Rashid Al Maktoum Solar Park', with a capacity of 13 MW, in addition to another project with a capacity of 100 MW in Dubai.

He added that in order to contribute to the increase of renewable energy ‘Masdar’ is working is studying multiple projects, whether in Abu Dhabi or Al Ain.

Answering a question on the impact of extraction of shale oil on the international prices, the minister denied this hypothesis on the ground, citing that there three major markets such as the gas heading to Asia, whose prices are dubbed the highest prices in the world at a cost of $14-16 cubic feet, while gas coming to Europe ranges between $10 -11and there is still a kind of uncertainty about the quantities of the exported shale gas in the US and Canada, expecting that there will be an increase in the amount of gas flow in the market after 2020 which would reduce the rise of prices.

Experts anticipate that the average of price will be between $ 11 to 12 and the third market is American market, whose prices ranges from between $5- 3.5.

Power and prices

He also commented on the difference between oil and gas usage and their importance in power generation, energy minister said: ''When oil prices were cheap, it was an option for old stations but in the light of the environmental effects and high prices. 'Diesel has become the last choice for power generation."

Al Mazrouei said there are doubts about the exports of quantities of shale gas in US and Canada, expecting that there will quantities of gas flow to the market after 2020, hence, reducing hike of prices. Experts expect that average prices will range between $11- 12 for liquefied gas, but not less than $10.

Al Mazrouei added, "When the oil prices were lower, the burning of oil or diesel was an option for old fuel station, but with environment effect and higher prices, the use of diesel has become the last option and expensive for generation of energy.

"We are today and within the UAE's policy don not burn any liquids, while gas is environmental-friendly. When new projects are set up, we will be forced to burn diesel even in peak periods and summer."

The minister expected the growth and demand rates for oil would grow in coming years by 1 per cent annually, especially the world consumes today about 90 million barrels, of which 30 million barrels are exported through OPEC. This will reduce a bit with appearance of new shale oil or oil from non OPEC states.

He added that the current prices, which have been ranging around $100 per barrel for over five years, are logical, but with the growth rates increasing by 5- 7 per cent in China and India, the demand for oil will rise.

The local demand will also rise, Al Mazrouei continued, adding that the capacity of the UAE oil refineries rose from 500, 000 barrels per a day to 920, 000 million barrels per a day.

Regarding the production increase and reduction of government subsidy and his opinion about the government subsidy, the minister said, "The subsidy does not create an economy.

“When the subsidy continues, the economy cannot compete at world level at a time the UAE government vision aims to become one of the world's solid economies based on sustainability and economic growth."

Sustainability and subisidies

He added, "When we look at sustainable economies, we realise that they do not subsidise energy as we have today at a time we face general culture challenge that we should economise as the growth and progress do not go alongside extravagance."

Al Mazrouei said the UAE government would continue to subsidise since the consumption is logical, citing that the consumption rate among Emiratis, expatriates, economic and industrial sectors exceeds the world's rates by threefold- this incredible and unsustainable.

He added that the subsidy percentage ranges from 50- 85 per cent in some sectors. "If such subsidy is associated with consumption guide, it will continue. But with huge wastage compared to international standards, I repeat this is absolutely incredible."

About internal and external investments, the minister said the UAE is one of the top countries in the area of energy: oil and gas, as well as investments in the field of electricity generation in many countries worldwide.  He referred to the investments of International Petroleum Investment Company (IPIC) in the fields of fuel stations since 1970s, exploration and production of oil.

It bought in partnership with Total, SABSA company, which was owned by the Spanish government.

Mubadala, which invests in the field of exploration and production in three South East Asian countries, develops gas fields and sells it in Indonesia, Malaysia, Vietnam and a number of GCC states. Mubadala owns huge investments in Qatar, Sultanate of Oman and the Kingdom of Bahrain. Meanwhile, TAQA , the world's sixth largest developer of electricity privatisation projects, invests in electricity generation in Morocco, where it owns 45 per cent of the electricity. It also invests in many countries in Africa and the world.

Al Mazrouei added within a year he worked under Vice- President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, he has learnt and still learning a lot.

The minister also cited his tenure at Adnoc, where he had different local and international experiences, adding that he deems General Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, a role model and a second father, thanking all Their Highnesses, Members of Supreme Council and Rulers of Emirates and the late Sheikh Zayed bin Sultan Al Nahyan, the founding father of the UAE, who made the UAE one of the advanced countries.

He thanked. Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs, on learning much from him, urging youth to persevere and tackle challenges with huge ambitions.

"No one imagines UAE would turn from an oil producer country into an industrial state, whose companies manufacture special parts of IPAD, Airbus, Boeing and BMW vehicles", Al Mazrouei concluded.

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